Pakistan Economy - Daily News & Analysis

[Neo]

Continued from here

[Zaki]

Pakistan's exports to Malaysia up by 155 percent

KUALA LUMPUR (June 25 2010): Pakistan's exports to Malaysia have witnessed an upsurge of 155 percent in the first quarter of this year compared to the same period last year, with bilateral trade registering a growth of 18.3 percent. In monitory terms, the total exports touched to RM 251.19 million compared to RM 98.5 million in the first quarter of the year 2009, the Acting High Commissioner for Pakistan Dr Imtiaz A Kazi told a press conference here.

The Acting High Commissioner said the unprecedented increase in bilateral trade clearly reflects growing business and trade ties between the two countries and was the outcome of Free Trade Agreement (FTA) signed between the two countries in November 2007.

He said the trade potential between Pakistan and Malaysia was far more than the existing volume and urged the traders and businessmen of both the countries to take full advantage of reduced duties and tariffs for a multifold increase.

Dr Kazi said most of the increase in Pakistan's export related to Halal sector. Rice registered an unprecedented increase of 468.3 percent with an export of RM 155.5 million compared to RM 27.36 million. Potato registered an increase of 18.98 percent with an export of RM 9.6 million compared to RM 8.1 million, onion an enormous increase of 12000 percent with export of RM 12.5 million compared to RM 0.01 million of the same period of last year.

Maize made a debut entry with export of RM 5.8 million while other sectors like cotton yarn saw robust growth of 349.009 percent with export of RM 11.59 million compared to RM 3.32 million during the same period last year. The press conference was also addressed by Honorary Investment Counsellor for Pakistan in Malaysia, Dato Salim bin Fateh Din, Razzak Hashim Paracha, Chairman, Karachi Association of Trade and Industry (Kati), Shahaab Sharrif, partner of Utelus of Pakistan and Mohammad Rashid Hashmi, Chief Executive of Mohammad Hashim Tajir Surma.

He said Malaysian exports to Pakistan also registered significant growth in the same period ie 13.8 percent with palm oil and natural rubber showing increase of 18.2 percent and 60.7 percent respectively. In monitory, total bilateral trade registered 18.3 percent increase with an overall trade of RM 1.930 billion compare to last year's trade of RM 1.612 billion in the first quarter'.

The Palm Oil exports to Pakistan showed substantial increase of 28.08 percent with export of RM 1.34 billion compared to RM 1.04 billion in 2009. The insecticide sector increased 8.34 percent with export of RM 5.92 million compared to RM 5.47 in 2009. Natural rubber registered an increase of 60.7 percent with export of RM 16.35 million compared to 10.17 million in 2009.

The Honorary Investment Counsellor of Pakistan in Malaysia Dato Salim bin Fateh Din, who is also the Chairman of Pro-term Committee of the Malaysian Chapter of Joint Business Council (JBC) announced the composition of Malaysian Chapter of Joint Business Council had been finalised and will be formally announced shortly.

Chairman, Kati said the Pakistani traders and investors have now shifted focus from USA and Europe to exploring the markets of South East Asia. He said that there exited an enormous potential in bilateral trade between Pakistan and Malaysia in areas such pharmaceuticals, consumer products, and Halal sectors which needed to explored further.

Shahab Sharif of Utelus said Malaysian traders were keen to import Pakistan's onion, potato, apricot, mangoes and rock salt in raw form and as well as in value-added form.

He said that he had already received order of 250 containers per month from Carrefour, one of the largest hyper markets of Malaysia and 20 containers of potato per week from another buyer besides receiving orders in bulk for import of Pakistani apricot, mango, and rock salt.

The Chief Executive of Mohammad Hashim Tajir Surma Mohammad Rashid Hashim said that Pakistan was reasonably strong in halal cosmetic and dietary products and Malaysia could be one of the major markets for their export. Later the media visited the Pakistani stalls and were briefed on the products exhibited in Pakistan pavilion. The 7th annual edition of MIHAS, the premier Halal Showcase of Malaysia was officially inaugurated on 23rd June and will continue till 27th of this month.

[Neo]

Pakistan's industrial production grows by 4.52%

June 21, 2010

Pakistan's industrial production witnessed steady growth of 4.52 percent in the first 10 months of current financial year (from July 2009 to April 2010), mainly on the back of strong performance of consumer goods manufacturing sector, local newspaper Daily Times reported Saturday.

The growth in industrial output went further higher in the month of April alone, recording 5.59 percent increase, compared to the corresponding month of last year, the report said.

Pakistan's industrial production massively fell in the last financial year, however it started recovering from August 2009. This fiscal and growth trend has continued so far during the current financial year.

"The turnaround in industrial growth has been led by the consumer discretionary sector, with production growth of high double digits in autos and allied products, and in electronic goods. Pharmaceuticals, leather goods, and fertilizer also contributed to overall industrial growth," the recently Economic Survey of Pakistan cited the reasons for the overall performance of industrial sector.

Despite stronger export order, books for some segments of the textile industry from around November last year, especially for cotton yarn, reported positive growth. There is a trend of improvement in this sector and if external demand for exports remains strong in the months ahead, the overall sector may benefit further, it added.

Source:Xinhua

Pakistan's industrial production grows by 4.52% - People's Daily Online

[Neo]

Forex reserves rise to $15.78bn

Friday, June 25, 2010

KARACHI: The country’s total liquid foreign exchange reserves position slightly improved to $15.777 billion by the week ended on June 18 from $15.709 a week ago, a central bank official said on Thursday.

Syed Wasimuddin, chief spokesman, State Bank of Pakistan (SBP) said that the foreign exchange reserves held by the SBP improved to cross $12 billion from the previous figures of $11.969 billion. The foreign exchange reserves held by other commercial banks surged by $28 million to $3.768 billion against $3.74 billion last week.

The countryís foreign exchange reserves crossed $16 billion mark by the week ended on May 28, owing to inflows of IMF’s fifth tranche and Coalition Support Fund.

Pakistan’s forex reserves hit a record high of $16.5 billion in October 2007, but fell steadily to $6.6 billion by November 2008. During the same year, Pakistan requested the IMF for emergency help to support the balance of payments crisis.

The IMF approved the 23-month standby arrangement of around $7.6 billion on November 24, 2008. Later on August 7, 2009, it was augmented to $10.66 billion and extended to the end of the current year.

Forex reserves rise to $15.78bn

[Neo]

Refining plant: Rekodeq to generate Rs 45 billion annually: minister

QUETTA (June 23 2010): Provincial Finance Minister Asim Kurd Gailo on Tuesday said that after installation of refining plant at Rekodeq, the project would generate over Rs 45 billion income for Balochistan. Addressing the post-budget briefing at Civil Secretariat here, he said that Rs 1 billion has been allocated in annual Balochistan Budget for Fiscal Year 2010-11 for installation of a refinery at Rekodeq to refine gold, silver and copper, being explored at Rekodeq and Saindak.

He said that presently gold, silver and copper of Rekodeq and Saindak was shifted to China for refining and later the Chinese government gave some part of it to Pakistan, after taking its share. He said that total Rs 4 billion would be incurred on installation of refinery at Rekodeq, for which Rs 2 billion would be earmarked in Balochistan Budget 2011-12 and Rs 1 billion in the third year.

He recalled that noted atomic scientist Dr Samarmand Mubarak during two meetings with the Balochistan government's stakeholders had assured that installation of refinery at Rekodeq would help in generating Rs 45 billion for Balochistan annually.

He said that installation of refinery at Rekodeq would also create 15,000 jobs, helping in resolving unemployment issue. He said that Rs 12 billion was allocated for establishment of Balochistan Board of Investment which, after consultation and recommendations of experts, would invest in certain sectors.

He said the Balochistan government had disliked the idea of handing over control of Gwadar Port to Singapore government and had conveyed its feelings to the federal government. The provincial government will like to run the port. He hoped that a functional Gwadar Port would provide big revenue to the provincial government.

He highlighted that it was the first time in the history that Balochistan got its due share in the National Finance Commission Award and natural resources. He noted that achievement of such share helped the provincial government to raise salaries of police, Balochistan Constabulary and Levies Force by 100 percent and of other employees by 50 percent besides enhancement in medical allowance by 15 percent. He claimed that earlier, in the past no Balochistan government could raise salaries of the employees by 15 percent. He said that Rs 12 billion was allocated in new budget for law and order against allocation of Rs 6 billion in last year. He added that Rs 200 million was earmarked for the payment to the Frontier Corps Balochistan for helping in maintaining law and order in the province.

He said that huge funds had been allocated in new budget for creation of over 5800 posts, adding that already 5000 posts were being filled under Aghaz-e-Haqooq-e-Balochistan Package. He said that over 6600 other posts were lying vacant at the provincial departments while the federal government had promised to take 5000 youths in federal posts from Balochistan, adding that such process would help provision of jobs to over 20,000 youths.

He said that due to raise in salaries, the Balochistan government would bear Rs 17 billion additional expenditures. He added that non-development expenditures had surged to Rs 83 billion from Rs 53 billion. He said that in new budget, Rs 30 million was allocated for development schemes to be identified by every MPA. He recalled that last year such amount was Rs 50 million for every MPA. He said the efforts were being made to curb corruption. He recalled that in the past, percentage (lion's share) in government contracts was by 24 percent which had been reduced to 12 percent.

He denied giving comments on secret fund of the Chief Minister. He also avoided commenting on purchase of costly vehicles for ministers and officials and additional expenditures of CM Secretariat and Ministers' offices. He said that Rs 7.1 billion deficit of the new budget would be bridged through revenue collection and savings in expenditures on development schemes.

Responding to a question, he said the Balochistan government would not follow Sasti Roti Scheme as launched by the Punjab government. He said that Balochistan culture did not allow launching such schemes, adding that in his view such schemes would amount to turn people into beggers. He said that last year Rs 100 million was paid as compensation to families whose beloved ones were killed in target killing.

Business Recorder [Pakistan's First Financial Daily]

[Neo]

Body validates GDP growth rate at 4.1% for 2009-10

ISLAMABAD: Economic experts on Friday validated the gross domestic product (GDP) estimate at 4.1 percent for 2009-10 and claimed that it was made on the consistent methodology in use since 1999 and even the sources for obtaining data were the same.

On the instruction of Federal Finance Minister Abdul Hafeez Sheikh, the Economic Advisory Council had constituted a committee to examine the methodology for arriving at the provincial growth estimates produced by the Federal Bureau of Statistics (FBS) for 2009-10.

The committee on Friday presented its report to the government in presence of Planning Commission Deputy Chairman Nadeemul Haq and endorsed 4.1 percent GDP estimates for the year 2009-10. The report available with Daily Times revealed that these estimates were in line with recent decline in GDP growth.

Even if we take average growth of last two years 2008-09 and 2009-10, it would be 2.6 percent, which is not an impressive number. The perception that the GDP growth was not estimated on standard methodology and was deliberately enhanced to a high level at 4.1% was not correct. Limitations in estimation of the GDP, however, exist and need to be removed. Further, to enhance image of FBS as well as reliability of its data. The committee suggested that the FBS would be strengthened that facilitated citizens’ access to information in a timely fashion and meets the needed quality standards. It also suggested that capacity of the FBS needed to be enhanced focusing on human resource development (HRD) and upgradation of its physical and IT infrastructure.

To ensure transparency in estimation of national accounts, the FBS might be allowed to release the GDP numbers along with analysis and estimation methodology and data sources.

The report further explained that according to the practices of preparing, approving and releasing the GDP numbers in Pakistan, three types of estimates are made - provisional estimate for the current year 2009-10, revised for the previous year 2008-09 and final for 2007-08. The provisional estimates are based on eight to nine months’ annualised data. Data providers also supply revised data for the previous year and final figures for the earlier year. If the provisional data was mature enough, the revised and final estimates would vary less otherwise the variation would be large. Hence, each year national accounts estimates pass through three stages.

Another observation of GDP growth rate was that the growth rate of livestock generally remained around 3.0 percent whereas in 2009-10, it turned out to be 4.1 percent. The figure seemed to be manipulated.

In response, the report revealed that there were four major components, which determine the growth of this sector - new born animals, slaughtered animals, milk production and poultry and poultry products. The data for first three components were estimated from inter-census growth rates (1996 and 2006 censuses), whereas, for the last component, poultry association provides data.

The growth of livestock was mainly determined by change in the stock of animals. From 2007-08 onward, the growth rate on an average turned out to be 4.0 percent. Year-wise growth data however, showed small variation. The impression that growth of livestock sector had been manipulated on higher side in 2009-10 was incorrect. The third observation raised on GDP growth rate was the construction sector for 2009-10 at 15.3 percent was very high. It pushed the overall growth rate to a high level of 4.1 percent. In response, the report revealed that the value addition of construction was estimated through investment expenditures on construction activities. Value-added coefficients of different types of constructions have been developed and the same were applied to investment in construction to determine the value of the sector. Data was collected both for the public and private sectors. For public sector, as the revised data for the current year was not available at the time of estimation of GDP, the budgeted data was used. Private sector data collected through surveys was based on six to nine months’ annualised estimates. Accordingly, some variation was usually seen between provisional and revised estimates, whereas under the revised estimates, relatively improved data is used. As the value addition of construction sector, 2.0 percent of GDP was relatively low; a small change in value addition gives a larger percentage change in its growth rate. This situation was also supported by the fact that over the years, 2003-04 to 2009-10, a large volatility in growth rate of construction sector ranging between 6.2 to 17.2 percent has been seen.

Daily Times - Leading News Resource of Pakistan

[Neo]

Pakistan’s debt-to-GDP ratio to cross 61 percent
Breaches Fiscal Responsibility & Debt Limitation Act limit of 60 percent

Sunday, June 27, 2010

KARACHI: Pakistan’s total debt-to-GDP ratio has crossed 61 percent this fiscal year, breaching the 60 percent limit set under the Fiscal Responsibility and Debt Limitation Act, the central bank said.

The country’s external debt-to-GDP ratio has hit 30 percent, while domestic debt-to-GDP ratio has mounted to an alarming level of 31 percent, the State Bank of Pakistan reported in its official website.

Despite better performance on the external front, domestic public debt remains on the rise, up by 20 percent during the 11 months of the fiscal year.

Pakistan has been facing the burden of mounting debt pressure. The same stems from escalating fiscal deficit of the country as compared to the budgetary estimates. During FY10, the fiscal deficit rose to 5.2 percent of the GDP against the budgeted 4.7 percent. The domestic side remained a prominent source of financing fiscal deficit.

In between, a differentiating factor came in the form of the International Monetary Fund’s (IMF) budgetary support under its augmented funding plan for Pakistan.

The contribution of the IMF funding in the overall external financing of the country has risen. The IMF’s total share in external debt has risen from four percent in FY06 to 14 percent till the third quarter of FY10.

Contribution of public debt under total external debt dropped to 82 percent from 91 percent in FY06.

The disbursements under the IMF programme are expected to conclude in FY11, but it remains to be seen whether the government will seek further budgetary support from the global donor during FY11 in case additional inflows from sources such as the United States under the Kerry-Lugar and Tokyo pledges fail to materialise on time.

Even though the IMF programme contributed towards bringing stability, favourable external factors also played a major role.

The country’s current account deficit has shown substantial improvement as it dropped by 66 percent during the first 11 months of the current year. Credit should be given to better export performance, which registered a growth of three percent during the period.

However, the real savior was in fact the recessionary condition in the global markets, which kept commodity prices, especially oil under stress. The result is evident as imports registered a decline of 3.5 percent.

Another commendable aspect is record level of remittances, which is set to reach $8.8 billion in FY10, thereby, providing desirable support to the overall balance of payments in the absence of foreign direct investment (FDI).

Despite better performance on the external front, domestic public debt is still on the rise.

“Overall public debt, thereby, remains a strong source of vulnerability to the economy and mounting domestic debt is also strongly suggesting an interest rate rise in the offing,” said Farhan Bashir Khan, an economist at InvestCap Securities.

Pakistan’s debt-to-GDP ratio to cross 61 percent

[Neo]

Domestic debt surges by 19.04pc in 11 months
External financing key reason for sharp rise: SBP

Friday, June 25, 2010

KARACHI: Pakistan’s outstanding stock of domestic debt rose by 19.04 per cent to Rs4.633 trillion by May from Rs3.892 trillion during the corresponding period last year, the central bank said on Thursday.

The rise in domestic debt is attributed to the net external financing due to lower-than-expected disbursement of the pledged foreign financing and increase in the external debt repayment on maturing stocks of the foreign currency bonds, the State Bank of Pakistan (SBP) said.

In a recently released report the SBP had said that a slightly higher than the projected fiscal deficit and the virtual halt with the budgeted external finances put pressure on the domestic source of financing to finance the budget deficit.

“Consequently, the structure of domestic debt changed significantly with increasing share of scheduled banks and non-bank debt in the total domestic debt,” it said.

The outstanding stocks of permanent debt went up by 16.79 per cent to Rs789 billion during July-May 2009/10 against Rs675.6 billion during the corresponding period last year.

Pakistan Investment Bonds (PIBs) retained its dominant share in the outstanding stocks of permanent debt with Rs505.3 billion against Rs441 billion.

The head of floating debt rose by 22.66 per cent during the first 11 months of FY10 to Rs2.397 trillion against 1.954 trillion during the corresponding period last year, the central bank said.

The unfunded debt showed an increase of 14.89 per cent to reach Rs1.44 trillion against Rs1.253 trillion. The outstanding stocks against major National Savings Scheme (NSS) instruments recorded a positive growth except for Defence Savings Certificate, which dipped to Rs223 billion against Rs259.8 billion, it added.

Domestic debt surges by 19.04pc in 11 months

[Neo]

‘Pakistan loses potential tractor market in Japan’

Thursday, June 24, 2010

TOKYO: Export of substandard Pakistani tractors to Japan has resulted in loss of a potential market and created a bad impression for all Pakistani products, said an official report of the Embassy of Pakistan in Tokyo.

The report acknowledged major faults and use of poor-quality material in these tractors.

Ministry of Industries requested the Pakistan embassy in Tokyo to investigate the matter following a report published in The News on February 10.

The Pakistan embassy in Tokyo detailed a senior official to investigate the matter after meeting with the concerned persons.

The official met with the importer of Pakistani tractors and buyers and also physically inspected the said tractors.

The official acknowledged major faults in two heavy-duty tractors and use of poor quality material in others. The report recommended to the Ministry of Industries to take strict action against those who were involved in this deal, replace the faulty tractors and compensate losses to the importer.

It also recommended that the tractor company should send a technical team to provide onsite technical support to restore customer confidence.

‘Pakistan loses potential tractor market in Japan’

[Neo]

Group-wide Restructuring: KASB attracts $40m foreign investment

KARACHI: KASB Group has attracted $40 million foreign investment to augment its plan of group-wide restructuring through creation of holding company.

The restructuring plan also includes investment of up to $80 million at the KASB finance level, which would complete in multiple phases. “In the first phase, Asia International Finance, a China-based group with assets over $3 billion will invest $40 million as strategic investors in KASB finance”, the information communicated to stock market on Wednesday suggested.

The group announced that as part of its commitment towards sustainable growth in financial sector of Pakistan and to better leverage its international relationship, KASB group is planning a group-wide restructuring of its financial services businesses. “The group will create a new financial holding company KASB Finance subject to regulatory approval with the intent to become holding company for KASB bank, KASB Securities, KASB Funds, KASB International and KASB Modaraba”, it stated. KASB is a major group in Pakistan with operations across a broad spectrum of financial services sector of Pakistan. The group also possesses strong reputation in global financial institutions like Bank of America, Merrill Lynch and Blackrock Inc, which have spanned over two decades.

Chairman KASB Group, Nasir Ali Shah Bukhari said that foreign investors’ commitment reflected the group’ strength as a leading franchise and Pakistan as a lucrative FDI avenue despite the geopolitical and macroeconomic challenges.

Daily Times - Leading News Resource of Pakistan