Monday, June 15, 2009


KARACHI : The Sindh government has allocated Rs 1,233 million for the development of industrial sector under the Annual Development Programme (ADP) in the fiscal year 2009-10. The funds earmarked for the industrial development have been increased by Rs 104 million as compared to the last year's allocation of Rs 1,129 million for some 16 new and ongoing schemes, official sources told Business Recorder.

Of these schemes, development work on ten projects is under way, while only six new schemes have been included in the next year's ADP, they added. The sources said Rs 73.884 million has been earmarked for the ongoing schemes of the Sindh Small Industries Corporation, and Rs 150 million for new projects.

Break-up of the allocations is as follows: Rs 34.457 million for extension of Small Industrial Estate, Hyderabad, Rs 11.854 million for establishment of Small Industrial Estate in Ghotki district, Rs 5.639 million for setting up of Small Industrial Estate in Mithi, district Tharparkar. While Rs 21.934 million has been earmarked for the up-gradation of nine Small Industrial Estates in districts Thatta, Sanghar, Dadu, Hala, Badin, Nawabshah, Rohri, Sehwan Sharif, and Mirpurkhas.

The new schemes include extension of Small Industrial Estate in Larkana district with an allocation of Rs 50 million, and Small Industrial Estate Power Looms, Hyderabad with an amount of Rs 100 million. The SITE Ltd will give Rs 100 million as its share.

Rs 29.053 million has been earmarked for the improvement of infrastructural facilities in five estates - SITE Limited in Karachi, Nooriabad, Kotri, Hyderabad and Sukkur. Rs 100 million has been allocated for the development of infrastructure at SITE Benazirabad (Nawabshah).

Rs 100 million for laying of water supply line from Keenjhar Lake, Thatta to SITE Nooriabad. The scheme is being undertaken on 50:50 basis between the provincial government and SITE Ltd. Rs 70 million for the construction of 5.0MGD filter plant at SITE Hyderabad on 50:50 basis between the Sindh government and SITE Ltd. The new scheme includes consultancy service for combined effluent treatment plants in Karachi with an allocation of Rs 20 million.

Rs 100 million has been allocated for water connection to industrial and economic zone at Dhabeji and adjoining areas under public-private partnership. Rs 400 million has been earmarked for establishment of development and management companies for SITE Karachi, Nooriabad, Kotri and SITE Sukkur. Rs 3.557 million has been allocated for the improvement of the office of the deputy director industries and residential accommodation in Hyderabad district, and Rs 14.273 million for up-gradation of Sindh Government Press in district Khairpur.


(BRecorder)

• 0 comments »

Monday, June 15, 2009

Foreign direct investment in China fell for an eighth month from a year earlier as companies cut spending to weather the worst economic slump since the Great Depression.

Investment slid 17.8 percent in May to $6.38 billion, the commerce ministry said at a briefing in Beijing today, after falling 22.5 percent in April.

China is relying on government-led spending under a 4 trillion yuan ($586 billion) stimulus plan to revive growth. Investment from abroad may increase when the global economy recovers from what the World Bank forecasts will be a contraction of almost 3 percent this year.

“Companies have just been trying to survive the crisis, I don’t think they’re in the mood for aggressive overseas expansion,” said Wang Qing, chief Asia economist for Morgan Stanley in Hong Kong. “It’s too soon to see a pick-up.”

For the first five months of the year, foreign direct investment declined 20.4 percent.

Premier Wen Jiabao cautioned during a tour of Hunan province on June 12 and 13 that the world economic outlook remains unclear, the government said in a statement on its Web site yesterday. China has yet to establish solid foundations for a recovery, he added.

The Chinese economy expanded 6.1 percent in the first quarter from a year earlier, the slowest pace in almost a decade. Full-year growth may be 7.5 percent, according to a Bloomberg News survey of economists last month.

Overcapacity, Unemployment

The nation’s economic problems include slumping exports, falling profits, industrial overcapacity, unemployment and potential budget shortfalls, the premier said. Positive signs include a bumper summer harvest, gains in retail sales, rebounding industrial output, improving market confidence and faster growth in urban fixed-asset investment, Wen said.

China “mustn’t underestimate” the difficulties and needs to prepare to tackle them over “a long-term,” the premier said.

Foreign-invested businesses account for 30 percent of industrial output, 55 percent of trade and 11 percent of urban jobs, according to the commerce ministry.

China will further relax and streamline procedures for investment from abroad, commerce ministry spokesman Yao Jian said at today’s briefing. The nation wants to create jobs and to attract money for high-technology industries, backward regions, and environmental protection, Yao said.

Tesco Plc , the biggest U.K. retailer, is among foreign companies still expanding in China, saying it will spend an average of 500 million yuan ($73 million) on each of four new shopping centers.


(Bloomberg)

• 0 comments »

Monday, June 15, 2009


ISLAMABAD: Pakistan State Oil (PSO), the state owned fuel supplier, has conveyed to power generation companies that due to the current financial crunch owing to the accumulating circular debts it is unable to continue to tender for importing Low Supphar Furnace Oil (LSFO), official sources told Business Recorder. According to latest reports, PSO is owed Rs 80 billion by financially ill power generation companies.

PSO has been maintaining uninterrupted supply of LSFO to Kot Adu Power Company (Kapco) for the past several months. It was only after an exchange of correspondence and exchange of discussions, an amount of Rs 14 billion was transferred to the PSO directly in March 2009 for adjustment against Kapco outstanding dues of Rs 25 billion. Since then no payment has been received and with the continuity of supplies, the outstanding has accumulated to over Rs 20 billion (inclusive of the LSFO-HSFO price differential amount).

Consequently, PSO is unable to make payment to Attock Refineries Limited (ARL) as a result of which supply of local LSFO has been drastically reduced. Presently, the major portion of LSFO supplies is imported. Nonetheless PSO which is facing serious cash flow problems due to non payment by major fuel customers of the power sector totalling Rs 80 billion inclusive of Kapco, is not able to procure the product through imports.

"We apprehend that PSO will not be in a position to go for tendering process of LSFO cargos anymore. We have already conveyed this to WPPO with the request to arrange payment of the outstanding LSFO-HSFO price differential amount immediately," the sources quoted, PSO's top management informing the Petroleum Ministry. The sources said that PSO was of the view that it has taken this stand to save the utility from complete collapse/shut down as it is meeting 75 per cent POL requirements of the country.

"We asked Kapco to pay outstanding dues on most urgent basis enabling the company to make necessary arrangements for import of LSFO failing which we will not be in a position to import any further cargos," the sources quoted the General Manager, Consumer Business of PSO as writing in a letter a couple of days ago.

A couple of months ago, the government had floated Term Finance Certificates (TFCs) to clear a portion of the inter circular debt but the current status of outstanding amount of Rs 80 billion against public sector power generation companies and Kapco is again a source of serious concern. The government has earmarked Rs 30 billion in 2009-10 budget to pay interest on TFCs but this amount is clearly inadequate to deal with the issue of inter circular debt which indicates that the power crisis will intensify in the coming months.



(BRecorder)

• 0 comments »

Monday, June 15, 2009

ISLAMABAD: The Advisor to Prime Minister on Finance, Shaukat Tarin, said on Sunday that in case of any delay in receipts of pledges from Friends of Democratic Pakistan (FODP) Pakistan has lined up commitment of $4 billion from the International Monetary Fund (IMF).

Addressing the post-budget news conference here, he said that FODP forum has been requested to give money for social sectors so that the growth-oriented policy could be pursued and implemented in true spirit through financial resources available with the country. He said that the World Bank, the Asian Development Bank, and Islamic Development Bank (IDB) would give $4.80 billion in the next two years. An assistance of $5.80 billion is expected from FODP forum in the same period.

"After achieving targets of economic stabilisation plan, the economy is poised to go for sustainable, equitable and job creating growth. The current account deficit and fiscal deficit are well under control.

The budget 2009-10 is focused on agriculture and manufacturing with agenda of enhancing productivity level through improvements to human capital base and physical infrastructure and ensure availability of cost effective energy in the country.

Shaukat said that during 2008-09 the response of this government was phasing out of the subsidies and sustaining the budgetary resources. He said that the expenditures were rationalised through a process of prioritisation of government development schemes to reduce budget deficit.

He said in this regard development expenditures were reduced and went down by Rs 120 billion. He added that SBP followed a tight monetary policy to reduce the aggregate demand and to bring down inflation. There were adjustments in petroleum prices and electricity prices to reduce burden on the budget, he added.

He said that net borrowing from SBP as of October was Rs 252 billion to Rs 258 billion. "By March it had been reduced to Rs 58 billion, which means we have started paying back to the SBP rather taking from it".

He said that import of non-essential items was curtailed by tariff adjustments to reduce the trade and current account deficits. He said that fiscal deficit has remained on target which means it has come down from 7.6 percent in 2007-08 to 4.3 percent in 2008-09. He said that current account deficit has been reduced from 8.5 percent to 5.3 percent of GDP, again a reduction of 3.2 percent in one year.

"Our tax and duty measures in Budget for Fiscal Year 2009-10 would revolve around providing protection to the poor and vulnerable against the current economic downturn by providing cash transfers and skill development, reviving manufacturing and industry, especially export-oriented industry, to raise their productive levels, broadening the tax base, instead of overburdening the existing taxpayers, and restraining unnecessary imports to improve the Balance of Payments position."

Tarin told a questioner that budgetary deficit will be around 3.4 percent during next fiscal year. Non-productive subsidies are being done away with this year, he said, adding that foreign exchange reserves stood at $11.30 billion while Gross Domestic Product valued Rs 14.82 trillion.

Responding to a query about entitlement of 15 percent ad hoc relief with regard to regular, contract and daily wage employees of the government and semi-government corporations, the Advisor said that all those who were getting their salaries from the national exchequer will be entitled to ad hoc relief. He said that levying carbon surcharge on POL products is a permanent feature and to help cut demand. "This will remain intact," he reiterated.

He said that the government would soon complete the National Finance Commission (NFC) Award within the next three months. This will help fair distribution of national resources between Centre and provinces. Tarin said that there was no jugglery of figures in the budget. "The Federal Budget 2009-10 is an open document. We have placed all our budget documents in the media cell of Ministry of Finance to maintain transparency," he added.

The government would pass on to the consumers impact in case oil prices increase along with rates of carbon surcharge on POL products. Although the government has imposed carbon surcharge on CNG, it would remain 35 percent cheaper than POL products and the aim of the government is to ensure use of gas resources wisely.

"Earlier, the CNG price was 58 percent of the POL products prices and now we have raised it from 58 percent of POL products prices to 65 percent of the POL products prices," he said.

The government would collect Rs 134 billion from carbon surcharge on POL products and carbon surcharge on CNG imposed in the budget 2009-10. Rs 122 billion would be collected from carbon surcharge on POL products and Rs 12 billion from carbon surcharge on CNG in next fiscal year 2009-10. Carbon surcharge on POL products will be Rs 8 per litre on high speed diesel oil (HSDO), Rs 10 per litre on motor spirit (petrol), Rs 6 per litre on kerosene oil, Rs 3 per litre on light diesel oil, and Rs 6 per kg on CNG.

He said that out of $1.5 billion Kerry Lugar Bill aid to be received from United States, $1 billion or Rs 80 billion would be spent in terrorism affected 25 percent districts of NWFP, Balochistan and Punjab during 2009-10.

He said NFC issue has been discussed in the special Cabinet meeting and Prime Minister would soon re-constitute Commission to hold detailed negotiations with provinces. Issue of arrears of Net Hydel Profits of NWFP against Wapda would also be discussed during NFC Award negotiations.

He said that power tariff increase would be made in case it was necessary, in gradual manner but not in one go. He hinted that the government would not pass on to the consumers the inefficiencies of public sector entities that are wasting Rs 150 to Rs 200 billion due to their inefficiencies. The government would reduce the line losses of distribution companies to keep the power tariff at reasonable level.

He clarified that Rs 19.4 billion that has been indicated income from privatisation in 2009-10 would mainly come from $700 million remaining PTCL privatisation proceeds that were held up due to the dispute over assets in provinces. He said that the issue has been resolved with the provinces and Etisalat will release to Pakistan the remaining privatisation proceeds soon.


(BRecorder)

• 0 comments »

Monday, June 15, 2009

KARACHI: The Indian Tea Board plans to open an Indian tea promotion centre in Pakistan and Egypt with a view to increasing its market share in both the countries.

Sources said on Friday that India is striving hard to boost its tea exports in both prominent CTC tea consuming countries since the disintegration of the Soviet Union.

In the past, India’s largest chunk of tea production was imported by the Soviet Union. However, after losing this biggest market, Indian tea producers are looking for alternate markets such as Egypt, Pakistan and Iran besides UK.

The Pakistani consumers had declined the Indian CTC tea in the first place due to its poor quality. In order to cope with the situation, the delegations of Indian tea board and the Indian tea producers association have visited Pakistan twice lobbying among the tea packers, blenders and local importers.

The Pakistan tea association has however suggested to the Indian exporters to influence the tea packers as they could increase Indian tea component in their blended tea.

Courtesy: Finance.Kalpoint.Com

• 0 comments »

Monday, June 15, 2009

VIENNA: The OPEC oil producers’ cartel said the worst of the impact from the economic crisis had passed for the oil markets, as it fractionally reduced its demand estimate for 2009 on Friday.

“In light of the considerable challenges the world economy and commodity markets, particularly the oil market faces, have undergone, the worst appears to be behind us,” the Organization of Petroleum Exporting Countries wrote in its latest monthly report.

“As the world economy stabilises, the world oil demand appears to be settling down,” it said. “Industrial production activities are steadying and in some parts of the world and have even improved slightly. This should stop the bleeding in oil demand. There are no significant downward revisions to our previous oil demand forecasts.”

OPEC estimated that demand would contract by 1.62 million barrels per day (bpd) or 1.89 per cent in 2009, only a marginal downward revision in demand from its earlier forecast.

In its previous monthly bulletin released in May, OPEC had been penciling in a contraction of 1.57 million bpd or 1.83 per cent for 2009. Nevertheless, uncertainties remained, OPEC cautioned.

To view the latest financial, forex stuff, please visit: http://finance.kalpoint.com

• 0 comments »

Monday, June 15, 2009

CAPE TOWN: Companies from the United States and the United Arab Emirates are interested in establishing large farms in Zambia to grow sugar and grains, the southern African country’s agriculture minister said on Friday.

Although a growing number of such land investments elsewhere have proved controversial, Agriculture Minister Brian Chituwo told Reuters Zambia had so much land available there would not be opposition.

He said a US company had offered to invest as much as $200 million in sugar cane production to make ethanol, involving small-scale farmers, but was waiting for proper policies to be put in place.

Chituwo added Zambia had 115,000 hectares of prime land suitable for sugar cane production.

He said a Dubai company was keen to grow rice or wheat.

“They are looking at 200,000 hectares, but we have 900,000 hectares of prime land available so the issue of land really should not be a problem. It is just a question of the mechanics of implementing this,” he told Reuters on the sidelines of the World Economic Forum on Africa in Cape Town. He said Zambia’s lack of exchange controls and the fact that it had lots of land available made it an ideal place for agricultural investment.

To read the latest financial, forex & Prizebond Updates, please visit: http://finance.kalPoint.com

• 0 comments »

Friday, June 12, 2009

European stocks drifted between gains and losses as a rally in health-care shares offset concern the three-month surge by the Dow Jones Stoxx 600 Index has outpaced prospects for earnings. Asian shares climbed for a third straight day.

GlaxoSmithKline Plc led pharmaceutical stocks higher as the World Health Organization declared the first influenza pandemic since 1968. BT Group Plc increased 5.2 percent after Bank of America Corp. advised buying the shares. Total SA led a decline by commodity producers as oil and base metals slid. Li & Fung Ltd., the biggest supplier of clothes and toys to Wal-Mart Stores Inc., rose 6.2 percent on higher retail sales in China.

Europe’s Stoxx 600 slid 0.1 percent to 214.6 at 11:26 a.m. in London, trimming its fourth straight weekly gain to 1.9 percent. The gauge has surged 36 percent since March 9 on speculation the $12.8 trillion pledged by the U.S. government and Federal Reserve will end the first global recession since World War II.

“There are lots of people who have missed the upturn in equities and there is the end of the quarter looming so I think we’ll see some buying there,” Christian Gattiker, head of research and strategy at Bank Julius Baer & Co. in Zurich, said in a Bloomberg Television interview. We are likely to see “some more difficult markets during the summer lull in July.”

(Bloomberg)

• 0 comments »