Pakistan Economy: News & Discussion

[Zaki]

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.

 

[DaRk WaVe]

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.

 

[DaRk WaVe]

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.

 

[Zaki]

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.

 

[Zaki]

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.

 

[DaRk WaVe]

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:

 

[DaRk WaVe]

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.

 

[DaRk WaVe]

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.

 

[Armand2REP]

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/20...ct-investment-in-pakistan-declines-40-7-.html

 

[DaRk WaVe]

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.

 

[Armand2REP]

Pakistan State Oil nears Bankruptcy

Thursday, July 15, 2010

PSO's oil stocks recede to 11 days of national requirement

ISLAMABAD: The state-run company, Pakistan State Oil (PSO), is in financial straits these days, reducing its oil stocks to 11 days of the national requirement.

"The PSO is left with only three-day petrol reserves while the diesel stocks can last for 11 days and the situation can further deteriorate if the company's receivables of Rs 130 billion are not paid in time," an official of the PSO said Wednesday.

The official said PSO had so far received only Rs 34 billion out of the Rs 41 billion approved by the prime minister to be released for the PSO.

Similarly, the official said that PSO's payables had swollen up to Rs 116 billion - Rs 80 billion to refineries while Rs 36 billion to be paid to the international oil suppliers.

The source said the company was about to cross the borrowing limits and if the PSO was not bailed out and left defaulting on its payables then implications could affect the entire petroleum sector. On the other hand, the circular debt has also affected oil refineries forcing them to produce at low capacity.

"The circular debt has hit the oil refineries manifold, forcing them to operate at low of their capacities," said an official of an oil refinery. The sluggish repayment process has left the oil refineries in the lurch as marketing companies were importing oil at their own expense, he added. These companies were not clearing their payables of the local refineries, rather they were spending billions of dollars on oil import, he added.

"The huge oil imports are being made at the expense of local refineries, which are operating under capacity due to the prevalent circular debt, creating serious liquidity crisis for them," the official observed. He said the refineries are close to crossing the borrowing limit from banks and not in a position to import crude oil for a long period. The oil refineries have also called for working out a fair and consistent pricing mechanism to help the petroleum industry survive.

http://www.dailytimes.com.pk/default.asp?page=2010\07\15\story_15-7-2010_pg5_4

 

[DaRk WaVe]

Pakistan to lead global rice exports in 2010: FAO​

KARACHI: Pakistan is expected to lead increases in global rice exports in 2010. A report entitled, "Rice Market Monitor" published by the Food and Agriculture Organization (FAO) of the United Nations, has predicted that exports of rice from Pakistan will rise to 3.8 million tons this year, as compared to just 2.8 million tons in 2008.

The FAO report has also forecast Pakistan's paddy production for 2010 to be about 10.2 million tons, which is 100,000 tons higher than 10.1 million tons of paddy cultivated in 2009.

Higher production has been attributed to "greater availability and use of fertilizers, hybrid seeds, and favorable prices for an active pace of exports" by the United Nations subsidiary.

According to the report, global rice trade forecast has been downgraded by 900,000 tons from earlier estimates to 30.4 million tons. The decrease has been largely attributed to "weak pace of imports", in particular from Asian countries.

Despite the downgraded forecast, rice exports are expected to increase by 3.8 per cent, or 1.1 million tons globally over last year to 30.4 million tons. Paddy production forecast for the 2010 season has been set at 704.4 million tons.

The FAO report cited that the "expansion in globally traded volumes in 2010 is forecast to be met by increased exports from Pakistan, which looks set to ship record levels (of rice)".

The report predicted that Pakistan is the only rice exporting nation that will increase its exports in this season. All other major rice exporters, including India, Egypt, Thailand, Myanmar and Cambodia will be impeded by a reduction in international demand for rice.

After processing, Pakistan's total rice production touched 6.2 million tons in the harvest season of 2009 and is expected to reach 6.8 million tons in 2010.

The Food and Agriculture Organization has highlighted that "competitive prices and large inventories boosted by two consecutive good harvests have already enabled the country to ship 1.8 million tons by May".

The report further stated that in order to satisfy growth in international demand for Pakistani rice, the country will have to "cut its reserves (of rice) by 19 per cent to 1.0 million tons". However prices of rice have increased in the domestic market, despite higher production. Analysts have attributed this increase to rise in the cost of cultivation as well as strong local demand for high qualities of rice such as basmati rice.

Conversely, export growth has been dominated by lower qualities such as 25 per cent broken rice. Rice exporters have also expressed confidence that Pakistan will achieve record rice exports in 2010.

 

[ajtr]

Myth of record exports​

Tuesday, 20 Jul, 2010

The Trade Development Authority of Pakistan (TDAP) feels jubilant over the record exports made in the year that ended on 30th June.

However, this information is misleading. The continuous trade deficit is a consequence of the TDAP's failures — the organization that preceded the Export Promotion Bureau (EPB) has never been able to implement a trade policy initiative apart from some lucrative ones.

Major fiascos in the implementation of trade policy initiatives include Pakistan's display centre in Saudi Arabia, warehousing scheme in Kenya. The scandal of the Shanghai Fair inflicted a loss of billions of rupees from the funds raised from tax on exports, namely, the Export Development Surcharge (EDS).

Ironically, the representative bodies of exporters have remained silent spectators to the sheer waste of their money. Such acquiescence on the part of their representatives needs to be addressed by exporters to get to the myth of 'record exports' this year.

It is only commodities and semi-finished goods that have jacked up our exports slightly over the highest achievement in yesteryears. It is therefore unbecoming of an organisation like TDAP to show a false picture of a 'record' export of commodities when it is driven more by the dynamics of commodity markets and less by a trade promotion organisation's efforts.

Another issue is that a preponderant share in our exports is that of raw material and semi-finished goods exported to our competitors. This seems to be nurturing the cut-throat competition against ourselves — a suicidal course, of which the TDAP has not been able to find a solution as yet.

It is high time that the TDAP took up the cause of our exports in its right earnest. The TDAP, in the first place, should realise the existence of these negative trends which may lead to our extinction from whatever small, documented exports we have.

Basmati rice for instance has suffered a big decline in the year in question. If this trend continues, the rice exports at the end of the current year would register a drastic decline. Exports in other important sectors like fish and fish preparation have registered a decline while it should have been double the value fetched in the year had the TDAP been efficient enough to prevent fish export ban to European Union countries; it has been four or five long years for the ban to still be in place.

The prices fetched by our exports are dirt cheap. Does the TDAP monitor this data? If yes, than what policies does the TDAP have to jack up the prices?

The TDAP's policies focus on diversification of export products at the cost of realising the potential for more earnings through better prices of existing products.

For instance, there is a great potential for the purpose which can be realised through adequate support of high-end products, e.g., apparel, garments and made-ups like towels. Instead of remaining silent over exports of raw materials and semi-finished goods to our competitors, the TDAP should strive for converting these materials into value-added products made by ourselves.

Similar is the case with our leather sector exports, which is not picking up due to TDAP's inaction. The raw leather exported to our competitors mostly in Asia under the pressure of powerful tannery owners may be discouraged and upstream industries supported through well-designed policies.

Practical steps should be taken to ensure manufacturing of high-end products. The same policies may be developed for carpets, rugs, wall-hangings, etc.

The TDAP cannot diversify export products because it is beyond its scope to act alone in the larger economic sphere. What can it do to promote exports of copper from Sandak? Or, for that matter, gems from KP and northern areas, falcons from inaccessible places et al.

Last but not the least, the TDAP is advised to create a working relationship with the Customs and the State Bank of Pakistan in order to collect and collate export data without waiting for a long period of six months to be told by a third agency, Federal Bureau of Statistics, about the export destinations of Pakistan.

Under this situation it is impossible to frame appropriate policies to help boost exports.

 

[ajtr]

Short of sugar​

Monday, July 19, 2010
As the holy month of Ramadan approaches it would be inconsistent if somewhere somebody had not manufactured a crisis related to a vital commodity that will affect all and sundry. This year it is to be sugar that may be the crisis of choice, with the more pessimistic of pundits predicting that its price may rise to Rs100 or more per kilo. The tale is one of good intent gone bad and calls into question the competencies of those at the top of the Trading Corporation of Pakistan (TCP). It appears that the $50 million contract that the TCP made with a Chinese import company for 100,000 metric tons of the sweet stuff may not be fulfilled despite their having been granted an extension of the deadline for the first delivery. Do not for one moment deceive yourself that the sugar is en-route from China because it is not; it is coming from South America, Brazil to be precise, and our embassy there has confirmed that the port from which the sugar is to leave is congested and delays are likely. So how has the TCP got itself – and us – into this bitter-sweet tangle?

Perhaps the first thing to understand is that there is no Plan B, and the government is in a bit of a tizzy as there is no secret stock of sugar which may be fed into the markets to prevent a shortfall. An unintended consequence is almost certain to be a ballooning of local prices and the hoarding of what stocks there are. The chairman of the TCP has called an emergency meeting for Saturday, the outcome of which we are as yet unaware, but during which he is expected to cancel the contracts awarded to Yunnan and Sadat and further seek damages from them for their failure to fulfil the order. The Chinese had won the order after putting in a tender so low that it practically gave a heart attack to our indigenous sugar importers and a $50 million credit line was opened to them through the National Bank of Pakistan. Had the deal come off we might have saved ourselves as much as $10 million on a single contract. The Chinese may lose the $1 million earnest money that they deposited but the sugar, if it ever arrives, is going to be costly; certainly more than the $488 per metric tonne that was quoted against a market rate above $700 per metric tonne. That a figure so far below the market rate was accepted as credible by the TCP and, what is more, accepted from an importer who has previously defaulted, makes one wonder if there may be a few fake economics degrees held by the directors of the TCP. We now await the reports of pre-shipment inspection companies, but the word circulating in official circles is that the TCP, via a basket of failed contracts, has incurred losses of Rs4.5 billion. And the sugar? Still in Brazil.

 

[ajtr]

TCP in a fix over second sugar contract​

Monday, July 19, 2010
Chinese firm blacklisted, $976,000 seized

By Rauf Klasra

LONDON: Top guns of the Trading Corporation of Pakistan (TCP) are in a fix about the second sugar import contract awarded to the son-in-law of Prime Minister Yusuf Raza Gilani's cousin after $976,000 performance bond deposited by him was forfeited and the state-owned Chinese firm Yunan & Coal, involved in the sugar import, was blacklisted for failing to execute the first contract to import 100,000 tons of sugar.

The Chinese firm, Yunan & Coal, working in close collaboration with Ali Syed, son-in-law of former defence secretary Saleem Abbas Jilani, had won two separate contracts of $50 million each for the import of two consignments of 100,000 metric tons of sugar each. It has failed to execute the first contract of 100,000 metric tons of sugar worth $50 million thus landing the country in a big crisis.

The TCP banned the Chinese firm on Saturday when it failed to deliver despite being given 10-day extension in the deadline to import sugar. An LC of $50 million was established in favour of the Chinese firm in the National Bank of Pakistan. It was expected that if the firm executed the contract as per agreement, Pakistan could have saved $10 million in the one deal alone as prices offered were the lowest. But this '$10 million gamble' could not work as per expectation.

The Law Division is now being contacted to get the legal opinion whether the Chinese firm could be allowed to execute the second contract. The TCP bosses were severely criticised by market forces for awarding contract to a firm, which did not have the required capacity to import sugar. But TCP bosses had offered counter argument that had they not awarded the contract to the firm, they would have been accused of ignoring the lowest bidder to benefit the higher bidder.

Talking to The News, TCP chairman Anjum Bashir said he had blacklisted the Chinese firm after its default was established. He said he had also directed the authorities concerned to forfeit $976,000 performance guarantee from the firm, adding the blacklisting process would start as per law. However, he claimed the TCP had enough stocks to provide sugar in the market through outlets of the Utility Stores Corporation. "If government and the ECC will decide, I will release stocks to market as and when required," he added.

However, Ali Syed, the son-in-law of the premier's cousin, did not respond when contacted to get his comments. Ali was quite confident that his Chinese friends would do some miracle to meet the deadline of July 16 to provide details of ship from Brazil port heading towards Pakistan. But an official said this 'miracle' never happened - bad luck to Ali and top guns of the TCP.

 

[ajtr]

BP selling Pakistan assets to pay for oil spill​

Updated at: 2100 PST, Tuesday, July 20, 2010 ShareThis story

KARACHI: BP Plc plans to divest its exploration and production operations in Pakistan, as part of a plan to sell global assets to help pay for the worst oil spill in US history, a BP official said on Tuesday.

"This process should be completed by December 2010," said Sabeen Jatoi, the BP spokesperson.

"Pricing will be a matter for bidders. ... We will not be selling at a price that does not represent a good deal for BP shareholders."

However, there are no bidders right now and BP is setting up its dataroom in Pakistan after which bidders will come forward as with any acquisition, Jatoi added.

BP unveiled plans last month for about $10 billion in asset sales following the oil spill which has caused an economic and environmental disaster in five US states along the Gulf Coast.

BP said in a statement that it had spent $3.95 billion on efforts to cap the well and clean up the spill.

 

[Zaki]

Pakistan to receive $3 billion from Friends in October: Qureshi​

RECORDER REPORT
KARACHI (July 30 2010): Foreign Minister Shah Mehmood Qureshi on Thursday said Pakistan will receive remaining $3 billion pledged by the Friends of Democratic Pakistan (FoDP) by October this year. Talking to media at the farewell ceremony for Pakistani youth delegates participating in the 5th World Youth Congress in Turkey at Arts Council of Pakistan here on Thursday.

Qureshi said that the FoDP had pledged $5.2 billion in Tokyo of which $2.2 billion have been received. He pointed out that the FoDP will meet again in Brussels in October 2010 and Pakistan will be receiving the remaining amount pledged by these countries before that meeting.

He made it clear that Pakistan Afghan Transit Trade Agreement is a bilateral agreement between Pakistan and Afghanistan. He said there should be no confusion as the agreement was signed only by the Pakistani and Afghan ministers. "India was not mentioned in this agreement," he added.

On a query, the foreign minister said both Pakistan and India have realised that dialogue is the only way to resolve all disputes between the two neighbouring countries. He said Pakistan is ready to resume dialogue with India to discuss all disputes.

He said Pakistan respects Indian concerns on terrorism and Bombay attack. However, India should also respect Pakistani concerns on the situation in occupied Kashmir and the issue of water. On a question about Pak-Iran gas pipeline, he said the project is in progress. He pointed out that the government is considering dedicating all the gas of this project for power generation to overcome the shortage of power in the country.

On another question, the foreign minister said that a stable and peaceful Afghanistan is in interest of Pakistan. He said the world community recognises Pakistan's efforts in war on terror. He pointed out that Afghan President Hamid Karzai has also appreciated Pakistan's efforts on this front. He said Pakistan has deployed over 150,000 troops with over 1000 posts at its western borders to control the situation.

Earlier, while speaking at the ceremony, Qureshi congratulated the 45 Pakistani youth delegates selected to represent Pakistan in the 5th World Youth Congress to be held in Turkey. He asked the delegates to project true picture of liberal and democratic Pakistan while attending the event.

He said the 40 percent of the country's total population is youth. "We should invest in our people," he said, adding that education and health sectors were neglected in the past and it is needed to focus on these sectors. He mentioned that Pakistan and Turkey enjoy excellent bilateral relations built over generations. These relations are not confined to government level, as people of both countries love and respect each other.

He thanked the Turkish Ambassador to Pakistan for facilitating and waiving visa fee for Pakistani delegates. Speaker Sindh Assembly Nisar Ahmed Khuhro, Deputy Speaker Shehla Raza, Minister for Youth Affairs Faisal Sabzwari, Turkish Consul General in Karachi and General Secretary Pakistan Arts Council, Karachi were also present on the occasion.

 

[Rage]

Pakistan needs Trade with India.

 

[nitesh]

A research article (how the truth is dicovered :emot158::emot15:

Revelation of a colossal damage

LAHORE: The fundamental principle of economics, which is usually the first topic that is taught in an economics class, is the succinct concept of "scarcity", which is often also referred to as the "mother of economics".

The alluring definition of this simple concept is cloistered in four words – all resources are limited. There is an obvious and discreet extension of this definition, which elaborates that "since resources are limited, therefore they should be spent discreetly". I remember our economics teacher telling us that had there been no scarcity, we would not have been studying the subject of economics. Baffled after 15 torturous sessions of three hours each, we wished what he had said could have been true. Ironically, this naive wish becomes paltry when one ponders over the fact that even the richest economy in the world, the US, whose economy equals the size of the four economies that it succeeds, also has to face the same problem of scarcity. So be it the richest man or the richest economy, scarcity is evident for all and, therefore, nobody can afford futility in their way of living. Planning is eminent and so they should plan discreetly to tackle scarcity.

In relation to the concept under discussion, Pakistan's frugal economy reveals a startling fact that I observed during a random study.

This splendorous fact is that the size of Pakistan's economy, measured through GDP-PPP (purchasing power parity), is $439 billion.

This figure, by all standards, is a mind-boggling number considering the patchy and fragile image that our economy carries.:emot0:

For those who are oblivious to the significance of this number, the following fact will be a surprise. The fact is that in a list of the most powerful economies in the world, Pakistan is ranked 27th out of 180, way above some of the most stable and scintillating economies of the world, including Switzerland, the UAE, Israel, and New Zealand.
:happy_7:
Now anyone reading this would either jump off their chairs in zest or would probably conspire it to be a botch of some mathematical calculation. But one needs to be a complete maniac to challenge either the IMF or the CIA – who are the very source of this information.

Pakistan's economy deserves a dignified salute for its ballooned size, despite years of coercion by the West and an internal political battle of supremacy. After being amused with the above fact, few questions popped in my mind, which are quite perplexing considering the brilliance our economy has shown over the years. These include – where does all this monumental wealth disappear that Pakistan amasses each year? How come there is never enough for the economy and the nation? Why has there always been a shortage? Why is Pakistan burdened with the frightening amount of loans and why does it never stop begging?:emot159::emot15::emot15:

But there were two questions that stood out, one, if Pakistani economy precedes those of countries like the UAE, Israel, New Zealand and Switzerland, then why is there a peculiar variability in the living standards of these glaring nations and Pakistan? And second, why do these nations have a class-less society. The fact stands despite 23 percent of the Pakistani population not even earning $1.25 a day and 60 percent earning less than $2 a day. A rationalisation of these questions was achieved when I explored a list of countries by GDP per capita.

To my dismay, I discovered that Pakistan was ranked 132nd, slightly above countries like Togo, Senegal, Ghana and Zambia.:emot15::emot15:

This gruesome revelation not only answered all the questions, but also led to the conclusion that even if one is the 27th richest man in the world, he will still continuously be pleading for cash if he has to feed a group of people who require feeding costing over and above one's accumulated wealth. Pakistan's economic gains are also being shackled in a similar way, where even a sum of $439 billion is not enough to address the constantly growing needs of a mammoth population.

So the tyranny and the colossal damage for the economy of Pakistan is its growing population, which is a major deterrent in bringing economic prosperity to the life of a common man.

On the other hand, nations such as the UAE and Switzerland are literally ranked lowest amongst the most populous nations in the world, but Pakistan ranks 6th. Thus it has been revealed that the continuous growth in population is creating major economic misery in Pakistan.

It is the number one reason for abject poverty, because of which the fruits, of being the 27th most powerful economic nation, are not being distributed amongst the entire population.

Even the bulk of fruits are scarce for a population of 180 million, where as the other scintillating economies, which produce fruits in a much lesser quantity as compared to Pakistan, are able to distribute them quite discreetly because of their tiny population. Population has destroyed various economic organs of Pakistan and has disabled our economists to effectively deal with the fundamental of economics – scarcity.

 

[Known_Unknown]

^^Pakistan is an inconsequential state from the Indian POV. The state GDP of Maharashtra is greater than the entire national GDP of Pakistan, even though Maharashtra has a population of only ~100 million compared to ~170 million for Pak.