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Last updated: Friday 23 Dec, 2005-12.30 P.M (PST)



In oC




Today 12 26 38 Sunny
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Tomorrow 0 18 59 Sunny
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updated: Fri - Sun 23-25 Dec, 2005




KARACHI         - 021 LAHORE          - 042 ISLAMABAD    - 051 FAISALABAD   - 041 MULTAN          - 061 PESHAWAR    - 0521 CANADA          - 1 KUWAIT           - 965 INDIA               - 91 IRAN                - 98 U.K                   - 44 U.A.E                - 971 U.S.A                - 1








Dec 05 - 11, 2005


Pakistan's textile exports to European Union (EU) dropped by 16.3 per cent in the first eight months of the current calendar year mainly due to the capture of EU textile market by Chinese products. The European Union's latest figures reveal that not only Pakistan but the textile export of a number of other developing countries also suffered a major setback as a result of about 40 per cent increase in Chinese export to EU market.

Textile export from other Asian countries included South Korea, Thailand and Bangladesh also saw significant reduction, by 28.6 per cent, 15.1 per cent and 9.3 per cent respectively.

The unprecedented boom in the Chinese export to EU is simply at the expense of Asian and African clothing exporters. This upward swing is likely to continue keeping in view the availability of cheap labour in China and the price compatibility of its products.

Textile exporting countries have been struggling to keep up with China's large and modern clothing production facilities in a liberalized trading environment.

Burma and the Philippines were the worst losers with their export down respectively by 54.4 per cent and 41.4 per cent in value terms.

EU's imports from the group of African, Caribbean and Pacific (ACP) nations essentially poor former European colonies, which were given preferential trade treatment by the EU, dropped by 24 per cent in value and 28.1 per cent in volume.

The figures have also proven wrong the apprehension of some European textiles companies which forecast the EU market would be flooded by cheap clothing from China and other countries after the abolition of quotas on 35 key products.

Instead, the EU's overall textile imports rose by only 2.1 per cent in value and 2 per cent in volume.

The figures show China's boom in clothing exports, with EU imports from the country increasing 43.9 per cent by value and 39.9 per cent by volume in the first eight months.


The government has handed over the Karachi Electric Supply Corporation to a consortium after receiving Rs15.9 billion of the Rs20.24 billion highest matched bid.

The remaining Rs4.34 billion will be invested by the new buyer for improving the utility that has been running into 'technical' losses for years.

This finally completed the transfer of 73 per cent shares along with management control of the KESC to private sector - a process that has faced a lot of problems since the government decided to privatize the utility in mid-1990s.

The most immediate challenge for the new buyer will be to reduce KESC's losses and control frequent power breakdowns in Karachi.

The consortium comprises the Hasan Associates, Al-Jomaih Holding Company of Saudi Arabia and Premier Mercantile Services.

Privatisation Commission Secretary Tehsin Khan Iqbal signed the transfer documents and handed them over to the attorney of the consortium.

Speaking on the occasion, Privatisation and Investment Minister Dr Abdul Hafeez Shaikh said the KESC's transfer would provide better service to the industry, reduce cost of doing business and improve its efficiency.

He said the buyer would invest $500 million in KESC in three years and $75 million of them during the current fiscal year.

The minister said the KESC sale would be followed by that of the Pakistan Telecommunication Company, Pakistan State Oil, Pakistan Petroleum Limited, National Investment Trust and Pakistan Steel Mills Company.

He said PSMC privatisation would be completed by mid January 2005. He said negotiations with Etisalat were continuing to take the PTCL sale to its logical conclusion.


Pakistani rice prices eased marginally over the past week, but exports remained soft due to offers of cheaper products from other countries on the international market, dealers were quoted as saying.

"There are very few new orders, and exporters are only shipping previously committed orders," said a Karachi-based dealer.

Pakistani exporters were mostly shipping rice to traditional African markets, but dealers said buyers were increasingly looking to cheaper Indian and Vietnamese rice.

"They are saving at least $4 to $5 per ton, which we cannot match because of high domestic prices," the dealer said.

International buyers were buying from Vietnam and India, which were offering export prices of $216 and $218 a ton, respectively, he said. The same quality Irri-6 variety from Pakistan was quoted at $220-$221, he said.


The flow of bank credit towards the textile sector has slowed down which is the real reason for overall decline in the private sector credit off-take. "The textile sector is not borrowing aggressively though the cotton arrival is at the peak," a banker was quoted as saying.

The slowdown of the textile sector has already started producing negative impact as the industrial production fell sharply in the beginning of the new fiscal 2005-06.

The first quarter credit off-take by the private sector fell by over 40 per cent reflecting a slow growth. Bankers said that the textile sector, which has enough raw cotton in its storage, was playing with the cotton prices and making effort to bring them down.

Bankers said that the textile sector should have borrowed additional Rs15 to Rs20 billion till the end of November. Bankers who deal with the textile sector were not aware about the exact borrowing by the sector, but said that the first quarter report showed very low flows of liquidity towards the sector.


A controversy has arisen between the ministries of Agriculture and Textile over 2.5 million bales of cotton that the latter wanted to import to meet the growing demand of the "expanding" industry, Food, Agriculture and Livestock Minister Sikandar Hayat Bosan rejected a recent statement by Textile Minister Mushtaq Ali Cheema that the government would import 2.5 million bales of cotton, saying it had brought down cotton prices and was harming farmers' interest.

"This statement, which has brought down prices by Rs20 to Rs25 per 40kg of phutti in some areas, has not only harmed the interests of our farmers, but is also against the very spirit of our existing cotton policy. So, I must clarify it," Mr Bosan said while speaking at a news conference at his ministry.


The tax authorities paid Rs21.327 billion as refund/rebate to exporters during the July-November period of the current fiscal as against Rs30.242 billion the same period last year, indicating a decrease of 29.4 per cent. Official figures released here on Wednesday showed that the decrease in the payment of refund was recorded following the exemption of sales tax on five major export-oriented sectors in the budget.

Tax wise break up showed that the CBR paid Rs13.152 billion as sales tax refunds to exporters during the period as against Rs23.826 billion paid the same period last year, showing a decline of 44.8 per cent.


The State Bank of Pakistan (SBP) has allowed the low income group to open bank accounts with no minimum limit of deposits and without service charges.

SBP Governor Dr Ishrat Hussain in a meeting with media people announced that the SBP has asked all banks operating in Pakistan to introduce, with immediate effect, the Basic Banking Account (BBA) system.

Dr Hussain said that the BBA would facilitate low income people in the country, because the account could be opened with any bank by depositing only Rs1,000.

Earlier, there was no provision for the low income group to get any facility from banks while most of the banks had set Rs10,000 as a minimum deposit. A deposit of less than Rs10,000 allowed banks to deduct service charges up to Rs50 per month.


All flour millers and owners of small Chakis operating under the food grain licence in Sindh are now free to lift as much wheat from the government stock as they wish on officially fixed issue price of Rs1,112.50 for a 100-kg bag.

The Sindh government holds a stock of about half-a-million tons of wheat in its storages. This wheat was procured from farmers in April and May this year against a bank borrowing of about Rs5 billion. The interest on this loan is 9.5-10 per cent.


Sales of fertilizer during the first month of the Rabi season (October 2005) depicted a phenomenal growth of 70 per cent, compared to the same month last year, which the National Fertilizer Development Centre (NFDC) has attributed to "speculative buying made by investors who indulge in profiting".

The recent speculative upsurge in demand to speculative buying by dealers was believed to be due to the slow pace of wheat sowing on account of delay in clearance of cotton, paddy and sugarcane fields and reported water shortages.

According to the latest NDFC report, total urea off-take for the 10 months (Jan-Oct 2005) stood at 4.1 million tons. That represented increase of 17 per cent year-on-year from 3.5 million tons. Urea off-take during October 2005 stood at 378,000 tons (including 43,000 tons of imported urea) as compared to 223,000 tons during the same period of last year.

Local production of DAP increased by 12 per cent during October and 13 per cent during Jan-Oct period. DAP sales during October was about the same at 255,000 tons compared to 258,000 tons in the same month last year.


A swing in Pakistan's current account to a deficit did not pose a threat to the economy as it would be offset by increased foreign direct investment and use of state reserves, the central bank governor said.

In July to September, the first quarter of the fiscal year, the country's current account flipped to a deficit of $1.427 billion from a year-earlier surplus of $119 million as the cost of oil imports soared.

"As long as the current account deficit is financed by non-debt creating flows, such as the foreign direct investment, we have nothing to worry about," State Bank Governor Dr Ishrat Husain told in an interview.

Pakistan is expecting foreign direct investment of about $3 billion in 2005-06.

The central bank has forecast a growth of 6.3-6.8 per cent in the current fiscal year to June 30, 2006. Foreign exchange reserves stood at $11.525 billion in the week ending Nov 19, down from a record high of $13 billion in the week ending April 30.


Gold rates in the local market continued showing an upward rally on the back of rising international prices, touching a new peak of Rs9,750 on Monday last from Rs9,700 per 10 grams on Saturday. The price of a 10-tola gold bar was being quoted between Rs114,000 and Rs115,000 as compared to Rs112,620 on November 22. Gold prices rose to Rs9,635 per 10 grams on Tuesday (November 22) from Rs9,515 on November 21. It was Rs9,085 per 10 grams on November 11, 2005. In the last 17 days, gold became dearer by Rs665 per 10 grams.


Pakistan has imported 3,121 tons of garlic, potatoes and tomatoes from India since May 2005 through the land route of Waghah border. Official figures showed that only 250 animals were so far imported through the same route.

The government in May last allowed import of garlic, potatoes, onions, tomatoes and livestock from India through Waghah border to arrest the constant rise in prices of the commodities in the local market.


The House Building Finance Corporation (HBFC) has introduced "mortgage loan transfer facility" for its customers who have obtained loans for construction or purchase of houses or flats from local or foreign banks. HBFC Chairman and CEO Zaigham Mahmood Rizvi was quoted by a newspaper as saying that the facility had been approved by the corporation's board of directors in its recent meeting held at Karachi.

"This being a normal practice in mortgage finance industry," Zaigham said, added that hitherto it was not normal for the HBFC to entertain such sort of business.

He said that under the facility, the corporation would repay the loan liability on behalf of its customers (mortgage finance only) and book loans and assets in its own books.


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