Pakistan Economy: News & Discussion

Transit of exports to India via Wahgah: Kabul sets condition for signing deal?

KABUL (July 11 2010): Afghanistan expects to sign a trade agreement with Pakistan this month in a move which could boost stability, but only if its neighbour drops opposition to transit traffic with India, business leaders said on Saturday.

A long deadlock over Afghan demands for transit of exports to India via Pakistan through the sensitive Wagah land route was close to ending, clearing the way for Afghanistan-Pakistan Transit Trade Agreement (APTTA) within weeks, Afghanistan Chamber of Commerce director Abdul Qadir Bahman told Reuters.

"It is not yet certain, but we have very strong hopes differences have been overcome," Bahman said. Bahman said both sides would hold an eighth round of talks before an international conference in Kabul later this month in which donor countries and Karzai's government will try to chart a path forward for the conflict-torn country. "The main point is access to the sea for exports to India," he said, promising a deal would also help combat the current thriving blackmarket trade between the two countries.

"If we sign this agreement, it will decrease that because we will have found a way for everyone to carry out business without any problems," Bahman said. Transit to Afghanistan through Pakistan is currently governed by the 1965 Afghan Transit Trade Agreement which specifies ports, routes, transport and customs transit procedures.

Both Afghanistan and Pakistan have agreed on the need for a new agreement to give Afghanistan sea access and provide Pakistan with direct routes to Central Asia. But Pakistan says Afghanistan is refusing to agree to customs duty on Afghan cargo in Karachi and other measures to combat illegal smuggling such as compulsory licencing, bank credit guarantees and quarantine restrictions Fifty percent of Afghanistan's trade is with its five neighbours Pakistan, Iran, Tajikistan, Turkmenistan and Uzbekistan. Trade between Afghanistan and Pakistan is worth more than $1 billion.

Port Grand opening next month: visitors to pay Rs 200 each for entry to food resort

ISMAIL DILAWAR
KARACHI (July 11 2010): The long-awaited opening of the Asia's biggest food and entertainment resort, Port Grand would be carried out in the mid of next month. "In the first phase the soft opening would be undertaken in mid August," Farooq Hassan, Vice President of Port Grand, told Business Recorder in an interview conducted on Saturday at the scenic site.

Grand Leisure Corporation (GLC) is constructing the Karachi Port Trust's mega project at the 13-acre scenic coastal stretch of Karachi Port ranging from Native Jetty Bridge to M.A Jinnah Bridge roundabout at a cost of over Rs 1 billion on Built-Operate-Transfer basis for 21 years.

Management of the well-known Food Street expects a huge crowd of 10,000 local and foreign visitors in a single day at the under-construction resort, which is first of its kind in the country. "Within a few months of the soft opening we would have influx of people but for a full-fledged operation we hope that around 10,000 people to visit the resort in a day," the vice president said. This figure, Hassan said, was for a normal day while for weekends his management was expecting the number of visitors to range between 15,000 to 17,000.

He said that the management had decided to set entry fee for the Port Grand at Rs 200 per head, out of which the visitor would be allowed to do a hundred rupees' shopping. That means the effective rate of entry in Port Grand is to be Rs 100. "This is to ensure that sober and decent people enter the resort because this is a place where we would like to welcome all families and professionals," the soft-spoken deputy chief added. About security, he said there would be security cameras installed throughout the resort to snap the wrongdoers, if any. "We would keep the photos in record and would not allow entry to a miscreant next time," Hassan said. To a query on feasibility of the 1867-built bridge, Hassan said the government was tending to lay down the outdated bridge, but the Port Grand management reclaimed it and renovated it in a way that sky rocketed original cost of the project, Rs 200 million, to over Rs 1 billion.

Pak Steel to get another Rs22 bn: Syed Khursheed Shah

Monday, 12 Jul, 2010


Pakistan Steel has given a lot to the nation. We should not hesitate to provide funds, if needed, for its revival and strength, the Minister asserted. — File Photo

KARACHI: Federal Minister for Labour and Manpower Syed Khursheed Ahmed Shah said on Monday that the government was determined to revive and expand Pakistan Steel, and strongly rejected the impression that the Mill would be privatized.

The Minister was addressing Pakistan Steel workers at the oath-taking ceremony of newly elected office bearers of Pakistan Steel Peoples Workers’ Union within the premises of the Mills.

Central Secretary General of PPP Senator Jahangir Badar, Advisor to the Sindh Chief Minister Rashid Rabbani, Special Assistant to the CM Syed Waqar Mehdi, President PPP Karachi Syed Najmi Alam, General Secretary PPP Karachi Saeed Ghani, Secretary General of Labour Bureau Pakistan and former Sindh labour minister Khawaja Muhammad Awan, Acting CEO of Pakistan Steel Imtiaz Ahmed Lodhi besides officials of the Peoples Union (CBA) were present.

The Federal Minister said Steel Mill has a great potential to grow. It has never been a burden on the national exchequer. Not a single penny has ever been given to it as subsidy.

This project was completed at a total cost of Rs25 billion and it has so far returned to the national exchequer more than Rs97 billion in the shape of duties and taxes.

It has retired entire previous loans and is capable enough to re-pay the new loan of Rs25 billion recently approved by Prime Minister Syed Yousuf Raza Gilani under “Pakistan Steel Bail Out Package.” The PSM has already got Rs3 billion as part of this package.

Pakistan Steel has given a lot to the nation. We should not hesitate to provide funds, if needed, for its revival and strength, the Minister asserted.

Like steel mills in other countries, Pakistan Steel suffered heavy financial losses as side effects of global economic recession and turmoil in the steel industry.

However, he said, the skilled, hardworking and committed workers of Pakistan Steel will turn this Mills around and the work on its expansion will also start soon to achieve its targeted production capacity of 3 million metric tons. This will make the PSM more competitive in local and international markets besides providing more employment.

President Asif Ali Zardari takes great interest in the revival and expansion of Pakistan Steel seeing it as Shaheed Zulfikar Ali Bhutto's gift to the nation.

Prime Minister Gilani is very much concerned about the progress of PSM. He said in 2006, conspiracies started to sell out Pakistan Steel at very low price. Shaheed Mohtarma Benazir Bhutto directed the party leaders to resist its privatisation.

Every institution is not for earning profits, she had remarked adding “My father had established Pakistan Steel to strengthen the infrastructure and economy of the country, and for socio-economic uplift of the masses by promoting down-stream/ engineering industry,” Khursheed Shah quoted Benzair Bhutto.

He said Pakistan Peoples Party (PPP) is the only true representative of democracy in the country and has always worked for the betterment of the poor instead of guarding the interests of the rich.

He listed the steps taken by the present PPP government for the welfare of the workers including repeal of anti-workers laws introduced by last two governments and restoration of thousands of employees in different public sector organisations.

The PPP government has confirmed the services of a large number of employees. 4500 workers in PSM were also confirmed although it was a big challenge in the persisting financial crisis of the Mills.

We have also raised minimum wages of workers up to Rs7500 per month. Syed Khursheed Shah lauded the role of Pakistan Steel Peoples Workers Union (CBA) for the welfare of the workers and the Mills.

He also highlighted the reconciliation policy adopted by Shaheed Mohtarma Benazir Bhutto in the interest of the country and for strengthening of the democracy. PPP Co-Chairman and President Asif Ali Zardari continued the same policy and offered full cooperation to all major political parties/ groups for good of the country and the people.

The Federal Minister for Labour and Manpower, on this occasion, announced to set up C.T. scan and MRI facilities for PSM workers and their families from Workers Welfare Fund.

He also announced that around 4.2 million registered workers will now get their medical treatment even at Aga Khan Hospital, if needed.

Central Secretary General of PPP Senator Jehangir Badar said his party has always been struggling to ensure the respect and rights of workers.

Shaheed Zulfikar Ali Bhutto gave great importance to workers since the formation of PPP and strived for their uplift. The spirit behind nationalization of industries was to ensure a proactive role and involvement of workers in the national economy and in the development of the country.

He said the PPP with the support of the workers will protect Pakistan Steel from all kind of conspiracies.

Thar coal priority source of power: Gilani

Monday, 12 Jul, 2010


Gilani directed all the concerned federal and provincial agencies to extend full required support for Thar coal projects and ensure timely availability of infrastructure at the site.


KARACHI: Prime Minister Syed Yousuf Raza Gilani has declared Thar coal as the priority source for power generation and of national importance.

Chairing a special meeting of the Sindh Cabinet, wherein he was updated on Thar coal projects at the Chief Minister House here on Monday, the Prime Minister said that Thar was the future of Pakistan.

Sindh Governor Dr. Ishratul Ibad Khan, chief minister Syed Qaim Ali Shah, federal ministers Rehman Malik, Raja Pervaiz Ashraf, Syed Naveed Qamar and members’ sindh cabinet were also present on the occasion.

He directed all the concerned federal and provincial agencies to extend full required support for Thar coal projects and ensure timely availability of infrastructure at the site.

He directed the provincial government to have consultation with the federal finance minister with regards to allocation of funds in the current PSDP and also regarding project financing for the Sindh Government's Joint Venture Project.

Earlier, Secretary Coal and Energy Department and Managing Director Thar Coal and Energy Board (TCEB), Ajaz Ali Khan gave a briefing on Thar coal project.

The vision of Thar Coal and Energy Board (TCEB) was shared with the Cabinet which is to generate at least 10,000 megawatts of power from Thar coal by 2020, which will save $ 79 billion of foreign exchange on fuel replacement cost and would give benefit of Rs8 trillion to the national economy on account of reduced power generation cost.

MD TCEB along with SECMC Khalid Mansoor gave a detailed presentation to the Prime Minister and the Cabinet with regard to ongoing progress on Sindh-Engro JV Project and informed the participants that this is a flagship project of Sindh Government, and its design feasibility study will be completed next month.

It has entered a critical phase where availability of infrastructure has to match the project time-lines. Any delay will make project financing availability difficult. The Prime Minister assured his full support and appreciated the efforts of the Government of Sindh.

'Chitral to be linked to China after construction of Chitral-Gilgit Road'

CHITRAL (July 13 2010): The government will link Chitral with time-tested friend China by constructing Chitral-Gilgit Road that would make the northern districts of Pakistan a hub of economic investment, said Federal Minister for Communication Arbab Alamgir Khan here on Monday.

He said Chitral-Gilgit Road and Lawari Tunnel will open up Khyber Pakhtunkhwa for investment and would give further impetus to development process in Chitral, Dir, Swat and Malakand Agency, Dr Alamgir Khan remarked.

Addressing a big public gathering at Chitral and Garm Chashma here after starting of his three days visit, he said the completion of these two mega projects will revolutionise the communications sector, enhance trade activities with Central Asian Republics and bring an industrial revolution in Khyber Pakhtunkhwa. The construction of tunnel will help establish strong road links with Central Asian States and hopefully it would be completed in 2011 at a cost of Rs 17.50 billion.

Telenor Pakistan Completes 50 Solar-powered Cell Sites

*Telenor Pakistan says that it has become the country's first mobile operator to complete the largest solar-powered telecommunication network to be established in Universal Service Fund-assisted areas.

Of the 50 solar-powered cell sites established, 47 are in the USF-assisted areas of Mirpur Khas and Bahawalpur. The sites are providing telecommunication services to nearly 1.63 million people who previously lacked any such access. The other three sites are in Islamabad and Khyber-Pukhtoonkhwa.

The solar-powered cell sites are an outcome of Telenor Pakistan's Green Energy Project.

Khalid Shehzad, Chief Technology Officer, Telenor Pakistan commenting on the achievement said: "We are delighted to have created the largest solar-powered cell network in the USF-assisted areas of Mirpur Khas and Bahawalpur. With the deployment of solar-powered cell sites our aim is to provide environment-friendly telecommunication services even in the remotest areas of Pakistan. By doing so we are reducing power demands on the national grid and also helping to reduce carbon emissions. Alternative energy solutions are the way forward and we will continue to explore greener, more environment friendly solutions for our business."

USF is a government fund set up with the aim to provide basic data and telephony services to the unserved and underserved areas of the country.

Solar energy is one of the salient features of Telenor Pakistan's Green Energy Project that will help in preventing emission on average of 2.5 tons of carbon dioxide per site per year.

Pakistan exceeds export target of $19.3 billion

KARACHI (July 13 2010): Pakistan has achieved it's highest ever exports mark of $19.3 billion in the fiscal year 2009-10 (FY10), Business Recorder learnt Monday. According to official sources in the Trade Development Authority of Pakistan (TDAP), the country has so far recorded exports worth $19.3 billion which not only exceeds the target set for exports in FY10 ie $18.8 billion, but also eclipses the previous best recorded at $19.05 billion in FY08.

They also said that with a complete data of the outgoing fiscal year, the exports are expected to be around $19.5 billion. Citing reasons for the record exports, despite a global financial meltdown, sources said that the main reason was the exports of rice that yielded around $2.3 billion - showing an overall growth of 8 percent as compared to the preceding year. Exports of textile and clothing, which crossed the $10 billion mark, recorded a growth of 7 percent as compared to the last year. Fruits, vegetables and jewellery exports were doubled, with jewellery registering more than half a billion dollars in exports, as compared to FY09.

These performances in exports, the authorities claimed, were also indicative of the products' diversification taking place within the country's export goods-basket. "New and unconventional products are emerging, as the textile sector exports are surely loosing their preponderant share, which now accounts for 53 percent of our exports," they added.

According to them, horticulture exports have made significant strides and have gone up by 68 percent as compared to the FY09. At the inaugural ceremony of TDAP's flagship event - The Expo 2010, the Prime Minister gave out special awards to the new and innovative products exported from Pakistan, which included electric energy meters, PET bottle-grade resin, and glitter for use in fashion apparels, which together now accounts for $250 million worth of exports.

Sources further said " While our traditional markets of the US and EU have remained static or even slowed down, our exports to regions of Africa and Asia as well as Russia and the C.I.S. are showing a robust growth. As per the latest available data, Asia (including Russia) now has 44 percent share in Pakistan's total exports compared to 21 percent in USA's, 26 percent in Europe's and 6.5 percent in Africa's exports".

According to the authority these figures and trends gives a signal to the business community to change their traditional business outlooks and explore non-traditional, innovative, value-added products as well as the non-traditional markets of Asia and Africa.

Moreover, there are lesser non-tariff barriers faced by Pakistan's exports in Asia and Africa as well as Russia and the C.I.S., as compared to exports to the developed markets where such issues as Sanitary and Phyto-Sanitary (SPS) measures and Technical Barriers of Trade (TBT) compound's difficulties for Pakistan's exports in making further inroads in those markets.

Earlier the country, according to the available statistics, had recorded exports worth $17.6 billion by May 2010 and was expected to reach 19.3 to 19.5 billion dollars by June 2010. Sources said that the country, which could not achieve their export targets in the last two years, would achieve a record exports mark despite recession.

According to the Federal Bureau of Statistics, in July to April 2009-10, total exports reached a figure of $15.884 billion as compared to $14.703 billion during the corresponding period last year. In April 2010, it said, the export was recorded as $1.737 billion against $1.321 billion in the corresponding month last year.

It said that during the nine month of FY10, the country has exported textile and garments worth $8.516 billion as compared to $7.955 billion in the same period last year. Minerals and metals, the statistics showed were the other sectors in which a growth of 26.32 percent was recorded during the nine months of FY10. Agro and food, engineering goods and other sectors also recorded a growth of 5.02, 0.82 and 15 percent respectively by April 2010 of the current fiscal year.

According to the statistics, Africa is the region where the country has increased its export to 16.69 percent, while it has also achieved a 10 percent growth in export to Asia including Russia. Only 1.15 percent growth was recorded in the exports to Europe by April 2010. However a drop of 4.44 percent in growth was also recorded in the exports to America.

According to the Federal Bureau of Statistics report, the third quarter (January to March) of the fiscal year was exceptionally good for the exports, when all three months of this quarter achieved more than their targets. In the first two quarters, though exports surpassed their targets in October and December, however in the remaining four months, exports fell miserably against their targets.

In the first month of July, exports fell $178 million against the set target, $125 million in August, $129 million in September and $39 million in November of the outgoing fiscal year. In October, exports exceeded the target by $134 million and $146 million in December.

Car sales up 49 percent in FY 2009-10

KARACHI: Car sales during the closing fiscal year (FY) 2009-10 have witnessed an increase of 49 percent to reach 123,957 units as against 82,844 units in FY2008-09, data released by Pakistan Automotive Manufacturers Association (PAMA) showed Monday.

According to the latest numbers by PAMA, the auto sector witnessed a positive trend and remained remarkably high as car production - witnessing an increase of 44 percent to 121,647 units compared with 84,308 units last year. The auto sector witnessed highest year-on-year (YoY) growth since FY04.

This increase of 49 percent in sales during the said period is primarily attributable to enhanced liquidity from rural economy, consumers’ purchasing power along with improving macroeconomic situation in the country, said Furqan Punjani – an analyst at Topline Research.

Interestingly, car sales surged by massive 25 percent to 16,663 units in the month of June 2010 alone compared with May 2010.

During FY10, Indus Motors recorded highest ever sales of 50,823 (market share of 36 percent in FY10) versus 34,146 units last year (market share of 34 percent in FY09), up 49 percent YoY.

Moreover, the biggest local car assembler - Pak Suzuki sold 79,993 (market share 53 percent) versus 50,584 units last year (market share 51 percent), up 46 percent YoY. PSMC was the primary beneficiary of improvement in auto financing schemes due to a stronger correlation with its lower end products. However, the company’s newly launched product ‘Swift’ (1300CC hatch back) failed to post impressive volumes as only 2,353 units have been sold since the car was launched in January 2010.

However, Honda Car and Dewan Motors lost their market share. Honda Car sales were marginally up by 6 percent to 12,980 units in FY10 - losing its market share from 12 percent to 9 percent. Similarly, Dewan Motors, which sold 2,207 units last year, was able to sell only 1,371 units in FY10.

On a month on month basis, auto sales were up by 25 percent in June 2010. INDU recorded volumetric growth of 17 percent (highest ever monthly sales of 5,793 units) whereas PSMC volumes rose by 31 percent from the previous month.

It is expected that car sales would remain on the higher side going forward as in the month of June 2010 alone, car sales were 24-month high at 16,663 units. Last time in June 2008, monthly car sales were peaked at 17,044 units. With car sales improving by 49 percent in FY10, the economic recovery, improving consumer confidence along with resumption of auto financing by major banks, will lead car sales going forward, he said adding that the assembled car industry may grow by 10-15 percent in FY11 due to strong improvement in economy car segment sales.

During the FY10, sales of trucks remained up by 15 percent with units sold 3,620, sales of buses shrank by 4 percent, LCV, Vans & Jeeps witnessed an increase of 7 percent in sales with 16,496 units farm tractors sales rose by 18 percent to reach 71,512 units and motorcycles and three wheelers sales also witnessed improvement by 45 percent with units sold 737,759 units. To recall, FY09 had been a dismal year for local auto manufacturers as volumes fell by 47 percent to a 6-year low of 99,310 units. In 2008-09 the global automotive industry witnessed worst slowdown amidst dramatic financial crises worldwide. The ongoing global economic crisis, negative security developments and continued power shortages slowed Pakistan’s real GDP growth to 2 percent for 2008-09 compared with 5.8 percent achieved in the prior year.

Over $2.2 million deal for tug due shortly: PQA set to discharge pilot boat tender

ISMAIL DILAWAR
KARACHI (July 14 2010): Port Qasim Authority is all set to discharge the tender it had invited afresh in March this year for chartering a pilot boat in search of more competitive rates due to 'high' cost of hiring. The country's second largest port operator is, however, soon likely to clinch a multimillion dollars deal with a UAE-based firm, M/s Global Marine Service (GMS), for the hiring of an ASD berthing tug.

According to sources, PQA's tender committee has recommended to the Board to reject the tender in view of the exorbitant rates of at least $7,390 per day offered by the only bidder, M/s Lamnalco. They said the committee had suggested inviting a fresh tender for chartering the pilot boat as the presently quoted rates were very high and equivalent to that of a tug.

The sources said the disqualification of M/s Smit Loire's craft on technical ground and non-offering of a pilot boat by the GMS had left PQA with the only option, namely M/s Lamnalco, which had sought the rates of its liking. The PQA Board, however, is likely to reject the offer in the light of technical committee's recommendations, they added.

It is interesting to note that at present under an extended contract PQA is paying at least 1,825 euros or $2,300 to Smit Loire for a pilot boat excluding fuel consumption. But, the sources said according to Lamnalco's rates quoted in the fresh tender the Authority, in case of awarding a contract, would have to pay around $3,500 to the Cypriot company.

Thanks to GMS's rational rates that, the sources viewed, had arranged for the proponents of a fresh tender in PQA Board to find a face-saving. As Smit and Lamnalco had, respectively, demanded $8,898 and $7,674 as daily hiring, fuel consumption and demobilisation charges excluding customs duties for the tug, they added. They said, subject to Board's approval, the PQA authorities would soon sign a contract with the lowest bidder, GMS, for the chartering of an ASD tug at the rate of $6,270 per day.

They said roughly saying a likely deal with the Sharjah-based firm would help the funds-starved PQA save over a thousand dollars per day. The sources said exorbitant rates for the pilot boat were, however, putting to question rationality of the decision of PQA authorities to tender afresh for the same. PQA had opted for tendering afresh for the floating craft instead of extending its 2008's agreement with Smit Loire. The sources said the Dutch company, in its recent bid, had come up with an offer of $8,898 for the services of its tug, KST 56.

Record exports help reduce trade deficit in fiscal year 2010

RECORDER REPORT
ISLAMABAD (July 15 2010): Pakistan exports grew by $19.382 billion during 2009-10, up by 10 percent over $17.688 billion for the same period of last year, according to Federal Bureau of Statistics (FBS). Official figures released by the FBS on Wednesday showed that the exports surpassed the target set for the last year by around one billion dollars. The trade deficit in 2009-10 was $15.32, 10.54 percent less as compared to $17.13 billion over the same period of last year.

A slight 0.32 percent decline was also witnessed in imports which declined to $34.70 billion in 2009-10 from $34.82 billion in 2008-09. Analysis of the data also revealed that for the month of June 2010 the country's exports recorded a 19.54 percent increase. The exports in June 2010 stood at $1.81 billion against $1.52 billion exports for June 2009.

The imports in June 2010 witnessed a decline of 3.45 percent to $3.22 billion as compared to $3.33 billion imports for the same month of last year, June 2009. As a result the trade deficit decreased by 22.69 percent in the month of June 2010 to $1.40 billion.

The analysis of the data of June 2010 over previous month showed an increase of 3.75 percent in exports in June 2010 over May 2010. Exports in June increased to $1.819 billion compared to $1.753 billion for May whereas imports declined by 4.14 percent during the period. The imports have decreased in June 2010 to $3.22 billion compared to $3.363 billion for the month of May 2010. As a result, the trade deficit of $1.404 billion in June was 12.73 percent less compared to $1.609 billion for May 2010.

Hinopak plans to increase bus exports to 400

Hinopak is planning to export buses and trucks to the Middle East and Africa to help reduce the country’s trade deficit, said the company’s CEO, Hideya Lijima. The company has a 65 per cent share in truck and bus manufacturing in Pakistan.

Hinopak is planning to take annual exports to 400 buses, earning $30 million per year for the country, said Deputy General Manager Hinopak, Ahmed Rauf. He added that production of 25 buses for export cost Rs160 million.

They were speaking at a ceremony organised to celebrate the first batch of exports on Tuesday.

Hinopak, established in 1986, will ship 25 buses this month to Emirates Transport for school and staff segments.

Lijima mentioned that the buses were designed taking the UAE and its geography, climate and economy into consideration. “Export of buses and trucks from Pakistan to the Middle East and Africa will help reduce trade imbalance,” he said.

“The company is striving to continuously tap prospective markets of Saudi Arabia, Qatar, Oman, Kuwait, Egypt, Bahrain, UAE, Jordan, Panama, Mozambique and Costa Rica,” said the company’s Director Sales and Marketing, Muhammad Irfan Sheikh.

“Japanese experts inspect the buses before they are exported. Maintaining standards of quality is always our first priority,” Sheikh added.

Sheikh said that export of vehicles will have a good impact on Pakistan’s automobile industry. Besides, the increase in the company’s production capacity will help improve local worker expertise and experience.

“Hinopak Motors has the government’s full support in its endeavour to increase the export capacity,” said Chief Executive of Trade Development Authority of Pakistan, Mohibullah Shah.

“I would like to see exports from present 25 units to 25,000 units in coming years,” he added. “It is an honour for Pakistan and Hinopak to export high performance buses to the competitive market of Middle East,” said Shah.

:happy_8:

Trade deficit shrinks by over 10%

The trade deficit narrowed 10.6 per cent during financial year 2009-10 compared to a year ago due to strong recovery in exports and contraction of imports, said the Federal Bureau of Statistics.

The gap between imports and exports shrank to $15.4 billion in the year ended June 30 compared to a deficit of $17.2 billion in 2008-09, a dip of $1.8 billion or 10.54 per cent.

However, despite the significant reduction in deficit, Pakistan missed the annual export and import targets set by the Ministry of Commerce.

Provisional trade data showed that during the financial year ended June 30, Pakistan exported goods worth $19.4 billion to the rest of the world, recording an increase of 9.6 per cent when compared to last year. The export target for the year had been fixed at $20 billion.

The import target was missed by a staggering $6 billion as the total value of goods coming into the country was estimated to be $34.7 billion, a mere 0.4 per cent drop compared to imports in fiscal 2008-09. The ministry had hoped to bring imports down to $28.7 billion.

“The improvement in trade deficit and record remittances will enhance the country’s capacity to pay back International Monetary Fund loans,” commented Saqib Sherani, the Principal Economic Adviser to the Finance Ministry.

He added that a surge in non-traditional export items like gems and jewellery had helped the country earn about $2 billion. He suggested that there was a need to further diversify the export basket.

The massive depreciation of the rupee against the dollar had also provided exporters a window of opportunity to sell their products in the foreign market at competitive rates.

On the imports side, a substantial drop in prices of crude and palm oil in the international market coupled with reduced domestic demand slashed the import bill. Imports of machinery and telecommunication equipment also decreased during the last fiscal year.

The trade deficit demonstrated an improvement of over 22 per cent in June 2010 when compared with the same month of the previous financial year. According to official statistics, exports in June 2010 increased to $1.81 billion from $1.53 billion recorded in June 2009. Imports during the month were around $3.3 billion, a reduction of more than three per cent as compared to last June.

While comparing the performance of exports in June 2010 with the previous month of the same year, it was learnt that exports increased by 3.8 per cent in dollar terms. Resultantly, the trade deficit in June shrank by 12 per cent when compared with May. Pakistan exported goods amounting to $1.82 billion in the month of June.

Imports during the month, as compared with May, decreased from $3.4 billion to $3.3 billion.

Textile sector to yield higher profits

The textile sector continues its commendable performance in the last quarter of fiscal year 2009-10 and is expected to make higher profits, according to analysts.

Value added exports, with a 53 per cent share in total textile exports, have already grown by five per cent in the first two months of the fourth quarter compared with the third quarter of fiscal 2010.

On the flip side, yarn exports on average have declined by seven per cent in April to May against the third quarter.

The decline in yarn export revenues will not dent the sector because of rising value added exports which fetch better margins, wrote JS Global Capital analyst Bilal Qamar.

Yarn exports comprise 14 per cent of total exports.

However, profits of spinners would take a hit in the fourth quarter due to a likely fall in volumetric export sales as evident from the export numbers, said Qamar.

Despite an impressive performance, the recently soaring cotton prices would put some pressure on the sector’s margins, Qamar added.

The analysis is based on the export data released by the Federal Bureau of Statistics (FBS) for the first 11 months of fiscal year 2010.

Value added exports to boost profits

Value added products have been focused on generating cash on higher margins as a regulatory duty had been imposed on yarn, said Qamar.

Sales usually pick up during the last quarter with orders from foreign buyers for the summer season, the analyst said.

This is evident from the average monthly exports for April to May which have increased by five per cent.

In addition to higher export volumes, rising prices have also supported the growth in value added exports. The value added sector stalwarts are knitwear, bedwear, towel and readymade garments.

Regulatory duty to hit spinners

Yarn exports have fallen by seven per cent in the first two months of the fourth quarter compared with the third quarter.

The spinners’ profits are expected to shrink during the quarter, according to the analyst.

To recall, the spinning segment reported healthy profits of Rs3.6 billion in the first nine months of fiscal year 2010, based on a sample of 20 companies which hold 80 per cent of market capitalisation.

Though yarn prices are still strong, the imposition of regulatory duty is likely to restrict volumetric export sales in June.

Moreover, local cotton prices have recently surged to new highs and currently trade at a premium to international prices which has limited the spinners’ ability to export yarn on better margins, the analyst said.

Foreign Direct Investment in Pakistan Declines 40.7%
July 14, 2010, 11:52 AM EDT

July 14 (Bloomberg) -- Foreign direct investment in Pakistan fell 40.7 percent in the 12 months ended June 30, led by a decline in inflows from the U.S. and Singapore.

Overseas direct investment fell to $2.21 billion in the period from $3.72 billion a year ago, according to an e-mailed statement from the central bank. Overseas funds sold $64.5 million of Pakistani stocks compared with a net sale of $1.1 billion a year ago.

Pakistan needs overseas investment to bolster an economy that is forecast by the government to expand 4.5 percent in the next financial year, the fastest pace in three years.

Foreign direct investment from the U.S. fell 43.9 percent to $488.4 million during the year, and from Singapore 55.7 percent to $122.8 million, the statement said.

Overseas investments have declined in the past three years after Pakistan’s military cracked down on Taliban militants along the border with Afghanistan, prompting the south Asian country to seek international loans and aid.

“Overall, there are security concerns in Pakistan and the global economic slowdown is behind the investment fall,” Muhammed Imran, head of research at Arif Habib Securities Ltd., said in a phone interview from Karachi.

Pakistan received a $7.6 billion loan from the International Monetary Fund in 2008 to help avoid defaulting on debt. The package was increased to $11.3 billion last year.

http://www.businessweek.com/news/201...nes-40-7-.html

World’s top investment groups eye Pakistan

KARACHI: World’s top investment and financial groups have shown keen interest in Pakistan’s equity-linked instruments such as convertible and exchangeable bonds for state-owned enterprises, expected to be issued by the Privatisation Commission.

They have also expressed interest in privatisation process under the Public-Private Partnership (PPP) mode. These groups include the Hong Kong Shanghai Banking Corporation (HSBC), Nomura (UK) and London Stock Exchange.

Senior officials of HSBC, Nomura, London Stock Exchange and other major financial institutions in London expressed the desire during meetings with the Federal Minister for Privatisation, Waqar Ahmed Khan, says a message received from the UK on Tuesday.

During the meetings, senior banking officials apprised the minister of the current global economic and financial environment and discussed various options for increasing foreign investment in Pakistan. They said that frontier markets like Pakistan were the key to future global growth and current market conditions were opportune for foreign investment in the country.

Khan said that the restructuring plan for state-owned enterprises would further improve overall economic environment and turn the loss-making companies into profitable ones.

This restructuring plan included generating capital via equity-linked instruments and efficient utilisation of proceeds for restructuring of companies on the privatisation agenda, he added.

The minister said that the economic environment in Pakistan has become more conducive for investment through consistency and continuity of investment-friendly policies.

The international community could play a vital role in promoting foreign investment in Pakistan, which would ease fiscal pressure on the government caused by the war on terror, he added.