SBP’s reserves decrease 6.55%, stand at $12.7bn
Foreign exchange reserves held by the State Bank of Pakistan (SBP) declined 6.55% on a weekly basis, according to data released by the central bank on Thursday.
On November 30, foreign currency reserves held by the central bank were recorded at $12,660.5 million, down $886.8 million or 6.55% compared to $13,547.3 million in the previous week, according to the central bank.
The decrease in reserves was attributed to external debt and other official payments, a development that raises concerns over looming obligations on an already burdened economy.
Overall, liquid foreign reserves held by the country, including net reserves held by banks other than the SBP, stood at $18,744.9 million. Net reserves held by banks amounted to $6,084.4 million.
However, keeping in mind the worrying reserves’ level, the SBP was quick to add that on December 5 it received $2.5 billion as “proceeds from Pakistan Sovereign bonds and Pakistan International Sukuk, after which its reserves stand at $14,883.1 million, and total liquid foreign reserves are up at $20,986.4 million”.
Pakistan recently raised $2.5 billion by floating dollar-denominated sovereign bonds in the international market in a bid to shore up official reserves.
Five sme projects worth Rs3.2bn approved
The government has granted approval to five new development projects proposed by the Small and Medium Enterprises Development Authority (Smeda) under the Public Sector Development Programme 2017-18, which will cost about Rs3.2 billion.
The projects include National Business Development Programme for SMEs across the country, Product Development Centre for Composite-based Sports Goods (Sialkot), Fruits, Vegetables and Condiments Processing Centre (Naushehro Feroz), Fruit Dehydration Unit (Swat) and Business Skill Development Centres for Women at various locations, according to a statement issued by Smeda.
Allocation of Rs250 million, Rs287.77 million, Rs321.5 million, Rs20 million and Rs28 million respectively have been made under the PSDP for these projects. Smeda CEO Sher Ayub Khan, while speaking in a meeting at the authority’s head office, recalled that Smeda entered into the ambit of PSDP in 2006 and so far it had handled Rs5,798.20 million worth of investments in about 27 projects across the country. Of these, 19 projects have been completed.
He told the meeting that Smeda projects were being run as common facility centres under the public-private partnership model.
He emphasised that the projects had provided various SME clusters with state-of-the-art technology, training and capacity-building services in order to meet international export standards.
He boasted that SMEs running fruit processing, foundry, auto vendor, light engineering, red chilli processing, textile spinning and honey production units were competing well in the export market because of support provided by the common facility centres.
Pak set to outdo India in introducing 5g internet: PTA
Pakistan, a fast growing digital nation, will emerge as the first nation in South Asia to introduce 5G internet services, stated the Pakistan Telecommunication Authority (PTA) in its annual report.
It said that Pakistan would even beat the largest regional nation, India, on this front as the neighbouring country is also in the run for introducing the most advanced internet service.
“The real potential of 5G (in India) can only be realised post-2025,” Amresh Nandan, research director at advisory firm Gartner, told Quartz.
Pakistan has set its eyes on launching 5G technology by 2020 and preparations have begun to test 5G cellular connectivity, the first of its kind in South Asia, according to the PTA’s annual report for 2017.
About two months ago, the federal cabinet allowed cellular companies to test 5G technology in Pakistan within the existing regulatory environment without charging the users. Network and cellular companies are conducting various lab and field tests to prepare themselves to launch the technology when it is ready.
“Yesterday, I visited a customer support centre of a cellular company and saw 5G signals on my mobile,” said Abdullah, a regular user of mobile internet services amongst millions of Pakistanis.
More than 87% of the population of Pakistan is covered by cellular mobile networks, out of which 70% are covered by 3G services while 30% can access 4G LTE services. Internet and broadband services are spreading to every nook and corner of the country, pushing the demand for more international and national connectivity, the report said, adding that international internet bandwidth is also increasing regularly.
ADB sees chance for Pak to emerge as trade hub
The Asian Development Bank (ADB) has suggested that Pakistan should emerge as a centre of trade and commerce by removing barriers on its international borders as two continents – Asia and Europe – are rapidly growing.
The advice comes at a time when Pakistan is struggling to improve relations with neighbours India and Afghanistan, which have become a stumbling block to any initiative for regional economic cooperation.
“With the rapid economic expansion of RICE countries – Russia to the north, India to the south, China and Japan to the east, and emerging Europe, there is a unique opportunity for Pakistan to emerge as a centre of trade and commerce to achieve higher levels of economic growth and reduce poverty,” said Xiaohong Yang, the ADB Country Director.
She was speaking at the formal launch of the Central Asia Regional Economic Cooperation (Carec) Strategy 2030, which is a new long-term strategic framework for regional cooperation.
The strategy is aimed at creating an open and inclusive regional cooperation platform that connects people, policies and projects for shared and sustainable development.
The ADB country director said at present, except for China, the value of Pakistan’s trade with other Carec member-countries stood at a very low level and Carec platform had the potential to help Pakistan create a much larger and much-needed integrated regional market.
She emphasised that by reducing or removing barriers at the border and behind the borders, economies of scale could be tapped.
Carec has 11 members but the new strategy is aimed at strengthening coordination with other international and regional cooperation mechanisms including China’s Belt and Road Initiative.
Afghanistan, Azerbaijan, China, Mongolia, Kazakhstan, the Kyrgyz Republic, Tajikistan, Uzbekistan, Pakistan, Turkmenistan and Georgia are members of Carec.
“Carec is very much aligned with the China-Pakistan Economic Corridor and both regional initiatives are natural partners of each other,” said Safdar Parvez, Director Regional Cooperation and Operations Division, Central and West Asia Department of the ADB.
Carec’s new strategy recognises the importance of economic ties with non-member neighbouring countries and will coordinate activities with relevant entities, especially in commercial and academic spheres.
A main stumbling block to Pakistan’s endeavour to reach Central Asia is Afghanistan, according to analysts. Kabul wants access to India in return for clearing the route for Pakistan to Central Asian Republics.
Exporters concerned over high power costs in Punjab
The Pakistan Textile Exporters Association (PTEA) has expressed concern over the suspension of system gas under the quota regime and supply of high-priced RLNG to export-oriented textile industries in Punjab.
This would further add to the high cost of doing business and would hamper the export pace, PTEA Chairman Shaiq Jawed lamented.
He condemned the government’s indifferent attitude towards the Punjab-based textile industry as it is already facing a serious blow of non-viability due to high cost of doing business. Supply of high-priced RLNG would serve to cripple the industry, which is already at a comparative disadvantage in respect of production costs in the region, he said.
Quoting gas tariffs within the region, he said that gas price in Bangladesh is $3/mmbtu, $4.2/mmbtu in Vietnam, $4.5/mmbtu in India; whereas in Pakistan system gas is available at $7.6/mmbtu and now RLNG would cost $11/mmbtu.
“With such a huge difference in tariff, how will our products compete with rival countries? Further, RLNG would cost almost 40% higher than other provinces,” Jawed remarked.
The gas tariff is already burdened with various incidentals such as UFG at 10%, GIDC at Rs100/mmbtu and cost of supply among others; whereas exporters cannot pass on these system inefficiencies to the international buyers.
Export-oriented textile industry has an established right on the system gas, which the SNGPL is making expensive through unjustified steps, he said.
Energy affordability is already a major concern but the SNGPL is meeting its financial needs at the cost of the industry, he added. The PTEA chief demanded equal prices across the board to attain a competitive edge in the international market.
Also sharing his views, PTEA Vice Chairman Ammar Saeed said that the rising cost of doing business over the last several years has not only stalled fresh investment but also hampered export growth and turnover.
“We have already lost the advantages of GSP Plus due to a non-conducive situation,” he added.
China, Panama to start talks on free-trade deal next year
Panama and China will begin negotiations in June 2018 to sign a free-trade deal, the two countries’ trade ministers said on Thursday, consolidating a relationship that has strengthened after the Central American nation ditched ties with Taiwan.
Panama’s June decision to end diplomatic links with Taiwan was a major victory for Beijing, as it lures away the dwindling number of countries that have formal relations with the island China claims as its own.
Last month, a senior Chinese diplomat said China will provide Panama with whatever help it needs.
Talks to sign a free-trade treaty will begin in June next year, said Panama Trade Minister Augusto Arosemena, who was speaking in Panama City alongside his Chinese counterpart, Zhong Shan.
The Chinese official said it was important to accelerate talks to open up trade between the two countries and deepen commercial links.
“China is willing to stimulate its companies to actively participate in the construction of infrastructure in Panama, including ports, that would be based on mutual interest,” Zhong said.
China and Taiwan have tried to poach each other’s allies for years, often dangling generous aid packages in front of developing nations, though Taipei now struggles to compete with an increasingly powerful Beijing.
Panamanian President Juan Carlos Varela, who signed 19 deals during a visit to Beijing last month, told Chinese state television in September the decision to switch recognition to China had nothing to do with “chequebook diplomacy.”
In October, a group including China Harbour Engineering Company Ltd (CHEC) began building a $165 million port in Panama for cruise ships, the first project announced between China and Panama since they established diplomatic ties.
PAC orders close to overbilling ‘honest’ consumers
The National Assembly’s Public Accounts Committee (PAC) directed the Ministry of Power Division and National Electric Power Regulatory Authority (Nepra) on Thursday to address the issue of overbilling of honest consumers which is done to recover line losses worth a whopping Rs200 billion.
A meeting of the PAC chaired by Syed Khursheed Ahmed Shah noted that all power distribution companies (DISCOs) were overbilling consumers to compensate for their losses. The meeting was held to review audit objections of the year 2016-17.
Shah asked Secretary Water and Power and chairman Nepra to reduce technical losses and overcome four percent electricity theft.
Power Division Secretary Yousaf Naseem Khokar said that measures are being taken to address the overbilling issue. The officers responsible would be sentenced to three years’ imprisonment for sending unjustified bills to consumers, he assured the committee. PAC was told by the auditors that an amount of Rs28.183 billion in losses was incurred during 2016-17 owing to under-utilisation of power plants.
Moreover, all independent power producers (IPPs) and generation companies (gencos) were supplying electricity to the Central Power Purchase Agency (CPPA) on take or pay basis, the auditors added.
Under take or pay agreement CPPA is bound to purchase all the available electricity from the power plants for idle capacity as well. Auditors noted that despite demand of electricity in the system, IPPs’ and gencos’ power plants were not used to their full capacity.