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 5. TRADE  6. GULF



April 01 - 07, 2002


The US foreign direct investment (FDI) into Pakistan has shot up to $148.5 million in the first eight months of this fiscal year from $46.7 million in a year-ago period.

"This clearly shows that investors' perception has improved," said president of Pakistan American Business Council Zubyr I. Soomro over telephone. He said the country might get still larger foreign direct investment in future due to greater international support that it had been receiving since September 11. But he warns that Pakistan will have to become more investment-friendly to translate the contractual investment into actual inflow of funds.

Soomro says bureaucratic hassles will have to be eased further and trouble shooting facility will have to be offered to ensure that those who have contracted long-term investment really bring it into Pakistan. "The challenge is for us."

Official breakdown of the $148.5 million US investment is not available but top bankers and industrialists say oil and gas sector has attracted much of this investment.

The latest State Bank statistics show that Pakistan attracted total foreign direct investment of $254.5 million during July- February 2001-02, up from $199.1 million received in July-February 2001.

Whereas the foreign direct investment from the US rose sharply, FDI from the UK fell to $20.5 million in the first eight months of this fiscal year from about $73 million in a year-ago period.

Foreign direct investment from Saudi Arabia also declined to $2.1 million from $34.7 million. But FDI from the United Arab Emirates and Switzerland rose from $3.2 million and $2.3 million, respectively, in July-February 2001 to $14.9 million and $6 million in July-February 2002. Foreign direct investment from Germany and France rose from $4.3 million and $700,000, respectively, to $5.8 million and $1.2 million. FDI from Canada shot up to $2.9 million in July-February 2001- 02 from only $100,000 in July-February 2000-01. But FDI from Hong Kong and Japan slipped to $1.8 million and $3.5 million from $2.2 million and $7 million, respectively.


The State Bank has closed out $211 million rupee-dollar swap that it had contracted with some leading banks a year earlier. In other words the SBP has returned to the banks $211 million that it had bought from them in March 2001 at different forward exchange rates with the average falling somewhere between Rs63- Rs64 per dollar.

The SBP had purchased these dollars with the understanding that it would resell the same to the banks in March 2002 at the exchange rate prevailing at that time.

Sources close to SBP say since the current exchange rate is a little more than Rs60 per dollar the SBP has earned well over Rs600 million profit by closing out the $211 million swap. They say the central bank will also close out by end of June this year another $100 million plus rupee-dollar swap that was contracted up to June 2001.


Prices of onion and tomato have gone up by 40 per cent and 50 per cent in the last few days as compared to prices prevailing in the first two weeks of the current month.

Onion prices surged to Rs13 per kg from Rs10 per kg, while in some areas retailers are charging Rs14 per kg. However, in some Punjab areas like Lahore, onion is selling at Rs1,600 to Rs1,800 per 100 kg.

Similarly the price of tomato has surged up to Rs24 per kg in various parts of the city. The wholesale price of tomato in Subzi Mandi ranges between Rs15 to Rs16 per kg.


The International Monetary Fund has announced completion of the first review of Pakistan's performance under a three-year Poverty Reduction and Growth Facility (PRGF) arrangement and cleared the way for the release of a further SDR 86.1 million (about $107 million).

This brings total disbursements to Pakistan under the IMF-supported programme to SDR 172.3 million (about $215 million).

The review was completed only after the IMF board approved two waivers for the non-observance of performance criteria on tax revenue and credit to public enterprises, and modification of the tax revenue performance criterion for end-March 2002 and of one structural performance criterion on tax issues.

The IMF warned that reduction in tax exemptions, subsidies and unproductive expenditure as well as improved tax collection would be required for the future.


The State Bank mopped up Rs8 billion from a fairly liquid money market on Wednesday through sale of long- term bonds sticking strictly to the pre-auction target.

The central bank had set Rs8 billion target for the sale of three-year and five-year Pakistan Investment bonds.

Bankers said the auction of PIBs had attracted Rs17 billion bids of which the SBP accepted Rs8bn and scrapped the rest. Bankers said the SBP drained out Rs2.66 billion and Rs5.35 billion respectively through sale of three-year and five-year bonds.


Adamjee Insurance Company Limited reported on Friday, net loss in the staggering sum of Rs500 million for the year ended December 31, 2001. Since the insurance giant had already posted Rs212 million in losses for the first half of the year, everyone was expecting the full year also to end in deficit.


The government of Denmark is to ratify the protocol to the existing agreement for the avoidance of double taxation with Pakistan.

The Danish foreign minister is expected to visit Islamabad in the next month to formally sign the protocol with his Pakistani counterpart on the part of their respective governments, Vakil Ahmed Khan, CBR official spokesman and Member Direct Taxes told on Friday.