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 5. TRADE  6. GULF



Nov 26 - Dec 02, 2001

Pakistan may get $1.5bn package from China

Pakistan will get around $1.5 billion package of bank deposits and investments from China when President Gen Pervez Musharraf visits Beijing next month, diplomatic sources told.

The president is scheduled to pay a four-day visit to the friendly country from Dec 20-24 to reciprocate Chinese premier Zhu Rongji's visit here early this year, official sources said.

The package includes around $500 million of bank deposits, $50-100 million of credit, Rs2 billion ($33 million) investment in a holding company, besides agreements on at least four power projects and mega Thar coal project, the sources said.

The two sides would also sign an agreement on rollover of three Chinese deposits worth $500 million it had kept with the National Bank of Pakistan as balance of payment support for Pakistan. The deposit would be rolled over for a further period of three years beyond February 2002.

An agreement for the establishment of Pakistan-China Joint Holding Company (PCJHC), with a minimum paid-up capital of Rs2 billion would also be signed. Both the countries would contribute Rs1 billion equivalent amount each. The holding company is expected to comprise six members, besides a managing director and a chairman.

The Chinese Export-Import (Exim) Bank would provide a credit line of $50-100 million to a Pakistani bank for the purchase of textile machinery and equipment from China by the Pakistani importers. Commerce Minister Abdul Razak Dawood is currently in Beijing to finalize details of this agreement.

Pakistan would also be signing an agreement with Shenhua group of China for the development of Thar Coal Mine and setting up of a coal-fired power plant in Sindh. The contract is being offered to Shenhua group through negotiations instead of an international competitive bidding as originally planned.

Govt, insurance cos to pool Rs750m

The government is expected to create a "reinsurance pool" with an initial capital of Rs750 million to provide cover to Pakistani companies for terrorism-related risk from January 1, 2002.

This is being contemplated on the report of a task force on insurance constituted by the Securities and Exchange Commission of Pakistan (SECP) last month. The international insurers have refused to provide risk cover to terrorism, civil commotion and riots after January 1, 2001.

The SECP chairman Khalid Mirza told a news conference on Thursday that the government would initially contribute to the Reinsurance Pool an amount of Rs500 million. The Asian Development Bank (ADB) is expected to provide $50 to 100 million which would be increased.

Another Rs250 million would be contributed to the pool by the insurance companies out of the premium they earn on account of the insurance cover provided for terrorism, riot strike damage (RSD), etc.

No cut in social sector funding

President Gen Pervez Musharraf has directed the officials of the ministry of finance and the Planning Commission to ensure that no cut is applied on social sector funding due to new financial difficulties being experienced in the wake of the Sept 11 terror attack on America.

Official sources told that during cabinet meeting held on Wednesday, the president said that the government could not afford to neglect social sectors and that funds set aside for health, education, rural development, women emancipation etc., should not at all be reduced.

He said that social sector funding should be fully protected during the current financial year. He said that he knew that a tough time was being experienced due to the Sept 11 events. He said funding for mega development projects should also be ensured so that they could be completed on time.

The president will chair an important meeting on Saturday to discuss issues relating to social sector funding, the sources said.

Banks to finance wheat buying

Banks will provide credit to flour millers for procurement of wheat at 12 per cent mark-up under commodity operations.

This decision was taken at a meeting held on Tuesday under the chairmanship of the State Bank Governor Dr. Ishrat Husain.

According to an SBP press release the meeting was attended federal food secretary Hafeez Akhtar; SBP deputy governor Tawfiq A Husain; top executives of five major banks namely National Bank, Habib Bank, United Bank, Muslim Commercial Bank and Allied Bank and office-bearers of Pakistan Flour Mills Association.

China to extend financial support

China on Tuesday agreed to extend financial and technical support to Pakistan for development of garment and leather industry.

An agreement to this effect was arrived at a meeting held here between the visiting Commerce Minister Razak Dawood and his Chinese counterpart Shi Guang Sheng.

Razak Dawood told APP that the two sides decided to enhance economic activity in the coming years, which could match the level of political and diplomatic ties. He said the two countries would give a major boost to their economic relations during the forthcoming visit of President Pervez Musharraf to China.

The minister, who is accompanied by a group of Pakistani investors, spent busy day on Tuesday, and met with several Chinese officials and businessmen.

MoU signed for defence ties with Romania

Pakistan and Romania have decided to expand military cooperation by importing arms and ammunition from each other.

Official sources said on Monday that a Memorandum of Understanding had been signed between the two countries to this effect. Pakistan Ordnance Factories chairman Lt-Gen Abdul Qayyum signed the MoU at Bucharest with the head of Romarm, the defence establishment of that country.

Romania will buy 125mm and 100mm tank ammunition which had been made by Pakistan for Al-Khalid tank. In return, Pakistan will import various kinds of arms and ammunition from Romania to meet its requirements.