Pakistan Economy - News & Updates - Archive

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Pakistan ranked 83 in ‘Forbes best countries for business’

ISLAMABAD: Pakistan has been ranked 83 in a global list of the best countries to do business in, improving from rank 93 of last year. While Pakistan has climbed 10 places, India is down thirteen notches to 64.

In the new Forbes study that compared business climate from various angles in 121 countries, Denmark tops the list, having displaced the US, last year’s leader, Ary ONE World TV reported. Ireland and Finland follow at No 2 and No 3 spots. The United States is at No 4 now, followed by United Kingdom.

The Forbes report pointing out that Pakistan, an impoverished and underdeveloped country, has suffered from decades of internal political disputes, low levels of foreign investment, and a costly, ongoing confrontation with neighboring India. However, since 2001, IMF-approved reforms most notably, privatisation of the banking sector - bolstered by generous foreign assistance and renewed access to global markets, have generated macroeconomic recovery.

Pakistan has experienced GDP growth in the 6-8% range in 2004-07, spurred by gains in the industrial and service sectors. Poverty levels have decreased by 10% since 2001, and Islamabad has steadily raised development spending in recent years, including a 52% real increase in the budget allocation for development in FY07.

In 2007 the fiscal deficit - a result of chronically low tax collection and increased spending - exceeded Islamabad’s target of 4% of GDP. Inflation remains the top concern among the public, jumping from 7.7% in 2007 to more than 11% during the first few months of 2008. app

Daily Times - Leading News Resource of Pakistan

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Pakistan and China pledge to take bilateral trade to $15 billion by 2011

BEIJING (July 02 2008): Pakistan and China on Tuesday pledged to take their bilateral trade to $15 billion by 2011, in their effort bringing economic ties at par with their strong political and strategic partnership. These views were expressed by Federal Minister for Housing and Works, Rehmat Ullah Kakar after his meeting with Secretary General of CPC Kashgar, Shi Dagang.

The meeting was held between the two leaders during the week-long fourt Kashgar Central and South Asia Trade Fair that started on June 28, the Commercial and Economic Counsellor of Pakistan Embassy Dr Naeem Khan told APP on return from Kashgar.

Shi expressed the hope that following implementation of Free Trade Agreement between Pakistan and China the bilateral trade would further improve. The meeting was also attended by Chinese Ambassador to Pakistan Lue Zhao Hui and Managing Director of Pakistan Housing Authority Raja Mohammad Abbas besides other members of Pakistan delegation. The Secretary General of CPC thanked the minister and his delegation for participating in the Fair in large number.

On the occasion, he also expressed his gratitude for the massive relief goods provided by the Pakistani government for the May 12 Sichuan devastated earthquake. Minister for Housing Rehmat Kakar called for greater co-ordination between the customs, immigration and Quarantine departments as well as among the Administrations of Xingjian and Northern Areas for smooth flow of bilateral trade. He also highlighted the importance of Pakistan and China Cross Boarder Economic Zones.

The minister said that Pakistan is keen to improve its communication and infrastructure network and in this connection he pointed out that the expansion of Karakarum Highway is already taken in hand at a cost of $500 million.

He further said that a feasibility study to lay a railway network between Havalian to Kashgar at a cost of Rs 144 million has also been carried out by the Government of Pakistan. He said that with improved communication network and integrated boarder management there will be much greater trade through the KKH.

The Housing Minister lauded the excellent arrangements made by the Chinese government for the Beijing Olympic and expressed the confidence that the August 8-24 sports gala would be the most successful ever staged in the history.

"The government and people of Pakistan fully support one China policy and strongly condemn those who elements who wanted to involve politics in the Games", he added. Out of 200 stalls established in the fair, 50 stalls have been set up by the Pakistani exhibitors while 28 by the business community of Northern Areas.

In the Pakistani pavilion, the business community has exhibited goods produced in the country showcasing the high quality products, which are attracting the visitors in the international fair of the economic importance. In the Northern Areas Stalls gem stones and local crafts have been displayed for the attraction of the visitors. The 4th Kashgar Central and South Asia Trade fair will conclude on July 2.

Business Recorder [Pakistan's First Financial Daily]

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Sialkot traders invited to invest in Kyrgyzstan

SIALKOT (July 02 2008): The Ambassador of Kyrgyzstan, Nurlan Aitmurzaey, has said that there is good agreement base between Kyrgyzstan and Pakistan in the area of economic co-operation, and eight such agreements have strengthened the base for making business protection of investment in Kyrgyz Republic.

Addressing the members of Sialkot Chamber of Commerce and Industry (SCCI) here on Tuesday he said that Kyrgyzstan and Pakistan should use the advantage of being members of World Trade Organisation in trade operations. The Ambassador said that Kyrgyz Republic attaches great importance to develop economic cooperation with Pakistan, and added that "we are creating Kyrgyz-Pakistani Business Council in this regard". The establishment of brotherhood relations of capitals of both countries, Baishkek and Islamabad, is under process of negotiation, he said.

He said that in November 2007 four countries of the region, Afghanistan, Kyrgyzstan, Pakistan and Tajikistan, had signed the MOU for development of Central Asia -South Asia Regional Market (CASAAREM). The initial plan is to export a minimum of 1000 megawatts power from Kyrgyzstan and Tajikistan to Afghanistan and Pakistan, he added.

The Ambassador urged the members of SCCI to invest in Kyrgyzstan, and business proposals would be welcomed and full co-operation would be extended in this regard. The promotion of direct foreign investment is part of policy, and public and private sectors have joined forces to attract additional investors, he said. He said that main factors are the liberal trade regime, full protection of investment and unlimited repatriation of profits, currency exchange freedom, low business costs an educated workforce and direct access to state authorities.

In his address of welcome SCCI President Dr Khurram Anwar Khawaja said that the visit of the Kyrgyzstan Ambassador would have positive impact on trade relations between Kyrgyz Republic and Sialkot and it would open a new era in bilateral trade. He said that Kyrgyz Republic could greatly help Pakistan in overcoming the power crisis by providing electricity as it has tremendous capacity for producing electricity. The exchange of trade delegations and one-to-one meeting of businessmen of both sides are crucial for improving bilateral trade for which both sides must ensure simple visa policy enabling the businessmen get visa, he added.

Business Recorder [Pakistan's First Financial Daily]

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US urged to establish ROZs all over Pakistan

LAHORE (July 02 2008): The Reconstruction Opportunity Zones (ROZs), established by US in NWFP, are not producing desired results due to the lack of interest among businessmen who are reluctant to put their money in that area which is without infrastructure and human resource facility. Thus the US should establish ROZs in all over the country.

The Saarc Chamber of Commerce and Industry Vice President, Iftikhar Ali, said in a meeting of the six-member businessmen delegation with US Deputy Secretary of State Richard Boucher at the residence of Principal Officer, US Consulate, Bryan D Hunt here on Tuesday. The delegation also discussed issues of common interest with the US Deputy Secretary of State while Mark Webber, US President's Special Assistant, and Peter W Bodde, Deputy Chief of the US Mission in Islamabad, were also present.

The delegation urged the visiting US Deputy Secretary of State Richard Boucher to ensure market access to Pakistan's merchandise by treating it in line with least developed countries. While stressing the need for bilateral investment, the business leaders said that all textile mills in Pakistan are in the grip of recession and the United States should restore Pakistan's textile quota and help Pakistani business community to initiate joint ventures with their US counterparts.

The business leaders said that Pakistani textile made-ups have no match as far as quality is concerned. If the right of access to the US markets is ensured the economic situation of Pakistan would be quite different.

They suggested that alongside aid to overcome the immediate problems Pakistan requires long-term assistance for development of its infrastructure, energy, water reservoirs, transfer of technology and development of agro-based industry.

Lahore Chamber of Commerce and Industry President Mohammad Ali said that Pakistan would help the United States to combat terror, and urged the diplomats to ensure market access to Pakistani merchandise since Pakistan had already suffered a lot on the economic front for being frontline state with the US in its war on terror. He said a little attention by the United States could give new lease of life to the Pakistani industry.

Business Recorder [Pakistan's First Financial Daily]

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Pakistan makes substantial progress in implementing IAFSP: ADB report

FAISALABAD (July 02 2008): Asian Development Bank (ADB) has agreed to provide 200 million dollars as second tranche to Pakistan keeping in view of the substantial progress made in the implementation of the Improving Access to Financial Services (Phase I) Programme (IAFSP).

In an update progress report, Team leader, N.P. Knoll, Financial Sector Specialist, Central and West Asia Department (CWAD) of ADB, said that there has been substantial progress in implementing the programme. First, the government adopted a national strategy for inclusive financial services and began its implementation.

This is the most important achievement of the programme and marks an important step in the development of Pakistan's financial sector. This is because building an inclusive financial system is an integral and core pillar of financial sector reforms. Second, the government took several actions with respect to KB, which are designed to improve its performance and contribution to the sector. The government also promoted fair competition between KB and other privately owned MFBs by relicensing KB under the same statute as the other MFBs.

Third, the government implemented measures to promote competition among MFBs and protect loan borrowers by requiring uniform disclosure of the full cost of lending. Fourth, the government took action to facilitate the introduction of new products and services by micro finance providers. These new products and services include Islamic banking products and mobile banking. All of these actions are expected to increase the number of micro finance clients served, although their impact will spread over time, he added.

N.P. Knoll said that the micro finance sector in Pakistan is vibrant and growing. The number of micro credit clients increased more than 40 percent between December 2006 and December 2007 to more than 1.5 million clients with a total loan portfolio of more than Rs 15 billion. However, outreach is low against given total estimated demand of 25 million-30 million clients. The small size and sustainability of many MFIs remains a concern, as the prevailing low interest rates charged by many MFIs are too low to sustain long-term growth and provide an adequate return on investment with respect to investor-owned MFIs.

The primary business of MFIs is lending, as most MFIs are not licensed to accept deposits. However, the sector has recently increased its focus on deposit mobilisation. From December 2006 to December 2007, the number of deposit accounts increased by 36 percent from 1.1 million to 1.5 million, while the aggregate volume of savings increased by 78 percent from Rs 2.2 billion to Rs 4.0 billion.

The Improving Access to Financial Services, Phase I (IAFSP) was designed to promote further diversification in the services and products offered by MFIs in order to enable the micro finance sector to continue to expand. While self-sustainability remains the ultimate goal, there is recognition that this will be a long-term process.

Micro finance in Pakistan is often regarded as a social service rather than a financial service. The government initially promoted micro finance through a subsidised, supply-led credit model. This model led to an unsustainable overdependence by the micro finance sector on donor funds. Under the earlier ADB micro finance programme, emphasis was placed on the establishment of Khushhali Bank (KB), a new institution created in 2000 by special statute, as a strategic way to launch the sector.

Although KB remains the largest micro finance bank (MFB) in Pakistan, it continues to rely on donor credit lines and has a limited product line, which does not include deposit services. Pakistan continues to lack strong, sustainable institutions that are able to reach the scale necessary to have significant impact.

To facilitate the growth of such institutions and ultimately increase the number of micro finance clients, the government is in the process of moving from the supply-driven model to a demand-driven and more market-oriented model, which includes greater private sector participation, he added.

Financial sector specialist of ADB said that the IAFSP is succeeding in accomplishing its objective of helping the government move to a more demand-driven, market-based micro finance sector. The programme has supported four interrelated reforms to facilitate this shift and address ongoing constraints to the growth of the sector: (i) developing an enabling policy, legal, and regulatory framework; (ii) improving capacity and strengthening institutions; (iii) promoting product diversification and innovation; and (iv) increasing basic and financial literacy.

In addition to reducing impediments to the development of demand-driven micro finance services, the IAFSP reform agenda reflects the government's continuing commitment to promote an inclusive financial sector that serves the entire population. The government's commitment is reflected in the goals set forth in its Medium-Term Development Framework 2005-2010 and Strategic Directions to Achieve Vision 2030, he added.

Financial specialist of ADB said that the programme includes 2-second tranche conditions and 3-monitorable actions to support product diversification and innovation. All of these actions have been completed. The SBP has issued regulations to support the provision by all licensed financial institutions of (i) Islamic micro finance services and products, and (ii) branchless banking services including mobile money transfers using cell phone-based technology.

To facilitate lost-cost, safe, and speedy transmission of remittances to Pakistan by overseas workers, a second tranche monitorable action requires commercial banks to establish and operate "Home Remittance Cells" and develop annual strategic plans to mobilise remittances. Most commercial banks have established home remittance cells. They have assigned dedicated professional personnel and sent related annual strategic plans to mobilise remittances to SBP. The government has fully complied with a related second tranche condition requiring enactment of a bill amending the Microfinance Institutions Ordinance, 2001, to allow MFBs to receive remittances directly from overseas workers.

Among the objectives of the programme is the establishment of partnerships between Pakistan Post and private sector financial institutions to expand the outreach of financial services. Pakistan Post issued a strategic partnership and model agreement to use the national post office infrastructure for expanded outreach and provision of sustainable financial services not offered by Pakistan Post. Pursuant to a second tranche monitorable action, Pakistan Post and The First Micro Finance Bank Limited (FMFB) entered into an agreement pursuant to which Pakistan Post would disburse micro finance loans and provide other related services for FMFB using Pakistan Post branches, he added.

N.P. Knoll said that the second tranche included one monitorable action regarding the programme's goal of supporting national literacy and education to improve access to financial services for poor and rural households. Programme support for this goal was to be provided by grants made using income from the endowment fund (the Fund) created by the programme. However, the fund has only recently become operational and has not yet made any grants. Therefore, the fund has not issued any quarterly reports, nor is any capacity building and training supported by fund income ongoing. However, SBP plans to begin making grants under the fund shortly and has assured ADB that it will start capacity building activities and the issuance of quarterly reports once it has approved grants, he disclosed.

Pointing out background, he said that the Improving Access to Financial Services (Phase I) Programme (IAFSP or the programme) for Pakistan was approved by the Asian Development Bank (ADB) on 14 December 2006. The program consists of a 300 million dollars loan from ADB's ordinary capital resources, a loan equivalent to 20 million dollars from ADB's Special Funds resources, and a 2 million dollars technical assistance (TA) grant.

The Japan Fund for Poverty Reduction financed an additional grant of 2 million dollars in support of the programme's objectives. The programme loan includes two tranches, each to be released after compliance with specified policy actions. The first tranche of 120 million dollars (comprising 100 million dollars from the ordinary capital resources loan and 20 million dollars from the Asian Development Fund loan) was disbursed on 12 January 2007, he explained.

N.P. Knoll said that the programme aims to reduce poverty, build a more inclusive, competitive, and efficient financial sector and promote sustainable economic growth. Its objective is to ensure access to sustainable institutional financial services at competitive prices for poor and low-income households and their micro-enterprises.

Business Recorder [Pakistan's First Financial Daily]

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Oil and gas prices hike to push inflation to 20 percent: analysts

ISLAMABAD (July 01 2008): The increase in oil and gas prices, along with one percent hike in general sales tax (GST), will push inflation up to around 20 percent as the steps taken by the government have sent alarming signals for all sectors of economy. These harsh steps taken by a 'popular' government is a gift to the people, which will further snatch their purchasing power with the beginning of new fiscal year from Tuesday, July 1.

"The beginning of the new fiscal year is not a good omen, as across-the-board increase in energy prices including gas and petroleum products, and electricity tariff in the offing, is definitely likely to hit the poor hard. This would also render thousands of industrial workers jobless as many industries have reached the verge of collapse and further increase would force them to come to a complete shutdown," said independent economists and representatives of chambers of commerce and industry.

"The increase will hit the poor heavily in an indirect way. The government steps will increase the prices of all essential and other commodities," said Senator Khushid Ahmad. Instead of reviewing tax regime on petroleum products, the government went ahead with unbearable increase in petroleum products, he remarked and predicted that inflation could reach up to 20 percent if the current trend of increasing energy prices went ahead.

The CPI inflation surged by 11.11 percent during 11 months of 2007-08, according to statistics of the Federal Bureau of Statistics (FBS). It may exceed 12 percent, against the original target of 6.5 percent, when the FBS would release full-year (2007-08) figures.

Electricity prices are expected to cross Rs 10 per unit for all categories except those small consumers using up to 50 units per month. The increase in prices is part of the conditions attached to $500 million World Bank programme lending support the bank has extended to Pakistan for budgetary support.

According to some estimates, the oil consumers are paying 14 taxes and charges including wharfage, a tax charged from countries at war to cover risk, on each litre of petrol and diesel.

"The opposition in Senate demanded review of oil pricing formula. Unfortunately, the government did not listen to our demand," Khurshid said. He said that government functionaries, including high-ups, were not prepared to change their luxurious lifestyle.

"The government looks to be least interested to cut its expenditures. The ruling party sends big delegations to foreign countries--a practice that was also done by last government. We see no change in the policies of the present and previous governments," he added.

Dr Shehzad Arshad, chairman of textile committee Federation of Pakistan Chambers of Commerce and Industry (FPCCI), said that after increase in petroleum and gas prices, the industries have been left with very limited options for survival.

"In 2004, inflation was recorded at around 4 percent. In 2008, it has already exceeded 11 percent. In 2009, the inflation will definitely touch even higher figures. In such a situation, the industries will lose to the regional competitors in international market," he said.

He said that the government had imposed 10 percent withholding tax on electricity bill if the consumer's bill exceeds Rs 20,000. Increase in GST from 15 percent to 16 percent is another counterproductive step taken by the government. The textile sector, which accounts for 64 percent of the country exports, provides employment opportunity to 40 percent of the industrial labour and contributes 10 percent to the GDP, will further suffer in 2009.

Business Recorder [Pakistan's First Financial Daily]

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Pakistan in need of increased economic aid: Gilani tells Boucher

ISLAMABAD (July 01 2008): Prime Minister Syed Yousaf Raza Gilani has said it is often not realised that one incident of terrorism in Pakistan leads to flight of foreign capital from the country besides discouraging the flow of foreign investment. Pakistan is in need of increased economic assistance not only to stabilise democracy but also to fulfil our promise of providing better life to the people, he further said.

He made these remarks while talking to Richard Boucher, US Assistant Secretary of State, who called on him at Prime Minister's House here on Monday morning. Gillani said that terrorism is a global phenomenon and a serious threat to humanity, ruining global peace and Pakistan is fighting extremism in its own national interest and not to serve the objectives of another country. Similarly, it was a terrorist act that claimed the life of Mohtarma Benazir Bhutto Shaheed.

He added, "Pakistan is convinced that there is a need to address the factors that encourage terrorism." With the inception of new political government, Pakistan has developed a three-pronged strategy to cement peace and security in the tribal areas in consultation with its coalition partners, which encompasses political, economic and security dimensions. The government has initiated dialogues with tribal elders, which is supported by the general public, he said.

On the other front, Gilani emphasised early setting up of the Reconstruction Opportunity Zones (ROZs) to accelerate economic activity in the troubled areas of NWFP and Balochistan so that more job opportunities could be created. He also stressed the need for providing assured access to US markets to goods produced in these ROZs.

On Saturday the government carried out operation against terrorists in the areas of Khyber Agency and destroyed the hideouts of militants, he told the delegation. In a statement, Prime Minister Syed Yousuf Raza Gilani has said that Pakistan greatly values its relationship with the US and is keen to strengthen it covering diplomatic, political, economic, defence and security fields.

"We are desirous of a broad-based and long-term relationship focussing especially on bilateral co-operation in trade, energy, investment, science & technology, educational and cultural fields with a view to bringing the people of the two countries closer to each other," he said.

Gilani said that he had no doubt that the victory of democratic and progressive forces in the country especially in the NWFP and Balochistan provinces and the formation of broad-based democratic governments at the Centre and in the provinces would further strengthen the close and co-operative relationship that existed between the two countries.

He said that there is a need for better monitoring of the borders from the Afghanistan side as our side has 900 check posts compared to about 100 such posts on the Afghanistan side, which is inadequate. The Prime Minister said Pakistan is keen to see a stable and strong Afghanistan in its neighbourhood which is equally good for both the countries and for regional peace and stability.

Pakistan is making utmost efforts to strengthen security along the Pakistan-Afghanistan border including the installation of biometric system on entry points. He said Pakistan has also offered to fence the border. Pakistan needs help all the more urgently in view of the steep rise in the global prices of oil and food commodities.

Boucher said that United States has great interest in the success of democratic government and economic well-being of the people of Pakistan. He said that US is ready to help resettle Afghan refugees in their country.

The meeting was also attended by US Ambassador to Pakistan Anne Patterson, Special Assistant to the US President Mark Webber, Advisor to Prime Minister on Interior, Rehman Malik, Advisor to Prime Minister on National Security, Mahmud Durrani, and Acting Secretary, Foreign Affairs. The Prime Minister recalled his useful meeting with President Bush at Sharm Al-Shaikh and said he looks forward to meeting the President in Washington next month.

US Assistant Secretary of State, Richard Boucher also called on Rehman A Malik and discussed with him the details of operation carried out in the tribal areas particularly in Khyber Agency. Malik said the situation in NWFP is under control and there is no law and order situation, however there are some miscreants who will be dealt with iron hand.

Later, Boucher also met Advisor to Prime Minister on National Security, Mehmud Durrani and discussed general security position in NWFP and Balochistan. Afterwards, talking to the US Congressional delegation led by Senator Cardin, the Prime Minister said, "We want the US to help Pakistan rebuild its economy."

Highlighting the importance Pakistan attaches to its relations with the United States, the Prime Minister underscored the desire to deepen bilateral co-operation in diverse fields, including defence, trade, economy, energy and social sectors. He told the delegation that the government's foremost priorities included fighting extremism and terrorism in Pakistan's own interest as well as rebuilding the economy.

The Prime Minister also apprised the members of Congress of the three-pronged counter-terrorism strategy. He further underlined the need for accelerating the ROZs initiative stressing that it would help expand economic opportunities and generate jobs.

The Prime Minister also underscored the vital interest Pakistan has in a stable Afghanistan. He apprised the delegation of the steps taken by Pakistan to strengthen security along the Pakistan-Afghanistan border and entertain 3 million Afghan refugees. The Prime Minister stressed the need for the international community to support these efforts.

The members of the congressional delegation highlighted the strategic importance of the US relations with Pakistan and reciprocated the desire to expand bilateral co-operation in various fields. They affirmed US readiness to support Pakistan in its efforts to address the security issues and to achieve economic progress over the long term.

They said that the US regards Pakistan as its important and strategic ally and is keen to closely work with the democratic government to help it overcome its economic problems. They said, "Pakistan is a linchpin in the region and we want to expand our bilateral co-operation in all areas including trade, investment and security matters."

The Congressional delegation included Senator Benjamin Cardin, Congressman Zach Wamp, Congressman Robert Aderholt, Congressman Mike McIntyre and Congresswoman Loretta Sanchez. The meeting was also attended by Advisor to Prime Minister on Interior, Rehman A Malik, Advisor to Prime Minister on National Security, Mahmud Durrani, and Acting Secretary, Foreign Affairs.

Business Recorder [Pakistan's First Financial Daily]

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Pakistan Last Fiscal Year Tax Revenue PKR1 Trillion; Up 18.3% - Official

ISLAMABAD-(Dow Jones)- Pakistan's tax revenue rose 18.3% to PKR1 trillion in the fiscal year that ended June 30, the chairman of the Federal Board Of Revenue said Wednesday.

During the last financial year, the tax collection authority collected PKR385 billion in direct taxes, up 38.5%, and PKR375 billion in sales tax, up 37.5%, Abdullah Yusuf told reporters.

This financial year's "target is based on nominal growth of the gross domestic product calculated on last financial year's collection of PKR1 trillion, which comes up to PKR1.2 trillion, and another PKR86 billion would come from some new revenue measures," Yusuf said.

During the last fiscal year, the Federal Board of Revenue collected PKR91 billion in excise duty, up 9.1%, and PKR150 billion in import tax, up 15%, he added.

Pakistan Last Fiscal Year Tax Revenue PKR1 Trillion; Up 18.3% - Official

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If I am not mistaken, this number can be doubled if the black market economy is documented and taxed. There are means and resources within the country to bridge the fiscal gap in imports. What is needed is the will to do so.

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If I am not mistaken, this number can be doubled if the black market economy is documented and taxed. There are means and resources within the country to bridge the fiscal gap in imports. What is needed is the will to do so.

Magar billi ki gardan mai ghanti kaun bandhay ga?
Top industrialists, landlords and even politicians are involved in black market.
I wonder if even true leadership can make a differnce, its the mentality that has to change.

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National Foods’ sales cross Rs4bn

Thursday, July 03, 2008

KARACHI: National Foods Limited (NFL) on Wednesday said its year-on-year growth in sales increased 28 per cent to over Rs4 billion during the financial year that ended on June 30.

“The secret of our success is understanding consumer needs and building a dedicated team that can deliver products and services that meet these needs,” a press release quoted Abrar Hasan, CEO of NFL as saying. “Our sales’ growth is very much in line with the company’s ‘Vision 20/20’ which targets sales of Rs50 billion by the year 2020.”

The food company underlined the importance of its endeavour to come up with innovative products based on research and market needs. NFL has more than 250 different products in 12 food categories. Its products are sold in over 35 countries.

National Foods’ sales cross Rs4bn

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Pakistan’s water storage capacity very low: ICCI

ISLAMABAD: Islamabad Chamber of Commerce and Industry (ICCI) Wednesday said at present, the storage capacity of the country was only 13 percent of the annual water flows from rivers while US has developed a 497 percent storage capacity from the annual flow from rivers.

President ICCI, Mohammad Ijaz Abbasi said Pakistan would be a water deficient country by 2012 if the water storage capacity were not enhanced.

He said due to lack of proper water management, particularly in rural areas a big chunk of rural population was migrating to urban areas in search of better career prospects.

Such migration was not only putting extra burden on already scarce urban amenities, but it was also creating several social problems and disturbing law and order situation, he added. He stressed upon the government to adopt modern water management techniques, particularly in rural areas to develop agriculture on modern lines and to enhance the productivity of agriculture products in the country.

Daily Times - Leading News Resource of Pakistan

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Financial Year 2007-08: Money market witnessed capital exodus

* Portfolio investment turned negative standing at $251.022 million

KARACHI: Country’s capital market saw huge capital flight during the financial year 2007-08, triggered by political instability and worst law and order situation, which marred the past year.

The portfolio investment turned negative by standing at $251.022 million (Rs 17.069 billion) during July-June period of last financial year, the figures of National Clearing Company of Pakistan (NCCPL) indicate.

Financial year 2007-08 witnessed worst economic and law and order scenario, casting dark shadows on the stock market as well, which witnessed historical ups and downs by remaining volatile throughout the year.

Though, the financial year began amidst political instability caused by reference against Chief Justice with wide-spread agitation and massive protests against the then government, however the more scary scene for the investors emerged in the aftermath of the assassination of Benazir Bhutto on December 27, 2007.

The break-up of portfolio investment shows that its trend was not discouraging in the first half of the fiscal, but the second half (January to June 2007-08) was catastrophic as far as the investment in stock market is concerned with the outflow reaching to new heights.

“The growth phase that started from 2001 to 2002 appears to be evaporating at the moment because of number of issues on political and economic sides, on which the new government is still directionless,” analyst Faisal Shaji noted while not expecting rosy picture on this front in the immediate future.

Since the new democratic government miserably failed to come up with a sound economic policy, the investor’s sentiments were also badly hurt by the rumours and speculations about measures regarding the levying of capital gains tax before the budget.

Since April 18, when Karachi Stock Market (KSE) rose to historical heights, till the announcement of the budget, market was abound with rumours that were disastrous for the investors particularly foreign ones, who offloaded their stocks and kept themselves at bay from the stock market.

Analysts predicted that emerging economic situation is bound to impact the stock market, ultimately causing concerns among the foreign investors. “In an era of high inflation, further interest rate hike could not be ruled out, which would certainly hit the economic growth as well as growth prospects of listed companies”, Shaji pointed out.

People are now recalling the events that followed the nuclear blasts in 1998, when major exodus of foreign investment was witnessed. The current situation is no more different from that one, which pains a worrying picture for the much cautious foreign investors.

Daily Times - Leading News Resource of Pakistan

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Portfolio investment turns negative in FY08

KARACHI, July 2: The fiscal year 2007-08 ending with net outflow from the portfolio investment left a big negative mark on the country’s vulnerable economic and political situation. It caused a total outflow of $4.6882 billion from the market.

The year-end final data released by the State Bank of Pakistan on Wednesday showed that the poor response of foreign portfolio investment added fuel to fire to the forex coffer of the country.

The June, the last month of the outgoing year, witnessed a net cumulative outflow of $146.6 million as the total inflows remained at $255 million while the outflows were at $402 million.

This negative situation prevailed throughout the fiscal year, which was contrary to the last fiscal year when the portfolio investment added about $1.9 billion to the total foreign private investment in the country.

The State Bank’s calculation reveals that during the year the total inflow reached $4.449 billion but the outflow exceeded it at $4.682 billion, thus the cumulative outflow was $233 million.

Analysts said the year just ended was the most instable period during the last five years and the entire year was full of incidents. They said each incident carried greater uncertainty damaging the image of the country abroad.

Unlike the fiscal 2006-07, the year ‘08 remained mostly under political uncertainty.

“The political uncertainty was the real cause of concern, which started with emergency, heightened with the murder of Benazir Bhutto and continued with the results of general elections,” said Abid Saleem, researcher at a brokerage house.He said despite formation of the new government, which presented its first budget, there was neither sign for change in the economic policies nor any indication of ending of war on the political front.

“While the economy is plagued with the rising inflation, the political situation is still not settled,” said the analyst adding that the next fiscal year would remain under the grip of same situation unless something happens to end this uncertainty.

Not only the portfolio but the foreign direct investment also declined substantially during the year as July-May figure showed that the FDI shrank by 14 per cent.

“The booming banking and telecommunication sectors protected the falling trend in foreign investment during the fiscal year just-ended,” said a senior banker. He said the banking sector had reached the saturation point due to the existing economic growth trend and would not provide much support in the coming days of the new fiscal year.

Analysts said the economic growth was the real key for attracting foreign as well as domestic investors. The uncontrolled hike in oil and gas prices with highly inflated commodity prices, it looks impossible for the country to achieve a reasonable 6 per cent economic growth, they said.

The recent action to support the share prices by imposing restriction that price of scrip can not slip more than one per cent but can move up to 10 per cent, also failed to attract foreign investment.

Most of the analysts, who are the real catalyst to bring foreign investors for portfolio investment, were of the view that no artificial step could attract the investors. They believe that the real economic growth was the only way to invite foreign investors.

Portfolio investment turns negative in FY08 -DAWN - Business; July 03, 2008

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FBR exceeds tax target, expected to collect Rs 1.005tr

ISLAMABAD: The Federal Board of Revenue (FBR) has crossed over the psychological barrio of Rs 1 trillion tax collection and the total collection is expected to reach over Rs 1.005 trillion against the provisional collection of Rs 1.002 trillion till June 30, 2008.

Muhammad Abdullah Yusuf, Chairman Federal Board of Revenue, announced this at a press conference at the conclusion of financial year 2007-08 focusing tax collection performance and explanation of budgetary measures announced in the budget 2008-09.

He said that during July-May period of last fiscal year 2007-08 the FBR has collected Rs 135 billion taxes and duty on POL products which includes sales tax at Rs 112 billion and customs duty of Rs 20 billion.

He said that amendments in the Economic Reforms Act have not empowered the income tax authorities to probe the foreign currency accounts. He clarified that the scope of the Capital Value Tax on immoveable property has reduced actually as its applicability has been limited to the rated areas of newly established district governments.

Investment Tax Schemes is a good opportunity for the existing as well as new taxpayers to legalise their hidden assets by paying 2 percent tax on fair market value of the assets. Now there is no excuse left for the new as well as existing tax payers to declare their hidden assets and get them legalised and be a part of formal economy. He said that no question about past years would be asked to those who would be availing facility of investment tax. He appealed that population having taxable income should come forward and contribute in the national development through their due contributions.

He also informed that government is also negotiating to revise Pakistan Afghanistan Transit Agreement to tackle the issue of smuggling as well as issues relating border trade. He said that a tracking system is being introduced to track the movement of trucks and trailers carrying goods meant for Afghanistan. This system would help trace trucks and trailers not entering Afghanistan. He did not denied the possibility that goods in transit to Afghanistan for NATO may be coming back to Pakistan.

He also explained that defense services are paying all taxes and duties as applicable on salaries, imports and purchases.

He said that for the current fiscal year 2008-09, the tax collection target is Rs 1.250 trillion with a required growth of 25 percent. This target has been set by assuming 17.3 percent nominal growth in the economy— 5.5 percent GDP growth and 12 percent inflation— making a total of 17.3 percent. Through this assumption the tax collection has been estimated at Rs 1164 billion. Some Rs 71.2 billion are expected to come through revenue measures announced in the budget which include Rs 26.7 billion in direct taxes side, Rs 38.2 billion from sales tax, and Rs 6.4 billion from customs duty, Rs 15 billion would be generated through efforts of the department with Rs 5 billion share in each tax i.e. income tax, sales tax and customs duty.

He explained that tax collection target of Rs 1.250 trillion would require growth of 27.3 percent in direct taxes with target of Rs 490 billion, 28 percent growth in sales tax with annual target of Rs 480 billion, 26.4 percent growth in federal excise duty with annual target of Rs 115 billion and 10 percent growth with annual target of Rs 165 billion is required to meet the said target.

Explaining the refund payment situation, he informed that FBR has paid Rs 68 billion as refund and rebates in 2007-08 as compared to Rs 82 billion in previous fiscal year 2006-07.

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