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IN THE NEWS
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. PAKISTAN
 

 

 

 

 
  PAKISTAN

 Oct 10 - 16, 2005

CEMENT SALES SURGE 9.3PC IN FIRST QUARTER

Cement sales grew by 9.3 per cent to 4.474 million tons during the first quarter of the current fiscal year as compared to 4.093 million tons in the corresponding period last year.

Exports of cement during the period under review registered a decline of 3.39 per cent over the corresponding period last year whereas domestic demand grew by 10.85 per cent, according to the All Pakistan Cement Manufacturers Association (APCMA).

"Increased consumption in the domestic market augurs well for the future and reinforces the fact that the GDP growth is heavily reliant on continuing quick pace of construction activity," it said.

During the period under review, the overall capacity utilization increased to 92.15 per cent from an expanded capacity base made available by optimization of production capability undertaken by several plants.

The first of the new kilns has also come into operation in the last month and additional capacity will come on stream during the remaining part of the financial year, it said.

During this period, upon recommendations of the APCMA, the government has permitted duty-free import of cement to meet any temporary shortages that might occur before the expansion in capacity becomes operational by mid 2006.

"However, owing to high demand in the petroleum-rich countries and for reconstruction work in the tsunami-hit areas, cement supply position remains tight all over the world. Extremely high energy and transportation costs have led to a price hike in this commodity in the international markets and it will be a real challenge to maintain the cement prices at the current levels in view of sharp increases in the cost of production and transportation," the APCMA said.

The APCMA views with some concern that despite making all efforts to increase supplies in the domestic market including despatches on holidays, prices in the open market continue to rise.

ADB LOWERS ISLAMABAD'S GROWTH FORECASTS

The Asian Development Bank (ADB) has reduced Pakistan's economic growth forecast to 6.5 per cent owing to higher deficits on fiscal, trade and current account fronts and lower than targeted cotton output during the current fiscal year (2005-06).

In its quarterly Pakistan Economic Outlook, the bank projected trade deficit widening to about $5.8 billion and a negative impact of high oil prices, necessitating revisions in the major economic targets for the year 2005-06.

After growing at a very high rates in the last two years, the manufacturing sector is projected to settle down to a more sustainable, but still robust, growth of about 11 per cent in fiscal 2006.

Substantial production capacity built in the last two years will come on line during the year and exemption of major export industries from GST will also boost production.

Agricultural growth is also likely to decline in 2006, mainly because of the high base effect, it adds.

The growth of the agriculture sector is projected at about three per cent in fiscal year 2006. The government had projected a 4.8 per cent growth in agriculture sector during the current year. In the services sector, the rapid growth of telecom services, banking and trade is likely to sustain in 2006.

The ADB said the tightening of monetary policy since last quarter of 2005 and opening up of imports of essential items will dampen inflationary pressures in 2006. However, expansionary fiscal policy, continued high oil prices and the large monetary overhang may make it difficult to reduce inflation significantly. Hence inflation has projected to decline only marginally to 8.5 per cent in 2006, compared with a government target of eight per cent.

With high GDP growth, projected double-digit increase in imports and ongoing improvements in tax administration, tax revenues are projected to grow by 17 per cent in 2006.

COTTON CROP MAY FALL SHORT OF TARGET

Basing their assessment on a shortfall of 46 per cent in first arrivals this year in comparison with the previous year, cotton sector experts and most of farmers feel that the current crop is unlikely to be above 11 to 12 million bales.

This would be three to four million bales below the target of 15m bales set by the government for the crop. The government had fixed the produce figure because of last year's bumper yield of 14.6m bales.

The experts are of the view that firstly the very target was unrealistic reflected hopes of the government rather than consistent potential of the sector and, secondly various negative factors comprising weather conditions, floods in Sindh, wind storms, excessive heat in August causing widespread flower shedding and current low temperature that is conductive for breeding of certain pests have combined to restrict the yield from the crop.

KNITWEAR EXPORTS TO US REMAIN SLUGGISH

Growth in knitwear exports to the US after the removal of quotas from January 2005 remained sluggish as compared to China, India and Bangladesh which registered a manifold increase during the same period.

According to a study carried out by a textile body, the growth in Pakistan's knitwear exports to the US was the slowest as compared to these countries which are main competitors in textile exports.

A fast running category 338 (men's upper) during the period under review recorded a growth of 21.74 per cent, whereas exports from China of this category scrambled by 1,241.03 per cent. Similarly, exports of this category from India registered a rise of 117.43 per cent and Bangladesh 232.19 per cent.

It is astonishing to note that per dozen price of this category quoted and received by Indian exporters stood higher than what Pakistani exporters received but still the growth in exports remained much lower than India. The average per dozen price quoted by Indian exporters stood at $40 and by Pakistani exporters at $38. The price received by Bangladeshi exporters stood at $26 per dozen, which is the lowest, and by Chinese exporters at $30.

INDIA FOR PROMOTING TRADE WITH PAKISTAN

Indian Foreign Minister Kunwar Natwar Singh has said that trade normalization at a time when both India and Pakistan are in the midst of growth spurt has opened up immense opportunities for the private sector on the either side. He called upon the private sector to pounce on this opportunity for a better and prosperous future of the two nations.

RUSSIAN FIRM INTERESTED IN PAKISTAN STEEL

MMK Steel, Russia's largest steel producers, is interested in purchasing Pakistan Steel with the aim to upgrade and modernize the existing plant's position, capacity and environment, company's deputy-director general Rafaat S. Pakhaupinov has said.

The MMK group also wanted to invest in Pakistan's steel sector, he expressed this in a meeting between Industries and Production Minister Jehangir Khan Tareen and a ten-member Russian delegation representing MMK Steel.

The minister informed the delegation that there existed tremendous opportunities for investing in Pakistan's steel sector because of rapid demand for steel products.

EXPORTERS TO CHALLENGE EU DECISION ON BEDLINEN

Eight bedlinen exporters have decided to challenge the dumping margin of European Union's technical team by October 13 before European Commission investigators.

The decision was taken in a meeting headed by Commerce Secretary Syed Asif Shah. The meeting was attended by the eight bedlinen exporters and representatives of textile associations.

According to a newspaer report, all the eight exporters received notices from the EC, which indicated the dumping margin of the investigated companies.

The exporters would individually challenge calculations methods, mistakes, concepts and statistics in their respective cases before the commission.

WB SETS TERMS FOR FUNDING PROJECTS

The World Bank has linked private sector investment in the development of Pakistan's hydropower sector to an immediate settlement of institutional, regulatory and commercial issues such as riparian rights and hydrological risks.

The bank made the observation in an aide memoire finalized in consultation with the Pakistan government as part of a power sector investment programme which is currently in the process of finalization. A World Bank team had been in Islamabad to push things forward.

According to the document, about 80 per cent of the country's economically viable hydropower potential has not yet been developed. The World Bank has cited the paucity of relevant information, prioritization problems and multi-user nature of water reservoirs and required pricing as impediments in the way of public and private investment in this sector.

PAKISTAN, CHINA EYEING $8BN TRADE BY 2008

Pakistan and China enjoy bright prospects to take their bilateral trade volume to around $8 billion by the end of 2008, when tariff on most items would be reduced to zero under the Early Harvest Programme (EHP).

By 2008 we are confident to achieve this target, since the two countries registered a rapid growth in their trade interactions in the recent years, a senior Pakistani official was quoted as saying.

According to Chinese Custom data, bilateral volume of trade is expected to touch $4 billion by the end of this year, since the growth rate, registered in seven months from January to August, 2005 was around 42 per cent, as compared to the corresponding period.

The increase in the trade was amounted to about $600 million during this period. "We are quite optimistic, expecting a big jump in trade volume taking it to $8 billion within next three years, since Pakistan starts exporting rice, mango, orange and some other food products to China from this year," the official said.

GOVT TO MAINTAIN STRICT FINANCIAL DISCIPLINE

The government has decided to strictly maintain financial discipline and macroeconomic stability for achieving what is termed "hard and demanding" GDP growth rate of 8.2 per cent by 2009-10.

According to a newspaper report, the government had asked its economic managers to ensure the sustained annual average growth of 7.6 per cent without compromising "macroeconomic stability" during the next five years period.

PAKISTAN, ROMANIA SIGN PROTOCOL

Pakistan and Romania have signed a protocol of Joint Government Commission of Economic, Technical, and Scientific Cooperation to further strengthen relations and boost bilateral trade.

The protocol was signed at the conclusion of the two-day 18th Pak-Romania Joint Government Commission last week.

AWARD FOR NBP

Global Finance, New York, one of the leading financial journals, has placed National Bank of Pakistan as "The Best Foreign Exchange Bank in Pakistan - 2005."

This is second consecutive year the NBP has won this prestigious award. The bank has also been recognized as the Best Domestic Bank in Pakistan - 2005.

INVESTORS SEEK THIRD COUNTRY ARBITRATION

International investors have asked Pakistan to provide third country arbitration and sovereign guarantees for $1.6 billion buyer's credit required for the construction of 969-mw Neelum-Jhelum hydropower projects in Azad Kashmir, said a newspaper report.

The new conditions had raised many questions in the federal government whether a second attempt to award contract for the development of one of the most strategically crucial projects would be successful to protect Pakistan's priority rights over river Jhelum, a senior government official was quoted as saying.

Technical and financial proposals for the development of the project to be received by October 22 through an international competitive bidding would be opened later this month under the original schedule.

Water and power ministry officials said most of the companies showing interest in the project belonged to China and a few from Europe. So far about 10 companies have indicated to participate in the bidding. Majority of these companies, the officials said, had appealed to the government to replace the condition of providing supplier's credit of about $1 billion with buyer's credit.

'EXPORTS TO RUSSIA CAN BE RAISED'

Pakistan can increase its exports to Russia up to $500 million from the current level of $20.3 million per annum if an appropriate strategy is evolved and due facilities are provided to exporters.

This was stated by the director, Pakistan-Russia Business Council of the FPCCI, Mohammad Farooq Afzal, on his return from a textile exhibition recently held in Moscow.

WOMEN ENTREPRENEURS EXHIBITION

The second South Asian Women Entrepreneurs exhibition will be held next week in Dhaka to promote products prepared by the womenfolk of the region.

The exhibition is organized by the Women Entrepreneurs Association of Bangladesh (WEAB) in collaboration with the Pakistan High Commission scheduled for October 10-15.

 
 

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