Pakistan Economy: News & Discussion

[Neo]

IMF MD praises Pakistan’s economic, financial reforms process

International Monetary Fund (IMF) Managing Director Christine Lagarde called on Prime Minister Nawaz Sharif at Blair House on Wednesday to hold talks on IMF-Pakistan cooperation.

During the meeting, the Prime Minister lauded the role of IMF in assisting Pakistan to achieve economic stability.

Nawaz Sharif highlighted the government’s policies aimed at structural, fiscal and monetary reforms in the short and medium term which have led to improved economic indicators for Pakistan.

He mentioned the steps taken with regard to making the State Bank of Pakistan more autonomous.

Lagarde praised the economic and financial reforms process being spearheaded by the government of Pakistan. She congratulated Pakistan on successful completion of the 8th review under IMF’S Extended Fund Facility program.

MEETING WITH BUSINESSMEN:

Meanwhile, addressing a business forum organised by US-Pakistan Business Council (USPBC) in Washington, Prime Minister Nawaz Sharif said that due to long termed policies and investor-friendly environment, Pakistan has become attractive destination for foreign investors.

He said Pakistan tax revenues increased by 33%. The Prime Minister said government is doing its best to overcome energy shortage.

http://www.pakistantoday.com.pk/2015...forms-process/

 

[thethinker]

Australian diplomat unveils aid programme in Quetta

http://www.dawn.com/news/1214531/australian-diplomat-unveils-aid-programme-in-quetta

QUETTA: During her first visit to Balochistan, Australian High Commissioner Margaret Adamson unveiled the Australian Aid Programme (AAP) for Pakistan here on Tuesday at the World Food Programme’s Humanitarian Response Facility.

Speaking on the occasion, she said: “Australia has particularly close links with Balochistan. That’s why I chose this province for my first official visit.

“We have longstanding connection with this part of Pakistan... Both of us have problems with water resources, both of us have strong agriculture and livestock sector and both of us have strong mineral resources to explore and develop.”

She said that since 2009 her country and the World Food Programme Australia had contributed 90 million Australian dollars for food storage facilities in the province.

Talking about the growing nutrition problems in the province, she said: “I have just been launching, together with the World Bank and other international partners, and very importantly a drive by the government of Balochistan a new programme for improving nutrition for little children and for mothers.”

Ms Adamson said that one of her government’s initiatives in Balochistan pertained to its agriculture sector. “We are doing research on seeds and crops that can work well in Balochistan which has problems with its water supply and that of course reaches down to the farmer and farmers’ families.”

She said that more programmes would be launched for the people of Balochistan.

Published in Dawn, October 21st, 2015

 

[thethinker]

IMF forecasts steep development budget cut

ISLAMABAD: The International Monetary Fund has projected that Pakistan’s national development budget will be cut by 25%, or Rs377 billion, for fiscal year 2016 in order to achieve the overall budget deficit target of 4.3% of total size of national economy. The Washington-based lender also projected that, as a result of lower development spending, the government will miss its economic growth rate target of 5.5%.

The IMF is projecting that the government will only be able to spend Rs1,136 billion on development this fiscal year, as opposed to the Rs1,513 billion approved by the National Economic Council, the steepest cut in recent years.

The bulk of the cuts will be borne by the provincial development budgets, which will collectively lose Rs313 billion, or 38.5% of their budgeted Rs813 billion. The federal development budget, by comparison, will only lose 9%, or Rs64 billion, of its budgeted Rs700 billion, the IMF projects.

The steep cut in the development spending will not only adversely affect current year’s economic growth rate but also delay many critical infrastructure projects due to a lack of funding. Against the official target of 5.5% GDP growth, the IMF has projected that Pakistan’s economy will grow at a pace of 4.5% this year.

The development spending will be cut to achieve the IMF-dictated budget deficit target of 4.3% of GDP or Rs1,292 billion. Achieving that target hinges on two factors: the Federal Board of Revenue meeting its target to collect Rs3,104 billion in taxes, and the provincial governments being forced to run a collective Rs297 billion in surpluses.

The surpluses are only possible if the provinces restrict their spending, including on development projects, said a federal finance ministry official, which in turn is linked to the FBR meeting its revenue target.

The seventh National Finance Commission (NFC) award grants 57.5% of most taxes collected to the provinces. Last year, the FBR could not achieve its Rs2,810 billion target. As a result, the provinces got Rs182 billion less than the promised amounts. It also led the government missing its budget deficit target for fiscal 2015, prompting Islamabad to seek a waiver from the IMF for having violated one of the conditions of its $6.3 billion bailout programme.

From the beginning of the fiscal year, the FBR is struggling to achieve this fiscal year’s tax target and is behind by Rs64 billion in just the first three months.

For the current fiscal year, the federal government has promised to give Rs1,849 billion to the provinces as their share in federal taxes under the 7th NFC Award.

The Federal Finance Ministry has assured the IMF that the provincial finance secretaries agreed that they would ensure budget surpluses equivalent to Rs297 billion. The Finance Ministry also claimed that the provincial finance secretaries have agreed that provincial spending will be maintained at 6.5% of GDP or Rs1,961 billion.

However, constitutional experts say that the federal government does not have the authority to make commitments with international financial institutions on behalf of the provinces.



Published in The Express Tribune, October 8th, 2015.

 

[Neo]

Pakistan close to clinching $16b Qatar LNG deal
By Zafar Bhutta
Published: October 28, 2015


ISLAMABAD: Pakistan and Qatar are getting closer to sealing a $16-billion liquefied natural gas (LNG) supply deal as the Economic Coordination Committee (ECC) is expected to give the go-ahead to the proposed energy contract.

Under the deal, US energy giant ExxonMobil and French firm Total, which have shareholdings in Qatar Petroleum, will also supply LNG to Pakistan.

Deal with Russia

According to discussions with different officials, the ECC will consider an LNG sale-purchase agreement in its upcoming meeting and its approval will allow the Ministry of Petroleum and Natural Resources to sign a government-to-government contract with Qatar. This will be followed by a commercial agreement with Qatargas, the world’s largest LNG company.

The petroleum ministry had sought the ECC’s nod to clear the way for Pakistan State Oil (PSO) to execute the sale-purchase agreement with Qatargas following the government-to-government deal.

“A summary has been sent to the ECC for consideration in its next meeting,” said Petroleum and Natural Resources Minister Shahid Khaqan Abbasi while talking to The Express Tribune.

Multi-million dollar contract: Gunvor wins LNG deal race, will be PSO’s supplier

“The LNG supply contract will be worth $16 billion keeping in view the existing price of Brent crude oil,” he said, but did not disclose the pricing formula.

According to the officials, the contract will remain in place until December 2030. However, a price review provision will be there that will enable Pakistan and Qatar to seek the price review after 10 years and they will have the right to terminate the sale-purchase agreement if they fail to arrive at a consensus on the price revision.

Under the proposed agreement, PSO will receive 1.5 million tons of LNG from Qatargas in the first year and the annual volume will be enhanced to 3 million tons from the second year.

OGRA sets LNG price ahead of Qatar deal

PSO, a state-owned company whose core business is oil import and its marketing, is now entering a new arena where it will receive LNG cargoes and provide them to the gas transmission companies.

According to the officials, the ECC is expected to allow PSO to sell LNG to the two gas distributors – Sui Northern Gas Pipelines Limited and Sui Southern Gas Company. PSO may also be authorised to provide LNG to third-party consumers.

In the original plan, Qatar had desired that Qatargas would supply LNG through its venture Qatar Liquefied Gas Company 3 (QG3) under the sale-purchase agreement. However, now Qatargas has proposed that LNG should be supplied through QG2.

OGRA proposes slashing fuel prices

The new proposal will deprive US-based ConocoPhillips of an opportunity to capture Pakistan’s market as a stakeholder in QG3. In QG3, Qatar Petroleum has a 68.5% stake, ConocoPhillips has 30% shares and Mitsui & Co has 1.5% shareholding.

QG2 is the world’s first fully integrated value chain LNG venture. It includes two world-class LNG trains with a capacity of 7.8 million tons per annum (mtpa) of LNG, 0.85 mtpa of liquefied petroleum gas, 90,000 barrels per day of condensate production, a fleet of 14 ships and a receiving terminal.

The project includes 30 offshore wells and three new platforms in Qatar’s North Field. This is a joint gas field with Iran from which Pakistan is also likely to buy natural gas under a gas pipeline project.

Published in The Express Tribune, October 28th, 2015.

http://tribune.com.pk/story/980210/much-awaited-pakistan-close-to-clinching-16b-qatar-lng-deal/

 

[Neo]

Uber set to launch operations in Pakistan

PHOTO: REUTERS

In what is surely a huge development for Pakistan and its emerging tech economy, Uber — the disruptive taxi-hailing service app which has taken the world by storm in recent years — is all set to launch operations in Pakistan.

“We can confirm we are currently recruiting for a team in Lahore, and are very excited about launching in Pakistan as we see huge potential in the way we can help people move around their city safely and reliably,” Shaden Abdellatif, communications manager for Uber’s Middle East and Africa operations told ValueWalk, an online publication.

“We are also excited about the opportunity for economic empowerment we can bring to the drivers we partner with,” Abdellatif added.

Pakistani entrepreneurs launch ‘Uber for rickshaws’

This development came to light after the company’s career page listed three vacancies in Pakistan, specifically Lahore. The three positions form what industry insiders refer to as Uber’s expansion ‘troika’: a general manager, operations and logistics manager, and a marketing manager who are put in place before Uber launches into a new market. It is already operating in hundreds of cities worldwide.

And while Uber’s arrival is generally exciting news for the country’s startup scene, we also wanted to know what existing players – ones who already occupy the online app-based taxi space in Pakistan – had to say about the development.

The first company we spoke to is itself a recent entrant and an offshoot of an international company, albeit one without the reputation and financial backing of Uber – Careem. Careem itself has just relaunched in Lahore hiring local turnaround expert Junaid Iqbal, to try and grow the company after having failed to make much of an impact in its first try at cracking the market back in April of this year.

Uber’s global success has spawned competitors around the world, many of which now rival Uber in certain markets. In neighbouring India, Ola cabs – a company started by an IIT graduate has received hundreds of millions of dollars in funding and is beating Uber at its own game. Similarly, Didi Kuaidi, a Chinese home-grown Uber, has also raised several billion dollars and is dominant over Uber in marketshare there.

Pakistani researchers develop solar-powered mobile phone network

Careem is another Uber-clone but one that has so far focused on the Arab market. What makes its arrival into Pakistan even more interesting is that one of its co-founders is a Pakistani based in Dubai.

“We were expecting Uber’s arrival. Competition is good and we are really excited about their announcement,” said Managing Director Careem, Junaid Iqbal, while talking to The Express Tribune.

Not exactly the response we were expecting, so we asked Iqbal why the imminent arrival of Uber has caused such a stir here.

“Uber’s arrival will only help develop the ecosystem and speed up the adoption of sharing/on-demand economy in Pakistan. It also brings the right kind of attention to our country,” said Iqbal.

In driving seat: Pink rickshaws take to the city roads

When asked about the now inevitable proposition of competing with a company that is believed to be currently valued at around $70 billion – twice the total market cap of all companies listed on the Karachi Stock Exchange – Iqbal simple replied, “The pie is big enough for everyone.”

He was also quick to point out how Careem had no shortage of funds at its disposal with a working model already in place in the Middle East and North Africa.

“We are in the process of getting some serious backers on board. “We are behind Uber in some countries in the region, … in some they are behind us and in some we are head-to-head.”

Careem raised $10m last year in its second round of funding – a significant contributor being Al Tayyar Group, a Saudi conglormerate.

So how exactly will businesses, such as Careem, compete with a behemoth like Uber? According to Iqbal, the key was in ‘localisation’.

Junaid Iqbal

“Our target market is from Morocco to Pakistan, hence our solutions and products are more localised. In terms of product, Uber offers NOW bookings. We offer both NOW and LATER bookings. With Uber you book through the app. With us you can book thought the App, Call Center and Website,” Iqbal said.

EasyFix, India’s Uber for repair and maintenance, raises seed funding

He went on to add how Careem’s approach would also be different in terms of payments. “In most markets. Uber offers credit card payments. We offer credit cards, cash and invoice payments (for corporate clients),” he added. However, having faced this same issue in cash-based India, Uber is adapting from its global model and allowing cash payments in that country and may very well do the same in Pakistan.

Careem isn’t the only player in the local market. Madeeha Hassan’s home-grown Savaree is among numerous others also trying to enter the ‘Uber’ ride-sharing and taxi space.

“It’s very exciting. It only validates the work we’ve been doing,” Madeeha says when asked about her thoughts on Uber entering the Pakistani market.

Madeeha Hasan

“There is a huge trust and culture issue. More importantly, there is a huge security issue,” she said, adding that Savaree was diligently working on this issue and doing things ‘differently’ when it came to ride sharing in Pakistan.

Going against the more formulaic positive announcements, the former head for Rocket Internet’s Easy Taxi service in Pakistan – yet another Uber clone that shut its operations earlier this year in Pakistan after failing to make a dent in the market, Adam Ghaznavi, was a little more pessimistic when asked what Uber’s arrival spelled for local competitors. “I think the security situation is always overestimated in Karachi and underestimated in Lahore,” he added.

Ghaznavi says the biggest problem in Pakistan is usage. “If you put all the numbers in a spreadsheet, it all looks great. But when you come down to doing it, it never really goes as planned,” he added.

Ghaznavi also managed to execute a little prank - adding more drama to Uber’s announcement – or what he called “an out of the box strategy at creating pre-launch brand recognition” for his new web marketing company, by posting a status on Facebook saying, “Uber starting its operation in Pakistan and guess who is the next GM.”

Pakistan-based real estate portal raises $9 million in series B financing

He later apologised for the post. “I’ve been getting calls nonstop. My dad just called me to congratulate me. Things clearly got out of hand,” he told The Express Tribune.

According to The New York Times, Uber is now the world’s most valuable private company, and a valuation of $70 billion would make it worth more than General Motors and Ford.

Careem, Savaree and many others are all in the game for that very reason: to get a piece of the action in Pakistan’s virtually untapped online ride-sharing market.

Some may also just be in it for the quick buck. “It could be one of the options available to us. At this point, we have nothing to lose,” said Madeeha when asked if her company would be willing to sell its operations to Uber.

But the real question is whether Uber – a company that has taken on governments, competitors, taxi drivers, tax authorities, journalists (and won) – is willing to share any of the pie at all.

http://tribune.com.pk/story/980530/uber-set-to-launch-operations-in-pakistan/

 

[Neo]

Balochistan protests against extension in mining lease
By Zafar Bhutta
Published: October 27, 2015

Abbasi assured Balochistan of maximum cooperation and facilitation in reaching a sustainable solution and finding a way forward according to the constitution of Pakistan and applicable laws and rules. PHOTO: FILE

ISLAMABAD: The government of Balochistan has lodged a complaint with the central government for the latter’s failure to bring the province on board before giving an extension in mining lease of the country’s first and largest gas field in Sui.

The protest came after the central government allowed a one-year extension in the mining lease contract for Sui, which is in Balochistan and is meeting the needs of consumers for more than six decades.

Network to under-sell: The mine in minerals

In a meeting held on October 7, Petroleum and Natural Resources Minister Shahid Khaqan Abbasi, however, clarified that notwithstanding any provision of the constitution and its interpretation, the federal government wanted to take the government of Balochistan into confidence while arriving at a final decision on extending the Sui mining lease.

He said the extension decision was taken on the last day prior to the expiry of the lease and that too was only for one year in the larger national interest as an interim arrangement to avoid the disruption in gas supply. “This interim arrangement will remain in place only until the resolution of outstanding issues,” he said.

Abbasi assured Balochistan of maximum cooperation and facilitation in reaching a sustainable solution and finding a way forward according to the constitution of Pakistan and applicable laws and rules.

Coal mining hazards in Balochistan

Reposing trust in policies of the federal government, Balochistan Chief Minister Abdul Malik Baloch stressed that the provincial government would reciprocate in the same manner. However, he insisted that constitutional rights of the province should be safeguarded and protected.

He was of the view that the extension in Sui mining lease should not have been granted without prior consultation with the Balochistan government.

Instead of undertaking such steps, the chief minister said he would prefer engaging the provincial cabinet and the assembly to arrive at a final decision in a democratic manner.

Eight coal miners killed in Balochistan mine explosion

“Though I don’t agree with the interim extension in the Sui mining lease, the government of Balochistan does not want to create hurdles or disrupt gas production and desires an amicable and workable way forward,” he remarked.

The chief minister suggested that the issue of mining lease would only be discussed with a representative of the federal government and not with the field operator, Pakistan Petroleum Limited (PPL).

He proposed that a working group should be constituted comprising representatives of the federal and provincial governments. He also called for holding regular meetings of the committee to come up with a solution.

Does Islamabad really care about Balochistan?

The working group will frame recommendations for consideration of the respective governments.

The chief minister proposed that Balochistan’s representative in the PPL board of directors should be a nominee of the province to ensure that its rights were protected and ensured. “The Balochistan government only wants what is rightfully its share under the constitution,” he said.

Petroleum Minister Abbasi, while praising the chief minister’s understanding of the issue, agreed to the proposal of setting up a working group to resolve the matter.

Published in The Express Tribune, October 27th, 2015.

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[Neo]

Ease of Doing Business index: Pakistan now 138th among 189 economies
By Shahbaz Rana / Creative: Mohsin Alam
Published: October 28, 2015

ISLAMABAD: It might come as a surprise to PML-N supporters, but its pro-business perception received a slight jolt on Wednesday, as Pakistan slid two places to be ranked 138th on the ‘Ease of Doing Business Index’ of the World Bank.

Pakistan improved its distance to frontier (DTF) score, from 51.62 to 51.69, but slid in the list of 189 economies of the world, ranked in terms of the ease it offers to entrepreneurs in doing business.

The country was originally ranked 128th last year, but the World Bank changed its methodology and repositioned the 189 economies. Effectively, Pakistan was re-ranked 136th for last year, meaning the country slid two places as it witnessed an overall deterioration in the regulatory and enabling environment for starting and doing business.

The report also gauged the efficacy of the bureaucracy and the nature of business governance, finding Pakistan not doing too well in these areas.

The Doing Business 2016 report is the flagship annual publication of the World Bank Group and is considered as the world’s most influential policy publications.

Countries like Bhutan claimed South Asia’s highest spot in the ease of doing business ranking, at 71st, followed by Nepal (99th) and Sri Lanka (107th). India stood at 130th, followed by Pakistan, Bangladesh (174th) and Afghanistan (177th).

The rankings are benchmarked to June 2015 and are determined on the basis of 10 pillars, each consisting of several indicators.

Minor improvement

Out of the 10 pillars, Pakistan’s position improved on only three. It showed a major improvement on dealing with construction permits, improving from 125 to 61, and enforcement of contracts where it improved the standing by 10 points to 151. On the indicator of paying taxes, the country’s position improved by one point to 171.

Weak points

The major deterioration was in trading across borders where the country slipped from 108th position to 169th. Pakistan’s rank deteriorated in starting a business, getting electricity, registering property, getting credit, protecting minority investors, trading across borders and resolving insolvency.

“The two-point slippage is marginal, but yes, the government needs to work harder and smarter to improve the overall ranking”, said Board of Investment Chairman Miftah Ismail, while talking to The Express Tribune.

He said during the last one year, his department focused mainly on two areas -dealing with construction permits and enforcing contracts and there was improvement on both pillars.

On the index of starting a business, the total number of procedures required to register a firm remained unchanged at 10. Similarly, the total number of days required to register a firm also remained unchanged at 19.

Getting electricity remained an area of concern and the country’s performance deteriorated. It takes 178.3 days to obtain a permanent electricity connection – worse than last years’ duration of 173 days. On the benchmark of reliability of supply and transparency of electricity tariff, the country was at the bottom.

The total number of days required to register property remained unchanged at 50. There were six kinds of procedures for getting a property registered.

The country’s position on protecting minority investors deteriorated by four notches to 25 but it remained impressive.

Despite an improvement of one notch to 171, paying taxes remained another area of concern. Businesses were required to make 47 kinds of tax payments, which consumed 594 hours or 25 days. They paid 32.5% of their income in taxes. For enforcing contracts, it took two years and seven months besides consuming 23% of the disputed claims.

On the index of trading across the borders, Pakistan slipped 61 notches. It took 62 hours for documentary compliance, 79 hours for border compliance and 13.5 hours for transportation before exporting a consignment. The cost of documentary compliance was $307, border compliance $456.4 and transport cost was $12.2.

The situation was worse in case of imports where it took 152.6 hours for documentary compliance, 140.6 hours for border compliance and 12.2 hours on transportation of the consignment.

Published in The Express Tribune, October 29th, 2015.

 

[Blackwater]

Do me a favor and put me on your ignore list. Stop quoting me if you're not obsessed with Pakistan and any Pakistani member.

If we ignore you Sade palle ki rah jana ha[emoji38][emoji38][emoji38][emoji38][emoji38][emoji38][emoji38]

 

[thethinker]

Pakistan to face balance of payment crisis in 2016, says AKD

http://tribune.com.pk/story/983301/...e-balance-of-payment-crisis-in-2016-says-akd/

KAARACHI: Business tycoon Aqeel Karim Dhedhi has said Pakistan will face a balance of payment (BoP) crisis next year.

In an interview with The Express Tribune, the chairman of the AKD Group said the external sector of the economy is likely to come under pressure as soon as 2016 when foreign exchange inflows from the International Monetary Fund (IMF) stop.

Improving balance of payments

The BoP reflects all economic transactions of a country with the rest of the world. A BoP crisis can put the national currency under pressure as soon as a country appears to be defaulting on interest payments due to fiscal constraints. In simple words, money leaves the economy during a BoP crisis and the government finds it difficult to borrow further, thus wrecking the value of the national currency.

“I foresee a BoP crisis because exports are declining and foreign direct investment (FDI) is nowhere to be seen. We should forget about achieving a current account surplus this year,” Dhedhi said.

According to the latest export figures released by the State Bank of Pakistan (SBP), Pakistan’s exports shrank by $538 million, or 9%, on an annual basis during the first quarter of the current fiscal year. Although the year-on-year rise in the FDI for Jul-Sept was $15.6 million, or 7.7%, the increase seems unimpressive in view of the GSP-Plus status that Pakistani exports enjoy in the European market.

January figures: Trade deficit contracts by more than half

Differing view

Dhedhi’s assertion that a current account surplus should not be expected in the current fiscal year is contrary to the forecast of many analysts. SBP data shows the deficit in the current account, which is part of the BoP, has narrowed significantly in Jul-Sept. The current account deficit clocked up at $109 million in the first quarter of 2015-16, down 93.3% from a year ago.

Declining oil prices are going to result in a year-on-year drop of over 23% in Pakistan’s oil import bill in 2015-16, as per the estimate of the IMF. However, Dhedhi says the deficit in the current account is unlikely to change into a surplus by the end of 2015-16 despite a massive drop in international oil prices.

“Even if the current account balance is in surplus (at the end of 2015-16), that will be because of our loans. Such a surplus has no real value,” Dhedhi says.

The Express Tribune explains foreign debt

Finance Minister Ishaq Dar prides himself on building SBP-held foreign exchange reserves from just about $3 billion in November 2013 to almost $15 billion. Critics, however, point out that most of these reserves owe their existence to foreign debt. In addition to total disbursements amounting to $4.5 billion from the IMF since 2013, Pakistan has also raised at least $3.5 billion from the international bond market by floating Sukuks and Eurobonds.

But the inflows of money from the IMF are going to dry up by the middle of next year. More importantly, Pakistan will start making loan repayments to the Paris Club — following the debt rescheduling of December 2001 – in 2016-17 while IMF repayments will begin from 2017-18. In the absence of meaningful reforms, according to Dhedhi, the result will be another BoP crisis.

“The economy shouldn’t be managed the way it’s being managed,” he says, adding that all-time low benchmark interest rate indicates economic managers feel ‘comfortable’.

Pakistan’s journey from $6b to over $15b

In a developing economy like Pakistan’s, low interest rates should be a reflection of economic growth, surplus reserves, shrinking budget deficit and low inflation, Dhedhi says. So why was there a need to raise money from the global debt market if we’re indeed comfortable economically, asks Dhedhi.

“An international bond is floated amidst the worst conditions when reserves are depleting fast. Those responsible for economic management are either thieves or simply stupid,” he says.

Not bullish on stock market

Saying that the China-Pakistan Economic Corridor (CPEC) is the only ‘trigger’ for the stock market, Dhedhi recommends retail investors should stay cautious going ahead.

Foreign exchange: SBP’s reserves clock in at $15.202b

The benchmark index of the Karachi Stock Exchange (KSE) has remained largely flat during the first four months of 2015-16, and Dhedhi sounds far from bullish on the stock market right now.

While he advises investors to look for value stocks in the food and consumer goods sectors, Dhedhi recommends they should stay away from sectors that are dominated by cartels or have received ‘artificial benefits’ from the government.

“It won’t be wise to be overly bullish on the stock market. Retail investors should invest, but not use borrowed money. It will be dangerous to borrow just because credit is cheap these days,” he says.

The writer is a staff correspondent

Published in The Express Tribune, November 2nd, 2015.

 

[warrior monk]

FDI almost flat despite large China inflows

KARACHI: Foreign direct investment (FDI) did not show any significant improvement during the first half of this fiscal year, though inflows from China rose significantly.

FDI increased by just 2 per cent year-on-year to $624 million during July-December 2015. Though $400m of this amount came from China, it did not reflect the expected inflows under the $46bn China-Pakistan Economic Corridor (CPEC).

The Chinese investment was just $180m during the same period of last year. This also reflects that FDI from other countries has dried up this year.

Pakistan and China have signed agreement for $46bn investment, but no time frame is available. Moreover, political differences among the provinces have deepened over the investment pattern under the CPEC.

The details showed that the inflow of FDI drastically reduced to $1bn during the six-month period under review from $1.78bn a year ago. However, the low outflow helped the country to retain $624m.

FDI has been a benchmark for developing economies that measures the prospects of economic growth in any country. Pakistan is the poorest among the regional counties regarding FDI while the government looks settled with the situation depending entirely on Chinese promises for $46bn. Political use of the CPEC in Pakistan is much bigger than the actual result, which is not very encouraging so far.

The State Bank of Pakistan reported that the overall foreign private investment fell by 49pc to $385m due to negative (outflow) figure of portfolio investment. The portfolio investment during July-December 205 was minus $373m.

The United States and the United Kingdom, which are major investors in the country, have changed their minds this year. In fact, the US emerged as a country which was willing to disinvest instead of investing in Pakistan. It disinvested $94m compared to $112m investment during the same period of last year.

In case of the UK, the investment remained positive, but fell sharply to $54m from $105m during the same period of last fiscal year. Other major investors were the United Arab Emirates, Hong Kong and Italy as their six-month investments were $86m, $73m and $54m, respectively.


http://www.dawn.com/news/1233241/fdi-almost-flat-despite-large-china-inflows

 

[abingdonboy]

@Blackwater @aditya g @Navneet Kundu @Gessler @HariPrasad-1 @Srinivas_K @AnantS @Ray @Kunal Biswas @warrior monk @Neo

I've been going through CPEC (Pakistan's self-proclaimed "golden ticket") news and analysis where I can find it and am I the only one who sees it as a collossal white elephant? From what I understand, poltical compulsions are major determinants in most routes (and not economic viability) and this is not an alturistic loan/aid program for China but they are taking 2 huge bites out of Pakistan- 1) the interest rates they are charging Pakistan are >10% in most cases (in some projects as high as 30%!!). Compare this to JICA that charges India >0.5% interests rates with 40+ year pay back periods and 2) this route serves China's interests (flooding the Pak market with their overproduced cheap goods) more than Pakistan's (Pakistan makes almost nothing worth exporting so some increased connectivity will not change much).

Are Pakistanis so desperate that they will happily take such a scam? Even if CPEC gets off the ground (which I don't think will ever happen considering the amount of poltics intertwined with the implementation of it) it is going to end up costing future generations of Pakistanis.

And this is another issue I have. I notice a lot of Pakistanis are content that their economy is growing at relatively stable rates now but few seem to be interested how this has come to pass in the face of almost zero structural reforms and the fact that Pakistan remains one of the lowest tax collecters in the world. Every few months Pakistan seems to be taking another loan (in one form or another) from somebody or another (IMF/WB/US/China/EU) and again, at very high interst rates. At some point in the future Pakistan's ability to service these debts is going to be strained to say the least- they simply aren't growing fast enough to be able to cover 7-8% interest rate loans and now seem to be caught in a debt trap where they are taking our new loans to pay back previous loans. Their growing forex that they like to brag about is simply negligable in the face of their total external debt.

It seems like a case of eating cake today just to eat grass for the forseeble future.

To compound the above, their debt isn't even being invested in the most valuble any devloping nation has- its human capital as by all social and economic indicators Pakistan's people are facing worse and worse conditions- literacy rates are dropping, poverty is increasing, productivity remains flat etc etc.

Am I missing something or is this regressive economic policy unavoidably going to end up in disaster? I surely can't be the only one who sees this.

 

[Bornubus]

Best time to impose an economic war.

The 1st step is to dump IWT and divert or block the rivers both in Punjab and in Kashmir most importantly Indus "the jugular veins"

 

[Gessler]

@Blackwater @aditya g @Navneet Kundu @Gessler @HariPrasad-1 @Srinivas_K @AnantS @Ray @Kunal Biswas @warrior monk @Neo

I've been going through CPEC (Pakistan's self-proclaimed "golden ticket") news and analysis where I can find it and am I the only one who sees it as a collossal white elephant? From what I understand, poltical compulsions are major determinants in most routes (and not economic viability) and this is not an alturistic loan/aid program for China but they are taking 2 huge bites out of Pakistan- 1) the interest rates they are charging Pakistan are >10% in most cases (in some projects as high as 30%!!). Compare this to JICA that charges India >0.5% interests rates with 40+ year pay back periods and 2) this route serves China's interests (flooding the Pak market with their overproduced cheap goods) more than Pakistan's (Pakistan makes almost nothing worth exporting so some increased connectivity will not change much).

Are Pakistanis so desperate that they will happily take such a scam? Even if CPEC gets off the ground (which I don't think will ever happen considering the amount of poltics intertwined with the implementation of it) it is going to end up costing future generations of Pakistanis.

And this is another issue I have. I notice a lot of Pakistanis are content that their economy is growing at relatively stable rates now but few seem to be interested how this has come to pass in the face of almost zero structural reforms and the fact that Pakistan remains one of the lowest tax collecters in the world. Every few months Pakistan seems to be taking another loan (in one form or another) from somebody or another (IMF/WB/US/China/EU) and again, at very high interst rates. At some point in the future Pakistan's ability to service these debts is going to be strained to say the least- they simply aren't growing fast enough to be able to cover 7-8% interest rate loans and now seem to be caught in a debt trap where they are taking our new loans to pay back previous loans. Their growing forex that they like to brag about is simply negligable in the face of their total external debt.

It seems like a case of eating cake today just to eat grass for the forseeble future.

To compound the above, their debt isn't even being invested in the most valuble any devloping nation has- its human capital as by all social and economic indicators Pakistan's people are facing worse and worse conditions- literacy rates are dropping, poverty is increasing, productivity remains flat etc etc.

Am I missing something or is this regressive economic policy unavoidably going to end up in disaster? I surely can't be the only one who sees this.

The CPEC is only going to get more & more economically unviable, for both Pakistan and China. As of Pakistan, it doesn't appear they have much of a choice here. Either they get whatever little investments & economic benefits (from an industrial perspective) is provided by China, or they get nothing at all. Because there is no way any private-sector firms from anywhere in the world would be ready to invest in Pak in any major way.

The POTUS himself has declared that Afg & Pak will remain unstable for decades to come.

That said, Gwadar is never likely to get the kind of economic importance as Pak public hope that it will. Only new port in the region that's going to flourish in a big way is Chahbar. It's linking with the INSTC is an additional plus. That, and Afghan leadership have made it clear that they will carry out their trade through Chahbar.

I don't know if you've already read these two wonderfully-written items by PKSG. I do recommend going through them once.

http://trishul-trident.blogspot.in/2016/01/is-it-really-cpec-or-is-it-chinas.html

http://trishul-trident.blogspot.in/2016/02/is-it-really-cpec-or-is-it-chinas.html

 

[Srinivas_K]

China is looking to invest in regions where there are more human resources available at cheaper cost. Pakistan fits perfectly in this regard.

China will benefit as well as this corridor will bring development for Pakistan.

It is upto their leadership to deal with the interest rates and agreements. Chinese are shrewd business people and they value money. Strategic importance comes next for them.

They have many routes planned and CPEC is one of them. For Europe and USA they use ancient silk route and sea route. But China is loosing the edge of manufacturing so the routes are planned will be used by the emerging nations effectively because of cheaper wages.

China, Japan and South Korea are investing in Vietnam and from there they are planning exports, the recent FTA between Vietnam ad Sri Lanka is one example.

Pakistanis exaggerate CPEC's importance. Regarding Gwadar world is moving towards electric vehicles, this city can become trading and export hub.

I've been going through CPEC (Pakistan's self-proclaimed "golden ticket") news and analysis where I can find it and am I the only one who sees it as a collossal white elephant? From what I understand, poltical compulsions are major determinants in most routes (and not economic viability) and this is not an alturistic loan/aid program for China but they are taking 2 huge bites out of Pakistan- 1) the interest rates they are charging Pakistan are >10% in most cases (in some projects as high as 30%!!). Compare this to JICA that charges India >0.5% interests rates with 40+ year pay back periods and 2) this route serves China's interests (flooding the Pak market with their overproduced cheap goods) more than Pakistan's (Pakistan makes almost nothing worth exporting so some increased connectivity will not change much).

Are Pakistanis so desperate that they will happily take such a scam? Even if CPEC gets off the ground (which I don't think will ever happen considering the amount of poltics intertwined with the implementation of it) it is going to end up costing future generations of Pakistanis.

And this is another issue I have. I notice a lot of Pakistanis are content that their economy is growing at relatively stable rates now but few seem to be interested how this has come to pass in the face of almost zero structural reforms and the fact that Pakistan remains one of the lowest tax collecters in the world. Every few months Pakistan seems to be taking another loan (in one form or another) from somebody or another (IMF/WB/US/China/EU) and again, at very high interst rates. At some point in the future Pakistan's ability to service these debts is going to be strained to say the least- they simply aren't growing fast enough to be able to cover 7-8% interest rate loans and now seem to be caught in a debt trap where they are taking our new loans to pay back previous loans. Their growing forex that they like to brag about is simply negligable in the face of their total external debt.

It seems like a case of eating cake today just to eat grass for the forseeble future.

To compound the above, their debt isn't even being invested in the most valuble any devloping nation has- its human capital as by all social and economic indicators Pakistan's people are facing worse and worse conditions- literacy rates are dropping, poverty is increasing, productivity remains flat etc etc.

Am I missing something or is this regressive economic policy unavoidably going to end up in disaster? I surely can't be the only one who sees this.

 

[AnantS]

@Blackwater @aditya g @Navneet Kundu @Gessler @HariPrasad-1 @Srinivas_K @AnantS @Ray @Kunal Biswas @warrior monk @Neo

I've been going through CPEC (Pakistan's self-proclaimed "golden ticket") news and analysis where I can find it and am I the only one who sees it as a collossal white elephant? From what I understand, poltical compulsions are major determinants in most routes (and not economic viability) and this is not an alturistic loan/aid program for China but they are taking 2 huge bites out of Pakistan- 1) the interest rates they are charging Pakistan are >10% in most cases (in some projects as high as 30%!!). Compare this to JICA that charges India >0.5% interests rates with 40+ year pay back periods and 2) this route serves China's interests (flooding the Pak market with their overproduced cheap goods) more than Pakistan's (Pakistan makes almost nothing worth exporting so some increased connectivity will not change much).

Are Pakistanis so desperate that they will happily take such a scam? Even if CPEC gets off the ground (which I don't think will ever happen considering the amount of poltics intertwined with the implementation of it) it is going to end up costing future generations of Pakistanis.

And this is another issue I have. I notice a lot of Pakistanis are content that their economy is growing at relatively stable rates now but few seem to be interested how this has come to pass in the face of almost zero structural reforms and the fact that Pakistan remains one of the lowest tax collecters in the world. Every few months Pakistan seems to be taking another loan (in one form or another) from somebody or another (IMF/WB/US/China/EU) and again, at very high interst rates. At some point in the future Pakistan's ability to service these debts is going to be strained to say the least- they simply aren't growing fast enough to be able to cover 7-8% interest rate loans and now seem to be caught in a debt trap where they are taking our new loans to pay back previous loans. Their growing forex that they like to brag about is simply negligable in the face of their total external debt.

It seems like a case of eating cake today just to eat grass for the forseeble future.

To compound the above, their debt isn't even being invested in the most valuble any devloping nation has- its human capital as by all social and economic indicators Pakistan's people are facing worse and worse conditions- literacy rates are dropping, poverty is increasing, productivity remains flat etc etc.

Am I missing something or is this regressive economic policy unavoidably going to end up in disaster? I surely can't be the only one who sees this.

This is just continuation of Pakistan's unofficial official policy of sleeping with highest bidder. China thinks it can fck her unlimited with its new found money and make him-her a loyal concubine. Pakistan being Pakistan, will GUBO till China has money, and meanhwhile silently transmit jehadi disease to China. Just as she-he did to US or Britain.

 

[Screambowl]

http://www.ndtv.com/india-news/indi...for-pakistan-1276918?pfrom=home-lateststories

 

[Indx TechStyle]

@Dazzler @Neo @musalman
Hearing from your news analysts that pakistan could go bankrupt soon. Is that true?

 

[Blackwater]

@Dazzler @Neo @musalman
Hearing from your news analysts that pakistan could go bankrupt soon. Is that true?

what r u talking about. they recently bought 8 f-16 tayare from amrika for 600 million dallar:biggrin2::biggrin2::biggrin2:

 

[Indx TechStyle]

what r u talking about. they recently bought 8 f-16 tayare from amrika for 600 million dallar:biggrin2::biggrin2::biggrin2:

Yeah, that's the point, their media is talking about how pakistani government is taking loans continuously. They are under heavy debt.
There are two trade blocks:
One of Iran, China and Russia
One of Arabian countries, Israel and India.
Pakistan chose with us. Paki media says this is a sazish of yevil hindoo baniya kuffurs to denuclearize the only islami atmi quwaat.

Indians and Arabians will sell them oil at 2-3 times more prize. Going in losses continuously, purr land's debt will be higher than it's GDP.
Then, yevil dark and short Hindu kuffurs will offer them 25-30 billion donations in exchange of denuclearization of land of pure.
:biggrin2::biggrin2::biggrin2::biggrin2:
By the way, India bribed all
bakis by making their first steal plant in pure land. Otherwise, they had no steel.

 

[tsunami]

30 character of economy...