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Sunday, 12 February, 2012
SBP keeps policy rate unchanged g
12 per cent discount rate kept to revive business confidence KARACHI ISMAIL DILAWAR
erming financing of country’s fiscal and external current account deficits as a basic challenge, the central bank Saturday kept the discount rate unchanged at the pre-2008 level of 12 per cent to revive business confidence in the crises-hit country. State Bank, declared achievement of the budgeted rs1.952 trillion tax collection targets as “ambitious” and projected that the fiscal deficit was difficult to be arrested at revised target of 4.7 per cent and was likely to swell beyond 5.5 per cent of the gDP by the end of FY12. Citing provisional estimates, the central bank said the fiscal deficit for H1-FY12, from the financing side, showed a deficit of rs532 billion or 2.5 per cent of gDP. given that the fiscal deficit was always higher in the second half of a fiscal year, at least by 0.5 per cent during the last 10 years, containing the FY12 fiscal deficit close to the government’s revised target would be difficult. The regulator said given a steady flow of workers remittances, the external current account deficit is expected to remain in the range of $3.5 billion to $5.5 billion, or 1.5 to 2.4 per cent of gDP, by end-June. “Central Board of Directors of State Bank of Pakistan (SBP) has decided to keep the per cent policy rate unchanged at 12 per cent,” governor SBP, Yaseen Anwar, announced here at SBP while unveiling the monetary Policy Statement for the next two months. Projecting the backbreaking inflation (average) to remain in double-digit, ranging from 11 to 12 per cent, for the current fiscal year, SBP governor said there were indications of underlying inflationary pressures in the economy on account of non-food CPi items. Suggesting the medium Term Budgetary Framework (mTBF) as imperative to check the persistent price hike, Anwar said, energy-shortages related uncertainties would have to be lessened to ensure a sustainable economy recovery in the country. “it must be emphasised that sustainable economic recovery over the medium term would call for a sizeable increase in both the domestic and foreign private investment in the economy. For this to happen, the business confidence needs to be revived by reducing
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uncertainties due to energy shortages,” the governor said. Against this backdrop, he said, SBP’s central board considered the early rate cuts of 200 basis points to be appropriate. About the financial deficits on the domestic and external fronts, Anwar said, the size of these deficits may not be considered large, given the current state of falling private sector investment demand in the economy. A reflection of overall low aggregate demand could be seen in the declining inflation trend, contraction in the real private sector credit, and falling volume of imports. According to SBP governor, lack of diversified and sustainable financing sources had resulted in substantial government borrowings from the banking system and declining foreign exchange reserves. “This has squeezed the availability of credit for the private sector and increased the pressure on rupee liquidity.” SBP, he said, had been providing substantial liquidity on almost permanent basis, on average rs230 billion during 1st July–9th February 2012, to ensure smooth functioning of the payment system and avoid financial instability. “The continuation of this trend, however, carries risks for effectively anchoring inflation expectations in the medium term,” he warned. The uncertain market liquidity flows have lead to excess volatility in short term interest rates and increased the challenges of monetary management. The main reasons for this uncertainty include, a sharper deterioration in the external current account deficit, a declining trend of foreign inflows, and a higher currency to deposit ratio. However, other market interest rates, such as KiBOr and Weighted Average Lending rate (WALr), have largely followed the policy rate reductions. A declining interest rate environment together with a relatively better growth in Large-Scale manufacturing (LSm) is expected to help the pickup in private sector credit. The LSm sector grew by 1.5 per cent during July-november, FY12, which is in contrast to an average contraction of 3.1 per cent during the same period of last three years. moreover, credit to the private sector has expanded by rs238 billion during 1st July–3rd February, FY12. However, to assess its likely path, few points need to be kept in mind. First, given the continuing energy
shortages, unfavourable law and order conditions, and an uncertain political environment, the desired boost in business confidence and thus private sector credit may not take place. Second, profitability of the textile sector, a major user of private sector credit, was better in FY11 due to higher cotton prices. This would facilitate repayments or keep the demand for fresh credit to a minimum in FY12. Third, the utilisation of installed industrial capacity is considerably low and continues to decline, which is inhibiting credit demand for fixed investment. Fourth, all of the fresh credit disbursement in H1-FY12 was utilized to meet the working capital requirements, which implies that a significant part of this credit will be retired in H2-FY12. “Thus, the full year expansion in credit to the private sector is expected to remain weak for yet another year in FY12 despite interest rate reductions,” said the governor. He said its year-on-year growth was already negative in real terms and indicated depressed private investment demand in the economy. in addition, the governor said, given substantial government borrowings from the scheduled banks together with rising bad debts, the banks were likely to continue to avoid lending to the relatively risky private sector. Citing provisional data, he said the government had borrowed rs444 billion from the banking system during 1st July–3rd February to finance its current year’s fiscal deficit. This includes rs197 billion borrowed from the SBP and show a year-on-year growth of 25.8 per cent. moreover, he said, these borrowings were significantly higher than the yearly financing requirements of rs293 billion envisaged in the FY12 budget. About tax collections, SBP governor termed as encouraging the Federal Board of revenue’s collection of rs840 billion during H1-FY12, showing a strong growth of 27.1 per cent, and the announcement of auctioning 3g licenses in the telecommunication sector saying these developments could help country contain the potential fiscal slippages. “However, based on the seasonal pattern of tax collections, the full year target of rs1952 billion still seems ambitious,” he viewed. At the same time, Anwar said, there were indications that the issue
of circular debt in the energy sector remained and losses of major Public Sector enterprises (PSes) continued to increase. Thus, the likelihood of slippages on the expenditure side on account of subsidies, over and above the budgeted amount, cannot be ruled out. The delay in these subsidy payments may have implications for resolving the circular debt issue. About the external sector, SBP governor said, the risks to external position had also increased due to worsening terms of trade, fragile global economic conditions, and continued paucity of financial inflows. in addition, $1.1 billion were scheduled to be repaid to imF during the second half of FY12. SBP’s foreign exchange reserves had already declined to $12.2 billion as on 9th February 2012 from $14.8 billion at end-June 2011. Similarly, the rupeedollar exchange rate had depreciated by 5.2 per cent in FY12, so far. Led by 33.7 per cent growth in imports of petroleum products on the back of elevated international oil prices, total imports have increased to $19.7 billion in H1-FY12. The volume of imports remained muted, which indicates moderation in domestic demand pressures. given the rising tensions in the US-iran relations and political uncertainty in the middle east region, oil prices are unlikely to fall significantly in the near future and may even increase. “Therefore, despite low volumes, imports are projected to grow in the range of 12.5 to 14.5 per cent for FY12,” he said. While the falling cotton prices played their part in sharper than expected slowdown in export receipts, $12 billion in H1-FY12, the volume of exports had also declined considerably. “Assuming that these trends would continue in H2-FY12, export receipts are projected to show a decline of 3 to 5 per cent in FY12.” Projecting the country’s external current account deficit at $3.5 billion to $5.5 billion, SBP governor said, the possibility of limiting the deficit to the lower bound of the range was mainly contingent upon the realisation of Coalition Support Fund, $800 million, and the proceeds from the auction of 3g licenses, estimated to be around $850 million. “The real challenge is to finance this projected external current account deficit,” he added. The actual net capital and financial inflows during H1-FY12 was only $167 million, due to the decline in both direct and portfolio investments and shortfalls in official flows.
Assuming that all the official flows contemplated by the government are realised–$500 million from the issuance of euro bonds, $800 million from the privatisation proceeds of PTCL, and budgeted loans from international financial institutions–the net capital and financial inflows could increase to $3.8 billion by June, 2012. These fiscal and external developments, he said, had resulted in a skewed composition of monetary aggregates. in particular, the increase in net Domestic Asset (nDA) component of m2 was disproportionately large while net Foreign Assets (nFA) had contracted. given its strong correlation with inflation, the resulting increase in nDA to nFA ratio was not a welcoming development, he said adding the Year-on-Year growth in m2 for FY12 was projected to be in the range of 12 to 13 per cent. The changing composition of m2 required a careful interpretation. For instance, the deterioration in the external sector was mostly due to adverse terms of trade developments and uncertain official inflows and may not be a sign of rising aggregate demand. Similarly, the pressure on aggregate demand due to the government borrowings from the banking system was being partly offset by the weak private investment demand. These conjectures were supported by the decline in Year-onYear CPi inflation to 10.1 per cent in January, 2012. He said the average inflation in FY12 would increase and was expected to remain in the range of 11 to 12 per cent, due to an increase in electricity and gas prices, high international oil prices, impact of exchange rate pass-through, increase in support price for the upcoming wheat procurement season, and substantial government borrowings from the banking system. mTBF, he said, envisaged a systematic reduction in the fiscal deficit to 3.0 per cent of gDP in FY14, by increasing the tax to gDP ratio and stipulates inflation targets of 9.5 per cent for FY13 and 8 per cent for FY14. Decisive reforms in the energy sector can also go a long way in achieving mTBF targets. These reforms would not only reduce the government’s reliance on the banking system borrowings, but also minimise the need to adjust the energy prices in a sporadic and unpredictable manner. To sum up, he said, despite moderate aggregate demand, pressure on rupee liquidity was likely to continue due to uncertain foreign inflows and substantial government borrowings to finance the fiscal deficit.
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Govt to expedite approval of Rs20b 500kV Thar-Matiari electricity transmission line ISLAMABAD
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AMER SIAL
He government has decided to expedite construction of the double circuit 500 kV transmission line between Thar matiari which is expected to cost around rs20 billion, but will allow the interconnection of Thar coal based 1200 mW engro Power Plant with the national grid by 2016. An official source said the project is expected to be approved at the upcoming Central Development Working Party (CDWP) meeting. PC-i of the project will be submitted to the planning commission and the project is likely to be financed with the assistance of China and Japan. He said the government decided to expedite the project, as it was informed that there was no way out of
the expensive thermal mix without enhancing the power generation from hydel and coal resources. While a few hydel projects were approved, there was no progress on the Thar coal. The ministry of Water and Power was given a green signal to submit PC-i for the project which will be approved by CDWP. The construction of transmission line is necessary as Sindh engro Coal mining Company Limited (SeCmC), a joint venture between the government of Sindh and engro, has completed the feasibility study. Without the transmission line, the company will face difficulty in achieving financial close, set for December this year, he said. Thar desert contains the world’s seventh largest coal reserves, totalling an estimated 175 billion tonnes of lignite grade coal. This is equivalent to
50 billion tonnes of crude oil, more than iran and Saudi Arabia’s combined oil reserves. initially, SeCmC plans to develop a 6.5 million tonne per annum coal mine in parallel with 1200 mW power plant, but the production capacity of the coal mine will be enhanced to 22.5 mt/a to support 4,000 mW of power generation capacity for 70 years. in subsequent phases, chemical and fertiliser plants would be set-up as part of a mega petro-chemical complex which would be supported by additional coal mining. Coal mining and power generation is estimated to start operation by December 2016. The source said, Japan has also shown interest to finance the transmission line and has stressed establishment of a power house. Japan has been historically averse to coal power projects due to environmental issues,
‘Agri research, seed development, utility stores should be privatised’ KARACHI
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STAFF REPORT
eDerAL Secretary ministry of Commerce Zafar mehmood said it is high time that the government should privatise, or outsource the agricultural research and seed development programmes in order to get maximum benefits for this much-neglected sector. Similarly, the Utility Stores Corporation should also be privatised for better supply chain scenario in the country, as they have a huge spread and they will be of much help to the farmer. He said so being the chief guest at the Pakistan Agri Conference held here in Karachi expo Centre on Saturday. While talking about the need of revolution in the agriculture sector of the country, he said the government is spending a lot on the agricultural research and seed development programmes since long, but now there is a need that the government should give these programmes to the private sector for much better outputs. ‘We have neglected value addition in the agriculture sector, and agri extension series of the provincial governments are not available to the poor farmer,’ he said, adding that the role of provincial governments in agri exports is minimal. ‘The land records should be computeried and traditional old system should be abolished, so that the farmer can spend his time on increasing productivity of its lands instead of tackling land record issues,’ he added. ‘Also, efficient infrastructure development in the sector has also been neglected, and since today’s world is very competitive i have been requesting the provincial governments to go for value addition and provide the people with efficient infrastructure,’ said Zafar mehmood.
Another issue is the agri exports, for which we are not doing enough to get the maximum benefits, he said, adding that we still are not able to export mangoes to Japan despite Japan’s plausible assistance in this regard many years back. even the best Kinnows we have in Sargodha region were not being exported a few years ago, now some 150 latest processing plants have been established there by, the investors from Karachi, which have resulted in the forex of $100m for the country, he added. Dr Ali Abbas Qazilbash of United nations industrial Development Organisation (UniDO) in his welcome remarks said that currently the organisation is helping the country through direct technical assistance and investment and technology transfer programmes. ‘Pakistan needs to have better productivity and value added products in the sector through the use of latest technology, which can maximise the benefits of high value agri exports,’ he added. A project Trade related Technical Assistance (TrTA) funded by european Union (eU) is meant for the support of the country in the areas of agriculture, fisheries, horticulture, etc, and will help the country to have access to the international markets, he added. Dean and Director of institute of Business Administration (iBA) Dr ishrat Hussain while delivering his keynote presentation titled ‘Agricultural Productivity and economical Development’ said that at the time of independence, Pakistan had 75 per cent labour associated with the agricultural sector that was contributing 50 per cent to the national gDP, now it has decreased to 40 per cent and 20 per cent, respectively. ‘Through progressive production practices, wheat production in the country can easily witness the growth up to 35m tonnes from the current production of 25m tonnes,’ he said, adding that the issue that needs to be addressed include
but its stance dramatically changed after the damage to the Fukushima Daiichi nuclear power plant by tsunami on march 11, 2011. Keeping in view the possible evacuation of 10,000 mW from Thar coalfield within next 10 years, national Transmission and Despatch Company (nTDC) with the support Asian Development Bank funding has initiated a feasibility study for laying 1300 km of transmission line to initially disperse up to 3000 mW from the Thar coal field to the national grid. Pakistan has huge coal reserves mainly in Sindh, estimated at 186 billion tonnes, Punjab 235 billion tonnes, Balochistan 217 billion tonnes, Pukhtoonkhwa 90 billion tonnes and Azad Jammu Kashmir 9 billion tonnes. These coal reserves can be used for affordable power generation for about 200 years.
inefficiently organised land markets (that result in low production); distorted water market (the influential gets maximum water); unequal water distribution (the poor farmer has no water); nonliberal retail market; low preference to the agri sector; unavailability of quality certification methods (strengthened quality assurance mechanisms to help both the consumer and the exporter), etc. Chief executive Officer engro Foods Limited, Afnan Ahsan while addressing the gathering talked about the challenges and opportunities the dairy industry of the country is facing. He said the value of dairy component of the agriculture sector is rs500bn which is 15 times higher than the mango market, but it is not even in the thought process of the government policies. He informed that the demand of the dairy products is continuously outpacing the supply, as the industry requires 11 litres of milk from one cow, which is currently standing at 4 litres; therefore, this gap has been resulting in a price increase. non-commercialised scattered farming is another issue and adding to it is the export of 11 per cent of our female breeding stock to Afghanistan, he added. ‘We are ranked at ninth among the world’s backward countries that are facing quality issues because in Karachi we have 12m bacteria count in one litre of milk, while in new Zealand, the count is 12 thousands per litre, therefore, we will never be able to export milk,’ said Afnan. The government has to establish a regulatory framework for this industry, he added. many technical experts, government officials, high ups of the private sector, scientists, development mangers of the sectors like sea food and fisheries, Horticulture, grain & Cereals, meat & Poultry, Dairy, etc. participated in the conference and shared their knowledge with the attendees. The Pakistan Agri Conference ‘Agricultural Competitiveness through Value Addition’ was supported by the Australian Trade Commission, USAiD, United States department of agriculture, Overseas investors Chambers of Commerce and industry, Federation of Pakistan Chambers of Commerce and industry, Punjab government, and Punjab Board of investment and Trade, among many others.
PSM losing local raw material for manufacturing steel products KARACHI GHULAM ABBAS
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AKiSTAn Steel mills (PSm) which is going through severe financial crisis is also losing local raw material for manufacturing steel products due to its duty free exports. As a large quantity of raw material is being exported by the local producers without any hindrance, PSm, the country’s only steel manufacturing institution, is fast losing local supply, forcing it towards further losses and lower production, sources told Profit. Citing reasons for the increasing exports of raw material of steel products, they said as the exporters and producers are paid the price and other expenses by the importers without any delay, they prefer to sale the products outside the country. Lack of any duty on exports of the material is another factor encouraging more exports despite the fact that PSm was in dire
need of them under the present situation. The finically strapped organisation was now depending more on locally produced raw material as it was unable to pay for huge imports. “india has duty on the exports of the same material, but in Pakistan the exporters are given a free hand to sale the valued raw material,” they added. While the mill was currently being run on below 20 per cent capacity in view of the shortage of raw material, the decrease in local supply could further force the mill towards billions of rupees worth losses in near future. According to sources, the management of PSm has also requested the concerned authorities to take notice of the increasing trend of exports and control it through imposing duty as done by india to save the mill from further losses. For the last three years, PSm was facing raw materials shortage due to financial crisis. PSm needs coal, iron ore, fine and lump as raw materials which are mainly imported from Canada,
Australia, germany, india, etc, for making steel. PSm sales and production were gradually decreasing while loss was increasing because of acute shortage of raw material and poor performance of its plants. in order to bring back the mill to a profit giving organisation, sources said, PSm should be given the required bailout package besides controlling the exports of raw material. PSm was facing loss of billions of rupees. it has to pay off huge bank loans and government taxes. it was, in fact, on the verge of collapse and bankruptcy and if the rs10-12 billion rupees bailout package was not given to the organisation it was fared that the production level could reach to a mere 10 per cent. Besides the shortage of raw material there were many factors for the current crisis in PSm including, low capacity utilisation, liquidity crisis, rise of cost of coal in the international market, mismanagement on the part of the administration and political involvement and interference from the government side.
Pakistan suffers trade deficit with 81 countries ISLAMABAD: Pakistan has suffered a trade deficit of $11.4 billion during July-December period of the current fiscal year as it faced a trade deficit with 81 countries including the world leaders, like China, Japan and Korea and also from developing countries like morocco, South Africa, and Belarus. According to experts, the reason for trade deficit with large number of countries, including some least developed, is the absence of engineering exports, which has nearly 70 per cent share in the international trade each year. Pakistan’s exports mainly consist of various products of textiles that are largely exported to USA, eU and Japan which were tapped in due to the textile quotes before the advent of free trade era in 2005. Textile exports increased significantly during the last fiscal year due to the increase in commodity prices because of the decline in the global cotton production. With higher international cotton yields, the advantage is over. Pakistan needs to invest in the value added sector and look for markets in Asia and Africa as present economic crisis in eU and US will not help in increasing textile exports. The government is trying to diversify its exports, but without developing the huge domestic market, its efforts would not yield desire results, as locally successful products and brands could easily make it to international markets. Successive governments have failed to promote the most potential agriculture processing industry, as large quantity of fresh vegetables and fruits could be exported in the food deficient middle eastern countries. Similarly, process grains could be easily exported to middle east, iran, Afghanistan and Central Asian States. The meat and dairy sector remains another untapped market, whose packed products could be exported from a region expanding from east Asian states to north African states; majority of which are meat and dairy deficient and have huge demand for meat and dairy products, experts said, adding that introduction of halal certification could have an catalyst effect to boost their exports. Pakistan’s exports of leather, sports goods and surgical instruments have declined during the last few years mainly because of the non implementation of international quality standards and introduction of cutting edge technologies for processed goods adopted else where in the world. IRFAN BUKHARI and AMER SIAL
Kisan Board demands Cane Procurement Receipt status LAHORE: Kisan Board Pakistan (KBP) has demanded giving Cane Procurement receipt (CPr) status of cheque to save the sugarcane growers from the injustices of sugar mill owners. it also urged the government to ensure payment by mills to the sugarcane growers within 15 days of sale of the cane under Cane Act besides abolishing deduction on weight of sugarcane. These demands were made by KBP general Council which met here on Saturday to discuss the issues faced by the agricultural sector and growers and recommended a set of proposals for resolving these hardships hampering the growth of agriculture. The meeting was chaired by KBP Central President Sardar Zafar Hussein Khan and was attended by the growers’ leaders from all provinces. The meeting also demanded abolishing the permit system for sugarcane growers and construction of shed outside sugar mills to save farmers from weather related problems. it also demanded provision of first aid facilities at these sheds. KBP general Council claimed at least five million people in the country were facing food shortage and Pakistan despite being an agricultural country was heading towards food crisis. it said poverty incidence was increasing day by day and these issues could only be controlled by improving the production of agricultural sector. However, it regretted that growth in agricultural sector remained almost nil from 1999-2011, while in the year 1949, agriculture had a share of 53 per cent in the total gDP. The meeting also demanded that the fertiliser manufacturing companies should be directed to print price of the fertiliser on each bag, to ensure provision of natural gas to these companies and launch an investigation into alleged wrong-doings, with regard to imported urea in national Fertiliser marketing Limited (nFmL). STAFF REPORT
Pakistan, India fail to develop consensus on opening trade gate LAHORE: Both india and Pakistan could not develop consensus on opening dedicated trade gate at Wahga border. neither Pakistani authorities, nor the indian government issued directions yet, Profit, learnt on Saturday. Speaking to media at The india Show, Federal minister for Commerce makhdoom Amin Fahim also indicated that the opening of dedicated trade gate at Wagha Border was not yet cleared, as construction work was underway. it is worth mentioning here that the soft opening of dedicated trade gate at Wagha border for bilateral trade between india and Pakistan was scheduled on monday, February 13, 2012. indian Commerce minister Anand Sharma, along with a delegation of 100 CeOs of top indian companies, has also been scheduled to visit Pakistan on February 13. earlier, it was planned that both commerce ministers would grace the historic event, but now it had been delayed as both sides were not prepared. STAFF REPORT
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Sunday, 12 February, 2012
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FICCI Secretary, Dr Rajiv Kumar g
Inefficient infrastructure, militaristic apprehensions impeding Indo-Pak ties LAHORE IMRAN ADNAN
nDiA-PAKiSTAn relations are much bigger than the trade and commerce between the two neighbouring country, but inefficient infrastructure and militaristic concerns on both sides of the border are major impediments in smooth relationship. These remarks were made by the Federation of indian Chambers of Commerce and industry (FiCCi) Secretary general Dr rajiv Kumar, while giving interview to a select group of journalists. Dr Kumar has come here to participate in the first single country exhibition of indian products, ‘The india Show 2012’, which was inaugurated by the Federal minister for Commerce makhdoom Amin Fahim at Lahore expo Centre on Saturday. Dr Kumar was of the view that both countries could save billions of rupees spent on account of defence and security, if trade relations between india and Pakistan improve. “Both neighbours should understand that these funds could be used for the development of masses,” he underscored. Both countries complemented each other meticulously, he indicated, “in the period of shortages, it is in their benefit to import goods from each other as it is cost effective and the easiest. in addition, once relations are harmonised, integrated production hubs can be set up at both sides of the border. There is no harm if Pakistan produces all cement and india produces some other products,” he stressed. responding to a query, Dr Kumar said that both sides were negotiating most favoured nation (mFn) agreement, but it could not produce results if port infrastructure remained inefficient on both sides of the border. Business community and media should press their respective governments to focus on infrastructure development, otherwise it was impossible to enhance trade volume between the two neighbours, he maintained. He, however, pointed out that the mFn status was necessary to give confidence to state
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machinery at both sides. “right now, people sitting at border posts and Customs stations have perception to discourage trade between india and Pakistan. Both sides are not prepared to handle increased volume of trade due to procedural and infrastructure hurdles,” he maintained. Highlighting another hurdle in india-Pakistan trade, he underscored that Delhi and islamabad could never help each other as people sitting in Delhi could not comprehend the potential of indiaPakistan trade, due to its smaller volume. He believed that governments in Pakistani and indian Punjab had to increase liaison and dialog to enhance trade. He pointed out that Chandigarh was a landlocked area that could benefit the most if trade relations between india and
Pakistan improved. He pointed out that currently it takes some three days to clear a consignment from Wahga Border, when only 150 trucks were crossing borders. if the volume increased the facility would choke down that would ultimately increase cost and result in total loss. He said as things stand large quantities of perishable commodities were being imported through Wahga Border but to liberalise trade both country had to open more ports. Answering a question, Dr Kumar said that Pakistani side had better infrastructure whereas india could not develop infrastructure at Wahga border to facilitate trade. He underscored that nontariff barriers (nTBs) was merely a buzz word, in fact most hurdles had already been removed except infrastructure. He indicated that visa issue had also been addressed. in future, business community would get multiple-entry and multiple-city visas. He further said that everywhere in the world, governments issue one visa for the whole country, but in case of india and Pakistan, both countries were still stuck up at city specific visas. Both governments needed to address this issue to liberalise trade by augmenting mutual trust, he underlined. Answering another question, Dr Kumar said Pakistan was a big market of 180 million consumers; if trade relations were improved india could get access to Central Asian States. “i do not see any problem if both countries move ahead with the same pace trade relations can normalise in two years or so,” he added. Speaking about energy, he pointed out that in Bathinda, gas pipeline was there if both countries had good relations Pakistan could import gas through this facility. “Tajikistan have some 4,000 mW abandoned hydroelectric capacity, if relations were improved both countries could benefit from this opportunity. india-Pakistan relations’ ramifications are much more than trade, it is only a tip of the iceberg,” he concluded.
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Indian commerce minister visit to open new era of relations LAHORE STAFF REPORT
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He leadership of SAArC Chamber of Commerce and industry (SAArC CCi) has welcomed the visit of high powered indian business delegation led by honorable Commerce minister of india, mr Anand Sharma. President SAArC CCi mr Vikramjit Singh Sahney, former President mr Tariq Sayeed and Vice President Pakistan Chapter mr iftikhar Ali malik, have regarded this visit as the commencement of new era of relationship between two leading economies of South Asia, adding that such initiatives would help defuse political tension and bring the two nations closer. This was stated in a press released issued by mr iqbal Tabish, Secretary general SAArC CCi. “The entourage of commerce minister includes top indian businessmen and more than 150 entrepreneurs and exhibitors is a positive reflection, which is instrumental to further deepen economic cooperation between the two leading nations of South Asia,” stated mr Sahney, who took presidency of SAArC CCi in January 2012. mr Annisul Huq, immediate past President of SAArC CCi from Bangladesh lauded the political leadership of both india and Pakistan for their recent efforts to normalise the relationship through economic diplomacy and expressed his best wishes for further improvement stating it is drastically required for the regional economic development. mr Tariq Sayeed, former President SAArC CCi appreciated the recent development in wake of endeavours of both of the governments for initiating business promotion strategy, which he perceived as an important element for the overall growth of South Asia. mr iftikhar Ali malik was certain that the visit of indian Commerce minister, high-powered indian businessmen and india Show in Lahore will not only help normalisation of bilateral relations, but also generate greater political much required to improve bilateral business environment, which can facilitate and increase economic growth and expansion of trade. mr Jashimuddin, VP- SAArC CCi (Bangladesh), mr Thinley Palden Dorji, VP- SAArC CCi (Bhutan), mr mahedra Pramir, VP-SAArC CCi (india), mr Ahmed mujuthaba, VP-SSArC CCi (maldives), mr Pradeep Kumar Shrestha, VP-SAArC CCi (nepal) and mr Kosala Wickramanayake, VP-SAArC CCi (Sri Lanka) have also expressed their best wishes for the success of the visit.
Federal minister inaugurates The India Show 2012 LAHORE STAFF REPORT
eDerAL minister for Commerce makhdoom Amin Fahim has said both indian and Pakistani governments are determined to ensure normalisation of economic and trade relations. The first single country exhibition of indian products, The india Show 2012, is part of these efforts that indicates that things are being put in the right direction. Federal minister was speaking at the inaugural session of The india Show here at Lahore expo Centre on Saturday. Fahim said the government was well aware of the reservations being expressed by certain sectors of the economy. He urged Pakistani pharmaceutical industry to bring down prices of locally manufactured drugs to compete with their counterparts across the border. Later, speaking to the press, federal minister said The india Show was just a beginning. Pakistan would reciprocate by showcasing, made in Pakistan Show, in india in the near future. Fahim admitted that existing infrastructure at Wagha border was inefficient to handle the increased volume of bilateral trade.
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However, he pointed out that things were improving gradually on both sides and infrastructure development was also underway. He said discussions were underway for three years multiple visas for the business community. Stakeholders on both sides of the border were deliberating to remove obstacles in the way of smooth commerce and trade. However, he underscored that no hasty decision would be made. Federal minister avoided the question about non-Tariff Barriers (nTBs) by the indian government despite awarding most Favoured nation (mFn) status to Pakistan in 1996. But he stressed that the situation was now heading towards normalisation. indian High Commissioner Sharat Shabarwal, Federation of indian Chambers of Commerce and industry (FiCCi) Secretary general Dr rajiv Kumar, Lahore Chamber of Commerce and industry (LCCi) President irfan Qaiser Sheikh and SAArC Chamber of Commerce and industry Vice President iftikhar Ali malik also spoke on the occasion. Addressing the inauguration ceremony, indian High Commissioner Sharat Shabarwal said india wanted to share its
growth potential with other countries, especially with its neighbours. india wanted to enhance bilateral trade with Pakistan, which would harness the economic prosperity. Shabarwal also pointed out that visa regime remained the main obstacle in promotion of bilateral trade between the two neighbours, but it was being eased out now. While highlighting The india Show, indian high commissioner said wide range of products were out on display by indian manufacturers. The india Show would pave way for future trade and commercial ties between india and Pakistan. Speaking on the occasion, LCCi President irfan Qaiser Sheikh said The india Show 2012 would lay a new milestone in the history of trade and economic relations of the two neighbouring countries. The show was a realisation of a dream of the business community of india and Pakistan to hold single country exhibitions at each other’s place. Sheikh said Pakistani business community was in favour of promotion of trade, especially with neighbouring countries. But, he underlined, it should not be at the cost of domestic industry, which was already struggling to survive
in acute energy shortage, rising inflation, widespread corruption and deteriorating law and order situation. irfan Qaiser said there were serious concerns and reservations from some sectors, including pharmaceutical, automobile, motorcycle, auto parts, sugar, textiles, cooking oil/ghee, etc. Any step forward without addressing concerns of the private sector with regard to awarding mFn status to india would only result in causing more problems. He said india granted mFn status to Pakistan in 1996, but Pakistan was still continuing with a positive list of importable items from india. Despite of that Pakistan could not take advantage mainly because of nTBs and some other impediments on part of indian government. Obviously there were complex domestic, political and security compulsions on both sides, which were bearing heavily on the existing framework for bilateral trade. Pakistani business community strongly felt that despite having granted Pakistan mFn status, a great deal of non-tariff and para-tariff barriers were still in place while exporting to india, he maintained. He pointed out that volume of documented trade between india and
Pakistan was around $2 billion, whereas, it was believed that the trade with india had the potential to be anywhere between $5 and $10 billion. But how much share Pakistan would be able to get out of it, was a big question mark. He further stated due to tight visa regime, bilateral trade between the two neighbours remained under $1.7 billion since past three years through regular channels. Whereas, overall volume of trade between india and Pakistan through irregular channels, like Dubai and Singapore ranged around over $3 billion per annum. it was high time to take benefit from each other’s strength and put aside all differences that had been hindering trade, commerce and economic prosperity, he stressed. After the opening ceremony, federal minister formally inaugurated the exhibition and took a round of the hall. LCCi Senior Vice President Kashif Younis meher, Vice President Saeeda nazar, US Consul general in Lahore nina maria Fite, former LCCi President mian mohammad Ashraf, former LCCi Senior Vice President Abdul Basit, former LCCi Vice President Aftab Ahmad Vohra and large number of businessmen, were present at the occasion.