8.3pc growth achieved, says Aziz

By Khaleeq Kiani


ISLAMABAD, May 17: Prime Minister Shaukat Aziz has said that Pakistan’s Gross Domestic Product (GDP) had achieved an impressive growth of 8.35 per cent during the current fiscal year owing to a 7.5 per cent growth in agriculture, 15.4 per cent in large-scale manufacturing (LSM) and 7.9 per cent in the services sector. Addressing the inaugural session of the Annual Plan Coordination Committee (APCC) here on Tuesday, the prime minister said that 8.35 per cent growth had been achieved against the budgeted target of 6.6 per cent, and it might go further up with the completion of wheat arrivals.

The announcement surprised many in the audience who were provided with a different data after the prime minister left the meeting. The data showed a growth rate of seven per cent, indicating 4.8 per cent growth in agriculture, 12.6 per cent in LSM and 6.2 per cent in the services sector. In his speech, the prime minister said it was a historic day for Pakistan. He said the per capita income had increased by 6.43 per cent to over $700. The purchasing power parity is expected to move in the range of $2,200-$2,500 this year.

The growth rate, which exceeded the target by a wide margin, was influenced by a broad-based growth in all sectors, the prime minister said. Manufacturing as a whole increased by 12.2 per cent, while textile sector grew by 24.5 per cent. This was for the fifth time in Pakistan’s 57-year history that a growth rate had exceeded eight per cent. In 1953-54, GDP growth was recorded at 10.2 per cent, while it was 9.4 per cent in 1964-65, 9.8 per cent in 1969-70 and 8.4 per cent in 1984-85, he said.

Mr Aziz said the unprecedented growth of 7.5 per cent in agriculture sector was because of a record harvest of 14.6 million bales of cotton and 21.4 million tons of wheat. The wheat output is expected to go up further as harvest data was still coming up. Quoting a senior official, the prime minister said that higher than targeted cotton output alone had pushed up the growth rate by 0.8 per cent. Major crops grew by 17.3 per cent and financial and insurance sectors grew by 21 per cent, the prime minister said.

Inflation has now been estimated at 10 per cent for the current year against a budgeted target of five per cent. “This shows that increasing investment is taking place and production is going up,” he said. With 8.35 per cent GDP growth, Pakistan would emerge as one of the top five fastest growing countries in Asia, he added.

Mr Aziz said that higher growth in almost all sectors had helped create jobs and resulted in additional liquidity to the market as an additional amount of about Rs35-40 billion had gone into the rural sector, improving the purchasing power of the people and causing emergence of a middle class whose spending would give an equilibrium to the economy.

The prime minister said that there was a need to revise monetary policy to bring inflation down to the single digit and added that he was confident that inflation would be contained to single digit this year. Mr Aziz said that next year’s development budget would be a record while measures would be taken to maintain fiscal deficit despite over Rs40 billion losses accrued under the head of petroleum development levy. He said the government would not lose sight of the fundamental objective of improving the quality of life of people.

He said more investments would have to be made in the education and infrastructure sectors and, more importantly, in the energy sector immediately, otherwise energy shortage could hamper growth.

Infrastructure requirements had increased exponentially to maintain growth rates for which greater efforts would have to be made. However, he said, it was heartening to note that capacity of ports was being augmented and road network was also improving. The prime minister asked the gathering, which included top bureaucrats not to cause delays in the execution of projects. “Don’t give projects to contractors who don’t complete them in time and don’t hire incompetent people,” he said.

He said the high growth rate had been achieved despite the fact that the country had to absorb unprecedented energy price hikes, which forced many countries, including some developed nations, to re-adjust their growth rates. Had there been no energy shock, the growth could have been much higher, he said.

The prime minister said it was a time-tested phenomenon that consistency in policies and continuity of power resulted in sustained economic development, of which Malaysia was a good example.

Source: http://www.dawn.com/2005/05/18/top2.htm

Badla rates rise to 14.4pc

KARACHI, July 23: The Carry Over Trade (COT) rates on the Karachi Stock Exchange soared by 290 basis points at 14.4 per cent as compared to previous 11.5 per cent during the last week owing to tight money market, but the State Bank kept the cut-off rates static on all the three tenures treasury bills in the recent auction.

“Over the week, the badla has become a game of chance as only first few contenders managed to lay their hands on it”, says a leading analyst commenting on the availability of funds.

But on the other hand COT investment stayed unchanged at the previous level of Rs12 billion, although open interest in the futures market showed a modest decline, apparently making room for rolling of positions during the next week, he said.

However, COT business fell by seven per cent to 107m shares from the previous 115m shares because of heavy leverage done in overvalued shares, notably Pakistan Oilfields and PSO.

Weighted average badla rate on the Lahore Exchange on the other hand declined to 9.9 per cent from the previous 10.8 per cent as investment further shrank to Rs867m from the previous week’s Rs.969m.

The KSE also witnessed a decline in open market interest where the spread fell into single-digit at 6.4 per cent from the previous week’s 14.1 per cent.

“The current row over the badla mode of financing has taken steam out of the market owing to a cap on outstanding positions at Rs12bn and at time when the corporate announcements from some mega issues are around”, another analyst said.

http://dawn.com/2005/07/24/ebr11.ht

315 firms registered in Dec

By Our Reporter

ISLAMABAD, Jan 17: The Securities and Exchange Commission of Pakistan (SECP) has registered 315 companies in December last year as compared to 233 companies registered during the corresponding month of 2004, reflecting an increase of 35 per cent.

Of the newly-registered companies, 300 were limited by shares, comprising of 10 public companies, 285 private companies and five single-member companies, showed official statistics issued here on Tuesday.

In addition, eight foreign companies and seven non-profit associations were also registered last month.

The Company Registration Office (CRO) in Lahore registered the highest number of 115 companies, while Karachi and Islamabad offices registered 101 and 64 companies, respectively. CROs in Multan, Faisalabad, Peshawar and Quetta registered 13, 12, eight and two companies, respectively.

A total of 54 companies were registered in the services sector, 36 in trading, 21 in information technology, 15 in communications, 10 in construction, 19 in real estate development, and 14 each in engineering, textile and telecommunications sectors.

Total authorized capital and paid-up capital of the 300 limited by shares companies registered during December 2005 amounted to Rs9.921 billion and Rs466.03 million, respectively. A total of 31 companies also raised their authorized capital by Rs1,475.9 million.

With the incorporation of 315 companies in December 2005, the total number of companies registered with the SECP by the end of calendar year 2005 has reached 4234 as compared to 2583 companies registered by the year 2004, reflecting an increase of 64 per cent.

http://www.dawn.com/2006/01/18/ebr10.htm

Falling reserves put stability at risk: Country may face $2 billion decline

By Shahid Iqbal

KARACHI, Jan 19: Fast depleting forex reserves could pose serious threat to the economic stability as over $1.1 billion slipped away in six months from the reserves. The hard-earned reserves have been facing continuous outflow since the beginning of the new fiscal year from July 1, 2005 and the pace of erosion picked up speed after record increase in the oil prices.

In the first week of July 2005, the country’s reserves were $12.613 billion and it reached to $11.504 billion on January 14, 2006, showing a fall of $1.109 billion or 8.8 per cent. If the outflow of dollars continues with the same pace, the country will face a substantial decline of over $2 billion by end of the current fiscal on June 30.

The reserves held by the commercial banks also showed a declining trend. The SBP faced an erosion of $778 million during the last six months while the commercial banks noted a decline of $331 million in their respective reserves.

The pressure of oil price-hike faced by the SBP resulted in the fast depleting of reserves as for more than a year the central bank has been paying oil import bills. The international oil prices have been fluctuating during the year but most of the time hovered around $60 per barrel that posed a serious threat to many developing economies including Pakistan.

“This is true that the oil prices have gone up and the SBP is facing pressure but there should be some mechanism to check the decline in reserves,” said an analyst.

So far no strategy has been devised to protect the reserves from further depletion. The reserves were built during the last six years by the SBP after spending billions of rupees on dollar buying as well as increased remittances.

The continuous fall in reserves is considered a threat to the stability of the economy as it had been six years back when the economy was at the verge of collapse on account of its ability to pay its external bills.

“The huge current account deficit in the range of $7bn to $9bn at the end of the fiscal may appear as the biggest challenge for the economic managers as remittances from overseas Pakistanis could not be enough to fill the gap,” said analyst Amjad Aleem.

The country is expected to receive around $4.2 billion remittances by the end of the current fiscal. During the first half of this fiscal $2.055 billion were remitted by overseas Pakistanis, official figures showed.

Either the government would have to meet $3 to $5 billion deficit from its own account (SBP reserves) or it would borrow from the market.

“Spending from its own reserves could send a shock to the market and destabilization process would be geared up. I think the government may not opt for this route to address the problem,” said Amjad.

The other option is the borrowing from the international market and donors like IMF, ADB etc. There is a possibility that the government will opt for launching bonds as it is already in the market with Euro bonds and Sukuk bonds.

http://www.dawn.com/2006/01/20/ebr4.htm

__________________
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rahi aetaqaaf mein chasm-e-num
kaeiN rath-jugouN ki dukhi huwee
na hi buth miley naa pari milee

merey charagarh mere hum-navaa
naa pari milee, na hi buth miley
naa hee en buthouN ka Khuda mila

Morgan Chase CEO lauds Pakistan's rapid economic Development

NEW YORK (US): The Chief Executive Officer of JP Morgan Chase, one of the leading international banks has lauded the rapid economic development of Pakistan.

The CEO James Dimon made these remarks while talking to Pakistan's Associated Press after a meeting with Prime Minister Shaukat Aziz here on Wednesday.

The Premier arrived here earlier in the day on a week-long visit to the United States.

James Dimon said that Pakistan has made a rapid economic progress especially during the past five years.

He recounted the contributions in this regard by Shaukat Aziz first as Finance Minister and now as Prime Minister.

The CEO pointed out that Shaukat Aziz was doing a great job for Pakistan and its people.

He expressed optimisim about further growth of Pakistan's economy mainly because of education of the people.

Expansion of Business

James Dimon suggested that his organization would expand its business in Pakistan saying that his organization would do whatever it could to contribute towards the country's betterment.

Earlier, during the meeting he apprised the Prime Minister of his
organization's operations in Pakistan. He highly appreciated the progress that has been made by Pakistan during the past couple of years which brought it into international limelight.

Now global investors are showing keen interest and looking towards Pakistan as a favourable investment destination.

Shaukat Aziz gave a brief overview of Pakistan's economy and stated that country's economy is growing at a rapid pace with a favourable micro economic environment.

He said that the gains that Pakistan has made were the result of wide ranging structural reforms launched in many sectors of the economy, consistency and continuity and transparency in policies which paid rich dividends.

The Prime Minister pointed out that Pakistan is actively pursuing its privatization programme. He further informed that 85 percent of banking is in the private sector in Pakistan.

Shaukat Aziz said we have made rapid progress but challenges are there and we have a roadmap to address these challenges.•

http://pakistantimes.net/Top20010602.htm

Canadian politician lauds Pakistan's economy

Staff Report

LAHORE: Canadian businessmen are impressed with the economic turnaround made by Pakistan in recent years and are keen to make investment in the country which is a gateway to landlocked Central Asian states, said John Tory, Canadian opposition leader, here on Tuesday.

He was talking to Lahore Chamber of Commerce of and Industry (LCCI) President Mian Shafqat Ali. Vice President Aftab Ahmad Vohra, LCCI Executive Committee member Mian Mohammad Usman and former senior vice president Sohail Lashari besides a number of other top business leaders were also present at the meeting.

The hour-long meeting, which ended with a pledge from both the sides to take concrete and sector-specific measures for the promotion of bilateral trade, took up a number of other issues coming in the way of further strengthening the existing relations between the two countries.

Giving an update on the Canadian economy, Mr Tory said the transfer of technology could change the whole economic scenario in Pakistan. He stressed the need for exchange of trade delegations and joint exhibitions both in Canada and Pakistan.

The Canadian leader urged the LCCI office-bearers to arrange a delegation of top Pakistani businessmen to have first-hand knowledge about the Canadian business atmosphere, as the exchange of trade delegations and exhibitions were the most effective tool to increase the level of bilateral trade.

The Canadian opposition leader praised the economic policies of the government, saying the consistency in policies had now started yielding results.

LCCI President Mian Shafqat Ali said Canada was among the leading countries that helped Pakistan in its efforts to have sustainable economic growth. He said the Canadian International Development Agency was Pakistan's active partner in development. The Official Development Assistance from Canada was also supporting Pakistan to reduce poverty and to contribute to a more secure, equitable and prosperous world.

He said the major bottleneck in promotion of trade and economic relations between the two countries was the lack of information about business opportunities available in the two countries. He said there was a need to undertake frequent exchange of business delegations, organizing country exhibitions, participation in fairs & exhibitions, seminars and workshops, etc to ensure a continuous liaison.

LCCI Vice President Aftab Ahmad Vohra said the situation with regard to net inflow of foreign private investment in Pakistan by Canadian investors was dismal, as it had reduced from 6.2 million US dollars in 2001-2 to 2 million US dollars in 2004-5.

He said there was great scope for cooperation in various industrial sectors between the two countries. The possibility of undertaking joint ventures in areas such as pharmaceuticals, electrical appliances, food stuffs, leather, textiles engineering goods, agro-based industries, chemicals, fertilizers, mineral and mineral based industries, oil & gas exploration, telecommunications, seaport development, dams, power generation, areas related to education, health & environment was bright.

He said trade between the two countries left much to be desired. The analysis of trade figures between the two countries showed that Pakistan's exports to Canada decreased from 205.9 million US dollars in 2002-3 to 194 million US dollars in 2004-5. On the other hand, Canada's exports to Pakistan had increased from 121.5 million US dollars in 2002-3 to 196.6 million US dollars in 2004-5.

Canada could also consider transfer of technology in the fields of food processing and preservation, agriculture, livestock development, fisheries, forestry, environment, pharmaceutical and agro-industrial engineering, he said.

http://www.dailytimes.com.pk/defaul...8-1-2006_pg5_15

__________________
kareiN meiN ney kesi ebaadateiN
rahi aetaqaaf mein chasm-e-num
kaeiN rath-jugouN ki dukhi huwee
na hi buth miley naa pari milee

merey charagarh mere hum-navaa
naa pari milee, na hi buth miley
naa hee en buthouN ka Khuda mila

KSE to sustain 10,000 pts level this time: analysts

By Farhan Sharif

KARACHI: Stock market analysts and traders have termed the recent surge of KSE-100 index relatively stronger, both technically and fundamentally, compared to the rally that led the market to a crisis in March 2005.

After a gap of almost ten months, the benchmark KSE-100 index once again crossed the 10,000 points mark on Monday. Investors are concerned if this time the market will sustain these high levels or it may come down again as happened in March 2005 when the index saw its steepest-ever fall after peaking to 10,303 points on March 15.

"We think that there is some difference this time that compels us to believe that the current run up at local bourses is sustainable," said Mohammed Sohail, head of research at Jahangir Siddiqui Capital Markets.

This time round the leveraged position is lower, the rally is less speculative and more broad-based and the market price earning ratio is lower than it was in March 2005.

Compared to March 2005 the reported leveraged position is substantially lower, which proves that the ongoing rally is genuine. The leverage of badla and stock futures reached a peak of Rs 78.2 billion on March 4, 2005, 3.3 percent of market cap and 17 percent of float adjusted market cap. Currently this leveraged buying is Rs 40.5 billion, which is only 1.4 percent of market cap and 7 percent of float adjusted market cap, said the analyst.

Unlike the March 2005 rally, this time the index has reached 10,000 points due to increase in share price of large number of companies. Compared to this in the March rally only few stocks jacked up the index thanks to market cap based index methodology, which is biased towards few companies, especially Oil and Gas Development Company. Last year in March the combined weightage of OGDCL and Pakistan Telecommunication Company Limited was as high as 50 percent. And these two stocks contributed 67 percent to the rise of 4,084 points from December 31, 2004 to March 15, 2005.

Furthermore, current trend looks relatively less speculative as overall volumes are lower than the March 2005 volumes. In first two weeks of March 2005 average daily volume, ready and futures combined, at KSE were 1152 million shares with trade value of Rs 152 billion or $2568 million as against average daily volume of 396 million shares worth Rs 42 billion or $708 million in the last two weeks.

http://www.dailytimes.com.pk/defaul...18-1-2006_pg5_6

Pakistan's trade with China's Xinjiang region reaches $340 Million
'Pakistan Times' Foreign Desk

BEIJING (China): China's Xinjiang reported trade worth dollar 340 million with Pakistan during 2005, showing an upward trend in their economic interactions.

Pakistan emerged as third largest trading partner of the region after Central Asian States Kazakhstan and Kyrgyzstan.

The Northwest China's Region's trade turnover with Kazakhstan surpassed $5 billion, 1.7 billion more than 2004, statistics show.

Kyrgyzstan was the second largest trading partner with Xinjiang last year, with a trade turnover of $740 million, up 60 percent year-on-year, statistics show.

Xinjiang, a Muslim-majority region, bordering Pakistan was expecting more trade with Pakistan with the implementation of special tariff package this year, said Zhang Yei, a senior official of the region's Foreign Trade and Economic Co-operation Department.

In an interview, he said economic activities between the two countries stepped up after the visit of Premier Wen Jibao to Pakistan last year and signing of the Early Harvest Programme.

Pakistan's entry into Shanghai Cooperation Organization (SCO) has also opened new avenues of economic interaction with China and Central Asia, especially through the land route.

Glory of the Silk Route

The Xinjiang region, striving to rejuvenate the past glory of the ancient Silk communication network carried rich potential to become a center of trade and economic co-operation, linking China with Pakistan and rest of the world.

Recently, various Xinjiang-based Chinese companies have shown keen interest in cooperating with Pakistan in areas of common interest including producing cheap electricity through renewable
resources.

In order to regularize the business activities, Pakistan Trade House (PTH) was also set up at Kashgar, near Pak-China border, initially with about 20 Pakistani companies.

Hectic business activities were witnessed last year that included a business conference arranged by Pakistan Embassy at Urumqi and the Urumqi trade fair where a special Pakistan's pavilion was set up to project the country's rich trade potential.

The occasion coincided with launching of PIA's regular twice-weekly flights between Islamabad an Urumqi.

Commercial Counsellor in Pakistan Embassy Shahid Mahmood said the business conference proved successful in creating awareness among the business community about the duty-free structure that brought hundreds of specified items at zero rate from this month under EHP.

Addressing a seminar, leaders of Xinjiang Region including Li Donghui, vice chairman CPPCC, China's top advisory body said there has been growing interest among the Chinese businessmen to undertake joint ventures with their Pakistani counterparts.

They hoped that Xinjiang will play a central role in developing regional trade. This is evident from the large number of trade delegations from Pakistan visiting Urumqi. The export of food items like mango and rice to China have also brightened the hope of achieving future trade targets, they added.

http://pakistantimes.net/Top220106010.htm

__________________
kareiN meiN ney kesi ebaadateiN
rahi aetaqaaf mein chasm-e-num
kaeiN rath-jugouN ki dukhi huwee
na hi buth miley naa pari milee

merey charagarh mere hum-navaa
naa pari milee, na hi buth miley
naa hee en buthouN ka Khuda mila

Forecast
From the Economist Intelligence Unit
Source: Country Forecast - Pakistan

The opposition has been critical of how the president and chief of army staff, General Pervez Musharraf, has handled the relief effort following the devastating earthquake in northern Pakistan in October 2005, but the Economist Intelligence Unit expects him to remain in power in 2006-07. He has the support of the army, a majority in parliament, the power to dismiss the prime minister and the right to suspend parliament. His supporters are also likely to be re-elected in a parliamentary election in 2007. The biggest risk to political stability is the possibility that he may be assassinated. Despite the earthquake, the economy is expected to perform strongly: real GDP growth is expected to reach 6.6% in fiscal year 2005/06 (July-June) and 6% in 2006/07, following the government’s provisional figure of 8.4% at factor cost (7.8% on an expenditure basis) for 2004/05. Inflation remains the biggest threat to the economy: annual inflation will average 8.6% in 2006 and 6.7% in 2007. The current-account deficit will widen to 3.8% of GDP in 2006 and 4.3% in 2007, in line with the rising merchandise trade deficit.

http://www.economist.com/countries/...rofile-Forecast

Annual data 2005(a)
Population (m) 156.4
GDP (US$ bn; market exchange rate) 110.7
GDP (US$ bn; purchasing power parity) 375.8
GDP per head (US$; market exchange rate) 708
GDP per head (US$; purchasing power parity) 2,403
Exchange rate (av) PRs:US$ 59.6
(a) Economist Intelligence Unit estimates.

Historical averages (%) 2001-05
Population growth 2.0
Real GDP growth 5.0
Real domestic demand growth 4.7
Inflation 5.2
Current-account balance (% of GDP) 1.6
Exchange rate (av) PRs:US$ 59.6
FDI inflows (% of GDP) 0.8

Major exports 2003 % of total
Cotton fabrics 10.8
Cotton yarn&thread 9.6
Rice 5.3

Major imports 2003 % of total
Machinery&transport equipment 26.7
Mineral fuels etc 23.8
Chemicals 16.0

Leading markets 2004 % of total
US 21.0
UAE 10.9
UK 7.0
Germany 5.1

Leading suppliers 2004 % of total
China 12.2
US 11.1
UAE 10.7
Saudi Arabia 10.4
http://www.economist.com/countries/...ofile-FactSheet

How Pakistan Is Picking Itself Up

Prime Minister Shaukat Aziz talks about efforts to deregulate and build the economy while overcoming the recent earthquake and fighting terrorism

Pakistani Prime Minister Shaukat Aziz traveled to New York and Washington in late January to meet with President George W. Bush, as well as U.N. officials and investors. He came at a delicate time, when U.S. forces had just bombed a Pakistani village, and while his country was still recovering from a devastating earthquake. Aziz discussed these turbulent events with BusinessWeek Senior Editor Chris Power. But the Prime Minister -- a former top executive at Citigroup (C) -- also gave a surprisingly upbeat assessment of Pakistan's economy. Edited excerpts of their conversation follow:

How has Pakistan fared since you became Prime Minister?

I think the single most important change is in the economy. We have transformed the mindset from that of a restricted closed economy to that of a totally deregulated economy where the three principles we work on are liberalization, deregulation, and privatization.

There's no distinction between local and foreign investment. Last year we clocked in 8.4% GDP growth, the second best after China. This year we will be close to 7%. Per-capita income is up to $736, and purchasing power parity per capita is about $2,500. The middle class is emerging, and people are doing well. Investment is at an all-time high -- both local and foreign. But still we need more. FDI last year was $1.5 billion. This year it will be $3 billion.

So you feel things are much better than they were five years ago?

Definitely. I think most people now feel that. And one indicator is that you can't find hotel rooms in Pakistan anymore!

One possible problem with this scenario is the current-account deficit, which is growing.

It's still within a safe range. The boom in imports is due to growth in the economy. When you have growth rates of 8% and demand is high, if you don't allow free imports, your price equation will get even worse. I think we are doing all right. Capital inflows are good. We haven't done anything unusual on debt. If you take the capital account into the numbers, the overall balance is pretty O.K.

What about the negative impact of oil?

Oil is looking tricky. We have sustained the high increase in oil prices. It does put pressure on our foreign exchange. But we are selling oil at market prices. There is no subsidy. It's tough. [Ordinary Pakistanis] don't like us for that. But if you subsidize, you take on debt to fund the oil bill, which is a killer.

Is the fiscal deficit feeling strain?

Our target this year is 3.8% of GDP, and we'll be no more than 4%. That increase is due to the earthquake, as you would imagine. But it's very well within control.

You want to widen Pakistan's tax base to boost revenues for the government. How is that going?

We are widening the tax base. In fact, our tax collection is doing well. We are up 33% so far this year over last year. That's all taxes -- income tax, import taxes, and the general sales tax.

Is that capturing all the possible tax revenues?

No. There's still a lot of potential. That's why I keep pushing them...a 33% increase is not good enough. Keep in mind that this increase in collection is in spite of the fact that the tax rates and tariff rates are all down. Gone are the days when you can run your country or economy by building high tariff walls around it.

How is the earthquake relief effort going?

I think most objective observers will tell you they are pleasantly surprised. It's a tough terrain. You are fighting the Himalayas. Even helicopters can't land in many places. We've created two independent entities -- a relief agency, which is providing food, tents, blankets, medical care, etc., and a rehab agency, which is more long-term. It focuses on income generation, building your own home, etc.

Has mortality gone up in the affected areas?

There has been no epidemic. These are tough people. You have a lot of respiratory problems, but I've been to most of the field hospitals. I've taken 64 trips to the earthquake area. Every week I go somewhere and check. It is our goal to get these people settled back in their traditional areas as soon as possible. It will take a couple of years.

Getting back to the economy, how is deregulation proceeding?

Let me tell you, it depends. In telecommunications, we have a great regulatory regime, a good regulator, tremendous investment coming in. We auctioned two licenses for cellular phones. We got $291 million each. We just sold our phone company, so we are moving ahead. In those areas it's working well.

But the Monopoly Authority, which regulates antitrust issues, needs fixing.

That's being remapped. We have a total program to reengineer and reinvent it. That's really not performing at par.

There has been some indication of hoarding and profiteering because of no monopoly control.

Some industries are accused of market fixing, but now we are going to really strengthen the whole agency and be tough.

How is Pakistan doing in developing workers' skills?

We now have shortages of skilled labor. So we have a major initiative for vocational and technical training, which we have just launched. And this is not talking about PhDs -- this is quick training for filling gaps in the economy. It's demand-driven. We've also made English compulsory in all federal schools from class one. There's no such thing as optional now.

Are the rural areas joining in the growth?

One of the best things that has happened in the last several years is farm income. Farm income is up. Farmer productivity is up. GDP grew last year by 7.6%. in real terms. Our whole strategy on agriculture is not subsidy-determined. Farmer profitability and linkage to international prices -- that was the fundamental reform in agriculture.

The U.S. is a big backer of your reform efforts.

They've been a great ally and a great friend of ours.

But how do you feel when the U.S. bombs a Pakistani village?

You know our view. It's a very regrettable incident. We cannot condone it. Innocent lives have been lost. At the same time we are very committed to fight terrorism, jointly with the U.S. and others. Because terrorism is no solution to any problem, and loss of innocent life is unfair. So we are committed to fighting terrorism. But there is a need for more coordination and more communication. The people of Pakistan are very angry.

The bombing doesn't make it easier for the government in the border region.

It's a difficult area. We have 80,000 troops there. That's a high number.

http://msnbc.msn.com/id/11021152/

__________________
kareiN meiN ney kesi ebaadateiN
rahi aetaqaaf mein chasm-e-num
kaeiN rath-jugouN ki dukhi huwee
na hi buth miley naa pari milee

merey charagarh mere hum-navaa
naa pari milee, na hi buth miley
naa hee en buthouN ka Khuda mila

World Bank's faith in Pakistan's economy
Hassan Mirza

The World Bank's increased assistance is a measure of its trust in the economic policies being implemented by the government and the positive impact they have left on the state of the economy in Pakistan. This confidence in Pakistan's economic health and the right direction of economic policies is not without reason. Facts speak for themselves. The GDP has registered a growth of over seven, in fact touching 8. This is owed to a 7.5 per cent growth in agriculture, 15.4 per cent in large-scale manufacturing and 7.9 per cent in the services sector. This is for the fifth time in Pakistan's 57-year history that a growth rate had exceeded eight per cent. In 1953-54, GDP growth was recorded at 10.2 per cent, while it was 9.4 per cent in 1964-65, 9.8 per cent in 1969-70 and 8.4 per cent in 1984-85.
The World Bank has announced to increase its grant to Pakistan. It will give $1.5 billion per year to Pakistan over the next three years. The World Bank has agreed to provide $2 billion for infrastructure development in Pakistan. The WB assistance will cover areas such as roads, ports, railways, etc. The announcement to this effect came from a WB team following its meeting with Prime Minister Shaukat Aziz. It was agreed during the meeting that a coordination cell would be set up by Pakistan's Planning Commission, to coordinate with the WB. Prime Minister Shaukat Aziz pointed out that an efficient infrastructure could save 1 to 4 per cent of GDP. Given Pakistan's developing needs, and with mega projects like Gwadar in place, the need for more and more investment in infrastructure in Pakistan cannot be overemphasised.
Higher growth rates in almost every sector of the economy have resulted in more jobs and additional liquidity in the market, improving the purchasing power of the people and creating a vast mass of middle class, Inflation, however, is high. The government is taking measures to bring it down. It is expected that inflation will be brought down to single digit, as also declared by the prime minister. The main cause of inflation is the rise in the prices of oil in the world market, and Pakistan being one of the main importers of oil has to spend more foreign exchange to run its industry and transport. Since this is an international factor over which Pakistan has no control, at best what the government can do is bear the main brunt of the oil spiral. Oil prices now touch $ 66 per barrel, which can sink any developing economy.
Using this economic improvement to address people's problems, more funds have been diverted towards education, infrastructure and energy, which is essential given their potential and utility in spurring national growth in both economic and human terms. Measures are being taken to increase the capacity of ports and improve the road network in the country. The present pace of the development is the result of the consistency in Shuakat Aziz's policies and reforms. With the advent of the WTO, which entails tough competition in the world market, Pakistan's economic about-turn could not have come at a better time, and the World Bank and other financial institutions' trust can be the most important factor in enhancing Pakistan's economic credibility.
As things stand, Pakistan's economy is all set to enter the phase of sustained growth. Budget deficit has been curtailed. The foreign exchange reserves that stood at a dangerously low level some years ago have gained strength. Pakistan's economy can sustain a rate of 7 to 8 per cent over the next three to four years with the private sector playing a leading role in it. With Pakistan's entry into ARF and its policy of expanding towards Central Asian Republics, SAARC, China, Japan and Latin America, Pakistani exporters are set to gain a foothold in new markets. This change in Pakistan's economic fate has been gradual. The growth rate of six is remarkable given that in 2001-2 it was 3 ).6 per cent and in 2000-1 it was 2.5 per cent. Since then owing to the policies ushered in by Mr Shaukat Aziz as finance minister and now as the prime minister, an overall improvement has been registered by the economy.
The soundness of Government policies can be gauged from Pakistan's economic performance even when some yeas ago, it confronted tensions on the border with India, Iingering drought, world market recession, the wars in Afghanistan and Iraq -- the latter having a negative effect on Pakistan in terms of rise in oil prices. Future economic projections are promising still: increased availability of water, as promised by water schemes, is expected to boost agriculture as well as increase hydropower generation. The textile industry, as also other sectors, is better placed for increased production after heavy investment in this sector in the past two years. Pakistanis' remittances, which have played the most vital role in enhancing the foreign exchange reserves, are likely to maintain their momentum. The construction sector and consumer-related schemes are showing results, thanks to the consumer credit schemes by banks and other financial institutions. Higher growth in manufacturing, together with a reduction in import tariffs, is likely to ensure growth in imports. That Pakistan is in for good times in the coming years would not be a wrong statement. After the attainment of the macro level, the trickledown will start at the micro level.
Foreign Direct Investment (FDI) remains the key player, however, it's expected to increase provided the internal political situation remains stable and no tensions erupt on the borders. In the context of the former, all political parties should make a commitment that they will adopt a mature attitude towards national issues. In the context of the latter, all sections of society should support Pakistan's efforts towards attaining economic betterment. It goes without saying that lawlessness created by foreign and local terrorists is an impediment that must be removed. In this context, support from masses is of great importance.
Coming back to foreign investment, FDI is an important instrument for facilitating a developing state's strides towards development. The most important role it call play is ill the form of supply of capital. In order to increase the level of foreign capital inflows, developing countries liberalise their trade and investment regime by relaxing governmental controls and offering a number of financial and trade incentives like tax concessions and tariff reductions. The Government has perfectly done this by way of a slew of incentives. It is better to look at the trend of FDI. Total FDI inflows into Pakistan from 1993-94 to 2003-04 stood at $6.68 billion, which came to $610 million a year, which's not a satisfactory level. The most damaging factor behind this low inflow was Pakistan's decision to go nuclear in 1998 that prompted several countries to impose economic restrictions. It's promising in this regard that owing to efforts by the government of Shaukat Aziz and Pakistan's move to curb nuclear smuggling, Japan, the US and other countries have now lifted embargo on aid to Pakistan. To make matters worse in 1998, foreign currency accounts were frozen to offset the economic repercussions of the blasts by the then government, which needless to say severely affected FDI.
The FDI level however is improving due to the efforts of the present Government's economic policies: in 2002-03, FDI was $798 million, while in 2003-04, it increased to $ 949.8 million. The largest amount of FDI has been made in the energy sector, which accounts for more than 42 per cent of total FDL The share of manufacturing has been about 25 per cent followed by the services sector whose share is 21 per cent. More foreign and local investment can be attracted provided political situation remains stable.
The strengthening of local government system in Pakistan is slowly but surely incorporating the concept of true democracy, as envisioned by President Musharraf, by way of devolving power to people at the grass roots. This process must continue as democracy in its true form is necessary to make economic gains and then trickle them down to people at grassroots.

http://www.financialexpress-bd.com/...d=19650&spcl=no

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kareiN meiN ney kesi ebaadateiN
rahi aetaqaaf mein chasm-e-num
kaeiN rath-jugouN ki dukhi huwee
na hi buth miley naa pari milee

merey charagarh mere hum-navaa
naa pari milee, na hi buth miley
naa hee en buthouN ka Khuda mila

The future of the economy
By Shahid Javed Burki

THOSE who read the Newsweek’s coverage of the state of the Pakistani economy it its issue of March 27 and then read my article that appeared in this space last week would be puzzled by the two different conclusions. The Newsweek’s Ron Moreau wrote about the “heady turnaround for a nation that, in the late 1960s, was practically a failed state with a near-zero GDP growth.” The magazine presumably meant growth in per capita income since even in the late 1990s GDP grew by almost four per cent a year.
I presented a somewhat dreary picture with the suggestion that the economic boom that was visible to all at this time was not sustainable over the medium, let alone the long-trun. Ron Moreau was writing about the present; I was reflecting on the future.
The present does look good. As Newsweek put it, “the proof is in the numbers. Last year, the coun-try’s GDP growth hit 8.4 per cent, the world’s second highest behind China, following two years of solid six per cent growth.” Actually it was one year’s six per cent growth — one of the three factual mistakes made by the magazine in its coverage — but using them as an issue would be a quibble since Ron Moreau was making the right point: he underscored the very important fact that growth in recent years has been accelerating, a good sign for any economy.
But to continue with the quote. “This year the economy is predicted to expand by seven per cent. After years of instability, with the govern-ment and military trying to distract people from their economic woes by waging jihad in Kashmir and railing against neighbouring India, a true middle class is now developing. Economic re-forms have given the government money to invest in health and education, and foreign investors are eyeing Pakistan for the first time. In many ways the country has become the world’s most surpris-ing economic success story.”
This, with one important difference, is an accu-rate reflection of the state of the economy at this time and I can add a great deal more to suggest that there is indeed an economic boom in the country. A large middle class has begun to exert its growing economic weight; it is buying cars and motorcycles in record numbers; it is purchasing “files” to lay claim to residential plots in numer-ous housing estates that have sprung up in most major cities; it is sending its children to expensive private schools; it is taking vacations in Europe and the Middle East; it is going to Dubai to shop in that city’s well-appointed shopping malls; it is spending enormous sums of money on weddings and other celebrations. The middle class is in a festive mood.
It is not only the middle class that has gone on a spending spree. Newsweek correctly reports on the interest of foreigners in bringing money to the country. However, we should read the Arab in-vestors for foreigners. A number of Middle East-ern financial and industrial houses and real estate developers are buying and developing assets in Pakistan. Successful privatization of a number of public sector financial and public utility compa-nies have brought the Arab investors to Pakistan. More will come as the country proceeds to put more publicly owned assets on the market. There is Arab interest in green-field plants. A good evidence of this is the ground-breaking ceremony performed a few days ago for a steel mill project that would add a million tons of capacity to do-mestic production.
There is also an increase in domestic investment not just in real estate but also in the economy’s productive sectors. Industrialists are putting new money into textiles and cement, and from my perspective, it is very significant that investment is being made in the sector of agricultural proc-essing. While hard numbers are difficult to come by, one has only to drive around in the main cities and along the motorway that connects Lahore with Islamabad to get a feel for what is happening in the economy. Large bill boards announce the offerings being made aggressively by commercial banks for the purchase of homes, cars, consumer appliances and for personal con-sumption. Mobile phone operators offer various services at affordable prices. A number of other billboards give information about new housing estates being developed. Some more tell of the arrival of new lines of dairy and packaged food products.
To this line of analysis based on reading the billboards, I will add one more observation. On the Islamabad-Lahore motorway I saw special-ized trucks transporting processed chicken, milk and other agricultural products. The latter is a particularly important indicator of development. It shows that agriculture is being commercialized and Pakistan may finally be on the road to achieving the remarkable potential of its country-side.
With all this happening why question the good performance of the economy? The point of my article last week and of the one today is to delve a little deeper into the economic situation. The present indeed looks good but this raises three queries about the future. One, is the present a good predictor of the future? Two, can the econ-omy achieve sustainable growth based on con-sumption? Three, should the nation sit back and enjoy itself as the future unfolds or is there good deal of additional work to be done before it can be said that the country has finally secured its economic future?
In last week’s article, I wished to highlight three conclusions. One, the current boom rests on weak foundations; it cannot be sustained unless a number of structural reforms are undertaken. The structures that need to be rebuilt or demol-ished altogether were created over a long time and a number of vested interests have developed around them to protect them from being changed. Two, there are a number of weaknesses in the economy that need the urgent attention of policymakers. The most glaring of these is that the boom rests mostly on consumption and not on investment. Three, the time available for setting the economy on the right course is not very long, perhaps no longer than a couple of years.
The period during which adjustments must be made is the period when the country must pre-pare for another set of elections. Correcting the economic course when elections are just around the corner is a difficult enterprise even for a ma-ture political system. It will be extremely difficult for a country that is still trying to find its political legs on which to stand. There is, therefore, not much time left to smoothen the economic wrin-kles.
In other words, I question Newsweek’s assertion that Pakistan is an economic success story. This is my major difference with the magazine. The economic story would indeed be a success if the current rate of growth in terms of per capita income could be sustained over a reasonable period of time; if significant reductions were occurring in the incidence of poverty; if policy-making in Islamabad had been thoroughly insti-tutionalized; if economic decision-making had been decentralized to the lower tiers of govern-ment that are closer to the people and if the ca-pacity had been created at these levels to deliver services and development to the people.
I see very few signs of any of these things happen-ing. This is why I believe that unless the course on which the economy is set is changed quite significantly and quite soon we may run into rough weather. This will not happen immediately but could occur within a couple of years. It would be dangerous to stay the present course.
“Staying the course” is a phrase popularized by George W. Bush in relation to his country’s poli-cies towards Iraq. But sometimes policymakers must take a deep breath, reflect carefully on the situation they are dealing with, and change course. The moment for doing precisely that has arrived in Pakistan with respect to the manage-ment of the economy. It seems churlish not to celebrate good things when they seem to have arrived and to worry about the future. But there are good reasons why I want to sound the alarm bell at this time. In my experience across the globe dealing with difficult economic situations, I saw many happy dreams turn into nightmares. And, I am an optimist by nature. When I look at Pakistan’s economic situation today I am re-minded of what I saw in Latin America in 1994. It was early in that year I took over as vice-president at the World Bank in charge of that continent and began to study the economies of the major countries in that area. Latin America then was buoyant; that was particularly the case with Mexico which was entering into a free trade arrangement with Canada and the United States, where large amounts of investment had begun to arrive from the United States, where the financial markets in New York were opening themselves for access to the Mexican government and to indigenous Mexican enterprises.
I then compared the Mexican situation to those that I had seen in East Asia, the region where I had worked before moving to Latin America. I saw many weaknesses in the Mexican economy, in particular the unsustainability of its external accounts, the increasing reliance on external borrowings to finance trade deficit, the exposure of the banking system to high risk borrowers, and poor productivity of the industrial sector which made it difficult to compete in the international market. Within a year, Mexico was in a deep crisis; its banking system collapsed, the value of the currency plummeted, inflation increased significantly, and the government’s financing spun out of control. Not only did the Mexican economy collapse, the country pulled down with it other countries of the region.
However, I don’t wish to be misunderstood. I don’t believe that we are heading towards a crisis at this time in our economic cycle. There is still time to correct the course. Pakistan’s economy has been on a roller-coaster ride all through its nearly 60 years of development. This is now the time to change the heady ways of doing things and begin to move towards a trajectory that points only in one direction, northwest, and with a gradient from which the economic engine will not slip.
This brings me to the task of drawing up a list of the many weaknesses I see in the economy. These include fiscal policy and government expenditure, insufficient public investment in several critical sectors, severe trade imbalances, an energy crisis that is just around the corner, slow moving ex-ports with heavy reliance on textiles and depend-ence on access to the United States’ market, choking of traffic on the main roads in many large cities with heavy associated costs to busi-nesses.
The list does not end with these. These weak-nesses can be overcome reasonably quickly but that would need the government’s attention within a well thought-out medium term frame-work. A framework does exist; it was developed under the aegis of the World Bank but that was a hurried job for which several ministries and de-velopment agencies provided inputs that were assembled within the covers of one document that lacks coherence, imagination and foresight.
These are good days but good days can turn into difficult times if public policy neglects to deal with the problems that lie just under the surface. From the list I have given above, I’ll take up half a dozen next week and develop them to indicate the sort of public policy initiatives that need to be taken.

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ان تازہ خداؤں میں وطن سب سے بڑا ہے--------------جو پیرہن اس کا ہے وہ مذہب کا کفن ہے
یہ بت کہ تراشیدۂ تہذیبِ نوی ہے--------------------غارت گرِ کاشانۂ دینِ نبوی ہے
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