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BUSINESS Monday, 11 March, 2013
Pakistan attracted $11.464b Fdi in last Five years ISLAMABAD: Pakistan received $11.464 billion in Foreign Direct Investment (FDI) in last five years, according to official documents. The documents reveal that the country attracted $2.6208 billion FDI in 200708 (March-June) and $3.7199 in the financial year 2008-09. In 2009-10, the country attracted $2.1508 billion as FDI whereas the figure stood at $1.6348 billion in 2010-11 and $0.8126 billion in 2011-12 In 2012-13 (January-July) FDI stood at $0.5251 billion. Meanwhile, National Database and Registration Authority (NADRA) earned a sum of Rs 7.5 billion from overseas Pakistanis as fee for issuance of computerised National Identity Card for Overseas Pakistanis (NICOP) during the last four years. According to breakup, NADRA earned Rs 1.3 billion as NICOP fee during July 2012 to March 2013, Rs 2.1 billion in 2011-12, Rs 1.7 billion in 2010-11, Rs 1.5 billion in 2009-10 and Rs 1.2 billion in 200809 from expatriate Pakistanis. APP
$7.878b loans obtained From imF in three years, na told ISLAMABAD: Pakistan has obtained $ 7.878 billion loan from the International Monetary Fund (IMF) from 2008 to 2010-11, according to documents placed before the National Assembly (NA). The documents revealed that the country obtained a $3.9 billion Stand-by Agreement (SBA) in 2008-09 while the SBA obtained in 2009-10 was $3.526 billion. In addition, $ 0.452 billion had been obtained as Emergency and Natural Disaster Assistance (ENDA) in 201011. The interest rates on these loans range between 1.07 percent and 3.07 percent per annum. The IMF had disbursed the amount in 6 tranches, each of which is payable in eight equal installments. APP
$372 MILLION COMMITTED BY E&P COMPANIES
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he government of Pakistan, in order to meet the energy shortfall in the country and fulfil future energy requirements formulated a new Petroleum Policy, 2012, wherein more liberal fiscal incentives were offered. Besides this, the government also introduced Tight Gas Policy, Low BTU Gas Policy, Marginal/Stranded Gas Pricing Guidelines and Shale Gas Framework for three pilot projects. In order to alleviate the shortage of hydrocarbons and to meet the future requirements of the country, Advisor to the prime minister on Petroleum & Natural Resources Dr Asim hussain said the Ministry of Petroleum & Natural Resources should play a dynamic and proactive role to meet new challenges. Following his directives, the Directorate General of Petroleum Concessions, after a lapse of almost three and half years, offered 58 blocks for
grant of exploration licences. The bids for these blocks were opened on 10th March (yesterday), in the presence of representatives of the provinces, exploration and production (e&P) companies and officials of DGPC/Ministry of Petroleum & Natural Resources. Dr Asim also said the execution of new exploration licences and ‘petroleum concession agreements’ form an integral part of the government’s drive to attract investment in the oil & gas sector, therefore, maximum number of exploration licenses ought to be executed with multinational, public sector and local e&P companies to achieve the country’s energy goals in the shortest span of time. Following advertisements published in leading newspapers calling for bids, the government received 66 applications for 50, out of the 58, blocks offered for bidding through open and transparent competitive bids. As a result of bidding, e&P companies have committed to invest a minimum financial expenditure of more than $ 372 million (Rs 37 billion).
PPl clinches 11 exploration blocks, committing over $64m KArAchI: Alligned with its aggressive exploration programme to optimise production and reserves replenishment of hydrocarbons, the Pakistan Petroleum Limited (PPL) won provisional grant of 11 strategically-fit exploration blocks offered in the latest bidding round held on March 10 at the Directorate General of Petroleum Concessions, Ministry of Petroleum and Natural Resources (MP&NR). The blocks won by PPL are located in Sindh, Punjab and Balochistan. The company has committed a total of 6,445 work units, which translate into a minimum financial obligation of $64.45 million, though actual investment would be significantly higher on discharging the work commitment. To engage a multinational E&P company in the bidding round, the PPL submitted two joint bids with OMV (Pakistan) Exploration GmbH. The Austrian E&P company will operate one of the two blocks, becoming the first multinational E&P in recent years to venture into the country as operator- a move likely to draw more multinationals to the local E&P sector. PPL was instrumental in bringing OMV to Pakistan during the 1989 bid round and has since partnered with the company in successful ventures, including Sawan, Miano, Latif and Tajjal fields. StAff RePoRt
APCNGA demands 7-day gas supply across Pakistan ALSO DEMANDS FORMATION OF INDEPENDENT COMMISSION TO PROBE INTO CAUSES, CONSEQUENCES OF ENERGY CRISIS ISLAMABAD
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he All Pakistan CNG Association (APCNGA) on Sunday sought 7-day gas supply to compressed natural gas (CNG) filling stations across the country as the change in weather has significantly subsided demand for gas. In a statement issued on Sunday, APCNGA Chairman Ghiyas Abdullah Paracha said the government must revisit the load shedding schedule for CNG sector and resume round-the-clock gas supply until next winter. “Government must end discrimination and provide relief to the masses before the dissolution of assemblies because we have braved unprecedented gas load shedding which took a heavy toll on routine life, the country’s economy and foreign exchange reserves,” said Paracha. Paracha further said reduced demand for gas has improved supply levels, adding that this fact can be verified from
records of gas distribution companies. The government is left with no excuse to continue its policy of unjust distribution of resources, he said. expressing disappointment over the petroleum ministry’s continued silence on proposals by APCNGA to end the gas crisis, he said the government must take steps to rescue the CNG sector and ensure smooth functioning, especially in Punjab, which has been hit the hardest. Paracha said Punjab is being penalised
by policymakers and remained exposed to high levels of load shedding compared to other provinces, solely for political reasons. he said foreign exchange reserves have touched alarming levels. In such a scenario, he said, the CNG sector can play a decisive role in cutting the import bill, providing some much-needed fiscal space. Rulers must realise that Pakistan is set to witness widespread political chaos if it fails to create around one million jobs per annum without which economic instability will persist, Paracha opined. The handling of the energy crisis since several years is adding greatly to unemployment which poses a massive security threat to the country, Paracha said. he demanded that an independent commission be formed to probe into the causes, consequences and the macroeconomic implications of the energy crisis and suffocation of the CNG sector. “Owners of the CNG filling stations will not accept deliberately engineered gas shortages anymore,” said Paracha.
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Where have china’s workers gone? Yukon HuAng & CLAre LYnCH
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I Jinping and Li Keqiang are taking over China’s leadership at a time when growth has slackened and labor issues have become more complex. Reports that businesses such as Foxconn Technology Group are raising wages and struggling to recruit workers in China have intensified debate over just how many surplus workers the country still has. Meanwhile, a boom in college-educated Chinese has raised concerns of an impending threat to U.S. competitiveness. These seemingly disparate concerns about China’s labor force are actually linked by common underlying factors, with critical implications for China’s ability to remain the growth engine of the world. China’s large pool of surplus labor has fueled its rapid industrial growth. Now this “demographic dividend” may be almost exhausted, and its economy reaching a Lewis turning point: a shift named after the Nobel prize-winning Arthur Lewis, who was the first to describe how poor economies can develop by transferring surplus labor from agriculture to the more productive industrial sector until the point when surplus labor disappears, wages begin to rise and growth slows. Citing periodic labor shortages and unskilled wages that have risen since 2003, prominent Chinese economists suggest that time has come. The International Monetary Fund disagrees and puts the turning point much later — between 2020 and 2025, based on a model analyzing labor productivity. A third view is that China’s surplus labor is still plentiful, given that about 40 percent of the labor force is still underutilized in the rural sector, mostly in agriculture, which accounts for only 10 percent of gross domestic product. mobility restriCtioNs: In China, many market imperfections impede the mobility and use of labor. Thus, actual availability may fall far short of what is potentially available. The hukou residency system that restricts migrant workers from accessing services where they are employed is the most glaring example of this kind of imperfection. Less obvious is the extent to which China’s rural- support policies, including subsidy programs, may be encouraging workers to stay in agriculture longer than they should. Surplus workers may not be in agriculture as in the original Lewis model but in smaller towns, underemployed at depressed wages. The result is that China has the highest rural- urban income disparity in the world. Why don’t these workers move to more productive jobs in more dynamic settings? In formal terms, it is because their “reservation wage” has increased — that is, the minimum wage they demand to move is much greater than their current wage, because for a generation that didn’t experience the hardships of the Mao Zedong era, the monetary and emotional costs of relo-
cation have risen. Many workers won’t move to major cities that lack affordable housing. They may also have rights to land that can’t be sold for full market value — thus, staying in familiar surroundings is now a more attractive proposition. If recent decades saw a huge migration that “brought workers to where the jobs are” along the coast, the future may mean the reverse, involving “bringing the jobs to where the workers are” with profound implications for China’s economic geography. In lesser known provinces such as henan, with a country- sized population of 100 million, large numbers of young workers seek factory positions but are unwilling to relocate to seemingly foreign places in coastal China. As China becomes more consumption-oriented with rising incomes and urbanization, the center of economic
VIA BLooMBerg The death of President hugo Chavez marks the beginning of a perilous and hopeful moment for Venezuela and the Western hemisphere. There is no denying the impact of the charismatic exparatrooper, a plotter and survivor of coups who demolished Venezuela’s political power structure, won three elections with wide support and used the wealth from the world’s largest oil reserves to advance, across the Andes and beyond, his homebrewed ideology of “Bolivarian socialism.” how long that incoherent ideology will survive its creator is an open question. The challenge now faci n g Venezuela and its
gravity will naturally move inland where two- thirds of the population resides. ColleGe Graduates: Just as young workers are demanding more satisfying jobs, they also increasingly feel entitled to a college education. Government policy has expanded access to higher education. From 2000 to 2010, the percentage of college-age cohorts enrolled in universities more than tripled in China, a rate of increase far above that of India, Malaysia and Indonesia. China wants to produce 200 million college graduates by 2030; they will make up more than 20 percent of the projected labor force, more than double the current ratio. The push to expand higher education means the number of college-educated has leapfrogged — and excessively so — ahead of those holding only vocational or junior college degrees. These college-educated workers are un-
willing to settle for factory work and compete for office-based positions. College graduates are four times as likely to be unemployed as urban residents of the same age with only basic education, even as factories go begging for semi-skilled workers. Given the underdeveloped service sector and stilllarge roles of manufacturing and construction, China has created a serious mismatch between skills of the labor force and available jobs. As the economy moves up the value chain, substituting more capital-intensive manufacturing for unskilled labor-intensive assembly, a shortage of semi-skilled workers is appearing. But the excessive growth of college graduates has outpaced the structural transition and prematurely shifted the labor supply from semi-skilled manufacturing workers to more knowledge- intensive service professionals. More emphasis
Chavez’s Legacy of Ruin neighbors is to ensure a peaceful transition to a new elected government. Under Venezuela’s constitution, an election must be held within 30 days. Given the supercharged atmosphere surrounding Chavez’s death — just hours earlier, Vice President Nicolas Maduro blamed Chavez’s enemies for his cancer, and claimed that opposition groups were sabotaging the nation’s power grid — the potential for unrest during the campaign looms large. In last October’s election, Chavez used the tools of incumbency, including not just government largesse but also dominance of the news media and other soft authoritarian strategies, to disadvantage his challenger henrique Capriles Radonski. That pattern will repeat itself, with the added uncertainty and tension that may come from rivalries between Maduro, National Assembly President Diosdado Cabelloand others within the postChavez camp. Good NeiGhbors: It will fall to Venezuela’s democratic neighbors, led by Brazil and Colombia, to exert influence for a clean and lawful campaign. Any public pressure by the U.S. will be as ineffective as it is unwelcome — in the short run, Chavez’s followers are likely to resort even more readily to anti-American invective to whip up popular support, as Maduro did the day Chavez died by expelling two U.S. diplomats for allegedly seeking to destabilize the country.
The disappearance of the larger-than-life Chavez does create more of an opening for the Organization of American States to call, if needed, for intervention under the Inter- American Democratic Charter. It also provides an opportunity to defeat a cynical “reform” aimed at weakening one of the hemisphere’s human-rights monitors. Chavez, along with his ally President Rafael Correa of ecuador, had led an attack on the OAS’s Inter-American Commission on human Rights, which had called attention to Venezuela’s authoritarian drift. In a measure to be taken up this month in Washington, they propose to cut funds to the judicial watchdog and particularly to its special rapporteur for freedom of expression, who defends liberty of the press and journalists. Some deft and forceful diplomacy could blunt that effort, which would weaken protection for opposition groups at a particularly bad time. Seismic political upheaval in Venezuela, however, is neither imminent nor desirable. Not only are 20 out of 23 governorships in the hands of Chavez supporters (many of them former military officers), but over the course of his dozen years in power he built up a 125,000strong militia, of whom 30,000 could be considered armed combatants. having them pour out into the streets is in nobody’s best interests. Instead, if moderate change is to come, it will be driven largely by economic necessity. Chavez’s policies, especially his most recent pre-
on vocational training and industry-specific engineering skills will help China fill its immediate need for manufacturing workers. economists will continue to debate whether China is running out of surplus labor. But pinpointing the timing of the Lewis turning point is less relevant than understanding how policy distortions, shifting labor migration patterns and higher education enrollments are creating labor shortages and skill-mix problems. As China enters a more complicated and less predictable phase of its economic development, its policy makers need to focus on how to encourage use of labor in the right places and with the right skills. (Yukon Huang and Clare Lynch are, respectively, a senior associate and a junior fellow at the Carnegie Endowment. The opinions expressed are their own.)
election spending splurge, have led to growing debt, among the highest borrowing costs of emerging market countries, one of the world’s highest inflation rates, and widespread shortages of milk, meat, toilet paper and other basic goods. A recent devaluation will help government finances but make imported goods even more expensive and seems like a short- term fix. ’homeGrowN Charm’: Such economic tribulations didn’t seem to dim the adulation of Chavez’s supporters, who backed him repeatedly. his likely successors, however, may not have his “immediate friendliness and…homegrown charm” — qualities that Gabriel Garcia Marquez singled out in calling Chavez “a natural storyteller.” And they probably won’t have as much money to mix with the magical realism. Starved of investment and milked to fund Chavez’s special projects, Venezuela’s state-run oil company produces onequarter less oil than it did when he first took office. In the days and months ahead, Chavez’s champions and critics will debate the extent to which his policies reduced poverty and inequality, and how accountable he should be held for the near-quadrupling of murders from 1998 to 2011, when more than 19,000 Venezuelans were killed (about the same as the total for the U.S. and the european Union combined). They may plumb the mysteries of Chavismo, including the wisdom of forging ties with Iran and Syria and giving away billions of dollars in oil each year to Cuba. But the luxury of mulling history’s verdict will be denied to whoever takes Chavez’s place, because the economic mess he left behind will demand all of his successor’s attention.