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POLICY

Dec 10 - 16, 2001

Insurance cos mergers, closures on cards

Pakistan's insurance sector is expected to soon undergo large-scale restructuring through mergers, acquisitions and closures in view of emerging market conditions and increased capital and solvency requirements.

Under the Insurance Ordinance 2000 promulgated last year and now being implemented by the Securities and Exchange Commission of Pakistan (SECP) required a strong, financially viable and professionally run insurance sector in the country, SECP sources told.

Professionals in the public and private sector insurance companies believed that weak companies were already under the threat of being wiped out under the Insurance Ordinance but the recent developments in the post-September 11 situation had accelerated this process.

The SECP sources said that the task force on insurance sector, constituted by the SECP, in its recent report also called for long term solutions through enhanced retention and reinsurance capacities of the domestic insurance sector.

The report said: "With the increased capital and solvency requirements laid down for the companies, bigger and stronger companies will remain in the market. Mergers and acquisitions will take place and the companies which will not be able to fulfil the requirements, will cease to operate."

Recently, the Securities and Exchange Commission of Pakistan (SECP) had directed local non-life insurance companies to raise their paid up capital to a minimum of Rs50 million by December 31, 2002 and to Rs80 million by 2004. Mandatory credit rating of the local insurance companies was another step towards that end, SECP officials said.

Of the total around 52 insurance companies, about 35 insurance companies were currently maintaining paid up capital of below Rs50 million. About 10 per cent companies in the local insurance industry are underwriting over 80 per cent of total business in Pakistan.

Cabinet approves National Housing Policy 2001

The federal cabinet on Wednesday approved the National Housing Policy 2001, outlining the government's role as of a facilitator and regulator to stimulate economic activity and employment generation.

The meeting, presided over by President Gen Pervez Musharraf, also decided to help harness individual and private potential for generation of resources.

The policy outlines inputs required for revitalizing the housing sector including financial and legal measures, indigenous production and use of building materials and construction techniques. It also specifies policy guidelines for low-cost housing, slums and katcha Abadis, rural housing and institutional and legal framework with clearly defined roles of the federal, provincial and local governments in the housing sector.

PTCL seeks increase in tariff structure

The Pakistan Telecommunication Company (PTCL) has filed a petition with the Pakistan Telecommunication Authority (PTA) for an increase in line rent and local call charges.

A well-placed source in the PTA told from Islamabad that a public hearing would be held at the telecom regulator's headquarters on Dec 10 to discuss the company's request for an upward revision in the tariff structure.

He added that the PTCL had asked for an increase of six to ten per cent in local call charges and eight to 12 per cent in line rent.

At present, the local call charges are Rs2.01 for five minutes and the line rent is Rs245 per month.

In July 2000, the PTCL had increased the local call charges by around eight per cent, from Rs1.86 for five minutes to Rs2.01 for five minutes. It had also raised the line rent from Rs204 to Rs245 an increase of 20 per cent.

EC's 50m euros for DPs camps

The European Commission has decided to pool in 50 million euros to help Pakistan bear the burden of Afghan refugees and help set up refugee camps.

Speaking at a news conference on Thursday, European Union Commissioner for Development and Humanitarian Aid Paul Nielson said that under a new five-year perspective of cooperation plan, relations with Pakistan would be beefed up, specially in the education sector.

Banks to set up branches in China

Pakistani banks would soon be allowed to set up their branches in China to do normal banking business.

When it is formally joining the WTO, China will cancel regional and client limitations to foreign-funded banks in handling foreign exchange business, then foreign banks can open foreign currency business to Chinese-funded enterprises and Chinese citizens.

Islamabad, Tehran to increase mly cooperation

Pakistan and Iran have decided to enhance military cooperation for manufacturing of small arms, ammunitions, artillery tank ammunition, propellant and various kinds of explosives.

"Both countries have resolved their differences over Afghanistan and are now ready for increased military collaboration in various fields," said Chairman Pakistan Ordnance Factories (POF) Wah, Lt-Gen Abdul Qayyum.

Mills asked to purchase Balochistan cotton

Commerce Minister Abdul Razak Dawood has urged the textile mills to start buying Balochistan lint cotton which is of very good quality.

He said that he himself visited Balochistan cotton growing areas of Usta Muhammad and Dera Allah Yar in last week of November along with Minister for Food and Agriculture, Khair Mohammad Junejo and other cotton crop experts, says a press release issued on Wednesday.

During the visit, it was observed that Balochistan was producing superior quality cotton of grade I, II and III which will help textile mills to produce higher quality and value added goods.