HIGH PROFITS ATTRACTING INVESTMENT FROM ALL CORNERS
UPCOMING JAPENESE INVESTMENT CAN MAKE ALL THE DIFFERENCE
June 8 - 14, 2009
The law & order situation is a major impediment hampering flow of investment, yet the attraction of high profits is attracting investment from all corners of the world.
These observations were made by Saleem Mandviwala, Minister of State and Chairman Board of Investment during a talk with PAGE on the sidelines of a briefing regarding investment opportunity and projects in the pipeline in the country.
It is interesting to note that despite persisting disturbed law and order situation and Taliban led violence in the tribal belt and the NWFP province, Pakistan attracted a total of $3.5 billion foreign direct investment during outgoing financial year 2008-09.
Besides long term investment in the hydro projects like Bhasha Dam to the tune of $12 billion, up-gradation of Tarbela and Mangladam, the two upcoming projects including Japanese Special Economic Zone and Chinese Special Economic zones are the exciting projects which are expected to be managed by Japan and China. The Japanese zone is likely to be administered by Mitsubishi while the Chinese by Haier Corporation.
Mandviwala, who recently visited Japan along with a Pakistan delegation and held meetings with the mega corporations like Mitsubishi, Toyota Corporation and Tokyo Chamber of Commerce, said that Mitsubishi has agreed to develop the economic zone some 15 km away from Port Qasim in Karachi. This was the fifth round of talks for investment in Pakistan, he disclosed. In this respect, a 2000 acre of land has already been earmarked jointly by the governments of Sindh and the Federal Government which will have its own power generation facility. Besides textile units, this zone will also house downstream industries of the automobile sector.
Japan is emerging as a major trade partner of Pakistan and has recently committed $1 billion to Pakistan which is partly for assistance and party for investment in Pakistan.
When his attention was drawn towards high rate of taxation, interest rate as well as high input cost due to levies on power and POL products, he replied that the forthcoming budget has been authored to address these basic issues and may be providing relief in taxation. Actually the idea is to ease the tax burden through broadening of the tax base.
Meanwhile, Akinori Wada, Consul General of Japan in Karachi has said that we even today consider Pakistan as the potential country with market of 170 million people and have increased our investment in Pakistan by 130 million US$. A few days back a very important meeting was held in Tokyo, it was Pakistani and Japanese businessmen dialogue meeting and very important reports were submitted to both governments. These reports have suggested very good proposals for expanding mutual trade and investment.
The Japanese while talking to the industrialists at SITE Association of Industry conceded that the Japanese Government in the past did not take much interest regarding investment in Pakistan probably because of frequent change of governments in last two decades and due to apprehension of inconsistency of policies.
It may be noted that leading Japanese Corporate like Mitsubishi Heavy Industry, Toyota Tsusho Corporations, and other Japanese investors were keen to invest in the power sector of Pakistan. However rapid change of governments weakened the confidence of the investors.
The Japanese Consul general said that the cordial ties between Japan and Pakistan have been developing continuously since diplomatic relations established in April 1952. During the last five decades Japan continued to be one of the major trade partners of Pakistan.
Major sectors of investment of Japanese joint venture projects are automobiles that include motorcycle and allied sectors. Other sectors include leasing, investment bank, and power projects. Various Japanese groups including Mitsubishi Heavy Industry, Toyota Tsusho Corporation etc. have shown interest to set up power plants in Pakistan under the new energy policy. On pinpointing the imbalance of trade between Pakistan and Japan Consul General said that the figures depicted in the record is incorrect and Pakistan has made export of more than 139.43 million US$ in 2007-08. We should not be disheartened by low value performance by Pakistan but as new venues and sectors are opening Pakistani businessmen can avail these opportunities to expand their business with Japan.
Speaking on the occasion Engr. M. A. Jabbar, Chairman SITE Association of Industry said that Japanese Government representative may note that to understand the political economy, the politics of a country can not be isolated as it drives and guides the economic policy and fixes the directions for growth of industry in the country.
Karachi is being de-rated for investments due to momentum of disturbances created during the last one year on account of frequent strike calls by political parties disturbing the working of industry which is also depriving the country of its GDP share. The revenue of the city including from the biggest industrial estate is also falling. He told the Consul General of Japan that SITE area alone was providing employment to more than half million people up to year and last but now this figures has come down due to power outages specifically affecting labor intensive small industries.
Research exposes the figure of 100,000 workers having lost their jobs due to power outages compounded by forced holidays, whereas the exact number needs to be researched, which may be more as the labor intensive small industry is adversely affected. Latest statistics show that Pakistan has about one fourth of 1% shares in the economy of Japan.
In comparison of China and Korea the Japanese products are much superior quality wise and we were purchasing them with close eyes. Now the scenario has changed perhaps due to slackness on the part of diplomatic missions of Japan to create awareness for the premium price to be paid for Japanese goods by consumers in proportion to the quality of the life of Japan origin product against other origins.
The Japanese Government and the Diplomatic Mission do not seem to be active in relation of EU and USA Governments and their Diplomatic Missions to protect their market in Pakistan. They persuade Government of Pakistan to crackdown the infringers on intellectual property rights for eliminating the counterfeit and fake products. He also added that in the ongoing fast track development of energy sector, Japan appears to be least interested as the US is having biggest share and so also EU is showing interest. He called these policy issues of non involvement of Japanese Government through import export banking facilities. He said that we do acknowledge the assistance of 10 billion US$ from Japan during the decades and more.
Consul General responding to the questions said that Japan considers Pakistan an important country which can be reflected by the holding of meeting of donors recently in Japan in which Japan also pledged 1 billion US$ to help the present disturbed economy of Pakistan. Further the importance given by Japan to Pakistan is manifested by extensive investments by private sector in this country.
PENSION TO BE DISBURSED VIA BANKS
The disbursement of the pension to the retired persons will now be made through all branches of commercial banks, which is highly appreciable move to make life easy of the elderly people by the supreme court of Pakistan.
The Supreme Court, in a Suo-Moto Notice in respect of the problems being faced by the pensioners, has ordered that pension may be disbursed through all branches of all the licensed banks and banks may be instructed to transfer the amount of pension in the pensioners' accounts on the procedure adopted for payment of salaries.
In order to implement the honorable Supreme Court's decision, banks are advised to:
a) Instruct all the branches to cooperate with the pensioners whenever they approach for account opening.
b) The accounts of government/semi-government/defense paid pensioners shall be exempted from levy of service charges as directed vide BPD Circular No. 23 of 2003 and the private pensioners should be allowed to open Basic Banking Accounts in terms of BPRD Circular No. 30 of 2005.
c) Ensure that the pension amount received from the relevant pension giving agencies is transferred to the pensioners' account in a timely manner.
d) Ensure that adequate seating arrangements and clean drinking water facilities are available in the branches for all senior citizens, especially for old-age pensioners as also advised vide BPD Circular No. 03 of 2006 w.r.t utility bills collection. Further, the bank staff should help and facilitate old-age pensioners (senior citizens) in availing banking facilities and treat them with respect and dignity as directed vide BSD Circular Letter No. 17 of 2000.
e) Approach the relevant pension giving agencies and finalize the procedural formalities for payment of pension in the manner prescribed by the Supreme Court.
FOREIGN RESERVES POSITION
The total liquid foreign reserves held by the country stood at $ 11,524.7 million on 30th May, 2009. The break-up of the foreign reserves position is as under: -
i) Foreign reserves held by the State Bank of Pakistan: $ 8,184.8 million iii) Net foreign reserves held by banks (other than SBP): $3,339.9 million iii) Total liquid foreign reserves: $ 11,524.7 million