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COVER STORY (June 28 - July 04, 1999)


For the year 1998 foreign banks operating in Pakistan have posted very poor results and current year is expected to be more difficult. It was due to sluggishness on the part of management but shift in government policy. Declining lending rates, shrinking spread and difficulties in resource mobilization are expected to reduce their profit margins further. However, foreign banks which were prompt in redefining their strategy for operation in Pakistan will succeed in maintaining their share in deposits and containing reduction in their profit margins.


The first salary increase for the government servants since 1994 dashed the hopes when finance minister told a post-budget press meeting that it will be based on the ‘initial basic salary’ and not on ’running basic salary.’ In addition, the new rates will result in to increase in the income tax on the salaried class to take away a chunk of a salary increased, which is seen as to little to lessen the financial hardship of the salaried class.


The government of Pakistan has signed a $ 50 million memorandum of understanding with a US company for a solar energy project in the arid province of Balochistan. The World Water Corporation, a New Jersey based company, will initiate the geographical and scientific study in September.


Despite fast approaching deadline for privatization of Pakistan Petroleum Ltd (PPL) and KESC, scheduled in August and September respectively, the change of management in the two organizations is not visible for yet another year. The army management is introducing administrative and financial reforms to give a better look to the KESC before its privatization to get a better price.


Union Texas, Unacol and Edison, the group of three oil and gas companies are conducting seismic survey to explore Karachi for oil and gas. The Karachi Concession was awarded to the group in 1997. Since large deposits of gas have already been explored in the outskirts of Karachi near Kirthar National Park, prospects of discovery in the urban area of Karachi are also bright.

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