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
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.
SOLAR ENERGY PROJECT
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.