Source: Credit Suisse Report on Pakistan Cement Sector |
CS analyst Farhan Rizvi says in his report that "higher PSDP (Public Sector Development Program) spending has led to a resurgence in domestic cement demand in FY12 (+8%) and with increased PSDP allocation for FY13 (+19%) and General Elections due in Feb-Mar 2013, domestic demand is likely to remain robust over the next six-nine months".
Nagan Chowrangi Interchange in Karachi |
In addition to public sector infrastructure projects, there is a lot of privately funded real estate development activity visible in all major cities of the country. Big real estate developers like Bahria Town and Habib Construction are developing both commercial and housing projects in Islamabad, Karachi and Lahore. Other cities like Faisalabad, Hyderabad, Larkana, Multan, Mirpur, Peshawar and Quetta are also seeing new housing communities, golf courses, hotels, office complexes, restaurants, shopping malls, etc.
Artist's Rendering of Sheraton Islamabad Golf City Resort |
CS analyst Farhan Rizvi has initiated coverage with "an OVERWEIGHT stance, as we believe compelling valuations, improving domestic demand outlook, better pricing power and easing cost pressures make the sector an attractive investment proposition. Despite better growth prospects (3-year CAGR of 17% over FY12-15E) and improving margins, the sector trades at an attractive FY13E EV/EBITDA of 3.8x, 49% discount to the historical average multiple of 7.4x. Moreover, FY13E EV/tonne of US$74 is approximately 29% discount to historical average EV/tonne of US$104 and 50% discount to the region".
Another CS analyst Farrukh Khan, based in Credit Suisse’ Asia Pacific headquarters in Singapore,says in his research report that “liquidity in 2012 has been concentrated in stocks offering positive earnings surprises (e.g., United Bank, Lucky Cement, DG Khan Cement and Bank Alfalah), enabling them to be strong outperformers. With further improvements in liquidity, we expect a broad-based price discovery to take hold in attractively valued oil and fertilizer stocks as well.”
A string of strong earnings announcements by Karachi Stock Exchange listed companies and the Central Bank's 1.5% rate cut have already helped the KSE-100 index gain 32% in US dollar terms year to date.
Related Links:
Haq's Musings
Strong Earnings Propel KSE-100 to 4 Year High
Development in Pakistan-Defence.pk
Credit Suisse on Pakistan Cement Sector
Credit Suisse Research Report on Pakistan Equities
Tax Evasion Fosters Aid Dependence
Poll Finds Pakistanis Happier Than Neighbors
Pakistan's Rural Economy Booming
Pakistan Car Sales Up 61%
Resilient Pakistan Defies Doomsayers
Land For Landless Women in Pakistan
147 comments:
Let's see: TWO industry analysts from the SAME company are bullish on ONE sector in Pakistan - cement - and the thread reads "Investment Analysts bullish on Pakistan". Misleading, and sadly intentional too.
VC: "Let's see: TWO industry analysts from the SAME company are bullish on ONE sector in Pakistan - cement - and the thread reads "Investment Analysts bullish on Pakistan". Misleading, and sadly intentional too."
Please read it again...one analyst's recommendation is specific to the cement companies while the other analyst has a more general recommendation. The second analyst's report is titled "Pakistan Market Strategy".
CS analyst Farrukh Khan, based in Credit Suisse’ Asia Pacific headquarters in Singapore,says in his research report that “liquidity in 2012 has been concentrated in stocks offering positive earnings surprises (e.g., United Bank, Lucky Cement, DG Khan Cement and Bank Alfalah), enabling them to be strong outperformers. With further improvements in liquidity, we expect a broad-based price discovery to take hold in attractively valued oil and fertilizer stocks as well.”
https://www.credit-suisse.com/conferences/aic/2012/doc/web/20120521_pakistan.pdf
Please understand that cement demand is a key barometer of economic activity in any nation....rising construction creates jobs, stimulates economy and spurs demand for a lot of other goods and services.
The bottom line is that KSE-100 has hit new highs just today on bullish sentiments. It's one of the best performing markets in the world, up 32% in US dollar terms this year.
http://www.brecorder.com/top-stories/0/1253313/
Of course, I understand the importance of cement, and other variables such as cardboard shipments and underwear sales as barometers of economic activity too.
All I am saying that your opinion would be more credible if there were more comprehensive data to support your conclusions, which is not the case at present.
That is all.
BTW, the Greek market is up by 30.6% too, compared to Pakistan's 31.4%. Is that enough to be bullish on Greece's outlook as well?
VC: "Of course, I understand the importance of cement, and other variables such as cardboard shipments and underwear sales as barometers of economic activity too...
BTW, the Greek market is up by 30.6% too, compared to Pakistan's 31.4%. Is that enough to be bullish on Greece's outlook as well?"
Both comparisons, cement with cardboard and Pakistan with Greece, suggest a basic lack of understanding of economics.
First, cement is a basic building material required in large amounts for all sorts of construction, including housing and public works. A classic approach to stimulating economies is to increase spending on public works to generate employment, increase demand for products ad services, etc. That's what's happening in Pakistan with growth of PSDP as the elections approach.
Second, comparing Pakistan with Greece is just plain ridiculous for the following reasons:
1. Greek stock market may have risen 31% this year, but at 890 level, it's less than 20% of its peak of 5000 reached in 2007. Pakistan's KSE-100, on the other hand, it is at 15,910, higher than its last peak reached in 2008.
2. Greek debt is 190% of its GDP while Pakistan's debt is 60% of its GDP.
3. Greek economy shrank by 6.2% last quarter while Pakistan's economy is still growing, albeit slowly.
4. Greece is an aging society while Pakistan has a very young population.
Here's a BR story on record earnings of specialty chemicals maker Clariant in Pakistan:
The profit after tax of Clariant Pakistan Limited has increased to Rs 901.455 million in the nine month period ended September 30, 2012 as compared to Rs 593.150 million earned in the corresponding period in 2011. The board of directors of the company in its meeting declared that the company's earning per share has increased to Rs 26.42 in the period under review against Rs 17.39 in the same period last year.
According to the financial results sent to Karachi Stock Exchange, the company's net sales increased to Rs 7.482 billion in the nine month period this year against Rs 6.553 billion in the same period last year while cost of goods sold increased to Rs 5.415 billion against Rs 4.943 billion.The company's profit before taxation increased to Rs 1,177.723 million in the nine month period this year against Rs 812.384 million in the same period last year.
On quarterly basis, the company's profit after tax increased to Rs 330.376 million translating into per share earning of Rs 9.68 in the quarter ended September 30, as compared to after tax profit of Rs 173.163 million with per share earning of Rs 5.08 in the same quarter last year.
http://www.brecorder.com/company-news/235/1253440/
http://www.clariant.com.pk/reg/emea/internet.nsf/vwWebPagesByID/4E23F30ABB0B76AAC12576A9005F1945?OpenDocument
Dr. Haq,
W.r.t "With further improvements in liquidity, we expect a broad-based price discovery to take hold in attractively valued oil and fertilizer stocks as well.”
What does "further improvement in liquidity" REALLY mean? What is this liquidity and how does it improve? Who is responsible for its improvement?
Would you please explain for the sake of your blog-readers who happen to be novices?
Thank you.
Here's an ET report on KSE-100 hitting a new high today:
KARACHI:
As investors shrugged off lethargy from the long Eidul Azha weekend, the stock market rebounded amid greater investor participation to close at a new historic high.
“With renewed buying interest from institutional clients and foreign fund managers, the market closed at yet another historic high,” said Topline Securities equity dealer Samar Iqbal. “Investors anticipate lower inflation figures for the month of October, due [to be announced] tomorrow. Bullish sentiments were further augmented after better-than-expected result announcements from Pakistan Petroleum and the Hub Power Company.”
The Karachi Stock Exchange’s (KSE) benchmark 100-share index gained 0.72% or 114.18 points to end at the 15,910.11 points level. Trade volumes surged to 136 million shares compared with Tuesday’s tally of 85 million shares. The value of shares traded during the day was Rs4.96 billion.
“Pakistan stocks closed at their highest-ever, led by oil and cement stocks, as global commodities and stocks rally in the aftermath of Hurricane Sandy,” commented Arif Habib Corp analyst Ahsan Mehanti. He also attributed the market’s optimism to the positive current account balance for the first quarter of the fiscal year, and speculation that the State Bank might announce yet another cut in its policy rate next month.
“Major activity was again seen in the cement sector with DG Khan Cement and Lucky Cement gaining 2.0% and 3.1% respectively,” reported JS Global analyst Shakir Padela. “This is likely on the back of October cement dispatch numbers due to be announced in the coming days.”
DG Khan Cement was the volume leader with 14.98 million shares gaining Rs1.04 to finish at Rs52.91. It was followed by Azgard Nine with 9.00 million shares gaining Rs0.46 to close at Rs6.97 and Askari Bank with 7.73 million shares losing Rs0.07 to close at Rs16.57.
“The Oil and Gas Development Company also managed to close the day up by 2.2% on the back of foreign buying in the script,” added Padela.
Foreign institutional investors were net buyers of Rs264.33 million, according to data maintained by the National Clearing Company of Pakistan Limited.
http://tribune.com.pk/story/459038/market-watch-cement-oil-stocks-take-kse-to-historic-high/
HWJ: "What does "further improvement in liquidity" REALLY mean? What is this liquidity and how does it improve? Who is responsible for its improvement?"
I am not certain but I think this analyst is talking about 1) the central bank further easing money supply through interest rate cuts and 2) new margin trading rules applying to stock purchases of more KSE listed companies
Dr. Haq,
Let us be careful.
This index is based on PKR.
http://www.marketwatch.com/investing/index/kse100?countrycode=pk
2008 Spring Peak 15,000
2009 Spring Trough 5,000
2012 Current 15,000
But in those 5 years, cumulative inflation has been 90%.
http://www.tradingeconomics.com/pakistan/inflation-cpi
This means that somebody who held on to his shares at the 2008 market peak of 15,000 has now suffered a massive loss of almost half his money-- even though the index is back at its peak.
In other words, just to keep up with inflation, the index today should have been around 28,000 if he was not to have suffered any losses w.r.t. 2008 position.
So in real terms the market is, in fact, down.
Do you agree?
Thank you.
I am not going to lie, business is booming. I have more domestic orders than what i can fulfill. I have made a killing in KSE in the past 2 months, companies are producing massive profits every month. The problem is not business, its bureaucracy and governance. Its the failure of the Government to collect taxes from these profit making companies, that is why our Government is broke. But than again, these politicians are benefiting immensely from these tax rules as their businesses are also booming.
Dr. Haq,
I am not sure that cement is the best indicator of an economy's performance, as I am told electricity (and also fuel/energy) consumption is a much more widely used proxy indicator.
However, there is some truth in that cement is a very basic material widely consumed in plant, housing & infrastructure contruction.
So let us look at the very graph you have yourself provided:
http://3.bp.blogspot.com/-jyCdx4bzlOA/UJFYu3q5daI/AAAAAAAADQw/UKdp4-K4c98/s1600/Cement+Charts+Total.jpg
What do we see?
1) From 2003-2007, there is a visibly-dramatic increase in LOCAL consumption of cement. This does correspond nicely with our 2003-2007 Mushy-Boom.
2) From 2008-Present, however, LOCAL consumption of cement has flatlined. There is no visible trend of any increase in LOCAL consumption of cement in the last 5years. Using the same methodology as in (1) above, we can conclude that our economy has been largely stagnant for the last 5 years. And this checks with the published anemic growth ever since the GFC bust and the Zardari Coronation.
3) Yes, cement EXPORTS are up and general cement production is also up. The LOCAL consumption part, however, is just treading water. This may be good for the cement companies, but the data do not look promising as far as our economy is concerned.
As you no doubt realize, if we keep this anemic growth phase up for another 5 years, we will soon have another "lost decade".
Once again, I fear that you are developing a bad habit of providing links to things that actually discredit the very point you are trying to make about our economy.
What is your view on this?
Thank you.
HWJ: "So in real terms the market is, in fact, down."
US $ traded at Pak Rs 60 in 2008 and trades at Rs. 95 now... so the rupee is down about 60% relative to US $.
But if you compare KSE-100 with other markets in the region and around the world, the KSE investors are still better off....and with price-earnings valuations at 50% discount, they have a lot more upside.
As CS analysts report, KSE listed companies are trading at significant discounts relative to their peers in the region.
That's why in US dollar terms, the KSE-100 has outperformed regional markets for several years now.
HWJ: "From 2008-Present, however, LOCAL consumption of cement has flatlined."
That's not how I read it. What I read is a big dip in 2009 and then recovery, and it corresponds with increase in PSDP allocation in 2011-12 and further planned increase in 2012-13 as the CS analyst's report explains.
Dr. Haq,
Once again you are providing references to things that discredit that which you are trying to prove.
You say: "....corresponds with increase in PSDP allocation in 2011-12 and further planned increase in 2012-13...."
Most people would have just taken your word for this. That would be intellectual laziness. So I did not.
I actually looked up our PSDP facts from the GOP itself.
PSDP Facts in Billion PKR (Please keep High Inflation in mind):
YEAR - ForeignAid - Local - Total
2010-11 - 70.4 - 391.6 - 462.0
2011-12 - 76.8 - 653.2 - 730.0
2012-13 - 167.0 - 706.0 - 873.0
Source: http://www.pc.gov.pk/psdp.html
So what do we see?
1) Yes, even allowing for 10% inflation, there was a burst of PSDP LOCAL-funded spending from 2010-11 levels in FY 2011-12.
2) But that has fizzled-out for current in 2012-13. What little increase (beyond high inflation) planned for the current year is coming mostly from FOREIGN aid.
So the facts do not conform to your idea that some heavy increase in spending is coming up in this year's (2012-13) PSDP.
What is your view on this?
Thank you.
HWJ: "So the facts do not conform to your idea that some heavy increase in spending is coming up in this year's (2012-13) PSDP."
The data you cited confirms what I said....that total PSDP is up...regardless of the size of the local or foreign components.
You neglected to mention these two interesting charts about the future trends in the growth of the middle class in Asia, from your own source:
from: http://www.adb.org/sites/default/fil...Chapter-02.pdf
-----------
India's middle class is projected to increase about 40% for the $2 and $4 standards, whereas the figures for Pakistan are about 30%, and yet you claim that somehow Pakistan's middle class will do better because of the past two decades.
Cherry pick not, for it is the death of science.
I do agree somewhat with the "upward mobility in a nation is the best indication of its economic, social and educational opportunity and dynamism" though, although you identify the wrong country intentionally.
VC: "You neglected to mention these two interesting charts about the future trends in the growth of the middle class in Asia, from your own source:
from: http://www.adb.org/sites/default/fil...Chapter-02.pdf "
Pakistan is starting with a bigger base of middle class than India. Pakistan, with 40% of its pop in middle class now, is well ahead of India's 25%, according to ADB.
As to the future, these are just projections, not reality.
You may want to bet against Pakistan, but I won't.
Reality is that Pakistan has continued to offer much greater upward economic and social mobility to its citizens than neighboring India over the last two decades. Since 1990, Pakistan's middle class had expanded by 36.5% and India's by only 12.8%, according to an ADB report titled "Asia's Emerging Middle Class: Past, Present And Future.
Historic data tells us that Pakistanis are very resilient in the face of adversity, and that's the secret of them being much more upwardly mobile than Indians.
Those who keep raising BOP crisis alarm should read the following from Business Recorder:
ABU DHABI: Pakistan expects that strong double-digit growth in remittances from Gulf region will help achieve its overall target of $15 billion in the current fiscal year 2012-13.
Remittances from Gulf Cooperation Council GCC states to Pakistan may hit $10 billion in current fiscal year as the government is confident of having positive results from fresh measures it announced to boost inflows from UAE and Saudi Arabia. Overseas Pakistanis residing in GCC countries sent home a record $8 billion in remittances in financial year 2011-12, reflecting 60.77% share in total remittances of $13.18 billion. About four million overseas Pakistanis residing in Gulf States remitted $6.573 billion in fiscal year 2010-11.
The remittances inflow from Gulf states rose about 21.71% in last fiscal year. Remittances from GCC may reach between $9.5 billion and $10 billion in current fiscal year amid hopes that same growth trend will continue. Remittances from GCC states rose to $730.56 million in July 2012 compared to $677.60 million in same month last year. Total remittances also climbed 9.89% to $1.20 billion last month, indicating a strong growth for rest of the year.
"Pakistan has been witnessing a growing surge in remittances since present democratic government took over in 2008. From mere $6.4 billion remittances in 2008, fiscal year 2011-12 saw record remittances of $13.18 billion. Hopefully, we expect to achieve $15 billion remittances target for the year 2012-13," Pakistan Ambassador to the UAE Jamil Ahmed Khan told Khaleej Times.
Saudi Arabia remained a leading source of remittances for Pakistan in Gulf region with a leading share of $349.66 million in July. The remittances inflow from UAE stood at $240.54 million and other GCC states contributed $140.36 million last month.
---
Remittances witnessed 17.67% annual growth in last fiscal year inviting attention of economic managers to exploit opportunity for enhancing remittances to the maximum.
--------
Analysts say rising foreign remittances has not only brought stability to value of Pakistani rupee, but also played key role in narrowing down gap between foreign payments and receipts. The rising remittances, second major source of foreign exchange earnings after exports, practically helped the country with record foreign exchange reserves despite high oil prices and costly imports.
According to World Bank data, Pakistan has become fifth largest remittances recipient developing country in 2011 after India ($58 billion), China ($57 billion), Mexico ($24 billion), and the Philippines ($23 billion). World Bank estimated that remittance flows are expected to continue growing, with global remittances expected to exceed $593 billion by 2014, of which $441 billion will flow to developing countries.
http://www.brecorder.com/top-news/1-front-top-news/75569-pakistan-expects-to-achieve-overall-target-of-15bn-remittances-in-fiscal-year-2012-13.html
^^^Those who keep raising BOP crisis alarm should read the following from Business Recorder:
-----------------------
So Dr. Khan, Dr. Mustafa and Profs Haider, Rana & Kiani (not to mention other economists & finance experts) are all FOOLS who have completely ignored these "rising remittances".
You alone "know stuff".
Is this your assertion?
http://www.thenews.com.pk/Todays-News-13-18012-Major-balance-of-payments-crisis-expected-by-Dec
http://www.thenews.com.pk/Todays-News-3-136413-Pakistan-to-repay-$11-billion-to-IMF-in-Feb
http://www.thenews.com.pk/Todays-News-9-137724-Before-the-implosion
http://www.thenews.com.pk/Todays-News-3-137335-IMF-sees-SBP-held-forex-reserves-falling-to-$75bn
http://www.thenews.com.pk/Todays-News-9-139050-Living-in-denial
http://tribune.com.pk/story/454598/living-from-loan-cheque-to-loan-cheque-govt-scrambles-for-funds-before-next-imf-repayment/
http://dawn.com/2012/10/15/looming-vulnerabilities/
I'm an IK supporter and I do think sitting there in the US, you let your patriotic feelings for Pakistan get the best of you. The average Pakistani doesn't have a family member working abroad so it is not very glossy as you suggests in your article about golf courses.
You're right about cement production and the KSE but in a developing country cement production is 2.5 times per capita income growth. That means the country is crawling at about 3 percent or 1 percent per capita economic growth. This is because of poor leadership. Also, there is a shortage of electricity and water and food prices are very high for the common man.
I suggest you start looking at the life of the common man rather than focussing on golf courses and fashion models. We live in Pakistan not America
HWJ: "So Dr. Khan, Dr. Mustafa and Profs Haider, Rana & Kiani (not to mention other economists & finance experts) are all FOOLS who have completely ignored these "rising remittances"."
Dr. Hafeez Shaikh, Pak finance minister and an eminent economist in his own right, disagrees with these economists.
Does dissent equal calling someone a fool?
Do you think Jim O'Neil of Goldman Sachs, the coiner of BRIC, is a fool when he says "India has the risk of ... if they're not careful, a balance of payments crisis. They shouldn't raise people's hopes of FDI and then in a week say, 'we're only joking'". "India's inability to raise its share of global FDI is very disappointing."
http://www.riazhaq.com/2011/12/goldmans-oneill-disappointed-as-india.html
Here's a News report on Pak current account surplus in Q1 of FY 2012-13:
KARACHI: Pakistan’s current account posted a surplus of $432 million during the first quarter of the current fiscal year, giving some respite to government confronting fast pace of foreign exchange reserves and weak foreign investment inflows, according to the State Bank of Pakistan (SBP) on Thursday.
The country experienced a current account deficit of $1.339 billion during the same period last year, it said.
A modest surplus in the current account balance is in line with the expectations of the economic analysts and experts, which have already indicated that the current account would remain in the green zone for the first quarter of FY13 in the wake of $1.2 billion Coalition Support Fund (CSF) reimbursements transferred by the United States to the services account of the country earlier in August this year.
Despite slowdown in the financial inflows and moderate pace of exports, the analysts attributed the current account surplus to two major developments, external account witnessed a decent growth in workers’ remittances and military aid from the United States under the CFS.
This is the second consecutive surplus in the current account balance as it recorded a surplus of $919 million in July-August FY13.
Analysts said the CSF put positive impact on both, current and fiscal deficits of the country.
“The position of the balance of payments will be highly dependent on the pace of dollar inflows and international oil prices in the second quarter of this fiscal year,” said Sayem Ali, an economist at a foreign bank.
“Oil prices and large debt repayments are likely to pose significant risk to the balance of payments position in FY13,” said Ali.
The country is expected to record small level of current account deficit in anticipation of another $600 million payment by the United States administration under the head of CSF by November, he said. This will help contain the current account deficit and cushion forex reserves to some extent, he added.
“The full-year FY13 current account deficit is likely to be $3.5 billion, or 1.5 percent of GDP as compared to the deficit of $4.6 billion (two percent) reported in the last fiscal year,” he said. The current account witnessed a deficit of $331 million during September 2012 as against the surplus of $1.084 billion for August this year.
The current account during July-September stood at 0.7 percent of GDP as compared to a deficit of 2.3 percent of GDP in the same period last year, it said.
According to the data, the trade balance remained negative as it amounted to $3.634 billion during the first three months of the current fiscal year as compared to $4.158 billion in July-September FY13.
During the period July-September 2012, services account saw a surplus of $2.120 billion as compared to $1.190 billion in the same period last year.
Total exports stood at $5.994 billion against $6.142 billion, while imports reached $9.628 billion against $10.30 billion during the corresponding period a year ago.
http://www.thenews.com.pk/Todays-News-3-138178-Current-account-posts-$432m-surplus-in-first-quarter
Here's an ET report on the performance of a Swedish fund investing in Pakistan:
The company is currently in the process of trying to find a distributor for the British market, where a large Pakistani expatriate population would form a natural investor base. DESIGN: ESSA MALIK
KARACHI:
One of the best performing mutual funds that invests in Pakistani stocks is based in Sweden.
The Tundra Pakistanfond, run by Stockholm-based asset management company Tundra Fonder, was launched in October 2011, within one month of the firm’s founding, and currently has the equivalent of over $40 million in assets under management, belonging to nearly 20,000 Swedish individual investors. Uniquely for European asset managers, Tundra’s Pakistan fund constitutes roughly 80% of the company’s total assets under management, tying its fortunes very closely to the Pakistani economy, or at least European investor interest in it.
But perhaps what is interesting is the fact that the fund is one of the best-performing funds that invests in Pakistan, returning approximately 21.3% in Swedish krone over the past year (about 20.2% in US dollars). That performance handily beats the MSCI Pakistan index, which rose by about 13.1% in US dollar terms during that period. The KSE-100 Index has yielded a 20.7% return in US dollars during that period.
Yet that is not Tundra’s only impressive feat. According to data provided by the Mutual Funds Association of Pakistan, Tundra’s performance, when taking into account the impact of the rupee’s depreciation, would beat all but five of the equity funds managed by firms based in Karachi, placing the Tundra Pakistanfond comfortably in the top one-third of all funds that invest in the Pakistani equity markets.
So how does Tundra do it? Its founder and CEO, Mattias Martinsson, appears to have had substantial experience in investing in emerging and frontier markets. Martinsson, 39, began his career in 1996 at a company called Hagströmer & Qviberg which specialised in offering Russian stocks to Swedish investors. That interest in Russia continues to this day, with Tundra’s only other country-specific fund being a Russia-focused fund.....
This remarkable understanding of the Pakistani market appears to come from a long-abiding interest in the country on the part of Martinsson.
“I came across Pakistan in 2005. At that time I, as most other people today, I had a lot of prejudice. I thought that Pakistan was an underdeveloped equity market, ruled by a military dictator. What I found was something very much different: IFRS [accounting standards], good corporate governance (for emerging markets), good disclosure and a well functioning equity market. In 2007, I attended a frontier markets conference in Singapore and met with ten or so Pakistani companies. Comparing them to the other attendees, I concluded that they were so far ahead, not only compared to their peers in frontier markets but also many emerging markets. I then visited Karachi, Lahore, and Islamabad in early 2008 and came back excited looking for a fund to invest in. There was none. Since then it has been a dream to launch a Pakistan fund.”
While it is not the only European mutual investing exclusively in Pakistan, it appears to be the largest. And given its compliance with UCITS IV European regulations, it is eligible to be marketed throughout the European Union. The company is currently in the process of trying to find a distributor for the British market, where a large Pakistani expatriate population would form a natural investor base.
Given Tundra’s astute investment decisions so far, European investors would be wise to keep an eye on its Pakistan fund.
http://tribune.com.pk/story/459989/frontier-markets-betting-on-pakistan-pays-off-for-swedish-asset-manager/
Dr. Haq,
Your friend (and guest columnist on your blog) Aakar Patell has a new article in which he makes predictions about our country:
http://tribune.com.pk/story/460283/ten-predictions-about-pakistan/
He predicts, in effect, that:
1) Pakistan's rate of population growth problem will soon be solved
2) Pakistan will face another lost decade in terms of economic growth.
3) Pakistan will continue to face law & order problems even after US leaves Afghanistan in 2014.
4) Pakistan has a cultural problem in its inability to SAVE.
5) Pakistan will be North Korea and India will be South Korea 20 years from now.
Would you please go to his article and comment to set the record straight? Please put him in his place firmly so that he doesn't keep maligning and denigrating our country again and again.
Thank you.
HWJ: "Your friend (and guest columnist on your blog) Aakar Patell has a new article in which he makes predictions about our country"
This Express Tribune article by Mr.Patel is less about forecast and more about wishful thinking.
In spite of all its problems, Pakistan has continued to offer much greater upward economic and social mobility to its citizens than neighboring India over the last two decades. Since 1990, Pakistan's middle class had expanded by 36.5% and India's by only 12.8%, according to an ADB report titled "Asia's Emerging Middle Class: Past, Present And Future.
http://www.riazhaq.com/2012/08/upwardly-mobile-pakistan-on-66th.html
I'd have to second Riaz here. I'm not an economist but from what I see regularly on streets, I'm quite optimistic about Pakistan's economy.
I'm an agricultural Landlord with plans to pursue Real Estate Development and Construction. Businesses from from small shops to Multi-Million Dollar real-estate projects are everywhere to be seen. Streets of Pakistan are flooded with over a Million Rupees cars. Restaurants, for all classes, are almost packed. There's at least over 8 Sold-out Real Estate Projects worth over a 100 Crores within 50 KM of Karachi Tool Plaza. A Land Lord with merely 100 acres of Agricultural Land is roaming in Vigo.
Now I'm not sure what do these things suggest if not an economic stability considering severe Energy Crisis, poor Law and Order and Terrorism among multiple other issues.
Here's Daily Times on KSE-100 crossing 16000 level:
Hopes for cut in policy rate boost KSE by 289 points
KARACHI: The Karachi stock market witnessed a historic trading week by breaching the psychological level of 16,000 points on back of hopes for further decline in the State Bank of Pakistan’s policy rate after consumer price index (CPI) inflation figures for October 2012 clocked in at 7.66 percent.
The Karachi Stock Exchange (KSE) 100-share index gained 288.83 points or 1.82 percent to close at 16,101.55 points as compared to 15,812.72 points of the previous week.
Analysts said investor sentiment was upbeat at the market throughout the week on expectations that October 2012 CPI figure will slide further.
The market opened on Tuesday after prolonged Eidul Azha vacations on a negative note as Hurricane Sandy that lashed US East Coast triggered uncertainty in global markets and propelled local investors to offload their holdings. The 100-share index shed 16.79 points or 0.11 percent to close at 15,795.93 points as compared to 15,812.72 points.
On Wednesday the market made another historic high level of 15,910 points as hopes for lower inflation for the month of October and better-than-expected earnings of Pakistan Petroleum Ltd and Hubco triggered across-the-board buying. The 100-share index gained 114.18 points or 0.72 percent to close at 15,910.11 points.
The record-breaking spree continued at the market on Thursday as investors went for buying on hopes that lower inflation figure will force the State Bank of Pakistan to reduce the policy rate. The 100-share index gained 52.26 points or 0.33 percent to close at 15,962.37 points
The market continued its record-breaking streak on the last trading day of the week Friday by crossing the psychological level of 16,000 points. The 100-share index gained 139.18 points or 0.87 percent to close at 16,101.55 points. The weekly turnover went up by 40.79 percent and traded 191.49 million shares compared to previous weeks 136.01 million shares.
“Market expectations were realised on Friday with October 2012 CPI clocking in at 7.66 percent as against 8.79 percent in September 2012, thus raising hopes of another rate cut in the next monetary policy (due in December),” said JS Sec analyst Furqan Ayub. “Investors’ interest was concentrated in the cement and textile sectors with Lucky Cement and Nishat Mills outperforming the market by 1.1 percent and 3.6 percent, respectively.”
Net buying by foreigners this week amounted to $12.6 million, he added.
Analysts said the market is at a historic high level and any untoward development can drag the market into the red zone, analysts said and added that technical correction is, however, due next week as usually when the 100-share index breaches psychological levels consolidation is seen and with this historic high it is evident.
http://www.dailytimes.com.pk/default.asp?page=2012\11\04\story_4-11-2012_pg5_16
Here's a Business Recorder report o Pakistan's cement industry:
There are signs of recovery of cement industry, which had generally recorded stagnant sales for the past four years or so, resulting in huge financial losses. The industry suffered a net loss of Rs 337 million in the first half of 2010-11 but earned a net profit of Rs 4,300 million in the first half of 2011-12. According to latest reports, total sales during fiscal year 2011-12 increased to a record level of 32.515 million tons, showing an increase of 8.84% in domestic sales and overall 3.45% increase compared to previous year as exports declined by 9.12%.
This trend of domestic sales is expected to remain in momentum in future, given the present conditions. The 2012-13 federal budget has provided more incentives and relief to cement industry such as excise duty has been slashed by Rs 200 per ton and the GST by one percent. These measures will encourage construction activities in the country.
Cement demand in any country is inextricably linked to the growth in GDP. Pakistan's 3.70 GDP in 2011-12 was lowest in the region but it is projected as 4.30 in the current financial year, following some strong prospects of economic revival. Major driver for cement consumption is infrastructure development and house-building projects. There has been an allocation of Rs 873 billion under the Public Sector Development Programme (PSDP). A number of mega water and power sector projects are in pipeline, including Diamer Bhasha multipurpose project and two additional Chashma Nuclear Power projects, while almost 12 other large projects are planned for initiation during this financial year. Construction of a project of the size of Diamer Bhasha is estimated to create an additional cement demand in the range of 8 to 9 million tons. PSDP allocation to Wapda is to the level of Rs 76.85 billion.
There are 56 housing and works projects covered under the PSDP, besides the ongoing reconstruction and rehabilitation activities nation-wide that would be accelerated, whereas National Highway Authority will get Rs 50.73 billion. Demand of cement is thus projected to grow by more than 20% this year and in subsequent years. Currently, per capita consumption of cement in Pakistan is 131-kg, one of the lowest even among developing countries, while world average is 273-kg. To ensure future economic growth, Pakistan will need to invest considerably in its infrastructure development, despite the economic challenges it faces.
Cement industry comprises 24 cement plants with an annual installed capacity of producing 44.22 million tons of cement. Key players of the industry are Lucky Cement with combined installed capacity of 7.712 million tons of cement annually, Bestway Cement having a combined capacity of 5.914 million tons, DG Khan Cement of 4.220 million tons, Fauji Cement of 3.433 million tons, Maple Leaf Cement of 3.370 million tons and Askari Cement of 2.675 million tons. These six groups of companies represent 62% of total installed capacity for cement production in the country. While these groups have been making substantial profits, small cement producers continue to struggle to recover their operating costs...
http://www.brecorder.com/articles-a-letters/187/1222558/
Here's an excerpt of Pakistan cement and minerals case study by ABB of Switzerland:
The consumption of cement increased from 70 kg in 2003 to 120 kg/capita in 2008, a 70% increase in 5 years.
Pakistan’s cement consumption per capita is comparable to that of India’s, which is at 132 kg.
Pakistan has 28 different cement producers, 22 of which are registered on the Karachi Stock
Exchange.
Production of cement
North region, Punjab and NWPT:
approximately.
30 million tpa.
South region, Sindh and Baluchistan:
approximately 10 million tpa.
minerals
http://www05.abb.com/global/scot/scot244.nsf/veritydisplay/e7af7737478c69ecc12575e60026c013/$File/CH_EMR_2009.pdf
India's cement production is also rapidly growing and due to deregulation imports from China and lesser extent Pakistan are making into India.
Times Of India:
With the onset of rains, the demand for cement is likely to weaken in the nezt few months. However, the construction activity is likely to gain pace once the monsoons ends, leading to higher demand. We believe cement despatches to reach 240.11 million tonnes in 2012-13, This will be 7.5% higer than the previous year," economic think-tank Centre for Monitoring Indian Economy (CMIE) said. The early despatch numbers declared by Ambuja Cements and ACC are a mixed bag. Ambuja's despatches grew 7.3% while ACC recorded 2.6% increase in May. Prices which were rising continuously for the past 8 months have started easing, CMIE said.
Dr. Haq,
This has nothing to do with "hordes of analysts like me who see Pakistan's glass not even half empty but completely empty...and repeat it incessantly'.
This is from the Government of Pakistan (GOP) itself.
Please look at Table 8.4 on page 118 in this GOP 2012 report:
http://www.finance.gov.pk/survey/chapter_12/08-TradeAndPayments.pdf
Do you hear GOP itself chanting the mantra of "Chadar, Chawal, Chamdi" to invoke the Export god?
In addition, look at Table 8.1 on Page 112 in the same report.
Can you see the stagnation in goods exports and the collapse in service exports? Can you see the explosion in imports of goods & services?
Can you see the collapse in FII (portfolio equity) and FDI invetsments? This is despite the fact that local leverage is driving the KSE higher in an unsustainable fashion.
Can you see the resulting drawn down (without debt repayment) in reserves?
The only thing preventing this bubble from popping is the temporary relief from rising Aid & Remittances.
If this stops or reverses, the whole system will collapse.
Can you see this? With your own eyes? In data provided by GOP itself?
Is the GOP also now run by "hordes of analysts who see Pakistan's glass not even half empty but completely empty...and repeat it incessantly"?
Would you please explain?
Thank you.
Here's a Business Recorder report on Tarbela dam's 4th tunnel power generation project:
The government would award the contract of 'Tarbela Fourth Extension Hydropower Project', costing $928.9 million, including $840 million World Bank loan in March next year to initiate Civil and Engineering and Management (E&M) work. According to documents obtained by Business Recorder, mobilisation of contract was expected by the end April 2013. Pre-qualification of applicants for Civil and E&M works is under way.
The project would be completed by June 2018. The government would spend $88.9 million for this project. Tarbela has an installed power generation capacity of 3,478 megawatts on tunnels 1, 2 and 3 while tunnel 4 was originally intended for irrigation water releases only, but subsequent studies proposed its conversion to irrigation-cum-generation tunnel.
The latest proposed installed capacity of Tarbela is 1,410MW. Ultimately, Tarbela's capacity would be upgraded to 4,888MW after the development of tunnel 4. The projected energy form the project is 3840 GWh/year while annual capacity factor is 31 %.
According to the Project's cost estimate, powerhouse and tunnel work is to cost $307.45 million, turbines, generators and auxiliaries; $434.24 million and implementation of SAP and EMP dam monitoring $28.63 million. Similarly, project management, technical assistance and training cost is $20.45 million while base cost with physical/price construction is $817.9 million.
The Executive Committee of National Economic Council (ECNEC) has approved the Project on August 16 this year for Rs 83.6 billion, including foreign exchange component of Rs 65.8 billion. A million families would benefit from the additional power. Load shedding would be substantially reduced. Documents also showed that about Rs 39 billion per annum revenue was expected after the completion of the Project. During construction period, between 2,000 and 2,500 jobs would be created.
http://www.brecorder.com/top-stories/0/1252452/
HWJ: "Is the GOP also now run by "hordes of analysts who see Pakistan's glass not even half empty but completely empty...and repeat it incessantly"?Would you please explain?"
This is just data that you've selectively picked...just like the hordes of analysts who like to paint a grim picture. Objective analysis requires more than just picking the bad news.
For example, the same GoP surveys also report rising production and demand for all sorts of goods and services...from autos, televisions, cement, home appliances, construction and retail to milk, meat, and cereals.
The same GoP reports also contain data on growing remittances and sustaining exports in the midst of economic problems in Europe ad US.
The same GoP reports also show slowly but gradually increasing per capita incomes YoY.
I strongly disagree with your contention that the Musharraf-Aziz clique did anything positive for our economy.
Please publish this on your blog. Contact me at the email address provided below if you have any questions. Thanks & best regards.
............
Institutions to invest
By Shakeel Ahmad
After assuming responsibility as Finance Minister and subsequently as Prime Minister, Shaukat Aziz, did not tire of informing the nation that Pakistan had broken the IMF begging bowl and the State Treasury was overflowing with funds. In fact, he went on to state that Pakistan would soon become a donor country. According to him, the financial commitments and contribution made for Afghanistan’s economic development were symbolic. Other countries could also expect Pakistan’s assistance in the development of their economies.
In order to justify his claims, national statistics were fudged. GDP figures for at least two preceding years were revised in 2005-06. This was unprecedented. The fallout effects were ignored. The first casualty was the loss of credibility of the data presented in the Economic Survey. Thanks to conniving bureaucrats serving in national institutions, poverty measurement instruments used in earlier estimations were discarded. Despite murmurs of dissent, new poverty measurement tools were used to produce results that could support the regime’s contention of a rising Pakistan.
According to these ‘new’ estimates the percentage of population living below the poverty line had shown an impressive decline. This reduction in poverty was attributed to the sound economic policies of the economic managers. It was a different matter altogether that they had made the country a laughing stock of donors as well as the international financial institutions. Pakistan could not count on the acceptance of any of its statistical data scrupulously prepared, in accordance with international norms, due to the suspicion that it may have been fudged.
The trumpeted economic growth was not driven by higher investment in new industrial units and for balancing and modernisation of existing plants and their production capacities. Very little investment was made in replacing obsolete technology to keep Pakistan competitive in the international market. There was no increase in the national savings rate, which is a key indicator for a shift in the growth trajectory. The savings rate also determines the nature of the economic growth process itself reducing dependence of the economy on external assistance.
Continued....
..Continued..
Savings provide the most important economic link between the past, present and future of a country. The stock of savings made by the public, private and corporate sectors help in determining the level of gross investment and the country’s growth rate. It follows that a low rate of savings if maintained over a longer period of time, entraps an economy in a vicious circle of low investment, low growth, low productivity and low real per capita income.
China was bracketed with some of the world’s poorest countries some 30 years ago. It was estimated that 80 percent of the population had income of less than $1 per day and only a third of all adults were able to read or write. Yet, it did not feel the need to rely on IMF’s rescue packages. Although it welcomed foreign investment, it did not knock the doors of international financial institutions for assistance. China relied on domestic savings for investment. Within the last 30 years, it has become one of the fastest growing countries in the world with real per capita growth close to 9 percent per annum during the 80s and 90s. This meant that China’s per capita income was doubling every 10 years, faster than almost any country in the world. It took the UK almost a century, USA 50 years and Korea 25 years to double their per capita incomes.
Pakistan, however, refuses to learn either from its own past or China’s performance. It does not require a Nobel Laureate in Economics to educate our economic managers that stagnant savings rate is explained by a negative contribution of household savings in physical assets, increase in deficit financing by the government and non-consequential savings by the corporate sector as a percentage of GDP. This latter phenomenon can be attributed to loss in profitability, repatriation of profits by multinational companies and closure of businesses due to their inability to compete in the external markets. The previous government was maintaining low interest rates as a policy measure to encourage investment.
Numerous tax concessions and implicit subsidies were allowed with the same objective. The desired outcome did not lead to an increase in corporate savings. Banks profited by the unprecedented differential in spread allowed by the State Bank under the government’s encouragement. These profits were disbursed as dividends and, in case of foreign banks, they were repatriated in foreign exchange.
Pakistan, thus, desperately requires resources for investment. These resources can come through higher rate of private savings. Now that the IMF has placed an embargo on the government’s borrowing from the State Bank, the Finance Ministry has to find resources from the non-banking sector to finance its deficits. A high rate of return on savings can play a major role in providing an impetus to savings, especially in view of the prevailing inflation and decline in the value of domestic currency. Other steps have to be taken in conjunction with the above. The government must learn to live within the given resources and lower the existing level of fiscal deficit. But this appears a difficult feat to achieve for President Zardari. It appears unlikely that he has the capacity to demonstrate simplicity and economy, even for symbolic purposes.
Shakeel Ahmad is a former member of the Civil Service of Pakistan.
Email:shakeelahmad1964@hotmail.com
I can also confirm anecdotally that the economy is picking up, just by counting the flat screen tv's, new fridges and micro-wave ovens being purchased in the middle class and lower middle class households, also purchase of new farm equipment points to the rise of the rural rupee.
Many Public sector projects are a ways for bureaucrats and people with power to skim funds and no one can stop them. These same people are buying cars and building their own homes. In my neighborhood back home the government chapparasi that used to bike to work has an airconditioned car and a nice house. He is still working the same job.
Now everybody tries to be Mr 10%
People tell me the job does't pay much but working for the government is the only way to get rich these days.
Bribery and corruption levels are so high I don't believe these economic figures.
@Rafi
same phenomenon even in tribal areas; some of it can be attributed to remmittances .....also the informal sector is yet to be quantified -- b/c it's very difficult. But you cant neglect the informal sector especially in a country like Pakistan
either way -- strong domestic consumption also helps drive growth.....that's why main focus should be on SMEs and on policies that foster and help widen the middle class (the real drivers)
would you say Pakistan's economy is doing very well? Sure, it may not be doing as bad as portrayed as well, but what about all the progress we see in our daily lives on streets? Please explain.
Husain: "would you say Pakistan's economy is doing very well? Sure, it may not be doing as bad as portrayed as well, but what about all the progress we see in our daily lives on streets? Please explain."
The biggest beneficiaries of the PPP govt have been the people in rural areas.
Since taking the reins of power almost over four years ago, the coalition government in Islamabad, which is led by the Pakistan Peoples' Party, has been increasing the support prices of wheat and other agricultural commodities every year. This policy has had the following effects:
1. It is transferring the additional new income of about Rs. 300 billion in the current fiscal year alone to the ruling party's power base of landowners in small towns and villages, from those working in the urban industrial and service sectors.
2. It has driven up food prices dramatically for all Pakistanis, particularly hurting the poor people the most.
3. It has reduced government tax revenues because the agricultural income is not taxed by either the federal or the provincial governments, and resulted in growing budget deficits.
4. It has significantly increased demand for consumer and industrial goods and services in the rural areas.
5. It has forced the State Bank of Pakistan to maintain a tight monetary policy which is drying up the much-needed credit for the industries and the average consumers alike.
6. It's likely to slow rural-to-urban migration and relieve pressure on major cities and their inadequate infrastructure.
http://www.riazhaq.com/2011/01/pakistans-rural-economy-showing.html
Away from the violence and the troubles of the big cities, the economy of rural Pakistan is booming. Flush with cash from bumper crops at record commodity prices, the farmers are spending on tractors, cars, motorcycles, mobile phones, personal grooming items, packaged foods and beverages and other consumer products like never before.
http://www.riazhaq.com/2011/10/fmcg-companies-profit-from-rural.html
^^^Riaz Haq Said: The biggest beneficiaries of the PPP govt have been the people in rural areas.................the economy of rural Pakistan is booming....... the farmers are spending on tractors, cars, motorcycles, mobile phones, personal grooming items, packaged foods and beverages and other consumer products like never before."
----------
Dr. Haq,
Let us assume that PPP increased food-prices specifically to move purchasing power away from urban area and towards their voter base in the rural areas.
Then it follows that any increase in the potential for consumption in rural areas must, in general, be matched by a decrease in the potential for consumption in urban areas.
The only reason overall (urban plus rural) consumption increased is because rural incomes are aggregate-taxed lower than urban incomes.
Therefore, the real NET increase in overall consumption came ONLY because of a decrease in tax revenue.
Still further, since the PPP did not cut spending in response to falling revenue, but rather increased the budget deficit, it follows that it is this INCREASE in the FISCAL DEFICIT that has financed the recent consumption boom.
Given that any increase in fiscal deficit crowds out private investment, it follows that the current consumption boom must be cannibalizing future investment.
Once again, the conclusions are the same:
1) This is not sustainable.
2) Crises (Financial, Debt, Currency) are just around the corner. They can hit AT ANY TIME now.
3) Without reversing current trends & policiues, total macroeconomic collapse is the only possible outcome that lies in our future.
Would you like to comment?
Thank you.
Dr. Haq,
Here is an article that shows that the resilient people of our country represent the best hope for Pakistan.
http://www.ft.com/intl/cms/s/0/986153d4-2804-11e2-afd2-00144feabdc0.html
But the mainstream Pakistani media never carries positive articles like this. They only seem to carry articles that potray Pakistan in a bad light.
Would you please highlight this positive article on your blog?
Thank you.
Oh Mr. haq, As I am time and again saying, your continuous obsession(like your countries) of talking crap about India and then aping them doesn't affect anybody but to suit your delusional ego. Be it 1971, 1965, 1999 or any other time. If you look at pakistan miniscule economy which has grown only on the basis of US aid. Just go through history and you'll see.
As for your non stop rant of how pakistan is more upwardly mobile and resilient than India. I would like to say that India has been extremely resilient to live with a terrorist nation by it's side even when this terrorist nation was constantly fed by the sole superpower US. As for your delusional claim about spending and upward mobility, i would like to show you statistics of how an AVERAGE INDIAN CONSUMER SPENDS TWICE AS MUCH AS AN AVERAGE PAKI CONSUMER.
http://www.tradingeconomics.com/india/consumer-spending
http://www.tradingeconomics.com/pakistan/consumer-spending
At todays, USD values, India's consumer spending is $600bn and paks consumer spending is $50bn
hence since Indian population is 6 times that of paks and consumer spending is 12 times we get an average spending of 2 times greater and that to at market exchange.
In PPP terms , It will be more like 2.5 times that of pak.
Now i know you'll argue about parallel black economy (like your people do to prop themselves up when the world recognises pak as a failes nation) , which is all nonsense since it has no figure and you cannot gauge the values. Plus pak is not the only one with a parallel economy.
So for all your statement about, How India has the highest number of poor, illiterate, sick, the fact of the matter is that we have the 2nd largest population which is close to 4 times the country (US) with the 3rd largest population. Hence, we are bound to have it.
But for comparison with a failed pak, India fares better on many of the per capita figures and as you can see, Indians consume 2times the pak and it will widen by leaps and bounds.
Good Day!
Vishesh: "at todays, USD values, India's consumer spending is $600bn and paks consumer spending is $50bn"
It makes no sense.
In nominal dollar terms, Pakistan's household consumption in 2010 was $145 billion while India's stood at $984 billion.
http://www.indexmundi.com/facts/pakistan/household-final-consumption-expenditure
http://www.indexmundi.com/facts/india/household-final-consumption-expenditure
And given the fact that Pakistan is more egalitarian with lower Gini index than India, I bet middle class in Pakista spent a bigger percentage of total consumption than India's middle class.
https://www.cia.gov/library/publications/the-world-factbook/rankorder/2172rank.html
@Vishesh: "At todays, USD values, India's consumer spending is $600bn and paks consumer spending is $50bn
hence since Indian population is 6 times that of paks and consumer spending is 12 times we get an average spending of 2 times greater....."
----
Firstly the data you have linked to are not certified WB data and may refer to different things in different countries.
In any case, macroeconomically speaking, this is not the correct way to analyze or compare consumption levels.
Here is how you do it:
A) Pakistan
1) Per capita GDP: 2800$
http://alturl.com/85puu
2) Household Consumption Rate: 82%
http://alturl.com/dd7xm
3) Therefore, average annual Houshold Consumption = 0.82 X 2800 = 2300$
B) India
1) Per capita GDP: 3700$
http://alturl.com/wnrdj
2) Household Consumption Rate: 58%
http://alturl.com/gpva7
3) Therefore, average annual Houshold Consumption = 0.58 X 3700 = 2146$
So household consumption levels are about the same in India and Pakistan.
The real difference between the two countries lies in the massive difference in their savings rates. Indians consume on average about the same as their Pakistani counterparts, but they save much, much more.
Feel free to run my comment by any serious economists you may know and they will confirm that what I have written above is true.
I hope this clarifies the point.
@Vishesh & @Riaz:
Why must the two of you always go round and round and round with this implied numbers game?
If a reference for Per Capita Nominal Constant Dollar values is what you want, you can find it at the same sources that both of you are quoting.
It is so simple:
A) Pakistan: 516$ in const 2000 USD
http://alturl.com/hrim4
B) India: 509$ in const 2000 USD
http://alturl.com/f4y6v
It is exactly as I said. The conclusion is the same as I drew from the PPP calculation:
India and Pakistan have about the SAME level of houshold (private) consumption as of 2011.
I hope that settles the matter.
@Visheesh
Before you jump on the "purchasing power" (PPP) issue, here are the WB data for PPP conversion in 2011:
A) Pakistan: 0.43 (or 2.33 X)
http://www.tradingeconomics.com/pakistan/ppp-conversion-factor-gdp-to-market-exchange-rate-ratio-wb-data.html
B) India: 0.41 (or 2.44 X)
http://www.tradingeconomics.com/india/ppp-conversion-factor-gdp-to-market-exchange-rate-ratio-wb-data.html
Conclusion: The difference between PPP ratios and Nominal ratios is less than 5% as of 2011.
Let us refrain from using emotions in the interpretation of data. They are what they are; regardless of what we might wish them to be.
I hope this helps elucidate the matter.
Vishesh: "Hence, Indian Household Final Consumption according to WB is 7.8 times the final consumption for pak as of 2011...As per these figures also, An average Indian consumes 25% more than a paki.And these are at nominal terms...
At PPP terms it will be greater."
Let me try and help you by explaining the concept of std of living as measured by basics like food, clothing, hygiene, etc. and to show you that an avg Pakistani lives better tha an avg Indian.
Food:
Pakistanis' diet is superior to Indians' diet in terms of nutriti9onal value putting an avg Pakistani in healthy BMI category.
In terms of average BMI (Body Mass Index), Pakistanis and Chinese are at 23, Indians 21 and Bangladeshis 20.5, all within normal range of 18.5 to 24.9. The average values of BMI for Europe, Middle East and North and South America are much higher.
http://www.riazhaq.com/2012/07/world-population-america-significantly.html
At 223 Kg of milk consumption per person in Pakistan which is about the same as the developed world's per capita milk consumption , it is more than twice that of neighboring India's 96 kg per capita
Indians consume only 3.2 Kg of meat per capita, less than one-fifth of Pakistan's 18 Kg. Daal (legumes or pulses) are popular in South Asia as a protein source. Indians consume 11.68 Kg of daal per capita, about twice as much as Pakistan's 6.57 Kg.
Edible oil consumption soars during the holidays as hundreds of millions of people eat sweets and fried foods during the September-December festive season. Pakistanis use about 20 Kg of oil, the per capita amount recommended by the World Health Organization, while Indians consume about 13 Kg per capita.
http://www.riazhaq.com/2012/10/pakistan-among-top-meat-consuming.html
Clothing:
According to The Fiber Report 2009/10, Indians consumed 4.18 million tons of textile fiber while Pakistanis consumed 2.558 million tons.
Assuming a population of 1.2 billion for India and 180 million for Pakistan, the per capita cotton consumption works out to 3.48 Kg in India and 14.2 Kg in Pakistan. If you add polyester fiber, India's per capita consumption of all textile fibers is still 7.5 Kg, less than half of Pakistan's.
http://www.alokind.com/Downloads/Indian%20Textile%20Trade%20-Golden%20Period-%20March%202012.pdf
http://www.oerlikontextile.com/desktopdefault.aspx/tabid-1763/
Hygiene:
India leads the world in open defecation. India(638m) is followed by Indonesia (58m), China (50m), Ethiopia (49m), Pakistan (48m), Nigeria (33m) and Sudan (17m). In terms of percentage of each country's population resorting to the unhygienic practice, Ethiopia tops the list with 60%, followed by India 54%, Nepal 50%, Pakistan 28%, Indonesia 26%, and China 4%.
http://www.riazhaq.com/2011/10/india-leads-world-in-open-defecation.html
HWJ: "A) Pakistan: 0.43 (or 2.33 X)
http://www.tradingeconomics.com/pakistan/ppp-conversion-factor-gdp-to-market-exchange-rate-ratio-wb-data.html B) India: 0.41 (or 2.44 X)
http://www.tradingeconomics.com/india/ppp-conversion-factor-gdp-to-market-exchange-rate-ratio-wb-data.html"
Indian govt officials use a bigger PPP factor of 2.9 to inflate India's PPP GDP as explained by The Hindu newspaper below:
The (Economic) Survey (of India) estimates India's PPP correction factor at 2.9, meaning the stuff available here for $100 will cost $290 in the US. That corresponds to an exchange rate of roughly Rs 15.5 to the dollar. But the interesting bit is about the linkage with GDP. Countries with per capita GDP of $1,000-1,400 in 2009 – which include India, Pakistan and Vietnam — have an average PPP adjustment factor of 2.3.
http://www.thehindubusinessline.com/opinion/columns/harish-damodaran/article1540678.ece
There are worries about carbonated drink consumption in South Asia. I think these are overblown considering the fact that per capita consumption in Pakistan is just 5 liters and in India 3 liters.
Compare this with milk, a healthier alternative, whose consumption in Pakistan is 223 Kg per person and 96 Kg in India.
http://www.riazhaq.com/2012/10/pakistan-among-top-meat-consuming.html
http://www.slate.com/articles/health_and_science/map_of_the_week/2012/07/map_of_soda_consumption_americans_drink_more_than_anyone_else_.html
Here's a recent Seekingalpha piece on Pepsi growth in South Asia:
Pepsi depends heavily on emerging markets for growth. It experienced a growth of 14% in emerging markets for the quarter. Organic net revenue in Europe grew by 7%, and in Asia, Middle East and Africa it grew by 10%. The company has significant international exposure, which means that the company's top and bottom lines are affected by foreign currency movements. This is made evident by a 5% decrease in company revenues due to foreign currency movement in the recent third quarter.
------
Asia, Middle East & Africa (AMEA) unit experienced strong growth for the quarter. Organic net revenue grew by 10%. Within this unit, snacks experienced double-digit volume growth rate. Beverages' volume experienced high single digit growth rate. India and Pakistan experienced snacks volume growth of 12% and 27%, respectively. Beverage volume for India and Pakistan was up 23% and 25%, respectively. Constant currency operating profit for the unit grew by 14%.
http://seekingalpha.com/article/935611-pepsico-or-coca-cola
^^^^^Riazhaq Wrote: "...However, the company’s ambitions may be tempered by the economics of demand and supply. The truck market has slowed over the last few years in Pakistan, a representative of Hinopak Motors – the largest truck maker in Pakistan – said.
Industry officials say that the decline in overall economic activity and continuous disruptions in Nato supplies to Afghanistan have resulted in significantly low sales of trucks in Pakistan."
----------------------
Dr. Haq,
What happens when the bulk of US troops leave in 2014 and the remaining ones are supplied from central asia?
Here is what I am seeing:
(1) The USD stream coming in for paying for "government services" (1.5 Billion USD) will be gone.
(2) The USD stream coming in for paying for the stream of NATO-supply trucks moving up and down Pakistan (1.5 Billion USD) will also be gone.
This will have two major implications:
1) Economic activity will decline further and additional pressure on PKR will result.
2) There will be a MASSIVE glut of truck-carrying capacity, in addition to the existing MASSIVE glut in truck-assembling capacity.
The NATO-supply business was very good for both truck-shipping companies and for truck-assembling companies. But when it ends, both businesses will be DEVASTATED. There will a shake-out. Massive bad debts will result. GOP will have to bailout many banks. Capital flight will occur. PKR will nosedive. Deficits & Public debt will both soar. This process will be neither pretty nor pleasant.
Hino-Pak (the #1 in our country) is hurting even right now. What will happen to them when the massive overhang of second-hand trucks comes into the market? And if a well-established player like Hino-Pak is concerned about what will happen post-2014, what chance will this "Al Haji Chini" company stand in such an adverse market for trucks?
Would you please leverage your Intel Management skills to analyze this issue?
Thank you.
HWJ: "What happens when the bulk of US troops leave in 2014 and the remaining ones are supplied from central asia?"
Well over 90% of the freight in Pakistan now moves via trucks...mostly private owned.
In mid-90s, Pakistan Railway had 10.45% share of passenger traffic and 5.17% of freight traffic, which has declined to 9.95% and 4.72% respectively by the year 2006-07, according to Economic Survey of Pakistan.
There will be a short term impact o truck demand but growth will resume because Pakistan will still be there with its growing population and its growing needs for transportation.
Trucking was growing before the Americas came and it will continue to grow after the Americas leave.
Dr. Haq,
This was a good article on the cement industry in our country.
But if it is doing well, it doesn't require our help.
On the other hand, it appears that our Steel Industry is on the verge of COLLAPSE.
We need to research its problems, analyze its shortcoming and propose innovative solutions to turn it around.
Could you do an article on what plagues our Steel Industry, why it is in such sorry shape and how it could be dramatically improved?
If India is producing 72 million tons of RAW Steel, given that our economy is 1/8 of theirs, we should be producing at least 9 million tons of RAW steel. So how much RAW steel are we producing today? How much are we importing? How could we do better?
http://dawn.com/2012/07/26/steel-mills-bailout/
http://archives.dawn.com/archives/153650
http://pakobserver.net/detailnews.asp?id=134702
Thank you.
Dr. Haq,
As you have been documenting, most of the recent FDI investments have been in the food or perosnal consumption sectors.
Here is an interesting article from Exp-Tribune:
http://tribune.com.pk/story/387131/industry-growth-in-food-pharmaceuticals-masks-dismal-year-for-manufacturing/
Note that growth was concentrated in the following sectors in 2011-12:
1) Food & Bev(Chawal)
2) Textiles (Chadar)
3) Leather (Chamdi)
4) Pharmaceuticals
5) Packaging Materials
Let us look at the GOP report the article is referring, in Table 3.1 Page 39:
http://www.finance.gov.pk/survey/chapter_12/03-Manufacturing.pdf
As we can see, the article is correct that virtually every other industry has COLLAPSED in 2011-12. It looks like that Miglani fellow was more or less correct when he commented on your other article.
The extent of the collapse of core industries is FRIGHTENING:
1) Steel: -28.5%
2) Rubber: -24.6%
3) Engineering: -10.2%
4) Electronics: -7.9%
5) Petroleum: -5.7%
6) Chemicals: -4.7%
What are your views? Do you now agree that Miglani was right? How do you explain the vast downward spiral in such core sectors? Is the "undocumented economy" now making steel, refined petro-products, rubber and engineering components on a "backyard" basis?
Please comment.
Thank you.
HWJ: "As you have been documenting, most of the recent FDI investments have been in the food or perosnal consumption sectors....What are your views?"
I am happy to see these as positive signs of the rise of the middle class in Pakistan which augurs well for many many reasons, including the future of politics and governance in Pakistan.
Another thing you missed is how the people are coping with the power crisis as seen in 143.9% growth in manufacture of generating sets.
Here's a quote from page 5 of Highlights chapter of Economic Survey 2011-12:
Items wise contribution in Large Scale Manufacturing indicates growth in Generating Sets
(143.9 percent), Blankets (109.9 percent), Electric Transformer (31.2 percent), Heavy
Machinery & equipments (21.0 percent), Sugarcane Machine (19.2 percent), Sugar (15.3
percent), Liquids/Syrups (14.1 percent), Tea blended (13.3 percent), Tablets (10.7 percent),
Jeeps & Cars (8.8 percent), Footwear (6.2 percent), LPG (3.4 percent), Cement (2.9 percent)
and Sugar (15.3 percent).
Automotive Industry such as Buses, Cars, LCVs and two/three wheelers managed significant
growth at 23 percent, 9.1 percent, 5.7 percent and 3.1 percent respectively as compared to -
24.7 percent, 16.4 percent, 23.3 percent and 12.6 percent during the same period last year.
http://www.finance.gov.pk/survey/chapter_12/highlights.pdf
Here's an interesting letter to Financial Times from two Pakistani readers:
....It can, of course, be argued that quality and institution-building will take some time. However, with the initiatives of some of the best American universities, the pace of reform can be quickened. Initiatives such as MIT Open Courseware (OCW), Open Yale Courses (OYC) and EdX now require just an internet connection and a laptop to access this world-class education. The word needs to be spread so that as many people as possible take advantage of this.
What American universities are doing is the beginning of a global reform in higher education. In our recorded history, no civilisation has ever opened its most advanced knowledge for others to benefit. We believe that nothing but the essence of real knowledge can truly transform our country.
It is with this faith that we meet every weekend on the outskirts of Lahore and try to gather as many people as possible to tell them what new opportunities have opened up in the shape of OCW and OYC, and how they can use those to transform themselves and society.
We also help underprivileged students understand the OYC lectures. We believe that these opportunities being offered by world-class universities can truly transform not just Pakistan but every country in the world.
Such initiatives need to be highlighted on broader and bigger forums as they represent far better opportunities than what is being offered by the profit-oriented education providers in Pakistan and other countries.
http://www.ft.com/intl/cms/s/0/ed95f842-29d4-11e2-9a46-00144feabdc0.html
Here's a Reuters report titled "Dismal trade, production data deepens fears about Indian economy":
India's economic gloom deepened on Monday with a surprise contraction in industrial production, a fall in exports and higher retail inflation, dashing hopes of a quick revival in an economy on track to post its slowest growth in a decade.
The data will add pressure on the government to boost economic growth by fast-tracking stalled tax and regulatory reforms. It will also bolster calls for an interest rate cut by the country's central bank, which has so far ruled out any before January, citing high inflation.
Two of the country's biggest business chambers expressed alarm at the data, which caused the rupee to fall to a two-month low. They said it was clear that the slowdown in manufacturing growth had not yet bottomed out.
"At this juncture, it is important that government does not lose momentum on the reform front and needs to take courage now to implement some big ticket reforms," said R V Kanoria, president of the Federation of Indian Chambers of Commerce and Industry.
The data underscored the scale of the challenges facing Prime Minister Manmohan Singh in trying to revive an economy that once boasted double-digit growth but has been hard hit by the global economic downturn and a series of policy missteps.
Credit Suisse said India's October trade deficit of nearly $21 billion was the country's worst on record and could prompt the government to impose measures to curb the deficit, such as further increases in import duties on gold.
Industrial production unexpectedly shrank an annual 0.4 percent in September, according to the Central Statistics Office (CSO). That came as a nasty surprise to economists who had forecast a rise of 2.8 percent in a Reuters poll.
Analysts had hoped India's festival season, which began in September and will peak this month, would boost sales.
Production of consumer goods fell 0.3 percent in September from a year earlier. Capital goods, a proxy for capital investment in the economy, shrank an annual 12.2 percent.
"Investment plans have slowed down. It takes a long time for investment plans to pick up again," said Montek Singh Ahluwalia, deputy chairman of India's influential Planning Commission.
Finance Minister P. Chidambaram told Reuters earlier this month that growth for this financial year could be as low as 5.5 percent, which would be the slowest rate of expansion since 2002/03.
Delays in environmental and other regulatory clearances, coupled with high interest rates, have hurt many industrial and infrastructure development projects.
The government has launched a slew of initiatives, including raising subsidized diesel prices and opening sectors like supermarkets to foreign players to revive the economy.
But Indian business leaders said it needed to swiftly take more steps, including speeding up approval of infrastructure projects, overhauling the tax system and, reducing its huge fuel, food and fertilizer subsidies burden.
Business leaders also called on the central bank to reduce interest rates that are the highest among the major economies.
Chidambaram has been arguing for lower rates, saying monetary policy has limitations in controlling inflation in an emerging economy such as India and that policymakers must learn to live with some inflation....
http://www.reuters.com/article/2012/11/12/us-india-economy-idUSBRE8AB0AJ20121112
Here's PakistanToday on the latest PSDP funds release by Planning Commission:
ISLAMABAD - The Planning Commission of Pakistan released Rs 88.8 billion under its Public Sector Development Programme (PSDP) against the total allocations of Rs 233 billion for the fiscal year 2012-13.
Out of the total Rs 51.5 billion had been released for 344 infrastructure development projects while Rs 34.5 billion had been set aside for 673 social sector projects, according to the latest data of the Planning Commission.
Similarly, Rs 0.8 billion had been released for 68 other projects and Rs 2 billion for Earthquake Reconstruction and Rehabilitation Authority (ERRA).
According to the data, these releases had been made against Rs 233 PSDP allocations up to November 8.
The total size of the PSDP for the year 2012-13 was Rs 360, including Rs 100 billion foreign aid, which was managed by the Economic Affairs Division and Rs 27 billion special programmes, release of which were made by the Cabinet Division or Finance Division.
According to break up details the total cost of 344 infrastructure projects had been estimated at Rs 2346.4 billion, out of which Rs 210.9 billion had been earmarked in the 2012-13 budget that included Rs 85.6 as foreign aid.
The total cost of social sector projects was Rs 547.1 billion, of which Rs 136.2 billion had been allocated in the current PSDP with foreign aid of Rs 8.4 percent.
The cost of other projects had been estimated at Rs 40.6 billion, out of which Rs 3 billion had been earmarked in the PSDP 2012-13 while Rs 10 billion had been earmarked for ERRA in the current development programme.
The Planning Commission of Pakistan had been following a proper mechanism for the release of funds and accordingly funds are released as per given mechanism.
http://www.pakistantoday.com.pk/2012/11/13/city/islamabad/planning-commission-releases-rs-88-8b-for-psdp/
In our recorded history, no civilisation has ever opened its most advanced knowledge for others to benefit.
These are general courses taught in MIT and Yale.
This is not DARPA research being put for other people's consumption!
Lets not get carried away!
Riazhaq to HWJ: "Another thing you missed is how the people are coping with the power crisis as seen in 143.9% growth in manufacture of generating sets"
------------------------
Dr. Haq,
You are correct. The power crisis has led to a very healthy 143.9% growth in the manufacturing of generating sets.
So if the power crisis worsens this year, it will be even better for the economy, as it will lead to even faster growth in the generator-set manufacturing sector.
I presume that this is the message you were trying to convey?
In front of every silver lining, there is a dark cloud.
Thank you.
HWJ: "So if the power crisis worsens this year, it will be even better for the economy, as it will lead to even faster growth in the generator-set manufacturing sector."
No, this is a testament to the resilience of the people in coping with difficulties and the industry's ability to respond to changing demands...something that eludes you as obvious from your multiple comments.
^^^Riazhaq wrote: "No, this is a testament to the resilience of the people in coping with difficulties and the industry's ability to respond to changing demands...something that eludes you as obvious from your multiple comments."
--------------------
Dr. Haq,
This is not true.
Whenever you do a blog article pointing to the resilience of our people, I either comment agreeing with you, or, having found no flaw in the article, I refrain from commenting altogether.
I have NEVER denied that our people are amongst the most resilient in the world. This is an undeniable fact. There can be no debate upon this point.
My point, however, was something altogether different. Our discussions on the economy are really about the following core-points:
1) You claim:
(a) Our excessive-consumption based economy is on the right track and so high-growth is just around the corner.
(b) We have a deep & diverse industrial base that has been strengthening over the past few years.
(c) We have a sophisticated military-industrial complex that manufactures aircraft, nuclear submarines, photon torpedoes etc.
(d) Excessive consumption (92%) is GOOD, because consumption is the sine qua non for investment activity.
2) I claim:
(a) Our excessive-consumption based economy is on the WRONG track, and that a financial/BOP crisis is just around the corner.
(b) We have a shallow and limited industrial base that is collapsing due to GOP mismanagement even as we speak. We have excessive reliance on textiles, food processing & leather (Chadar, Chawal, Chamdi), exactly as Dr. Ishrat Hussain said.
(c) It is not possible to have a military-industrial complex with an industrial base that is as shallow and limited as ours. Our "military-industrial complex" is merely an assembly operation for secretly-imported components.
(d) Excessive consumption (92%) is BAD, because without sufficient domestic savings, sustainable investment and stable long-term growth is impossible.
Please do not accuse me of dismissing the strength and resilience of the people of Pakistan. I have done no such thing.
Thank you.
HWJ: "It is not possible to have a military-industrial complex with an industrial base that is as shallow and limited as ours. Our "military-industrial complex" is merely an assembly operation for secretly-imported components. "
By your logic, the US "military-industrial complex is merely an assembly operation" because 1) Boeing relies on suppliers in 80 countries to build its aircraft. and 2) Lockheed Martin products are full of Chinese made parts.
Apparently, you are still stuck on the antiquated Gandhian notion of "swadeshi" and never heard of global supply chains used by almost every major manufacturer in the world today.
Your dismissive tone about "Chadar, Chawal, Chamdi" also suggests that you have zero understanding of what business and industry are all about.
All you are really interested in is to prove "Our excessive-consumption based economy is on the WRONG track, and that a financial/BOP crisis is just around the corner".
I think you are really misguided if not entirely ignorant about the basic fact that consumption drives investment in business and industry. Unless investors see a market for what they are investing in, there will be no business or industry anywhere in the world.
You also do not understand that every economy that can not print US dollars or euros, including Pakistan's, is vulnerable to BOP crises. However, the probability of a BoP crisis in Pakistan appears to be low as long as the energy prices remain relatively stable and the inflows such as remittances from overseas Pakistanis continue to rise.
Here's a speech by Pak Finance Minister Dr. Hafeez Shaikh on economy as reported in The Nation newspaper:
Finance Minister Dr Abdul Hafeez Sheikh has said that Pakistan’s economy continues to show signs of recovery with improvement in key macroeconomic indicators. Despite major external and internal shocks, the economy has shown resilience and is projected to grow by 4.3 percent in FY13 after a healthy growth of 3.7 percent in FY12. Exports continue to show a healthy growth, remittances remain strong keeping foreign exchange reserves stable and most importantly inflation has continued to show a declining trend.
The goal is to build on these positive trends and insulate the economy against any potential external shocks such as a rise in oil prices and global contagion, Sheikh said while addressing the inaugural sesson of PSDE on “ Economic Reforms for Productivity, Innovation and Growth” on Tuesday.
He said the Government has successfully doubled the tax collection from Rs.1 trillion to Rs.2 trillion in the last four years; remittances have more than doubled from US$ 6.4 billion in 2007-08 to US$ 13 billion by year end 2011-12. Inflation has moderated to 8.8% in the first four months of FY13. Exports are likely to cross the target of US$ 26bn in FY13. Hard budget constraints are being ensured to maintain fiscal discipline and expenditure has been curtailed to 35% of the budget in the first four months of FY13.
Sheikh said fiscal austerity measures of Rs15bn including freezing of non salary current expenditures and ban on new recruitments are currently under implementation. Austerity measures have been deepened under which current expenditures is being curtailed. Fiscal deficit is projected to be contained at 4.7% of GDP during FY13.
-----------
The finance minister said the government initiated important mega projects in energy and infrastructure sector which would provide the economy a base for sustainable economic growth in future. Some of the initiatives include: Neelum-Jhelum Hydropower Project, Diamer-Bhasha Dam, 4th Tarbela Extension Project; Chashma Nuclear Power Projects 3 and 4, Lyari Expressway, Mekran Coastal Road, M4 Motorway from Faisalabad to Khanewal, KKH Skardu Road and Realignment of KKH Road due to Attabad Lake. Mega projects completed during the period include Chashma Nuclear Power Project 2, Mangla Raising Project, Mirani Dam Project, Islamabad Peshawar Motorway and Islamabad Muzaffarabad Expressway. Overall, 650 projects worth Rs. 300 billion have been launched.
----------
He said major restructuring and reforms in Public Sector Enterprises (PSEs) and energy sector have been undertaken to reduce burden on budget and improve service delivery. Government has undertaken key structural reforms in the power sector under the Power Sector Reform Plan targeted at improving governance and legal framework and ensuring financial sustainability. In addition 3,334 MW has been added since 2008. Ongoing reforms have resulted in relative stability in the power sector and power shortages have been minimized along with reduction in line losses and improved recovery of arrears.
He said import of LNG and natural gas from neighbouring countries are being pursued to overcome the energy crisis. Extensive work is being done on turn-around plans of key PSEs. Restructuring plans of PIA, Pakistan Railways and Pakistan Steel Mills are under implementation and consequently haemorrhaging has been curtailed in these PSEs along with improvement in service delivery. Measures are being strengthened to restructure key PSEs with sound governance structures and professional management.
http://www.nation.com.pk/pakistan-news-newspaper-daily-english-online/business/13-Nov-2012/economy-showing-continuous-signs-of-recovery-inflation-brought-down-to-8-8-hafeez-sheikh
Dr. Haq,
I will try to address your other concerns point wise:
(A) "Apparently, you are still stuck on the antiquated Gandhian notion of "swadeshi" and never heard of global supply chains used by almost every major manufacturer in the world today."
I have no knowledge of Gandhi. And I have zero interest in any wacked-out theories of his.
However, the "global supply chains" of which you speak are arranged such that lowest-cost suppliers can be harnessed to cut prices for the final consumer.
Pakistan is one of the LOWEST COST-BASE countries in the world. Why should we depend on suppliers in higher-cost countries to fulfill our needs? The only reason we do that is because we do not have the industrial base— cost has nothing to do with it.
The US imports things it could easily make itself in order to reduce COST. We import things because we do not have the capacity or capability to make them ourselves.
Therefore, the "global supply chain" argument is a red-herring.
(2) "Your dismissive tone about "Chadar, Chawal, Chamdi" also suggests that you have zero understanding of what business and industry are all about."
I did not coin the term "C,C,C". And my tone was not intended to be dismissive. The term is regularly bandied about by native-Urdu speaking traders in the capital markets of Karachi. I'm sorry to see that you are not in touch with current Karachi Business Urdu terminology.
(3)"I think you are really misguided if not entirely ignorant about the basic fact that consumption drives investment in business and industry. Unless investors see a market for what they are investing in, there will be no business or industry anywhere in the world."
I have said this before and I will say it again: There is a difference between HEALTHY levels of consumption and EXCESSIVE consumption.
For a country at our level of development, our final consumption to domestic savings ratio should typically be 75: 25. This would have been reasonably healthy.
Our ratio right now is 92:8. This is EXCESSIVE consumption and abysmally-low domestic savings. This is UNHEALTHY.
You say 92% consumption is good, because that will encourage investors to invest. But what will they "invest" when there are so little savings. You have to save (defer consumption) first in order to be able to invest. Why is this so hard to understand?
If you answer, "we will get foreign investors to bring in the savings of foreigners", my point is that this is precisely what CAUSES macroeconomic instability. EXCESSIVE reliance on foreign capital service increases the chances of a BOP crisis at the smallest exogenous tremor in the international markets.
No country has ever come out of third-world poverty by relying EXCESSIVELY on foreign savings or investment. See the high-savings levels of the East Asian countries that developed so rapidly.
Continued....
..continued
(4) "You also do not understand that every economy that cannot print US dollars or Euros, including Pakistan's, is vulnerable to BOP crises."
Saudi Arabia cannot print USD. Are they living in fear of a BOP crisis? No, they are not. That is because they have huge FOREX reserves. We, however, do not and that is why our Newspapers carry warnings about the impending BOP crisis almost every day.
(5)"However, the probability of a BoP crisis in Pakistan appears to be low as long as the energy prices remain relatively stable and the inflows such as remittances from overseas Pakistanis continue to rise."
I fully expect energy prices to fall over the next few years as China's energy-intensive investment-boom cools down.
However, our BOP danger will still INCREASE.
This is because our BOP situation is entirely dependent on remittances from our workers in the GCC countries. As energy prices fall in real terms (as they did from 1985-2000), these GCC remittances will COLLAPSE (as they did from 1985-2000). And then a MASSIVE BOP crisis will be at hand.
I hope I have explained my views a little better.
I look forward to hearing your views.
Thank you.
^^^Here's a speech by Pak Finance Minister Dr. Hafeez Shaikh on economy....
---------
I have enormous respect for Dr. Shaikh as an Economist.
But as the Finance Minister of the PPP government, he is hardly an objective source.
What do you expect him to say? That the last 4 years of PPP government has destroyed the economy and if elected again the PPP will ensure another lost-decade?
He has to say what the party wants him to say. And the party will tell him to say "good stuff".
This is the way all governments work in democracies all over the world.
We need to solicit insightful opinions from more neutral economists-- like Dr. Ishrat Hussain and so on.
HWJ: "Pakistan is one of the LOWEST COST-BASE countries in the world..."
I think you need to learn more about the origins of trade and how it has been the cornerstone of human civilization and progress for thousands of years. If everyone made everything they needed, people would still be living in subsistence mode.
Please read "The Rational Optimist" by Matt Ridley.
http://books.google.com/books?id=YoVpW0zJIgYC&printsec=frontcover&dq=rational+optimist+matt+ridley&hl=en&sa=X&ei=vO2iUMLeD8bKiwKLp4HoAQ&ved=0CDMQ6AEwAA#v=onepage&q=trade&f=false
^^Riaz Haq Wrote: "I think you need to learn more about the origins of trade and how it has been the cornerstone of human civilization and progress for thousands of years. If everyone made everything they needed, people would still be living in subsistence mode."
-----
I agree with you on the importance of trade.
However, we should not fall into the intellectual-trap of giving it more importance than it is due.
In this regard, I think that perhaps we should ALSO learn more about how South Korea transformed itself from a 3rd-world country into a developed one.
Did South Korea really practice free-trade?
Once we have understood the demonstratedly-successful Korean path, we need to ask 3 questions:
1) Compared to SK: What did Pakistan do wrong and what did it do right?
2) Compared to SK: What did India do wrong and what did it do right?
Having found the answers to these two questions, we can then ask the CRITICAL question that stands before us today:
Which of the two countries has LEARNT FROM ITS PAST MISTAKES?
To assist with the first part, I quote the Economist(1999): http://www.economist.com/node/205915
(1) (a) India cut itself off from the world economy for 40 of its 50 years of independence,
(b) whereas Pakistan remained relatively open.
(2) (a) Pakistan had constant balance-of-payments crises,
(b) whereas India was a rare supplicant at the IMF.
(3) (a) India poured money into heavy industry, developing huge steel and refining industries.
(b) Pakistan has little industry worth mentioning.
(4) (a) Nonetheless Pakistan's economy outgrew India’s,
(b) And its GDP per head is a good 20% higher
To assist, with the second part, i.e. have we LEARNT from our past mistakes?
(1a) India cut itself off from the world economy for 40 of its 50 years of independence-- NO LONGER TRUE
http://alturl.com/6dnkk
(1b) whereas Pakistan remained relatively open-- HAS INVERTED COMPLETELY
India's Trade has gone up to 55% of GDP, ours is still only 28%
http://alturl.com/vze2q
(2a) Pakistan had constant balance-of-payments crises-- STILL TRUE
http://alturl.com/jgujm
(2b) whereas India was a rare supplicant at the IMF-- STILL TRUE
http://alturl.com/n5k7i
(3a) India poured money into heavy industry, developing huge steel and refining industries-- STILL TRUE
http://rbidocs.rbi.org.in/rdocs/Publications/PDFs/129_EHS110912F.pdf
(3b) Pakistan has little industry worth mentioning-- STILL TRUE
http://www.sbp.org.pk/ecodata/Export_Receipts_by_Commodity.pdf
(4) Nonetheless its economy outgrew India’s-- REVERSED COMPLETELY
http://alturl.com/ovhe8
http://alturl.com/sd7jw
(5) And its GDP per head is a good 20% higher-- REVERSED COMPLETELY
http://alturl.com/sy96p
SUMMARY: Trade is good. Trade is essential. But there is more to development than just "free" trade.
What do you think?
Thank you.
I think you need to learn more about the origins of trade and how it has been the cornerstone of human civilization and progress for thousands of years. If everyone made everything they needed, people would still be living in subsistence mode.
Banias have been into this for millenia!So please also please remember EVERY country has industrialized behind high tarrif walls without exception.So despite the utter failure of washington consensus to deliver any tangible benefits to Pakistan or any otehr country that follows it your parroting the same trade is an engine of growth line is a sign of stubbornness.
So Mr. Haq, I do remember how you, with so much of glee were boasting of high growth rate of cars soldin pak and how pak's middle class is faring so much better than India's with its record car sales jump. Well let's look at this year
http://dawn.com/2012/11/13/car-sales-drop-by-32-3pc/
38% DROP IN OCTOBER IN pakistan
http://www.ianslive.in/index.php?param=news/October_car_sales_up_23_percent_SIAM-390525/BUSINESS/5
23% RISE IN OCTOBER IN INDIA
Plus last years rise in pak was only due to some cab scheme. And even if you add your car imports which total to some 50-60000. Pak's total car sales equal 2-2.25 lakh units compared to 2.7 million units in India. Which is 12-13 times the units and 2 times per capita!
Here are some interesting facts according to euro monitor- As of 2010
Indian consumer expenditure on clothes and footwear was $51.3 per person and the same for a paki was $39.4
Similarly,
Indian comsumer expenditure was $804 per person and for a paki was $762.
No. of vehicles in use per 1000 people in India is 6.1 versus 2.1 for a paki.
http://www.euromonitor.com/medialibrary/PDF/Book_AMDAS0.pdf
Vishesh: "Indian consumer expenditure on clothes and footwear was $51.3 per person and the same for a paki was $39.4..Similarly,
Indian comsumer expenditure was $804 per person and for a paki was $762."
And yet, an average Pakistani eats and dresses better and lives in less crowded and healthier situation than an average Indian.
What it means is that, contrary to Indian govt assertion of 2.9 vs 2.3 PPP factor, Pakistanis have better purchasing power than their Indian counter parts.
Here's my earlier comment on this subject of std of living:
Food:
Pakistanis' diet is superior to Indians' diet in terms of nutriti9onal value putting an avg Pakistani in healthy BMI category.
In terms of average BMI (Body Mass Index), Pakistanis and Chinese are at 23, Indians 21 and Bangladeshis 20.5, all within normal range of 18.5 to 24.9. The average values of BMI for Europe, Middle East and North and South America are much higher.
http://www.riazhaq.com/2012/07/world-population-america-significantly.html
At 223 Kg of milk consumption per person in Pakistan which is about the same as the developed world's per capita milk consumption , it is more than twice that of neighboring India's 96 kg per capita
Indians consume only 3.2 Kg of meat per capita, less than one-fifth of Pakistan's 18 Kg. Daal (legumes or pulses) are popular in South Asia as a protein source. Indians consume 11.68 Kg of daal per capita, about twice as much as Pakistan's 6.57 Kg.
Edible oil consumption soars during the holidays as hundreds of millions of people eat sweets and fried foods during the September-December festive season. Pakistanis use about 20 Kg of oil, the per capita amount recommended by the World Health Organization, while Indians consume about 13 Kg per capita.
http://www.riazhaq.com/2012/10/pakistan-among-top-meat-consuming.html
Clothing:
According to The Fiber Report 2009/10, Indians consumed 4.18 million tons of textile fiber while Pakistanis consumed 2.558 million tons.
Assuming a population of 1.2 billion for India and 180 million for Pakistan, the per capita cotton consumption works out to 3.48 Kg in India and 14.2 Kg in Pakistan. If you add polyester fiber, India's per capita consumption of all textile fibers is still 7.5 Kg, less than half of Pakistan's.
http://www.alokind.com/Downloads/Indian%20Textile%20Trade%20-Golden%20Period-%20March%202012.pdf
http://www.oerlikontextile.com/desktopdefault.aspx/tabid-1763/
Hygiene:
India leads the world in open defecation. India(638m) is followed by Indonesia (58m), China (50m), Ethiopia (49m), Pakistan (48m), Nigeria (33m) and Sudan (17m). In terms of percentage of each country's population resorting to the unhygienic practice, Ethiopia tops the list with 60%, followed by India 54%, Nepal 50%, Pakistan 28%, Indonesia 26%, and China 4%.
http://www.riazhaq.com/2011/10/india-leads-world-in-open-defecation.html
"What it means is that, contrary to Indian govt assertion of 2.9 vs 2.3 PPP factor, Pakistanis have better purchasing power than their Indian counter parts."
well i am not quoting INDIAN stats, I am quoting those by EUROMONITOR. In anycase, these are not PPP terms, these are in NOMINAL terms!
Even in PPP terms India has a much better parity than pak.
Vishesh: "well i am not quoting INDIAN stats, I am quoting those by EUROMONITOR. In anycase, these are not PPP terms, these are in NOMINAL terms!"
Regardless of the source or whether it's nominal or PPP, these figures do not explain how Pakistanis manage to eat better, dress better and live better than their Indian counterparts as I have shown by actual consumption patterns of basics like food, clothing, etc.
Look like things are improving.
Exports are increasing.
Imports are decreasing.
Trade deficit is shrinking.
http://alturl.com/nxx9m
Let's be grateful for this bit of good news in these uncertain times.
Here's an excerpt of a story in The News about the size of Pakistan's informal economy:
ISLAMABAD: Pakistan’s informal economy has expanded, reaching 91.4 percent of Gross Domestic Product (GDP). At a PIDE conference on Thursday, economist, M Ali Kemal said, “according to data for 2007-08, our formal GDP is half our actual GDP. However, it is still an under-estimated figure since investment data is not adjusted. The informal economy is 91.4 percent of the formal economy.”
He further said that the formal economy contributed Rs10,242 billion of the estimated Rs19,608 billion that the economy generates. Moreover, the informal economy stands at approximately Rs9,365 billion.
“Estimating the size of the underground economy is crucial for policy makers,” said Kemal. According to Economic Survey findings, total consumption for the entire population of the country is Rs17,261.6 billion and private consumption is Rs7,835.31 billion.
The sum of Rs9,426.29 billion is not reported in the formal economy.
During the session on poverty and household consumption, Dr Ashfaque H Khan, Dean NUST Business School (NBS) and Umer Khalid cited findings from a research paper on the consumption pattern of male and female-headed households in Pakistan.
According to their findings, marginal expenditure shares were highest for housing, durables, food and drink for households headed by men while they were highest for durables, followed by housing and food, and drinks for households headed by women. Higher marginal expenditures by households headed by females on education and durables were found in comparison with their male counterparts as these results were consistent in urban and rural areas of Pakistan.
Further, households headed by women were found to have higher budget shares for education, housing, fuels and lighting, clothing and footwear and lower average expenditure on food, drink, transport and communication compared to those headed by men.
The study also examined the consumption behavior of both types of households to determine consumption patterns and how they vary with change in economic status.
This analysis revealed that in the first three expenditure quintiles, the consumption expenditures of households headed by men were higher than those by women.
Moreover, in the last two quintiles, the consumption expenditures for households headed by women were slightly higher than those headed by women.
http://www.thenews.com.pk/Todays-News-3-143058-Size-of-informal-economy-at-914-percent-of-GDP-study
http://www.pide.org.pk/psde/25/pdf/AGM28/M%20Ali%20Kemal%20and%20Ahmed%20Waqar%20Qasim.pdf
^^^"He further said that the formal economy contributed Rs10,242 billion of the estimated Rs19,608 billion that the economy generates. Moreover, the informal economy stands at approximately Rs9,365 billion...."
----
Dr. Haq,
Please STOP blindly copy-pasting everything you find on the internet without verifying it against common sense.
According to your quoted source:
1) Formal Economy: 10,242 Billion PKR = 106 billion$
2) Informal Economy: 9,365 Billion PKR = 97 billion$
3) Total Economy (Sum of 1 & 2): 19,608 Billion PKR = 203 Billion$
So what is new here? The WB reports our economy as 210 Billion$
http://www.tradingeconomics.com/pakistan/gdp
So all the World Bank calculations and all the data the GOP is reporting to WB INCLUDES the famous "informal" economy as well.
Where is the NEW beef?
Do you agree? Or do you think that I have missed something?
Please comment.
Thank you.
HWJ: "Do you agree? Or do you think that I have missed something?"
You are commenting without reading the paper. It's based on data from earlier years....not the current year. Research studies take time and often use historic data.
http://www.pide.org.pk/psde/25/pdf/AGM28/M%20Ali%20Kemal%20and%20Ahmed%20Waqar%20Qasim.pdf
Here's a PakistanToday report on rising foreign remittances from Pakistani diaspora:
The Ministry of Finance has claimed that Pakistan will receive a record $14 billion in foreign remittances during ongoing financial year 2012-13 mainly because of the overseas Pakistan’s confidence in the economic policies of the incumbent government.
An official of finance ministry told online that surge in foreign remittances will go a long way to put the nascent economy of the country on path to firmness and growth.
The official said the government was expecting an increase in the inflow of foreign remittances in the upcoming months which will help support meager economy of the country.
In the first four months (July-October) of current fiscal 2012-13 overseas Pakistanies have sent $4.964 billion in foreign remittances, compared with$4.315 billion in the same period last year.
According to the State Bank of Pakistan in October 2012, the inflow of remittances from Saudi Arabia, UAE, USA, UK, GCC countries (including Bahrain, Kuwait, Qatar and Oman), and EU countries amounted to $347.52 million, $293.74 million, $217.56 million, $197.18 million, $163.37 million and $37.48 million respectively as compared with the inflow of $291.20 million, $216.50 million, $167.60 million, $117.56 million, $131.54 million and $28.08 million respectively in October, 2011.
The monthly average remittances for July to October 2012 come out to $1,241.05 million as compared to $1,078.77 million during the corresponding period of the last fiscal year.
During last financial year ending June 30, 2012 remittances sent home by overseas Pakistani workers crossed $13 billion mark for the first time in country’s history.
According to the State Bank of Pakistan, overseas Pakistani workers remitted a record amount of $13,186.58 million during the last fiscal, showing growth of 17.73 percent when compared with $ 11,200.97 million received during the preceding fiscal year of 2010-11.
Remittances received from all countries of the world showed substantial growth during the last fiscal year and almost all of this growth was through banking channels.
On the hand, the country’s foreign exchange reserves may continue to face pressure due to re-payment of IMF loans in the next more than three years as Pakistan is likely to go to the International Monetary Fund (IMF) to seek a fresh loan in current fiscal year 2012-13 for the retirement of IMF’s Stand-by Arrangement (SBA) facility.
According to the Central Bank, the country’s foreign exchange reserves have dropped from $14.100 billion to $13.845 billion in the week ending November 9, 2012.
http://www.pakistantoday.com.pk/2012/11/17/city/karachi/foreign-remittances-to-hit-record-in-fy-13-finance-ministry/
The informal economy flourishes because of its tax-free status and black money. Trying to bring it into the tax net will cause it to either flee or shrink, leaving the state coffers unable to deal with its debt obligations, just like now.
VC: "The informal economy flourishes because of its tax-free status and black money. Trying to bring it into the tax net will cause it to either flee or shrink, leaving the state coffers unable to deal with its debt obligations, just like now. "
More and more of the economy will become documented with the rising use of technology. Bringing a small slice of it in the tax net will make a significant difference for public finances.
Here's a BR report on expected textile export boost to EU:
Mian Zahid Aslam President Faisalabad Chamber of Commerce and Industry (FCCI) has said that EU has granted 75 items duty-free market access under the Autonomous Trade Concessions (ATCs) till December 31, 2013 of which 26 items originated in Pakistan have been offered under Tariff Regulated Quotas (TRQ) while 49 items have been covered under non-tariff regulated quotas effective from 15th November, 2012 as the package has been notified in the official Journal of EU.
As an increased market access to EU, which is the largest trading partner of Pakistan. Pakistan will make a net gain of 31.4 per cent in export of textiles under the EU Autonomous Preference Scheme, he added. Value of exports for 2011 was $1709 million and under the EU Preference Scheme, the exports are estimated to rise to $2246 million yielding in net increase of 537 million, he added. He asserted that the package will provide real and substantial support to Pakistan's exports mainly of textile exports to EU.
He continued that EU Preference Scheme was highly beneficial for the business community and urged textile exporters of Faisalabad particularly to make best use of the facility to increase their exports to EU countries. He further stated that by availing these facilities Pakistan will make double gain; firstly, they will avail the quota facilities and increase the volume of their exports and secondly, Pakistan will qualify for further concessions in the year 2014 when this quota region for these items is reviewed.
Chamber Chief however pointed out that trends in both exports and imports indicated contraction in national economy, which could cause serious repercussions for employment, fiscal outcome etc mainly because of shortage of electricity and gas to the industries. Quoting, he said that export growth was negative by 2.3 per cent in the July-September quarter while imports declined by 6 per cent during this period, indicating sluggish economic activities in the country, which could depress the export growth prospects further and put more pressure on the current account.
He continued that in the wake of lesser availability of gas particularly to Faisalabad industries from where about $4 billion exports generated annually to the national textile exports, trade surpluses will hardly be available for exports and apprehended to reap real results of the EU package to Pakistan.
Mian Zahid emphasised that country needs greater diversification in the structure and direction of trade with increased focus on value addition and increased export expansion through regional and new markets like Africa, South America and Islamic world. He urged the government for better market access by concluding FTAs and PTAs with countries of potential markets for Pakistani products and also facilitating towards emerging economic blocks of China and Russia and even neighbouring Indian market of 1.2 billion people.
He pleaded for adopting trade diplomacy which could help gain GSP Plus status for Pakistan in 2014 emphasising also to the exporters for compliance with the relevant rules of origin of products and the procedures related thereto. He also emphasised the need for a well consulted trade policy by the government in this context.
....
http://www.brecorder.com/cotton-a-textiles/185/1259000/
Here's a News report on Deputy Chairman of Planning Commission criticizing economists at Pak Society of Development Economists (PSDE) conf:
Deputy Chairman Planning Commission, Dr Nadeem Ul Haq, on Thursday lambasted technocrats and economists for giving bad policy advice to politicians in Pakistan. He said that advisers did not focus on government expenditures and only concentrated on increasing revenue through funding from multilateral donors. Wasteful expenditures ballooned as subsidies alone were consuming approximately Rs500 billion per annum, he said.
“As a nation, we failed to increase tax to GDP ratio since independence,” said Haq while chairing the concluding session of a three-day conference that was organised by PIDE in collaboration with HEC, FES, IGC and WWF-CCaP-EU.
He asked why economists do not look at the expenditure side of government operations. Economists blamed politicians for not implementing the desired reform agenda but on the flip side, economists themselves were not presenting the correct agenda to the politicians, he said.
“There has been no growth in the economy as it has followed a dysfunctional model,” he said. Further, everyone was talking about macro stability as the first step and then taking care of growth, he said. “Why can’t we prefer growth? – and I am advocating this despite being affiliated with the IMF in my carrier,” he added. There has been a trade off between two objectives and the economists should come forward to devise a future course of action. Pakistanis built universities without teachers and research, built offices without required officers and built infrastructure without thought, he said. The politicians did not have the ability and understanding to grasp these issues and followed what technocrats advised them to do, he said.
-----------
Former Governor State Bank of Pakistan, Dr. Ishrat Husain, said that the nature of reforms that Pakistan should undertake contain two components – stabilisation and long-term structural reforms. He examined the record of the last 65 years with respect to those reforms as well as political and economic developments.
The incumbent government could not manage the lingering crisis in 2009 forcing Pakistan to approach the IMF in November 2009. A homegrown reform package, consisting mainly of mobilising additional taxes to bring fiscal deficit under control, was agreed upon, he said.
Lack of political consensus on General Sales Tax (GST) and Agriculture Income Tax (AIT) among the coalition partners led to the breaking down of the agreement with the Fund – but only after incurring a heavy financial obligation of eight billion dollars, to be repaid in 2012 and 2013, he said....
http://www.thenews.com.pk/Todays-News-3-143061-Economists-come-under-fire-at-PIDE-conference
Here's a News report on Oct jump in FDI in Pakistan:
Pakistan’s foreign direct investment (FDI) climbed sharply to $125.4 million during October, providing some relief to the deteriorating balance of payments position, according to the data released by the State Bank of Pakistan (SBP) on Thursday.
The FDI inflows increased to $125.4 million just in the single month of October as compared to $59.6 million during the same month last year, depicting a significant jump of $71.2 million, or 131 percent, it said.
The increase in FDI inflows was evident from the fact that foreign companies invested $187.1 million in various sectors of the economy during October as compared to $186.4 million during the corresponding month last year.
Nonetheless, the FDI outflows, including divestments and repatriation from the foreign investors stood at $61.7 million as against the outflows of $126.8 million during October 2011.
Oil and gas exploration, trade, electrical machinery and transport were the main sectors, which attracted a significant amount of foreign direct investment in the country during the last month.
Economic experts say that improvement in the FDI inflows is a positive sign for the economy, showing revival in investors’ confidence in Pakistan.
The inflows of FDI in Pakistan plummeted by 24.2 percent to $244.4 million during the first four months of the current fiscal year as against $322.7 million during the same period last year.
The fall in FDI inflows during July-October FY13 amounted to $638.5 million as compared to $766.6 million a year ago.
The provisional figures released by the Satate Bank of Pakistan showed that foreign private investment attracted $370.8 million during July-October FY13.
The net inflows of foreign investment in Pakistan stood at $365.2 million as compared to $221.2 million a year ago, showing a growth of 65.1percent.
The portfolio investment at the Karachi Stock Exchange stood at $126.4 million as against the outflow of $74.9 million during the corresponding period last year.
During October, the portfolio investment was recorded at $30.1 million as against the outflow of $28 million last month.
Of the total FDI of $244.4 million, major investment was made in the oil and gas exploration sector followed by IT services and information technology, and the transport sectors.
http://www.thenews.com.pk/Todays-News-3-143063-FDI-rises-to-$1254m-in-October
Dr. Haq,
Again we can look at South Korea during its rapid development phase from 1975-1995, when it transformed from a 3rd-world country into a developed one with a diverse and deep industrial base:
http://www.tradingeconomics.com/south-korea/gross-fixed-capital-formation-percent-of-gdp-wb-data.html
We can see from the WB chart that their Investment levels were >30% of GDP on average in that critical development take-off period.
For our economy to get into the take-off stage we need at least 30% of 210 Billion$ = 63 Billion $ of investment this year.
What do we have? Table 1.6 on Page 13 gives us the data-
http://www.finance.gov.pk/survey/chapter_12/01-GrowthAndStabilization.pdf
Total Investment (Fixed Capital Formation) 2011-12: 10.9 % of 210 = 23 Billion $
So we are 40 BILLION $ short of the investment needed for real "take-off" development.
And where is this meager 23 Billion$ investment going?
We can see Table I.8 in the APPENDIX at the END of the report:
http://www.finance.gov.pk/survey/chapter_12/01-GrowthAndStabilization.pdf
Observations:
(1) From the peak in 2007, ALL sources (Public-Private-General Government) are DOWN significantly.
(2) Sector wise, however, it is interesting to see that only the following sectors are holding or improving on their 2007 peak investment levels:
…. (i) Agriculture
…. (ii) Small-scale Manufacturing
…. (iii) Wholesale & Retail
…. (iv) Dwellings/Housing
…. (v)General Services
(3) Investments in ALL OTHER sectors have collapsed since their peak in 2007.
I thought you might find this interesting because a large part of your blog is about mango-milk, rising consumption, malls-shops-restaurants, massage parlors and construction of real estate. This is precisely what the investment data in Table I.8 (Appendix) indicate as areas in which investments have either held or grown from their 2007. So there is some truth to the observations you make in your blog—the investment data do confirm them.
The bad news, however, is that in EVERY OTHER SECTOR, investments have COLLAPSED.
Something to reflect upon; what are your views?
Thank you.
Nadeem Hussain: 89% of Pakistanis are unbanked
M M Alam
Karachi— Nadeem Hussain, President & CEO of Tameer Microfinance Bank noting that presently some 89% of the Pakistanis were unbanked & savings to GDP ratio was in single digit deciphered: “The principal reason behind this is the difficulty in opening a bank account, the opening balance, minimum balance requirement and the banking industry’s banking hours.
The easypaisa Khushaal account not only addresses these challenges but provides additional benefits. By materially reducing the barrier to entry we expect to change how Pakistanis save”. He was speaking while introducing easypaisa Khushaal on the occasion of easypaisa’s 3rd launch anniversary.
Terming it another step towards the financial inclusion of Pakistanis, Nadeem Hussain hoped that the joint initiative by Tameer Microfinance Bank & Telenor Pakistan would bring a valuable difference in the lives of the people here. Easypaisa Khushaal is a new savings product offering free life and accidental death insurance coverage.
By subscribing to easypaisa Khushaal and maintaining a monthly average balance of Rs. 2000 in their easypaisa Mobile Accounts, customers will be covered for life and accidental death insurance absolutely free. The insurance provided through easypaisa Khushaal is unique in the fact that it provides protection against the risks of riots and terrorism as well. The amount of insurance coverage is tied directly to subscriber’s Mobile Account balance and the insurance provides converge of up to Rs. 500,000 in case of natural death and Rs. 1 million in the case of accidental death, with an additional benefit of Rs. 5000 per month for five years in both cases. The higher the balance in a customer’s mobile account, the higher the insurance coverage will be.
Roar Bjærum, Chief Financial Services Officer at Telenor Pakistan, commenting on the new product said: “I would like to start off by congratulating our customers on 3 successful years of easypaisa. With easypaisa Khushaal, a major stride forward has been taken by bringing the financial security right at its customer’s doorstep. We at easypaisa are committed to making the lives of our customers easier and we are confident that with easypaisa Khushaal, we move forward to honoring our commitment with our customers”.
Easypaisa Khushaal subscribers will also have the opportunity to win exciting rewards including a brand new Honda Car through a quarterly lucky draw besides the benefits of savings and insurance. The higher the balance in to customer’s Mobile account, the higher will be his/her chances of winning in the lucky draw.
Existing easypaisa Mobile account customer can subscribe to easypaisa Khushaal by dialing the Telenor helping 345 from their mobile phones or by visiting their nearest Telenor Sales and Service Center or Franchise or Tameer Bank Branch.
Here's an excerpt of USAID Pakistan director Jock Conly's interview published in PakObserver:
Q: How much amount is being spent in a year on the USAID projects in Pakistan?
A: We are seeing an increase in the amount of expenditure on the USAID projects as several projects are at an advanced stage of completion that require more expenditures. In Financial Year 2013, a huge amount of $800 million would be utilized for the development of the USAID projects in Pakistan. Earlier, the annual quantum of expenditures on the USAID project was less than this amount.
Q: Any new sectors/areas being included in the upcoming projects?
A: We have short-listed five key sectors in the USAID programme that I have mentioned earlier. We select a new project from within these five areas after consulting the stakeholders. Once the new project gets all the mandatory approvals, we start work on it immediately.
---
For example, the USAID has supported the government to generate 400 MWs of electricity per day that was sufficient for the consumption of 6 million people. We are working on more projects to support the government to generate more electricity.
------------------
Energy: Fatal Incidents at the Hyderabad Power Distribution Company Declined by 80% and Non-Fatal remained zero since January 2012 and this surprising but much-needed change is a direct result from the linemen training organized by the USAID Power Distribution Project. The project plans to train a total of 9,000 linemen from all public power distribution companies in such key skills as first aid, pole-top rescue, and modern grounding. In addition to preserving human lives and health, this effort will improve maintenance of the transmission lines. This in turn will reduce power distribution losses that are estimated at 10 percent of all electricity produced.
On October 3, U.S. Consul General Michael Dodman and Sindh Governor Ishrat-ul-Ibad launched cooperation between the USAID Power Distribution Programme and the Karachi Water and Sewage Board. Under this $900,000 initiative, USAID will upgrade 75 old water pump sets to improve Karachi’s water supply and reduce power consumption by up to 1.73 megawatts.
Economic Growth: During the month of October, the Entrepreneurs Project helped 450 women medicinal and aromatic plant collectors in Swat Valley sell more than 12,000 kilograms of medicinal and aromatic Iants. On average, each woman earned $270. Earlier, the project also trained these women to identify and collect plants without damaging their growth.
For the fourth year in a row, the USAID and FAO Balochistan Agriculture Project organized livestock markets in Killa Saifullah, Mastung, Loralai, and Zhob in connection with Eid-ul-Azha. By bringing markets closer to producers, the project reduces the cost to the farmers, increases their bargaining power, and improves their revenues. This year, more than 3,000 farmers participated in the markets from October 9-15.
Recently, USAID-supported Malakand farmers sold 100 tons of approved chip stock potato to the PepsiCo plant in Sundar Industrial Estate, Lahore. The USAID Project is linking small-scale potato producers in Malakand to large-scale buyers, helping them access greater economic rewards.
http://pakobserver.net/detailnews.asp?id=182399
^^^^HWJ: "...And where is this meager 23 Billion$ investment going?..."
http://www.finance.gov.pk/survey/chapter_12/01-GrowthAndStabilization.pdf
------
Dr. Haq,
For comparison purposes, just so that we can all get a feel for the scale of difference between the investment levels of various South-Asian countries, I looked up India's equivalent Economic Survey report:
http://indiabudget.nic.in/es2011-12/echap-09.pdf
http://indiabudget.nic.in/es2011-12/estat1.pdf
Investments..............2010-11
(Billions of US$)
Mining....................$14.1
Registered Manuf..........$107.5
Unregistered Manuf........$20.7
Electricity...............$20.7
Plant Construction........$19.7
All Other Industries .....$195.5
---
TOTAL Indust Invest.......$378.1
Non-indust Invest.........$167.1
---
TOTAL Investments.........$545.2
Let us do a reality check of SCALE-
1) Population (Ind/Pak): 6.5
2) GDP Output (Ind/Pak): 8.0
2) Investment (Ind/Pak): 23.0
What does this tell you?
Where do you think we will be 5-7years from now with respect to India? If you think the code-coolies are arrogant towards our country now, how do you think they will behave on your blog 5-7 years from now?
Why are we investing so LITTLE? We can't we also invest 30-35% of our GDP like India is doing?
What are your thoughts on this?
Thank you.
Saudi Arabian group planning $1b investment in Cement, Energy, Autos
ISLAMABAD: Al-Qarnain Group of Saudi Arabia has said it is planning to invest $1 billion in the areas of energy, construction, hospitality and automobiles in Pakistan over the medium term.
Group’s Chief Executive Officer Eyad Al-Baaj, in a meeting with officials of the Board of Investment (BOI), apprised the Pakistani authorities of their investment plans, according to an announcement made by BOI here on Tuesday.
He discussed with BOI Chairman Saleem H Mandviwalla and Secretary Shaikh Anjum Bashir investment opportunities in various sectors of mutual interests of Saudi Arabia and Pakistan.
Al-Baaj said the group would invest $400 million in the first couple of years and increase the investment to over $1 billion in five years. These funds would become part of foreign direct investment in Pakistan and the group was interested in investing in energy, building and construction, hotel and automobile sectors, he added.
“The group is also entering into joint venture with Pakistani cement company Dandore. Current capacity of Dandore is 350 tons a day, which will be enhanced up to 7,500 tons,” he said.
The CEO stressed that the group was aware of the energy problems in Pakistan and was interested in constructing independent power plants with production capacity of 150 to 200 megawatts. The group is also keen on producing solar panels, their installation and back-up services to consumers.
Al-Qarnain, which is one of the biggest construction groups of Saudi Arabia, has also submitted proposals for construction of low-cost housing schemes in Pakistan.
In the automobile sector, the group plans to establish a state-of-the-art assembly plant for heavy trucks and buses with a comprehensive licence from Belarus. The CEO hopes that the plant will meet domestic demand, but its main target is to export vehicles to Gulf states, African countries and other buyers around the globe
Dr. Haq,
I am trying to see what it will get for you to wake-up to the grave danger of having low savings & low investment rates.
Here is something that might open your eyes with respect to Decadal Cumulative Investments (DCI, defined as the sum of all investments over a 10-year period measured in constant-USD):
A) China
http://www.tradingeconomics.com/china/gross-capital-formation-constant-2000-us-dollar-wb-data.html
DCI 1982-1991 = 1.3 Trillion
DCI 1992-2001 = 3.5 Trillion
DCI 2002-2011 = 10.0 Trillion
DCI 2012-2021 = 15.0 Trillion (PROJECTED)
B) India
http://www.tradingeconomics.com/india/gross-capital-formation-constant-2000-us-dollar-wb-data.html
DCI 1982-1991 = 482 Billion
DCI 1992-2001 = 950 Billion
DCI 2002-2011 = 2.7 Trillion
DCI 2012-2021 = 7.0 Trillion (PROJECTED)
C) Pakistan
http://www.tradingeconomics.com/pakistan/gross-capital-formation-constant-2000-us-dollar-wb-data.html
DCI 1982-1991 = 90 Billion
DCI 1992-2001 = 127 Billion
DCI 2002-2011 = 168 Billion
DCI 2012-2021 = 240 Billion (PROJECTED)
RATIOS:
China/Ind 1982-1991 = 2.6
China/Ind 1992-2001 = 3.6 Increase
China/Ind 2002-2011 = 3.8 Constant
China/Ind 2002-2011 = 2.1 Decrease
RATIOS:
India/Pak 1982-1991 = 5.4
India/Pak 1992-2001 = 7.5 Increase
India/Pak 2002-2011 = 15.6 Increase
India/Pak 2002-2011 = 29.2 Increase
RATIOS PER CAPITA:
(6.5 to 1 Ind/Pak Population)
India/Pak 1982-1991 = 0.8
India/Pak 1992-2001 = 1.2 Increase
India/Pak 2002-2011 = 2.4 Increase
India/Pak 2002-2011 = 4.5 Increase
Conclusions:
(I) India is catching up with China as China's investment slows due to imbalances and India's picks-up speed at right balance.
(II) Pakistan was ahead of Indian during the 80s with higher investment on per capita basis
(III) In the post-reform nineties, however, India caught up and slightly surpassed with Pakistan on per capita basis.
(IV) In the aughties, India increased its lead to a ratio of 2.4 times per capita investment compared to Pakistan
(V) In the next decade, if Pakistan continues to stagnate with low investment, India will have an 4.5 times lead in per capita investments.
(VI) The next decade will be critical for Pakistan.
(VII)IF Pakistan bungles it, India's per capita GDP will be 3 times that of Pakistan's by 2021.
What do you think? What is your analysis of the trends?
Thank you.
Here's an ET story on Unilever targeting Pakistan market as a priority:
It is a global food and consumer goods giant that serves over 2 billion consumers every day in more than 180 countries around the world, but Unilever’s global management team is convinced that the key to their future success lies in 16 emerging markets, of which Pakistan is one.
Paul Polman, the CEO of Unilever, and Harish Manwani, the chief operating officer, visited Pakistan on Tuesday in what appears to be part of their global push to gear the company’s growth strategy towards emerging markets. “We want to be in every market with more than 100 million consumers,” said Manwani. “And we want to be in every market where the purchasing power of the consumer is growing. Pakistan meets both of those criteria, the first one by quite a lot.”
About 56% of Unilever’s revenues come from emerging markets, a number that Manwani says could rise to as high as 75% over the next few years. In Pakistan, the company operates two subsidiaries, Unilever Pakistan and Unilever Pakistan Foods, both of which are publicly listed on the Karachi Stock Exchange. For the year 2011, the company’s Pakistani subsidiaries earned combined gross revenue of over Rs73 billion, or about 1.3% of the global total for Unilever.
Growth in Pakistan is significantly higher. While Unilever’s global revenues grew by around 5%, revenues in Pakistan grew by a much stronger 9.9%, even when taking into account the rupee’s depreciation against the euro, the company’s global reporting currency. In Pakistani rupees, gross revenues of both companies grew by nearly 17%.
But it is not just the current growth figures that appear to be attracting Unilever’s attention to Pakistan, but rather what is clearly a rapid expansion of the Pakistani middle class, which is causing purchasing power – and thus the propensity to buy branded products – to rise among a wide and diverse array of Pakistani consumers. Unilever is increasingly finding that it is selling its products to everyone from the bank CEO who works on Karachi’s II Chundrigar Road to the small shop owner in rural Sanghar to the grain merchant in a small town outside Sialkot.
------------
Malik said that the company is actively trying to reach consumers in small towns and rural areas, well beyond the larger cities in the country. The company reaches 50,000 retailers in rural areas, said Malik, a number that keeps on expanding rapidly.
That focus on rural consumers appears to be part of the global strategy: Paul Polman said that Unilever’s connection to farmers and rural communities is part of its efforts to integrate its business strategy with social responsibility. “Over 40% of the world’s population is in agriculture. We want to integrate over 500,000 of them into our global supply chain. They tend to be more reliable suppliers and help us reduce our volatility. In turn, we provide them with a better livelihood,” said Polman.
Unilever’s global CEO was effusive in his praise of the team in Pakistan. “The water conservation techniques pioneered in Pakistan will now be replicated in Unilever factories around the world,” he said. “Pakistan has always provided us with talent, and is in fact exporting talent. Over 55 Pakistanis are now working in senior positions in Unilever all over the world.”...
http://tribune.com.pk/story/469350/food-consumer-goods-unilever-targets-pakistan-among-top-priority-markets/
^^^^RH: "Those who keep raising BOP crisis alarm should read the following from Business Recorder.."
------
Balance of payment crisis predicted after March 2013
By Sajid Chaudhry
Thursday, November 15, 2012
ISLAMABAD: A severe balance of payment crisis is being predicted after March 2013, as the country’s net foreign exchange reserves are likely to come down to $6.8 billion by the end of this fiscal year, as the foreign exchange outflows are likely to remain $1 billion per month, official sources at Ministry of Finance informed here on Wednesday.
There is a PANIC like situation on external account following decrease of $1 billion in the month of October 2012 on account of due payment to donors, the sources informed and added that the foreign exchange reserves would drop to $6.8 billion by the end of current fiscal year if previous pace of depletion of $4 billion annually continued. He said that the foreign exchange reserves declined to $10.8 billion at the end of June 2012 from $14.8 billion for the same period of previous year. If this pace continued, the country’s foreign exchange reserves would deplete to $6.8 billion by the end of June 2013. An increase in oil prices in international market would further increase pressure on foreign exchange reserves as more foreign exchange would be required to meet oil import bill, said that sources.
The sources informed that $500 million Eurobond transaction, privatisation proceeds of the Pakistan Telecommunication Company (PTCL) and auction of 3G Spectrum are not likely to materialise during the ongoing fiscal year and this is putting additional burden on foreign exchange reserves of the country. The sources informed balance of payment situation could have gone even worse if the $1.2 billion arrears of Coalition Support Fund (CSF) had not been released to Pakistan. This disbursement has helped the country to at least maintain the foreign exchange reserves at the present level otherwise, net foreign exchange reserves have gone even lower.
When country’s foreign exchange reserves had declined to the lowest level, there was a plan in hand to approach International Monetary Fund (IMF) for having bailout package. However, the sources informed that at present there is no plan to approach IMF for fresh loan programme, sources added. Authorities are concerned over this situation as they strongly feel that during the general election year as foreign exchange reserves have fallen again, what would happen in the country, the sources maintained. Economic managers are trying to overcome balance of payment situation and they are in close contact with US Treasurer authorities and it is expected that CSF arrears around $600 million would be disbursed to Pakistan by December, sources added.
The sources informed that remittances sent by overseas Pakistani have helped the country at this difficult time and their contributions in the economy in the shape of their monthly remittances are helping to maintain the foreign exchange reserves. A study revealed that during the crisis-like situation in the country overseas Pakistanis are sending regularly their remittances on monthly basis to help their families.
The official also appeared concerned over sustainability of inflation at singe digit because decline in inflation was due to decrease in energy and food prices. He said that the core inflation is still in double digit, which is a matter of concern for the country.
Here's an excerpt from a piece in The Atlantic Cities on economic mobility in US and comparing it with Pakistan:
A 2007 study by the organisation for Economic Cooperation and Development combined a number of previous estimates and found income heritability to be greater in the United States than in Denmark, Australia, Norway, Finland, Canada, Sweden, Germany, Spain, and France. The United Kingdom, which had been far less mobile than the United States during the late nineteenth century, brought up the rear, but this time it was just a bit less mobile than the United States. Thanks to a 2012 recalculation by Miles Corak, an economist at the University of Ottawa, we can now add Switzerland, Japan, New Zealand, Singapore, and Pakistan to the list of societies that are more mobile than the United States.
http://m.theatlanticcities.com/jobs-and-economy/2012/05/what-matters-economic-mobility/2089/
http://www.tnr.com/article/politics/magazine/100516/inequality-mobility-economy-america-recession-divergence#
More news of increasing Saudi investments in South Asia--
http://alturl.com/25u79
http://alturl.com/vjec2
TWO YEARS AG0 (Sep, 2010) Riaz Haq gave the following advice to Zardari & the GOP:
"In addition to reviving the national economy from its current slump, the biggest long-term challenge for Pakistan's economic leadership is to improve the nation's ability to deal with external and internal shocks. This will require learning from the experience of India or other Asian economies in building sufficient internal revenue base for public expenditure, attracting greater foreign investment, expanding and diversifying exports and strengthening hard currency reserves. Inability to deal with these challenges will doom Pakistan to perpetual dependence on IMF and consequent loss of sovereignty to it."
http://alturl.com/qsthv
----
Dr. Haq,
With respect to Sept 2010, can you tell us where we stand today (Nov 2012) on the 5 issues you raised:
1) Has there been any improvement in the Tax/GDP Ratio over the last 2 years?
2) Has there been any improvement in FDI/GDP Ratio over the last 2 years?
3) Has there been any improvement in Exports/GDP Ratio over the last 2 years?
4) Has there been any improvement in the Engineering_Goods/Total_Exports ratio over the last 2 years?
5) Has there been any improvement in the Reserves/Imports Ratio over the last 2 years?
Would you research this?
I think SBP should that the data on file:
http://www.sbp.org.pk/departments/stats/NDSP.htm
http://www.sbp.org.pk/ecodata/index2.asp
Do you see any improvement? Did Zardari & the GOP take your blogged-advice as offered 2 years ago in September of 2010? If not, do you think your blog campaign is working? If not, do you at least recall Einstein's definition of Insanity?
Please let us know your thoughts.
Thank you.
Dr. Haq,
Your friend Pankuj Mishara is back with a story on how innovative US companies like IPSoft are threatening to destroy India's 70 Biliion$ per year low-end IT-export industry.
November 26, 2012: http://www.livemint.com/Industry/fQZuM7Rp965GBoLx0UPUeP/IT-exporters-adding-revenue-with-fewer-new-employees.html
He is projecting that millions of code-coolies in India will wind up unemployed.
Thank you.
Here's a Bloomberg story titled "Pakistan, Land of Entrepreneurs":
On a warm Sunday morning in November, Arif Habib leaves his posh home near the seafront in southern Karachi and drives across town in a silver Toyota Prado SUV. About half an hour later, he arrives to check up on his latest project: a 2,100-acre residential development at the northern tip of this city of 20 million. He hops out, shakes hands with young company call-center workers who are dressed for a cricket match, and joins them at the edge of the playing field for a traditional Pakistani breakfast of curried chickpeas and semolina pudding. After a quick tour of the construction site, he straps on his leg pads, grabs his bat, and heads onto the field. “The principles of cricket are very effective in business,” says Habib, 59. “The goal is to stay at the wicket, hit the right balls, leave the balls that don’t quite work, and keep an eye on the scoreboard. I feel that my childhood association with cricket has contributed to my success.”
Habib, who started as a stockbroker more than four decades ago, has expanded his Arif Habib Group into a 13-company business that has invested $2 billion in financial services, cement, fertilizer, and steel factories since 2004. His group and a clutch of others have become conglomerates of a kind that went out of fashion in the West but seem suited to the often chaotic conditions in Pakistan. Engro (ENGRO), a maker of fertilizer, has moved into packaged foods and coal mining. Billionaire Mian Muhammad Mansha, one of Pakistan’s richest men, is importing 2,500 milk cows from Australia to start a dairy business after running MCB Bank, Nishat Mills, and D.G. Khan Cement.
These companies have prospered in a country that, since joining the U.S. in the war on terror after Sept. 11, has lost more than 40,000 people to retaliatory bombings by the Taliban. Political violence in Karachi has killed 2,000 Pakistanis this year, and an energy crisis—power outages last as long as 18 hours a day—has led to social unrest. Foreign direct investment declined 24 percent to $244 million in the four months ended Oct. 31, according to the central bank.
At the same time, some 70 million Pakistanis—40 percent of the population—have become middle-class, says Sakib Sherani, chief executive of Macro Economic Insights, a research firm in Islamabad. A boom in agriculture and residential property, as well as jobs in hot sectors such as telecom and media, have helped Pakistanis prosper. “Just go to the malls and see the number of customers who are actually buying in upscale stores and that shows you how robust the demand is,” says Azfer Naseem, head of research for Elixir Securities in Karachi. “Despite the energy crisis, we have growth of 3 percent.”
Sherani of Macro Economic Insights estimates the middle class doubled in size between 2002 and 2012. “Those who understand the difference between the perception of Pakistan and the reality have made a killing,” Habib says. “Foreigners don’t come here, so the field is wide open.” The KSE100, the benchmark index of the Karachi Exchange, has risen elevenfold since mid-2001. Shares in the index are up 43 percent this year alone. Over the past decade, stocks have been buoyed by corporate earnings, which were bolstered in turn by rising consumer spending.
---------
Today, Habib has 11,000 employees and annual revenue of 100 billion rupees. He plans to expand into commodities trading and warehousing. “I’ve created all my wealth in Pakistan and reinvested all of it here,” says Habib, who drives himself to his cricket matches and is never accompanied by security guards. In 1998, when Pakistan’s share index fell to a record low after the government tested nuclear weapons, Habib bought shares even though “people thought I was mad.”...
http://www.businessweek.com/articles/2012-11-29/pakistan-land-of-entrepreneurs
Here's a BR report on Sheraton's expansion in Pakistan:
"Two new Sheraton properties are under construction in Islamabad", revealed Antoine Joignant in a recent interview with BR Research. He elaborated that one site is located on the Islamabad-Murree road, called Sheraton Golf & Country Club; while the other overlooks the Rawal Lake in Islamabad.
"The Sheraton Golf & Country Club shall be the most spectacular property in the country, as it has been designed by the same architects that designed the Atlantis in Dubai. This 367-room hotel shall include an 18-hole golf course with many other amenities for guests," he said. He also revealed that the Sheraton Islamabad shall be a 180-room hotel primarily catering to business travelers.
--.
According to Antoine Joignant, being a part of the Starwood group provides an edge to the Sheraton Karachi over its competitors. One key differentiator is our ability to personalise our services and guest experience through various Starwood online tools which allow real-time tracking of maintenance work and guests' feedback.
As is the norm at most hotels, guests would previously fill out survey cards at the end of a typical stay which would then be sent to be compiled by the relevant department. But the system in place at Starwood Hotels allows guests to offer their feedback online, which is then compiled automatically.
"Now instead of receiving survey results at the end of the month like other hotels, we are receiving guest responses instantaneously. That is revolutionary as it gives us the ability to address clients' requests while they are still at our hotel, instead of waiting for them to come back the next time," he explained.
"We already have a programme in place for our most frequent clients, whom we call ambassadors, whereby a dedicated member of our team helps make arrangements for them according to their personal preferences, he said. The system not only sends clients' comments to hotel management in real-time; it also provides live scores for each location against the hotel chain's benchmarks allowing the hotel management to follow their relative performance. "Globally, we are the only hotel chain to have such a system in place, which is why our service is distinguishable from competitors", he summed up.
PAKISTAN: THE DIAMOND IN THE ROUGH "Pakistan is a treasure trove of culture, natural beauty and mouth-watering cuisines for world travelers," says Antoine. A long list of attractions ranging from the pristine beaches of Karachi and Balochistan, awe-inspiring peaks of the Northern Areas, local art and handicrafts; to the historic sites of Moenjodaro and Harappa, rolled off his tongue like that of a well-traveled local.
"It is very unfortunate that the image that has become attached with this beautiful country is set in violence and unrest," he said. He highlighted recent events such as the Grand Opera, Peshawari Night and food festivals that the hotel conducted to attract international travelers and locals alike; pledging grander functions in the future. He expressed hope that these attractions will play a part in countering negative international perceptions regarding Pakistan.
Antoine Joignant also highlighted that the value for money which guests receive in Pakistan is much higher than that provided by hotels in other countries in the region. He admitted that the local hotel industry is facing tough times given the subdued flow of foreign tourists to the country, but he stressed that occupancy rates have been on the rise for Sheraton Karachi over the past three years.
http://www.brecorder.com/brief-recordings/0/1262726/
^^HWJ: "Has there been any improvement in the Engineering_Goods/Total_Exports ratio over the last 2 years?"
---
Here are the typically-evolving "hopeful" media stories about our exports of Engineering Goods over the last few years--
1) APRIL 2010
"Pakistan PLAN to boost engineering export to $5bn a year"
http://alturl.com/8ygay
2) MAY 2011
"Exports of engineering goods CAN cross $1bn"
http://alturl.com/y4pej
3) AUGUST 2012
"Govt SHOULD promote exports of engineering goods"
http://alturl.com/kii4w
But what has really happened? Is anything really happening? Let us check the FACTS from State Bank of Pakistan--
http://www.sbp.org.pk/ecodata/Export_Receipts_by_Commodity_arch.xls
Exports of Engineering Goods:
FY -- Million USD
2004 -- $238.9
2005 -- $285.6
2006 -- $283.4
2007 -- $324.7
2008 -- $325.2
2009 -- $347.5
2010 -- $300.8
2011 -- $423.4
2012 -- $391.5
I will leave you to draw your own conclusions.
^^^HWJ: "Let us check the FACTS from State Bank of Pakistan--"
---
Here is an objective reality-check as a wake-up call. If this does not open our eyes, I don't know what it will take.....
EXPORTS of ENGINEERING GOODS in Millions of USD:
FY --- Pakistan -- India - Ind/Pak
2004 -- $238.9 -- $12,405 --- 52
2005 -- $285.6 -- $17,348 --- 61
2006 -- $283.4 -- $21,719 --- 77
2007 -- $324.7 -- $29,567 --- 91
2008 -- $325.2 -- $37,365 --- 115
2009 -- $347.5 -- $47,286 --- 136
2010 -- $300.8 -- $38,271 --- 127
2011 -- $423.4 -- $58,137 --- 137
2012 -- $391.5 -- $67,093 --- 171
Sources:
(I) Pakistan SBP
http://www.sbp.org.pk/ecodata/Export_Receipts_by_Commodity_arch.xls
(II) India RBI
http://dbie.rbi.org.in/DBIE/dbie.rbi?site=statistics
Here's a BR story on rising cement demand in Pakistan:
KARACHI - The decline in the cement exports to India continues unabated where the uptake of Pakistani cement reduced by 38.50 percent during the first five months of the current fiscal year, 2012-2013. During July-Nov 2011 last year, Pakistan exported 298,214 tons of cement to India which reduced to 183,387 tons this year.
Although cement sector posted a healthy export growth of 11.71 percent in November 2012,India was the only exporting destination where exports declined in November as well.Pakistan exported 45,096 tons of cement to India in November 2011 which declined alarmingly to only 25,207 tons in November 2012. The cement sector of Pakistan otherwise showed healthy growth in the month of November, as for the first time this fiscal, both domestic consumption and cement exports posted double digit growth, on year to year basis. Total cement dispatches at 2.649 million tons during the month of November were, however, lower than dispatch of 2.766 million tons, a month earlier. However, when compared to November 2011 when the total cement dispatches were 2.255 million tons, the sales in the month of November 2012 were higher by 19.63%. Traditionally, cement dispatches in October are higher than in November. The market analysts term the current domestic market situation encouraging as during past five months of this fiscal, the local consumption has increased in four months and declined only in August by 3.41 percent. The local uptake of the commodity increased in two months out of five during this fiscal by over 19 percent. The first time it posted over 19 percent growth was in September 2012 and the second time in November 2012. The overall growth in local dispatches during the first 5 months of this fiscal was 6.78 percent. The cement exports from South zone during July-Nov 2011 were 0.986 million tons that declined in July-Nov 2012 to 0.837 million tons depicting an overall reduction of 15.06 percent. The cement exports from North zone declined nominally by 0.64 percent during this period to 2.804 million tons from 2.823 million tons in the first five months of this fiscal.
http://www.pakistantoday.com.pk/2012/12/04/news/profit/cement-conjures-double-digits-at-home-exports-to-india-dip/
Here's BMI report on Pak agribusiness:
The 2012 monsoon season was relatively kind to Pakistan’s farmers, especially in comparison with the devastating floods of 2010. Although localised flooding caused severe destruction in parts of Sindh and Balochistan, the main breadbasket region of Punjab enjoyed late rains after a dry start to the season, improving the prospects of rice, corn and cotton in particular.
Key Forecasts:
- Corn production to 2016/17: up 30.0% to 5.6mn tonnes. Continually improving yields and high prices on world markets will support an impressive increase in corn production.
- Cotton consumption to 2016/17: up 23.2% to 12.5mn tonnes. Demand for cotton will surge in the early years of our forecast as the EU lifts tariffs for a year, before falling back to steady yearon-
year (y-o-y) growth.
- Rice production to 2016/17: up 16.5% to 7.3mn tonnes. Pakistan will retain its place among the world’s most important exporters of the commodity as its producers look to expand into new markets.
- 2013 real GDP growth: 4.0%. Up from 3.7% y-o-y in 2012.
- Consumer price inflation: 12.4% in 2013 (up from 11% y-o-y in 2012).
Industry Outlook:
The 2012 monsoon season was relatively kind to Pakistan’s farmers, especially relative to the devastating floods of 2010. Although localised flooding caused severe destruction in parts of Sindh and Balochistan,
the main breadbasket region of Punjab enjoyed late rains after a dry start to the season; this has improved the prospects of rice, corn and cotton in particular.
In a major boost to the cotton industry, the EU has finally enacted a long-discussed measure that will suspend import duties on a range of cotton products from Pakistan. The European Parliament finalised the move in September, although the regulation will only apply until the end of 2013, rather than the two-year period initially pushed for by the EU. According to the Pakistan Cotton Ginners Association, the EU is one of Pakistan’s largest trading partners, accounting for more than 30% of the country’s total exports. Of this, the 75 items allowed under the deal contribute about EUR921mn, or 30% of the country’s total exports into the EU. ...
http://www.researchandmarkets.com/research/bgtf4x/pakistan
^^^RH: "In a major boost to the cotton industry, the EU has finally enacted a long-discussed measure that will suspend import duties on a range of cotton products from Pakistan. The European Parliament finalised the move in September, although the regulation will only apply until the end of 2013, rather than the two-year period initially pushed for by the EU..."
------
http://alturl.com/3rck2
EU riders to prevent large hike in Pak textile exports
November 20, 2012
Most of the 75 products meant for duty-free exports have been linked to a 20 percent quantity cap. The biggest disadvantage is the cap. The EU has permitted only a 20 percent hike in exports on quantity basis on most of the products, calculated on the basis of average for the years 2007, 2008 and 2009.
“A total of 75 items at the H.S Code 8-digit level have been granted duty free market access, of which 26 items are under quantity-based Tariff Rate Quotas, while 49 items are under a 20 percent quantity increase cap, based on an average of last three years exports,” said the official.
^^^^RH: "Those who keep raising BOP crisis alarm should read the following from Business Recorder.."
------
Here is an interesting op-ed from Dr Meekal Ahmed who used to a member of the Planning Commission as well as an economist at the IMF:
FALSE BRAVADO
December 4, 2012
By Dr. Meekal A. Ahmed
In the absence of a prompt and forceful change in policy direction, there seems to be no end in sight – the economy appears condemned to grow at a pace that is less than one-half of its economic potential.
..Before a BoP crisis, there is much bluff and bluster and a state of denial. When a BoP crisis is upon us, we go scampering off to the IMF, looking suitably downcast and chastened, because it means that we admit to having grievously mismanaged the economy (again), and desperately need help (again).
..Concurrently there is much talk and false bravado, most of it contrived, of getting rid of the “begging-bowl” and regaining our “economic sovereignty”. Until, of course, the next BoP crisis when the tiresome pantomime is played all over again.
READ MORE at:
http://alturl.com/ukyqe
Thank you.
HWJ: "Here is an interesting op-ed from Dr Meekal Ahmed who used to a member of the Planning Commission as well as an economist at the IMF"
Here's the thrust of the Op Ed by Meekal:
"None of Pakistan’s fine economists, sadly the best and brightest out of government rather than in it, are fooled by the government’s soothing words."
Typical of self-promoting economists who think they know best..had the same attitude toward Shaukat Aziz and his team in 2002-2007.
RH: "...economists who think they know best..had the same attitude toward Shaukat Aziz and his team in 2002-2007.."
----
And what was the result of the 2002-2007 policies of Shaukat Aziz and his team?
You say high-growth. That is correct, but that was only half the story.
The other half was what Dr. Shaukat Aziz in 2007 called "increased macroeconomic instability".
That is why we could not handle the downturn in 2008 and had to run to the IMF.
And that is EXACTLY what Dr Meekal Ahmed meant when he wrote:
"Did not the previous government chortle about the unstoppable economic boom they had engineered and ignore the warnings of “overheating pressures” and “speculative bubbles” that were alluded to as far back as 2005?
Here are a few excerpts of State Bank Governor Yasin Anwar's interview with Dawn:
Q. What is the outlook for inflation?
A. As you very well know, inflation has declined considerably over the past five to six months; from 12.3 per cent in May 2012 to 7.7 per cent in October 2012. Also, the pace of decline in inflation has been faster than our earlier estimates. Therefore, we are quite confident that inflation may remain below the target of 9.5 per cent for FY13. We discussed this assessment in the monetary policy statement of October 2012 as well. Currently, we are in the process of updating our inflation outlook in the light of latest developments. All I can say is that the likelihood of meeting the inflation target for FY13 remains quite high.
Q. Without additional foreign inflows, and IMF repayments, is the BOP situation under control?
A. In the first four months of FY13, balance of payment position has shown significant improvement over the last year.
Particularly, the external current account balance has turned into a surplus; $258 million, against a deficit of $1.7 billion in the corresponding period of last year. In the remaining months of FY13, we are expecting a deficit in the external current account.
However, this would remain moderate compared to both international standards and Pakistan’s own economic history.
The developments that need to be monitored carefully are those related to financial inflows. For the overall health of balance of payments, it is important that all the budgeted financial flows materialise. In case of shortfall or delays, the BOP may experience some stress, but, at this point in time, we expect the position to remain manageable during FY13. We do not foresee any difficulty in the repayment of IMF loans and other debt obligations that have already been factored in.
Q. Why, then, is the rupee constantly under pressure?
A. Like in most emerging economies, the day-to-day value of the currency in Pakistan is essentially determined by market forces of demand and supply of foreign exchange. While export receipts, remittances and financial inflows are the main sources of supply of foreign exchange; import payments, financial outflows and debt repayments influence the demand. The overall macroeconomic conditions such as inflation relative to trading partners and other factors like perceptions of economic stability also influence the behaviour of participants in the foreign exchange market. The SBP does not target any specific level of exchange rate. Our interventions in the foreign exchange market are essentially geared towards dealing with excessive volatility to ensure smooth functioning of the market.
As I have mentioned earlier, the trade balance together with remittances is in surplus during the first four months of FY13. It is the weak financial inflows that are creating some pressure in the foreign exchange market. As the budgeted financial inflows are realized in the coming months, the situation would become more manageable.
http://dawn.com/2012/12/02/sbp-in-control-defends-easing/
Here's a PakObserver report on Pak-South Korean deal for Malakand Tunnel project:
Pakistan and South Korea Wednesday inked two agreements for the Malakand Tunnel Construction Project and for development of water resources infrastructure including dams. The agreement on Malakand Tunnel Construction Project was signed during meeting of President Asif Ali Zardari with Kim Yong-Hwan‚ Chairman Export Import Bank of Korea‚ who called on him at the local hotel in Seoul‚ Korea Wednesday.
Under the Malakand Tunnel Loan Agreement‚ an amount of US $78 million will be provided for the project. The Korea Eximbank is an official export credit agency providing comprehensive export credit and guarantee programs to support Korean enterprises in conducting overseas business.
Malakand tunnel will provide a short route not only to people of Dir‚ Malakand and Swat and adjacent localities but would also be an easy access to central Asian states‚ providing the market access to the country for its products. Malakand Pass lies between Dargai-Batkhela and is situated at an altitude of 470 metres and 663 metres‚ respectively.
The South Korean government pledged the $78 million funding through the Economic Development Co-operation Fund (EDCF) for the construction of Malakand Tunnel project in Khyber Pakhtunkhwa province. The 9.7 km project also includes approach roads on both sides of the tunnel and three bridges.
The initial feasibility study of the tunnel has already been completed by South Korean consultants in collaboration with National Highway Authority Pakistan‚ which is also the Project executing agency.
http://pakobserver.net/detailnews.asp?id=185709
Here are a couple of reports on FDI in Pakistan.
First, a News report on FDI decline:
The World Bank has revealed that foreign investment in Pakistan has declined by $4.13 billion during the four years of the present government. This was revealed in a fresh report — ‘World Investment and Political Risk’ — of the World Bank.
The report said that there was a continuous trend of decrease in foreign investment in Pakistan and a conspicuous decline was recorded in the tenure of the present government. It noted that $4.13 billion investment decrease has been recorded from 2008 to 2011.
The report said that $5.44 billion foreign investment was made in 2008 in Pakistan which is continuously falling, and had reduced to only $1.31 billion in 2011. According to the report, $5.59 billion foreign investment was made in Pakistan which is the biggest ever investment made in the country.
In 2009, the investment reduced to $2.34 billion which further reduced to $2.02 billion in 2010. The report said that the foreign investment had also declined in India, however, there is an upward trend now.
http://www.thenews.com.pk/Todays-News-13-19298-Foreign-investment-in-Pakistan-plummets-WB
Second, a Business Recorder report on FDI over the last decade:
Pakistan had attracted net Foreign Direct Investment (FDI) inflows of US$ 25.66 billion during the last ten-year.
"Oil and gas, financial business,trade,construction,power,and communications were the major sectors attracting investment", Board of Investment (BOI) sources told APP.
The sources added that the USA,UK,UAE,Hong Kong,Switzerland, germany, Netherlands, Norway,Saudi Arabia, Japan were the major investing partners in the country.
They further said that Pakistan during the financial year 2011-12 had also witnessed an FDI inflows of US $ 1.4 billion.
The said that foreign investment inflows increased 49.6 percent in total foreign investment during July-October 2012-13 as compared to the corresponding period while major FDI inflows in transport sector were $60.7 million in October 2012-13
They added that global economy liberalized during 1980s and the government encouraged private sector business initiatives and FDI and cross borders investment by multinational companies (MNCs) gathered momentum.
http://www.brecorder.com/top-news/108-pakistan-top-news/94108-pakistan-attracts-net-2566bn-fdi-inflows--boi.html
^^RH: "Second, a Business Recorder report on FDI over the last decade:
(1) Pakistan had attracted net Foreign Direct Investment (FDI) inflows of US$ 25.66 billion during the last ten-year.
(2)They (BOI) further said that Pakistan during the financial year 2011-12 had also witnessed an FDI inflows of US $ 1.4 billion
(3) They (BOI) said that foreign investment inflows increased 49.6 percent in total foreign investment during July-October 2012-13 as compared to the corresponding period
------
Let us see:
(1) This seem true
http://alturl.com/wxsix
(2) This is false, as BOI is listing FDI in FY12 as 812 Million$ and SBP is reporting it as 820 Million$.
http://alturl.com/wxsix
http://www.sbp.org.pk/ecodata/NetInflow-NewFormat.xls
(3) This is false as SBP is listing Jul-Oct FY13 Net FDI at 244Million$ as opposed to corresponding FY12 level of 322.7 Million$. This implies a DROP of 24%.
http://www.sbp.org.pk/ecodata/Netinflow.pdf
^^RH: "Second, a Business Recorder report on FDI over the last decade:
Pakistan had attracted net Foreign Direct Investment (FDI) inflows of US$ 25.66 billion during the last ten-year."
-----
Here are the facts from SBP for last 10 years if FDI-
http://www.sbp.org.pk/ecodata/NetInflow-EcoGroup.xls
YEAR....All FDI..%Inc-YOY
FY02....$485......NA
FY03....$798......65%
FY04....$949......19%
FY05....$1,524....61%
FY06....$3,521....131%
FY07....$5,140....46%
FY08....$5,410....5% (Peak)
FY09....$3,720....-31%
FY10....$2,151....-42%
FY11....$1,635....-24%
FY12....$821......-50%
Total...$26,153
^^RH: "The World Bank has revealed that foreign investment in Pakistan has declined by $4.13 billion during the four years of the present government. This was revealed in a fresh report — ‘World Investment and Political Risk’ — of the World Bank.
The report said that there was a continuous trend of decrease in foreign investment in Pakistan and a conspicuous decline was recorded in the tenure of the present government. It noted that $4.13 billion investment decrease has been recorded from 2008 to 2011. The report said that $5.44 billion foreign investment was made in 2008 in Pakistan which is continuously falling, and had reduced to only $1.31 billion in 2011. According to the report, $5.59 billion foreign investment was made in Pakistan which is the biggest ever investment made in the country. In 2009, the investment reduced to $2.34 billion which further reduced to $2.02 billion in 2010. The report said that the foreign investment had also declined in India, however, there is an upward trend now.
----
Here is the >>ACTUAL<< report:
http://www.miga.org/documents/WIPR12.pdf
Keyword search for "Pakistan" yields only 4 Hits.
First, see the responses to QUESTION 7 on Page 63.
Then, neglecting the "BRICS", find the "Next-11" countries on that list.
The "Next-6", i.e. Turkey, Mexico, Indonesia, Vietnam, Thailand & Malaysia are right there at the top.
Neglecting South-Korea as that it already an OECD country, where are the others?
Do you see an optimistic pattern? How much fluid does that glass have?
In an Express Tribune article titled "Pakistan's tarred reputation", Pak economist Javed Burki paints a grim picture of Pakistani economy and references media stories of violence published in The Economist and The New York Times as a deterrent to foreign investors, governments and IFIs like IMF and World Bank.
http://tribune.com.pk/story/477347/pakistans-tarred-reputation/
What Brurki doesn't say (or maybe he doesn't understand?) is that governments, investors and corporations who do their own research know that Pakistan is too big and important a country which they can not afford to ignore for long.
Pakistan has a large and growing consumer base as well as a growing stockpile of sophisticated nuclear weapons. It can be highly profitable or highly dangerous depending how the world chooses to deal with it.
That's why the total foreign currency inflows into Pakistan have continued to grow for over a decade. Decline in FDI has been more than made up by growing remittances, grants and loans as well as significant increase in exports.
^^RH:That’s why the total foreign currency inflows into Pakistan have continued to grow for over a decade. Decline in FDI has been more than made up by growing remittances, grants and loans as well as significant increase in exports.
-----
Exports may have grown, but imports have grown as well. It is the trade balance we must look at in terms of how much foreign currency we need coming in.
In that regard, we can see that is not just FDI that has declined. Apart from remittances, EVERYTHING has either declined or failed to grow. Remittances are the ONLY thing holding-up the phony conspicuous-consumption economy. If remittances stop or reverse (capital flight), the structure will simply collapse. The PKR will go to 150/USD (as IMF is recommending) and we will be back in the IMF intensive care unit.
Here are the data from the world bank for Goods & Services (G&S) trade and Capital Movements.....
FY 2005 in Millions of USD:
Imports of G&S........$29,281
Exports of G&S........$19,111
DIFF (Imp-Exp G&S)....$10,170
Total Remittances.....$4,168
Total Aid Inflows.....$4,600
Net FDI Inflows.......$1,525
Net Portfol Inflows...$151
Inc External Debt.....$2,312
---
FY 2012 in Millions of USD:
Imports of G&S........$47,550
Exports of G&S........$30,500
DIFF (Imp-Exp G&S)....$17,050
Total Remittances.....$13,186
Total Aid Inflows.....$4,218
Net FDI Inflows.......$812
Net Portfol Inflows...-$70
Inc External Debt.....$4,756
Here is the original Intelligence report "Global Trends 2030":
http://alturl.com/rpvpf
Don't try to read it inside your browser, it slows down everything. Download the actual PDF to your computer and then read it locally:
http://www.dni.gov/files/documents/GlobalTrends_2030.pdf
KEYWORD search "Pakistan".
It is a real eye-opener in terms of what it says about our country's future. On Page 18, it lists our country as "high risk" of failure even as far as 2030. In most other instances, the old "Indo-Pak" hypenation seems to have been replaced by the "Af-Pak" term. There is also discussion of Pashtun demographics on both sides of the Durand line.
HWJ: "On Page 18, it lists our country as "high risk" of failure even as far as 2030."
It also says that N-11 group of nations which include Pakistan will have bigger GDP than the GDP of 27 EU nations combined.
But I don't put much credence in any long-term forecasts coming from the US intelligence because of their many major failures in anticipating key events like the Iranian revolution, the fall of the Soviet Union, 911 terror attacks and the recent Arab uprisings.
Here's a Bloomberg report on central bank rate cut in Pakistan:
Pakistan cut its benchmark interest rate to the lowest level in five years as policy makers seek to stimulate an economy battered by an energy crisis and insurgency that is likely to need more International Monetary Fund aid.
The State Bank of Pakistan reduced the discount rate by 50 basis points to 9.5 percent, Syed Wasimuddin, spokesman, told reporters in Karachi yesterday. The decision was predicted by 14 of 15 economists surveyed by Bloomberg News. One saw no change.
Pakistan’s economy will probably expand 3.5 percent in the 12 months through June, the IMF forecast Nov. 29, less than the 4.3 percent predicted by the government. Fighting with militants along the nation’s northwest border is sapping the budget and undermining confidence among businesses that are already struggling with record power outages that have shut factories and left thousands of people jobless.
“Pakistan is likely to go back to the IMF for another loan next year,” Hamad Aslam, head of research at Lakson Investments Ltd in Karachi who predicted yesterday’s decision, said before the announcement.
Pakistan is scheduled to repay about $7.5 billion to the Washington-based IMF between 2012 and 2015, with $1.2 billion due in June. A partially disbursed $11.3 billion loan program expired in September 2011.
The central bank’s reduction reflects inflation slowing to a 41-month low of 6.93 percent in November. Today’s cuts add to 2 percentage points of easing since August. The new rate will be effective from Dec. 17.
“Deceleration in inflation is faster than the projected path and credit extended to private businesses remains muted,” the State Bank said in its monetary policy statement yesterday. Average inflation for the year ending June will be below the 9.5 percent target, it said.
While the central bank has scope for a larger cut, it may opt for a conservative approach amid IMF repayments, Uzma Taslim, an analyst at Alfalah Securities Pvt. Ltd. in Karachi, said before the announcement.
The rupee traded at a record high against the dollar this week, after falling 9 percent earlier this year.
“Government finances are also under pressure,” Moody’s Investors Service said in November. “The budgeted deficit of 4.7 percent for the year ending June is likely to see slippage due to optimistic revenue and expenditure assumptions.”
Pakistan recorded the highest budget deficit in two decades in the fiscal year ended June.
www.bloomberg.com/news/2012-12-14/pakistan-cuts-key-rate-to-5-year-low-as-power-crisis-hits-growth.html
Here's a Daily Times report on a new steel mill starting production in Karachi:
Pakistan’s largest steel producing mill in private sector Tuwairqi Steel Mills Limited (TSML) is ready for commercial production in the first week of January 2013.
It would cater not only the steel needs of the country but would be able to export value-added products to other countries.
The setting up of such a mega project would entice foreign investors in the country despite the fact that local investors are also shifting their entities abroad because of bad law and order situation and energy crisis.
TSML mega project over $350 million is mainly sponsored by Saudi Arabian-based Al-Tuwairqi Company (ISPC) and Posco of South Korea.
TSML Director Project Zaigham Adil Rizvi at a seminar on Monday said this state-of-the-art Direct Reduction route of Iron (DRI) making plant would be starting commercial production but financial crunch put the project so late.
Posco-South Korean steel giant have invested $16 million to make this mega project keep going.
A revolution of industrial growth is in the offing as TSML is ready for commercial production in coming January. It is Pakistan’s first private sector integrated environment-friendly steel manufacturing project.
TSML will serve as a catalyst for the industrial growth in the country as steel has basic and vital role in the economic development of any country.
He said DRI technology is the latest in the world and is being used in not only developed countries but also in our region like Iran and India, so consistent highly quality of product can be achieved through this state-of-the-art technology, he said adding that this technology is environment-friendly.
Rizvi divulged TSML’s DRI plant after commercial production, would not only meet country’s steel requirements but would also create job opportunities for technical and skilled labour force for local people.
He said his team along with Posco delegates has started searching raw material in Balochistan and hoped they would not spend huge foreign reserves in importing raw material rather they would use the local material.
He claimed country’s workforce, especially the youth was not only dedicated and committed but also hard work, so the future of Pakistan was very bright.
Pakistan’s largest steel capacity of 1.28 million tonnes per annum plant would not only cater country’s requirements but also provide job opportunities to skilled and unskilled people.
Other countries including Korea wanted to purchase total production of TSML but TSML management has decided in principal that we would prefer to distribute all our products within the country and in this regard we have selected Lahore-based Shajarpak Company, as our sole distributor.
Khawaja Usman of Shajarpak said currently Pakistan was depending on imports for the production of heavy mechanical structures and engineering goods but after producing high-quality steel at TSML plant, Pakistan would be able to manufacture such heavy equipment locally.
India is giving more importance to its industrial sector while concerned authorities in Pakistan are least bother in this regard.
He hoped raw material from Balochistan would help steel industry to sell its products on low price.
http://www.dailytimes.com.pk/default.asp?page=2012\12\18\story_18-12-2012_pg5_7
Here are a couple of reports on Pak economy:
1. Dr. Ishrat Husain in The News:
“The economy is facing lot of difficulties due to bad governance,” he said at a seminar on ‘Pakistan’s Economic Outlook – 2013 & Beyond’ organised by the Institute of Chartered Accountants of Pakistan (ICAP) on Tuesday evening.
Dr Ishrat, who is also Dean and Director of Institute of Business Administration, disagreed with the doom and gloom painted about the economy by other speakers, saying the situation is not as worst as being projected. “There is plenty of room to improve the system by improving good governance in law and order, education and energy,” he added.
He said that it was an issue of governance that authorities were not taking action against tax evaders and criminals. “Due to lack of enforcement the criminals feel comfortable,” he said.
The economic situation is much better right now, he said and added that the country had witnessed a crisis like situation when oil ships were anchored on the ports and government had no money to pay them in the past.
He neither criticised the present government setup nor supported it, but said that the democratic system should be given opportunity for sustainable economic growth. “We did not allow democratic system to flourish,” he added.
Further, Dr Ishrat said that 50 percent population of Pakistan is living in an urbanised society, and most of them belong to middle class. Besides, a big strength of youth would set direction for better.
To a question about rupee depreciation against dollar that is creating difficulties in capital investment for manufacturing sector, which would result in decline in exports, he said rupee depreciation will help in increasing exports. He said that the nation was blinded by short-term measures and frequent changes of heads at SBP and finance ministry also resulted in economic instability.
http://www.thenews.com.pk/Todays-News-3-149270-Pakistans-economic-outlook-2013-&-beyond
2. Reuters on Pak current account deficit:
Pakistan’s current account deficit for the July-November period of the 2012/13 fiscal year was $365 million, compared with a deficit of $2.341 billion in the same period last year, the central bank said on Thursday.
In November, the current account deficit was $638 million.
The current account deficit for the 2011/12 fiscal year was $4.634 billion compared with $214 million in the 2010/11 fiscal year.
“This was positive mainly because of lower commodity prices and the gap between imports and exports was lower,” said Ahsan Mehanti, an analyst at Arif Habib Corp.
“At the same time, there was higher foreign investment in the country and higher remittances. There was a higher rupee to dollar value.”
http://dawn.com/2012/12/19/pakistan-july-nov-current-account-deficit-at-365-million/
Here's an Express Tribune list of Pakistani companies with over a billion in revenue:
The Billion Dollar Club
1. Pakistan State Oil Company
Revenues: $11.57 billion
Joined club: Before 1986
2. Pak-Arab Refinery
Revenues: $3.00 billion
Joined club: 2000
3. Sui Northern Gas Pipelines
Revenues: $2.52 billion
Joined club: 2004
4. Shell Pakistan
Revenues: $2.38 billion
Joined club: 2000
5. Oil & Gas Development Company
Revenues: $2.23 billion
Joined club: 2005
6. National Refinery
Revenues: $1.97 billion
Joined club: 2005
7. Hub Power Company
Revenues: $1.97 billion
Joined club: 2009
8. Karachi Electric Supply Company
Revenues: $1.84 billion
Joined club: 2008
9. Attock Refinery
Revenues: $1.74 billion
Joined club: 2008
10. Attock Petroleum
Revenues: $1.72 billion
Joined club: 2010
11. Lahore Electric Supply Company
Revenues: $1.49 billion
Joined club: 2006
12. Pakistan Refinery
Revenues: $1.44 billion
Joined club: 2011
13. Sui Southern Gas Company
Revenues: $1.38 billion
Joined club: 2005
14. Pakistan International Airlines
Revenues: $1.36 billion
Joined club: 2005
15. Engro Corporation
Revenues: $1.29 billion
Joined club: 2011
16. Pakistan Telecommunications Company
Revenues: $1.25 billion
Joined club: 2000
17. Kot Addu Power Company
Revenues: $1.14 billion
Joined club: 2012
18. Mobilink
Revenues: $1.11 billion
Joined club: 2006
19. Pakistan Petroleum
Revenues: $1.09 billion
Joined club: 2012
.
http://tribune.com.pk/story/483287/corporate-revenues-the-growth-of-the-billion-dollar-club-in-pakistan/
Here's Daily Times on Twariqi Steel Mill plant inauguration in Karachi:
KARACHI: Tuwairqi Steel Mills Limited (TSML) Pakistan’s first private sector integrated environment-friendly steel manufacturing complex of Al-Tuwairqi Holding (ATH)/ISPC of the Kingdom of Saudi Arabia inaugurated by Prime Minister Raja Pervez Ashraf at Port Qasim Karachi on Saturday.
The plant in its first phase has the capacity to produce up to 1.28 million tonnes of high quality Direct Reduced Iron (DRI), which is evidently steel’s most versatile metallic and a preferred raw material for quality steel making worldwide.
Raja Pervez Ashraf congratulated the entire team of TSML on the successful completion of the first phase and committed to extend all possible support from the government for the expansion plans of ATH and POSCO in Pakistan. He said, “It is a matter of great pride for us Pakistan has now started producing DRI, with the completion of the first phase of TSML. We are committed to transform our country into an industrial hub and for that we seek more projects-especially in the steel sector, since steel is the backbone of the industrial growth. TSML in poised to serve as a catalyst for the industrial growth of Pakistan.”
He was of the view currently Pakistan was among the countries that rely mostly on imports when it comes to heavy mechanical structures and engineering goods. By producing high quality steel within Pakistan we can manufacture such equipment locally by value addition with the help of downstream industries, he concluded.
He distributed shields among outstanding employees of TSML as a token of appreciation of their hard work and dedication to successfully complete the first phase.
The first phase has been completed with an investment of over $350 million. The plant spreads over an area of 220 acres at Bin Qasim Karachi and employs the world’s most advanced DRI technology of the MIDREX process owned by Kobe Steel of Japan. ATH/ISPC and POSCO have signed a memorandum of understanding (MoU) with the government of Pakistan for the backward and forward integration with an estimated investment 3 times higher than of the DRI plant. Forward integration would be a further value addition through a Melt Shop, producing world standard steel grades, while backward integration would be to the extent of exploring iron ore locally in Balochistan, its beneficiation and pelletisation as well.
Dr Hilal Hussain Al-Tuwairqi, Chairman Al-Tuwairqi Holding appreciated the efforts of TSML employees. He said Al-Tuwairqi’s vision was to participate in the development of national economy in order to have a long sustaining growth of Pakistan.
“We are looking forward to create for our younger generations, ample job opportunities to build a strong and prosperous nation on the face of this plant. Al-Tuwairqi sees Pakistan as a land of opportunities and we are very clear in our perception that Pakistan as a country has to grow and we are determined to play an instrumental role in its development, he remarked.
Joon Yang Chung Chairman and CEO POSCO of South Korea congratulated the entire team of TSML. He said it was heartening to learn that TSML has increased the production capacity of Pakistan by 1.28 million tonnes per annum, which would help meet the ever growing demands of steel in Pakistan.
Zaigham Adil Rizvi Director (Projects) TSML said TSML has massive expansion and modernisation plans not only to enhance production capacity at an exponential rate but also to improve productivity and efficiency, matching the highest global standards. Pakistan’s current per capita steel consumption is only 40 kilogramme, which is exuberantly low, when compared with the global average of 215 kilogramme. This establishes a dire need increased emphasis on achieving international benchmarks to become a modern and an efficient economy.
http://www.dailytimes.com.pk/default.asp?page=2013\01\13\story_13-1-2013_pg5_2
Here's a SteelFirst report on steel imports in Pakistan:
Pakistan's imports of iron and steel products were 13% higher year-on-year in November, as troubles at state-owned Pakistan Steel continued to encourage purchasing from outside the country.
Imports reached 155,517 tonnes in November, up from 137,548 tonnes a year earlier and a little down from 156,427 tonnes in October this year.
The struggling Pakistan Steel, the country's main producer with 1.1 million tpy of capacity, has been operating at an average utilisation of 20% during 2012 because of financial troubles. Steelmakers in Pakistan also faces higher costs and problems with intermittent power supply.
Both these factors have kept output restrained, encouraging more imports of finished products to fill the gap.
At the same time, the production problems have led to much lower scrap import volumes.
Inbound shipments of ferrous scrap in November dropped to 100,673 tonnes, down 48% on the month and 25% year-on-year.
http://www.steelfirst.com/Article/3134894/Pakistans-steel-imports-up-13-in-November.html
Here's PakistanToday on a new skyscraper in Karachi:
KARACHI - City’s tallest building, which has been constructed at a huge investment of Rs 7 billion, is all set to open its doors to the public and corporate sector with the objective to spur business and commercial activities in safe, secure and world class environment.
The high-rise project named Ocean Tower was set to break the record of being the tallest building in the country with 393-feet height and 28 floors, whereas the record was currently being held by a private bank building with a height of 370-feet containing 24 floors, situated on II Chundrigar Road.
Ocean Tower had been built according to international architectural standards and had state-of-art shopping centre and business centre. We have gathered a world of business and entertainment under one roof in the tallest building of the country in which top international brands of clothing, cosmetics, toiletries, food and cinema were available for the masses, said Siddiq Sons CEO Tariq Rafi, the company responsible for building Ocean Tower.
Ocean Tower would welcome a large number of shoppers from across the country, where they could buy goods related to food, health and entertainment, Tariq said. It was a premier place for conducting business and engaging in shopping, he added.
Furthermore, he said that all leading multinational companies and the country's business tycoons have set up their offices in Ocean Tower because they were facilitated into a dream corporate life in which business meetings, seminars and dinners could be arranged in one building while the companies could gain a good image in their relevant industries, he added.
Moreover, Tariq said that Ocean Tower had been built by keeping in mind the demands of modern and luxury lifestyle. The security system would be managed efficiently by man and machines, while uninterrupted power supplies and fire security compliances were also installed for the benefit of investors, he added.
Ocean Tower had been designed and built in such a way that it could effectively withstand earthquake jolts of 8.5 on Richter scale, which was well above the limit of any quake shocks experienced by the country so far. In addition to this, Ocean Tower had been equipped with UFLM fire safety standard, Tariq said, while adding that the building had 4,500 square feet dedicated space for car parking where more than a 1,000 cars could be easily parked.
http://www.pakistantoday.com.pk/2013/01/24/city/karachi/pakistans-tallest-skyscraper-to-open-soon/
Here's the latest cement report on Pakistan:
The All Pakistan Cement Manufacturers Association reported a 10.10% increase in domestic cement consumption in January. The country, which has almost 45 million t of cement capacity, has seen exports fall in recent years as expansion programmes increase capacity in Pakistan’s traditional export markets and new exporters have joined the competition. However, domestic demand is on the rise, hitting an all-time high of almost 24 million t in FY11/12.
January saw domestic sales reach 2.135 million t, comprised of 1.706 million t from the north and 429 000 t from the south of the country. Demand has been pushed by private construction as well as government infrastructure projects, a trend set to continue as the per capita cement demand in the country is well below average at 152 kg.
Energy shortage threatens production
However, a new threat is energy shortages, which the APCMA says hampered production in northern areas last month. The Islamabad High Court recently removed the Rs.50/mmbty Gas Development Infrastructure Cess (GIDC), declaring it illegal. Though this will bring down input costs for cement producers in the south, it is reported that it will have no benefit for the more numerous northern producers, who ‘have now been given least priority for gas supply’ (The Nation, 3 February). Some plants are looking into alternative energy supplies – DG Khan Cement, for example, is set to be one of the first applications for Kalina cycle technology in the cement industry.
Lucky Cement prospers
Meanwhile, Lucky Cement Limited has recorded a 42.15% y/y increase in half yearly profit for 2012/13. As of the end of December, the company reported profits of Rs.4.29 billion and improved net sales of Rs.17.511 billion, up 13.9% y/y. The company reportedly plans to upgrade its existing mills and packing machines to reduce operational costs. More information about the company can be found in the February issue of World Cement in the article ‘Pakistan: Cementing its Position’ from Lucky Cement. Subscribers can download the issue by signing in.
Lafarge appoints new country CEO
Finally, Lafarge Pakistan Cement has appointed Amr Reda as the new country CEO of Lafarge Pakistan. Reda had previously been the regional business controller of Lafarge Middle East and Pakistan and has been on the board of directors of Lafarge Pakistan since January 2007.
http://www.worldcement.com/news/cement/articles/Pakistan_domestic_cement_consumption_rises_854.aspx
Here's an ET report on rising cement consumption in first 7 months of FY12-13:
LAHORE:
A recovery in domestic cement consumption in the first seven months of the current fiscal year has saved the day for the industry, which has been constantly losing its export markets. January was another good month for local sales, with things continuing poorly on the export front.
According to a statement issued by the All Pakistan Cement Manufacturers Association, cement sales jumped by 10.10% to 2.135 million tons in the domestic market in January.
Mills working in the country’s north sold 1.706 million tons, while those in the south supplied 429,000 tons to the domestic market.
Meanwhile, exports of cement dropped 11.91% – with total exports at 522,584 tons in January. Of this quantity, mills in the north exported 330,016 tons and plants in the south shipped 192,568 tons overseas.
In seven months (July-January) of the current fiscal year, total cement sales rose 4.02% and reached 18.607 million tons – domestic consumption stood at 13.862 million tons, up 7.98% while exports were 4.746 million tons, down 6.05%.
Despite economic challenges like unemployment, unstable law and order conditions and the impact of sporadic natural disasters, domestic demand has been aided by private construction and the government’s infrastructure development programmes in the last 10 years, according to brokerage house Shajar Capital.
In the future, “rising remittances and changing socio-economic indicators like increasing urbanisation are expected to contribute to boosting housing demand in the country,” it said.
Discussing the patterns of consumption, Shajar said Pakistan consumed only 152 kilogrammes per capita of cement, lower than both world and regional averages, leaving room for expansion of demand.
A spokesman for the cement manufacturers association spoke of the energy crisis prevailing in the country, saying half of the cement units in northern areas could not operate at optimum levels in January because of the energy shortage.
Industry experts point out that cement manufacturers are not fully utilising capacity, hampering their ability to service bank loans. They say exports should be increased as the markets of India and Afghanistan can be exploited with the support of the government.
They stress that cement is one of the few commodities readily accepted in India, and it alone could triple Pakistan’s exports to Delhi. The only hurdle is the Indian bureaucracy, which impedes free and fair exports.
They asked the government to settle the issue through talks with the Indian trade officials.
http://tribune.com.pk/story/502722/domestic-cement-sales-rise-8-in-seven-months/
Here's Emirates 24-7 report on a massive property investment deal between Abu Dhabi Group and Malik Riaz:
UAE’s Abu Dhabi Group and Pakistani real estate tycoon Malik Riaz on Friday signed a deal to invest $45 billion (Dh165.15 billion) in Pakistan including building the world’s tallest building in Karachi.
Pakistan’s news channel Geo reported today that $35 billion (Dh165.15 billion) will be pumped in Sindh province while the rest will be invested in Lahore and Islamabad.
Under the deal, Sports City, International City, Media City, Educational and Medical City will be built in Pakistan’s financial capital. The news channel said that world’s Seven Wonders will also be built as part of the project.
The deal is expected to generate over 2.5 million jobs in Pakistan.
The channel, however, didn’t reveal the time for the completion of the project.
http://www.emirates247.com/business/economy-finance/abu-dhabi-group-property-tycoon-to-build-world-s-tallest-building-in-pakistan-2013-02-15-1.495174
Here's Daily Times on increase in Pakistan's cement exports in 2012-13:
The cement exports from the country witnessed increase of 15.81 percent during fiscal year 2012-13 against the same period of last year.
The cement exports were recorded at $577.878 million whereas during July-June 2011-12, the exports remained $498.844 million. On month on month basis, the cement exports also increased by 2.49 percent and decreased by 4.16 percent in June 2013 when compared with the exports in June 2012 and May 2013.
According to data released by Pakistan Bureau of Statistics (PBS), the exports in June 2013 were recorded at $53.338 million where as in June 2012 and May 2013 the value of exports remained $52.043 and $55.655 million.
http://www.dailytimes.com.pk/default.asp?page=2013%5C08%5C01%5Cstory_1-8-2013_pg5_4
Here's World Cement report about cement consumption in Pakistan:
The All Pakistan Cement Manufacturers Association reported a 10.10% increase in domestic cement consumption in January. The country, which has almost 45 million t of cement capacity, has seen exports fall in recent years as expansion programmes increase capacity in Pakistan’s traditional export markets and new exporters have joined the competition. However, domestic demand is on the rise, hitting an all-time high of almost 24 million t in FY11/12.
January saw domestic sales reach 2.135 million t, comprised of 1.706 million t from the north and 429 000 t from the south of the country. Demand has been pushed by private construction as well as government infrastructure projects, a trend set to continue as the per capita cement demand in the country is well below average at 152 kg.
Energy shortage threatens production
However, a new threat is energy shortages, which the APCMA says hampered production in northern areas last month. The Islamabad High Court recently removed the Rs.50/mmbty Gas Development Infrastructure Cess (GIDC), declaring it illegal. Though this will bring down input costs for cement producers in the south, it is reported that it will have no benefit for the more numerous northern producers, who ‘have now been given least priority for gas supply’ (The Nation, 3 February). Some plants are looking into alternative energy supplies – DG Khan Cement, for example, is set to be one of the first applications for Kalina cycle technology in the cement industry.
Lucky Cement prospers
Meanwhile, Lucky Cement Limited has recorded a 42.15% y/y increase in half yearly profit for 2012/13. As of the end of December, the company reported profits of Rs.4.29 billion and improved net sales of Rs.17.511 billion, up 13.9% y/y. The company reportedly plans to upgrade its existing mills and packing machines to reduce operational costs. More information about the company can be found in the February issue of World Cement in the article ‘Pakistan: Cementing its Position’ from Lucky Cement. Subscribers can download the issue by signing in.
Lafarge appoints new country CEO
Finally, Lafarge Pakistan Cement has appointed Amr Reda as the new country CEO of Lafarge Pakistan. Reda had previously been the regional business controller of Lafarge Middle East and Pakistan and has been on the board of directors of Lafarge Pakistan since January 2007.
http://www.worldcement.com/news/cement/articles/Pakistan_domestic_cement_consumption_rises_854.aspx
Here's Express Tribune on Bahria Town projects in Karachi and Rawalpindi:
RAWALPINDI: Pakistan’s largest real estate company, Bahria Town (BT) on Sunday started the booking process for its residential plots in Karachi and Rawalpindi.
Under the project, the real estate giant will allot plots to more than 0.5 million people. On the first day of booking, more than 50 thousand people received the form against a fee of Rs1,000.
The demand was such that some people reportedly resold their forms at a profit.
People from all walks of life showed great interest in the BT project and long queues of citizens were seen at the booking offices till late at night.
Talking to Express News, people said even the VIPs were found standing in queues, and the credit for this went to the founder and chairman of Bahria Town, Malik Riaz Hussain.
The BT representative said Sunday was reserved for the distribution of forms for residential plots. “The booking forms for commercial plots will to be offered on Monday (today),” he added.
http://tribune.com.pk/story/663864/bahria-town-project-over-50000-receive-booking-form/
Here's UAE's National newspaper story on real estate sector in Pakistan:
The government spends more than US$5 billion on construction from its annual development budget. The housing sector, however, gets less than half of the amount allocated for construction each year. The burgeoning population and rapid urbanisation calls for more housing schemes in the country. Private real estate developers have a crucial role to meet housing.
In view of the security concerns, private developers have resorted to building gated communities in major cities. Pakistan’s Bahria Town is Asia’s largest real estate developer and private housing society, which has practically implemented the idea of foolproof safety. Bahria’s ongoing projects, such as the JV D&B Valley, Golf City, Garden City, Bahria Icon, cover more than 1 billion square feet that will accommodate more than 1 million residents. Bahria’s 25,000 employees are delivering US$5 billion of iconic developments.
Administered by the Pakistan army, Defence Housing Authority (DHA) is a real estate organisationthat mainly develops housing for current and retired military officers. DHA has establishments in all the major cities including Karachi, Lahore and Islamabad. DHA City, one of the largest state-of-the-art residential-cum-commercial projects, is under construction in Karachi. DHA has also built gated communities. And the prices of residential and commercial property in DHA housing schemes have been on the rise.
Launched in 2008, DHA Valley is a joint venture of DHA, Bahria Town and Habib Rafiq Private. The project aims at developing a secure community with essential amenities. DHA Valley offers 1,125 sq ft and 1,800 sq ft residential plots for 650,000 Pakistan rupees (Dh22,749) and 880,000 rupees respectively, with a quarterly instalment plan for Pakistani residents. It also offers1,800 sq ft residential plots for US$12,900 for overseas Pakistani residents.
The winner of five awards from the Asia Pacific International Property Awards, Bahria Town is actually fuelling the growth of real estate sector in the country.
Bahria’s projects in Rawalpindi and Islamabad and the development of a gated community worth $6 billion in the twin cities is the great property success story. The amenities offered by Bahria Town attracted residents and allured real estate investors. It ensures a 24-hour supply of electricity, fool-proof security and other amenities. The value of real estate in the Bahria towns in Lahore, Islamabad and Rawalpindi has increased manifold in the past five years. The price of a 1,800 sq ft residential plot at Bahria towns in Lahore and Rawalpindi has increased up to 5 million rupees from 1.5m rupees in just three to four years.
Karachi, the country commercial capital, has endured stagnancy or a fall in property prices because of deteriorating law and order over the past five years. Bahria Town has come forward as the answer to many of the problems confronting the real estate investors. Bahria town Karachi is currently the focus of speculative trade in real estate. Frenzied investors are ready to offer triple the price for plot files. What is really a commendable the properties are financially accessible to the middle class. For example in the newly launched Bahria Town scheme in Karachi, the price for a 1,125 sq ft residential plot is 2.6 million rupees, while the price of a 2,160 sq ft plot is more than 5m rupees. Similarly, the price a two bed apartment is 2.6m rupees, while the price of four-bed apartment is 8.2m rupees. These properties can be purchased through instalments under a five-year plan.
http://www.thenational.ae/business/industry-insights/property/property-sector-aims-to-put-down-firm-roots-in-pakistan
Here's an Express Tribune story on real estate sector in Pakistan:
After passing through a correction phase of nearly five months, the real estate market in Lahore is once again on the path of growth. However, there are a number of reasons why the extent of the growth may not meet investors’ expectations.
For the past few years, developers, after failing to find a suitable place in Lahore, have tended to focus on neglected but other populous cities of Punjab including Multan, Faisalabad, Gujranwala and Sialkot.
Hashu Group is one of them, Bahria town, city housing schemes (once a part of Bahria town) are the others. The latest name is the Defence Housing Authority (DHA). Since DHA is the most trusted name for any investor – in Pakistan and overseas – people find a reasonable alternate to invest.
Gujranwala, Multan and Bahawalpur are three cities where DHA has planned to establish housing societies, among which the sale and purchase for DHA Gujranwala has already kicked off. Such developments are observed as a positive for the long-term growth of the real estate sector.
“This spread out is good for the market in general,” said Mian Talat, chief executive officer at Talat Enterprisers, a real estate firm. “People now have more choices to invest and live according to their convenience.
The correction in the Karachi Stock Exchange is also a factor behind the recovery of the real estate market recovery.
Common investors of both markets believe that the KSE may crash any time. Given the situation, investors tend to switch to the real estate market. When stock index starts declining, many investors switch over to the real estate market and this is what is happening exactly now”, Talat added.
Few years back, Lahore, Karachi and Islamabad/Rawalpindi were the only places where investors found some room to put their money in for some profits. However, these cities are now pushing their limits — Lahore’s boundaries are now merging with some of its districts due to various factors.
Property prices in Lahore, despite almost a 20% correction in these five months, are quite abnormal. It is hard to find a piece of one kanal of land in a decent housing scheme below Rs10 million. If the same amount of land is located in a prime location inside a housing schemes then the price exceeds Rs20 million.
“Since Lahore is one of the major beneficiaries of the real estate boom, it is unlikely that real estate activities are stalled in the future. This is due to developments of housing schemes in other cities”, said Waseem Tariq, Chief Executive Officer of F-1 Properties. “The price fluctuation mechanism for real estate, as per our expectations, will be solid now.”
http://tribune.com.pk/story/675018/real-estate-market-hits-growth-trail-again/
The first ten months of this fiscal year have witnessed 21.3 million tonnes of cement industry dispatches in local market, showing a growth of 2.7 per cent as compared to same period last year. The overall situation during the period showed a growth of 1.17 per cent as compared to the same period of the last fiscal year, as total dispatches increased to 27.986 million tonnes against 27.664 million tonnes from July 2012 to April 2013.
Local sales of the cement industry posted a growth of 9.85% during the first quarter of the current fiscal year, compared with the same period previous year.
Exports, however, recorded a decline by 8.13% compared with exports during the first quarter previous year.
The overall situation during the first quarter of the current fiscal year showed a 4.68% growth compared to the same period last year. Cement dispatches to domestic markets during September 2014 were 2.42 million tons compared with 2.12 million during the same month last year, depicting an increase of 13.86%.
Exports during September 2014 were 730,000 tons against 816,000 tons during September 2013, showing a decline of 10.6%. Total dispatches during September 2014 were 3.15 million tons compared to 2.94 million tons during the same month last year.
According to the All Pakistan Cement Manufacturers Association (APCMA), the industry has been struggling against the high duty structure, impractical imposition of maximum retail price (MRP), increasing import duties on coal, increasing power tariffs and axel load restrictions.
Additionally, an added issue for the industry is the growing trend of smuggling from Iran.
Domestic cement uptake in the southern region is being seriously affected due to unregulated smuggling of cement from Iran. Statistics showed that against a 10.8% increase in domestic sales in the northern region, domestic sales in the southern region showed an increase of only 5.4%.
http://tribune.com.pk/story/771101/local-sales-of-cement-industry-rise-9-85/
LAHORE: The cement industry of Pakistan is one of the main stream sectors that generates foreign exchange for the country due to its certified quality.
The main reason why Pakistani cement is preferred by other countries is due to the abundance of its basic raw material, limestone. However, the country is still far behind in introducing different varieties of cement to be used in different categories. The most commonly used cement is the Ordinary Portland Cement (OPC) in order to meet all construction requirements.
“The construction sector is expanding and there is dire need to introduce new cement qualities in Pakistan for better efficiency and cost reduction,” said Nabeel Asghar, head of project and operations, Technology Up gradation and Skill Development Company (TUSDEC), while talking to The Express Tribune.
Tusdec is operating a subsidiary – Cement Research and Development Institute – through which it is testing the quality of cement and allied materials. The institute was established in 1983 by the State Cement Corporation, at that time primarily for the Kalabagh Dam. Inauspiciously, the institute started lurking into dormancy and was looming in abjection in 2005, when Tusdec was entrusted with its operations on January 2006.
The institute after its re-launch was primarily testing different samples from cement manufacturers, contractors and consultants for quality certifications, however, the institute started testing samples to introduce Blended cement, and Fly-Ash cement.
Though blended cement is being manufactured in Pakistan by a single manufacturer, but at large, the contractors of mega projects mix other materials in OPC for mega structures, like dams, bridges, highways etc.
“For instance if we talk about the overall housing industry, contractors widely use OPC for constructing walls, and for renovating them,” Asghar said, adding that very few know that in the modern world Masonry cement is used for wall furnishings since low level cement is required.
Counterfeiting the impact of its strengths, the cement industry of the country is lagging behind when it comes to innovation due to the sink in latest technological advancements, he said.
The industry is also suffering from a lack of skillful human resource at each tier. The induction of manpower is required to enhance the output quality while minimising the cost and augmenting the distribution channels.
http://tribune.com.pk/story/780103/construction-sector-cement-industry-weak-due-to-lack-of-innovation/
Pakistani cement sales volumes up almost 9% in first 4 months
In Pakistan, cement sales have reportedly grown 8.87% in the first four months of the current fiscal year, reaching more than 8 million t. Customs Today reports that overall exports decreased y/y to 2.79 million t, a 4.43% drop.
There is something of a north/south divide in sales, with the northern region seeing a 10.4% gain in domestic sales but a 12.3% drop in exports, while southern cement producers reported a much smaller increase in domestic sales but a 12.5% increase in exports.
The All Pakistan Cement Manufacturers Association has reportedly claimed that government inaction has impeded industry growth. Fuel and power cost increases have put pressure on companies’ margins, as shown in the quarterly results reported last month. Increased taxes were also reported as an issue affecting the companies’ bottom lines.
http://www.worldcement.com/news/contracts/articles/Pakistani-cement-sales-volumes-up-almost-9-percent-in-first-4-months-838.aspx
FOR the calendar year 2014, the cement sector, with a market capitalisation of Rs295bn, provided a 70pc return to equity investors — far more than the benchmark KSE-100 index’s return of 27pc.
It marked the third consecutive year where the sector outperformed the broader market. Among cement companies, Kohat Cement Company (KOHC) provided the third-highest return of 97pc, after Pioneer Cement’s 135pc and Lafarge Pakistan’s 134pc.
Nabeel Khursheed, an analyst at Topline Securities, attributed Kohat’s performance to ‘improved production efficiency and swift deleveraging’.
Aizaz Mansoor Sheikh, the company’s CEO, told shareholders that KOHC’s pre-tax profit had grown 20pc to Rs4.38bn in FY14, from Rs3.77bn in the previous year. “Stable coal prices, better cement rates in the local market and growth in dispatch volumes contributed towards improved profitability,” he said.
And Kohat Cement is looking forward to the installation of a 15MW waste heat recovery plant (WHRPP), which is expected to mitigate the rising electricity costs. “The WHRPP is currently under construction, with a projected completion date of June 30, 2015,” the CEO said.
Despite all that, sounds reverberated in the market of spanners being thrown in the works of KOHC. Most sector analysts delivered the bad news of mine owners moving a petition in local courts against the company for non-payment of their dues, which was said to have led to a ban on excavation of essential minerals by the company.
However, the investor panic subsided on Friday afternoon following a clarification by KOHC’s company secretary, Khurram Shahzad, who said in a filing with the stock exchange that “the company has valid leasing rights from the KP government for the excavation of minerals from the leasehold land against payment of royalty and excise duty to the government…. At the present point in time, no stay orders are in the field debarring the company to exercise its valid and legal rights for the excavation of the materials”.
And the company assured investors: “The management is expecting cement dispatches [to] resume at their desirable level from next week”.
Waqar Uddin Salim, an analyst at Summit Capital, anticipates KOHC’s profitability to rise to Rs3.75bn in FY15. The industry’s dynamics remain healthy, with the Topline analyst anticipating cement sales to grow 6.8pc annually in the next three years to reach 21.8m.tonnes by FY17 and exports to rise to 7.9m tonnes per annum. The industry’s capacity utilisation is expected to mount to 89pc.
Meanwhile, Kohat has witnessed a big deleveraging in its balance sheet, with the ratio of long-term debt to total assets dropping to just 1pc in FY14, from a tall 35pc in FY10, and has room to increase capacity utilisation.
http://www.dawn.com/news/1156354/storm-in-a-teacup
With over 6% growth in sales in the first seven months of the current fiscal year, analysts say the cement industry is set to post highest-ever growth rate in the last five years.
This growth is more important for the cement industry officials as it is mainly based on local sales unlike the pre-2010 period when the industry used to equally rely on exports.
“Cement industry’s domestic sales have surprised everyone and the growth has surpassed all market estimates. Industry is likely to grow over 6% as it has risen in the first seven months (Jul-Jan 2014-15),” industry analyst Saad Hashmi commented.
Average growth in cement production was just 2.9% in the last three years. However, cement sales have shown an exceptional 6.2% growth in the first seven months in fiscal year 2015. Even if the industry succeeds in maintaining the current growth at the end of the fiscal year, it will be the highest expansion rate in the last five years.
Cement production posted the highest-ever number of 34.28 million tons in the last fiscal year 2013-14. Dispatches increased to 20.02 million tons during the first seven months of 2014-15 compared to 18.86 million tons in the same period of previous fiscal year. This means the industry can touch 36.6 million tons by the end of June 2015 if it grows at the current pace of 6.2%.
In all likelihood, Hashmi said the cement industry will succeed in maintaining 6% growth because the remaining five months (February to June) are all those in which the construction activity remains high.
Owing to the continuous decline in cement exports over the last five years, the industry is increasingly dependent on local sales. The impact of the rise in domestic consumption is so strong that while issuing the latest data, the spokesperson for the All Pakistan Cement Manufacturers Association recently claimed, “higher cement uptake depicts a turnaround in the economy.”
Commenting on the ‘immense satisfaction’ of the industry from rising domestic demand, he said cement companies have been reaping the benefits of record low international coal prices that have significantly reduced the cost of production.
Construction sector
Association of Builders and Developers Pakistan (ABAD) former senior vice chairman Saleem Kassim Patel told The Express Tribune that the private sector is showing a strong growth, which is one of the main causes of high cement consumption in the country.
“There is a huge backlog of houses, which is why this sector will continue to attract investments. What is more important is that the current rise in construction activities can turn around the economy if the government starts supporting it,” said Patel.
However, one of the biggest hurdles to the fast growth of the construction sector is the moratorium on new gas connections for high-rise buildings. Without gas, thousands of already constructed residential buildings are still unoccupied, causing financial losses of millions of rupees to the builders and their clients, he added.
Owing to the growing shortage of gas, the PPP-led previous government banned all new gas connections to CNG stations, high-rise buildings and industries in 2011. Since then, builders and developers say the ban has been proving damaging for new investments in this sector.
http://tribune.com.pk/story/833623/cement-industry-sector-likely-to-post-highest-ever-sales/
Domestic cement sales are up 9% year-over-year for the first 7 months of Pakistan's Fiscal 2014-15, according to media reports. Overall, cement industry reports cement shipment of over 20 million tons in 7 months, a 6% annual increase with rising domestic demand offsetting falling exports due to weakness abroad.
Market capitalization of Pakistani cement companies has jumped 70% last year, about 3 times more than the KSE-100 market index which rose 27% in 2014. This is the third consecutive year that cement companies have outperformed the broader market. Investors in Pakistan's cement sector have seen 600% rise in the last three years.
It appears that construction sector is getting a boost from falling inflation and declining interest rates with a big drop in world oil prices.
http://www.riazhaq.com/2015/02/record-cement-sales-raise-hopes-of.html
Investors snap up #Pakistan's first real-estate investment trust (Dolman City #REIT); Will boost #Karachi real estate http://on.wsj.com/1GyBSdX
Investors piled into Pakistan’s first real-estate investment trust, which was launched this week with a public offer that was heavily over-subscribed, the REIT’s lead manager and analysts said on Thursday.
The Dolmen City REIT offered investors a 25% stake in a 22.24 billion rupee ($218.5 million) shopping mall and an office complex at Dolmen City, one of the most prominent real estate developments in Karachi, Pakistan’s largest city and its economic hub. The Arabian Sea-front project includes three other structures not included in the REIT.
Traders and the REIT’s main advisor said the initial offer for 75% of the trust to institutional investors and high net-worth individuals through bookbuilding on Monday and Tuesday drew demand of more than 7 billion rupees for an offering of shares worth 4.17 billion rupees at a floor price of 10 Pakistani rupees ($0.10). At the strike price, the initial offer raised 4.59 billion rupees, according to the REIT’s lead manager.
The remaining 25% of the stake was to be offered to the public on Friday at a strike price of 11 rupees ($0.11). Analysts and the REIT’s management expected the Friday offering to be fully subscribed as well, raising another 1.53 billion rupees.
“The interest rate is at a 42-year low, with the discount rate at 7%, so for people who invest in fixed-income instruments, REITs are attractive,” said Muhammad Tahir Saeed, deputy head of research at Topline Securities, a Karachi-based brokerage.
Pakistan’s economy has improved in recent years, despite political turmoil, major security challenges, and chronic electricity shortages that have hobbled industry. The country’s main stock market in Karachi has gained 72% since the 2013 election and the country’s improving prospects are increasingly being recognized internationally. Prime Minister Nawaz Sharif’s government has said boosting investment is one of its key economic objectives.
With both buildings in the Dolmen City REIT fully occupied, it is expected to yield 9.5% in the first year, with a 10% increase every year based on escalation clauses in tenancy agreements. The development is located next to two of Karachi’s most affluent residential areas.
The Dolmen Mall Clifton, Pakistan’s largest shopping mall, currently has an occupancy rate of over 90%, according to a fact sheet provided by the REIT management. The mall has 130 stores, including foreign outlets such as Debenhams DEB.LN -1.13%, and a multi-level department store.
The neighboring Harbour Front office complex is currently fully occupied, with several high-profile tenants like Procter & Gamble and Engro, one of Pakistan’s largest corporations.
Pakistan’s commercial property sector was described in a first-quarter report this year by Lamudi Pakistan, an online real estate portal, as “almost at a standstill”. But analysts said investors in Pakistan are still keen on real estate as a long-term asset, particularly in properties such as Dolmen City’s Harbour Front with high-profile corporate tenants.
“In the long term there are significant opportunities as prices are low, meaning potential yields are high, and there is considerable room to expand and modernize Pakistan’s stock of commercial real estate,” BMI Research said in a report on the country’s real estate sector earlier this year.
Analysts said the success of the Dolmen City REIT could boost interest in the instrument.
“People were looking at Dolmen and expecting that, if it succeeds, many REITs will be launched in the coming years [in Pakistan],” said Saeed of Topline Securities. “I can foresee some groups [developing shopping malls] jumping into this asset class.”
http://blogs.wsj.com/frontiers/2015/06/12/investors-flock-to-pakistans-first-real-estate-investment-trust/
Pakistan’s Lucky Cement Ltd. is close to winning a permit to extract limestone in Punjab province, signaling expansion plans by the nation’s largest maker of the building material by market value.
The company will get a limestone quarry for a cement plant in Punjab, and the local administration has approved the deal, said Arshad Mehmood, secretary for Punjab’s mines and minerals department. An agreement is expected to be signed in the next few days, he said.
The Karachi-based cement maker is set to join producers including Attock Cement Pakistan Ltd. and D.G. Khan Cement Ltd. that have announced expansion plans as Prime Minister Nawaz Sharif looks to boost infrastructure spending.
“Everything is positive for construction,” Bilal Khan analyst at Karachi-based Global Securities Pakistan Ltd., said by phone. “If growth stays at the same pace, the person who decides to expand today is the winner.”
Sharif is seeking to accelerate growth in the $247 billion economy to the fastest pace since 2008 with the spending, while China and Pakistan have announced a 3,000-kilometer, $46 billion economic corridor, which includes roads, ports, power plants and dams.
Lucky Cement’s shares have advanced about 50 percent in the past year, outperforming the 21 percent gain in the benchmark KSE100 Index. Shares fell 1 percent to 523 rupees as of 10:21 a.m. local time. They rose to a record last month.
The company operates two plants at 85 percent of capacity in Pakistan. It also has a cement grinding facility in Iraq and is part of a venture that will build a cement plant in the Democratic Republic of Congo.
http://www.bloomberg.com/news/articles/2015-08-31/pakistan-s-biggest-cement-maker-to-get-mine-permit-for-expansion
From Global Cement:
Quoting a recent study, Alam said that the per capita cement consumption in Bangladesh was still low at 107kg, compared to 210kg in India, 265kg in Pakistan, 310kg in Sri Lanka and 570kg in Korea, indicating future growth of Bangladeshi cement consumption.
http://www.globalcement.com/news/item/3426-mi-cement-to-add-new-unit-soon
Real Estate is a promising and growing sector of the Pakistani economy. Pakistan spends $5.2 billion on construction in a year and according to the Pakistan Bureau of Statistics, construction output accounts for 2% of GDP.
With the rate of urbanization that Pakistan has been experiencing, there is a growing need for urban planning. Pakistan is home to Asia's largest real estate investors Bahria Town.
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Former chairman and present consultant of Bahria Town, Malik Riaz Hussain has signed an agreement with His Highness Sheikh Nahyan bin Mubarak al Nahyan, Chairman Abu Dhabi Group, Union National Bank and United Bank Limited under which $45 billion will be invested in Pakistan.
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The top players in the real estate industry are undoubtedly the DHA and Bahria Town. The latter has played a pioneering role in commercializing the real estate development and establishing it as a formal sector. Now the real estate investments come under the tax net. Similarly, DHA is also a top notch housing society. It is well-engineered and has state-of-the-art infrastructure facilities such as schools, colleges, universities, hospitals, cinemas, parks, marriage lawns, clubs, security management and traffic control system etc. Furthermore, the earthquakes in Pakistan have brought to the attention of regulatory bodies and the end consumers the need for enforcement of building codes and quality construction practices. According to survey of some Pakistani property portals including lamudi.pk, Homespakistan.com and Pakistan real estate.net interviewed several buyers of residential homes and commercial buildings and confirms that they prefer quality designing rather than cheaper and casually designed units. Hence, this makes it a perfect case to invest in the booming real estate sector of Pakistan.
Real Estate Investment Trust
Investors piled into Pakistan’s first real-estate investment trust, which was launched this year with a public offer that was heavily over-subscribed, the REIT’s lead manager and analysts said on Thursday.
The Dolmen City REIT offered investors a 25% stake in a 22.24 billion rupee ($218.5 million) shopping mall and an office complex at Dolmen City, one of the most prominent real estate developments in Karachi, Pakistan’s largest city and its economic hub. The Arabian Sea-front project includes three other structures not included in the REIT.
Traders and the REIT’s main advisor said the initial offer for 75% of the trust to institutional investors and high net-worth individuals through book building on Monday and Tuesday drew demand of more than 7 billion rupees for an offering of shares worth 4.17 billion rupees at a floor price of 10 Pakistani rupees ($0.10). At the strike price, the initial offer raised 4.59 billion rupees, according to the REIT’s lead manager.
The remaining 25% of the stake was to be offered to the public on Friday at a strike price of 11 rupees ($0.11). Analysts and the REIT’s management expected the Friday offering to be fully subscribed as well, raising another 1.53 billion rupees.
“The interest rate is at a 42-year low, with the discount rate at 7%, so for people who invest in fixed-income instruments, REITs are attractive,” said Muhammad Tahir Saeed, deputy head of research at Topline Securities, a Karachi-based brokerage.
https://www.linkedin.com/pulse/real-estate-pakistan-spends-52-billion-construction-year-safwat-zaki
(Pakistan Cement) Industry data on Wednesday showed that local cement sales rose 10.4 percent to 36.4 million tonnes during the last fiscal year, while exports sharply fell 22.8 percent to 4.5 million tonnes.
https://www.thenews.com.pk/print/214600-Cement-sales-up-54pc-to-409MT
Cement industry witnessed a 5.4 percent surge to 40.9 million tonnes in its sales during the last fiscal year of 2016/17 as local construction sector boomed to have broken its annual growth record of the past five years.
Analyst Nabeel Khursheed at Topline Research attributed the double digit growth in local sales for the second year in a row to ongoing residential construction projects and infrastructure development under China-Pakistan Economic Corridor (CPEC).
Khursheed said the government released Rs715 billion under public sector development programme for FY17, 90 percent of the total allocation, “which bodes well for the construction sector.”
Industry’s annual capacity utilisation reached 89 percent, a rate that was last achieved in the fiscal year of 2005/06. The capacity utilisation stood at 85 percent in 2015/16.
Construction sector reported 9.1 percent growth in FY17, while annual growth for the last five years (FY12-16) growth averaged at 6.3 percent. Credit offtake in construction sector was up 40 percent to Rs129 billion in the last fiscal year over the previous year.
Stock analyst said exports fell short of expectation due to manufacturers’ increased focus to local market, tapering export to Afghanistan, which consumes 40 percent of Pakistan’s cement outflows, and competition from the Iranian substitute.
Sales from cement factories located in north region increased 10 percent in FY17 to 29.817 million tonnes, while cement makers based in south recorded 11 percent growth in sales to 6.594 million tonnes.
Exports of north as well south cement mills decreased 16 percent to 2.889 million tonnes and 33 percent to 1.643 million tonnes, respectively.
In June, cement sales remained flat at 3.354 million tonnes as compared to the same month a year earlier, while export fell 10 percent over May.
“The decline in monthly sales figures is due to slowdown in construction activities during Ramazan coupled with the prolonged Eid holidays,” said Fatima Mohsin Ali, an analyst at Taurus Securities Ltd.
Generally, growing local demand gave a leeway to cement markers to increase prices and avert the pressure built due to high coal prices previously.
“Players were able to pass on the impact of federal excise duty (FED) by increasing prices by additional Rs15-20/bag thanks to robust demand outlook,” Khursheed said. “We believe if demand remains strong, pricing arrangement will continue.”
Government raised FED on cement to Rs1.25/kg from Re1/kg in the budget announcement for the current fiscal year of 2017/18.
International coal prices averaged $76/tonne as compared to its peak of $91/ton in November 2016.
Market researchers said cement mills based in north region factored in FED impact by pushing up prices by Rs15 to 20/bag to Rs545 to 575/bag. Prices in southern region are still hovering between Rs560 and 585/bag.
Ali expected an upward revision in cement prices by southern players too in the next one week, “settling in the range of Rs575 to 600/bag.”
Pakistan cement sales rise in first quarter but exports down
05 October 2017
http://www.globalcement.com/news/itemlist/tag/All%20Pakistan%20Cement%20Manufacturers%20Association
Pakistan: Cement sales rose by 15% year-on-year to 10.3Mt in the first quarter of the local financial year that ended in September 2017 from 9Mt in the same period in 2016. However, the export part of this figure fell by 16.7% to 1.29Mt, according to the All Pakistan Cement Manufacturers Association (APCMA). Exports fell faster in the south of the country, where the country’s ports are based, with a significant drop in seaborne trade.
“Robust construction activities within the country are supporting the cement sector, but it is still sitting on some idle capacity that could be exported through government facilitations like sharing the transport cost,” said the APCMA to the Nation newspaper. It added that the government should cut duties on cement to encourage the residential sector.
The All Pakistan Cement Manufacturers Association (APCMA) struck a triumphant note this week as it announced that its industry has over 26Mt/yr of capacity upgrades in the pipeline. Its chairman Sayeed Saigol concluded in a press release that the country’s growth trend required ‘massive’ investment and that its producers were working on it.
Graph 1 shows how the local industry has changed since 2009. At this time exports hit a high of over 11Mt, constituting 34% of all cement despatches at the time. Since then though exports have fallen to below 6Mt or 14% of despatches, as local despatches have started to increase. Although local despatches have risen each year, the growth rate was below 1% in 2011. In 2016 it was over 14%.
Much has changed since 2010. At this time production capacity hit a high of 45Mt/yr in the 2009 – 2010 Pakistan financial year, according to APCMA data, but then utilisation sunk to below 73%, its lowest rate in over a decade. Pakistan’s cement producers sought a way out by exporting their cement. Export volumes subsequently exploded to a high of nearly 11Mt in 2008 – 2009 from next to nothing at the turn of the millennium.
The effects of this had particular repercussions in eastern and southern Africa as local producers suffered against seaborne imports. In 2012 the outgoing chief of South Africa’s PPC summarised the problem by saying that imports were not a threat to African expansion, provided that a cement plant was not built within 200km of a port. Rightly or wrongly cement from Pakistan was vilified by the African press and then legislated against. South Africa even implementing anti-dumping duties to howls of derision from Pakistan.
Funnily enough though the APCMA has recommended that Pakistan’s government do exactly the same thing against imports of cement from Iran. Industry scare stories about Iranian cement being sold illegally in Pakistan have circulated since at least 2012. Iran’s nuclear deal in 2015 must have worried the local industry, as the prize for Iran was the lifting of international sanctions making it easier for one of the world’s largest cement producers to start exporting its product. However, president-elect Trump’s disdain for the Iran deal may put those worries to rest if the deal is ‘cancelled’.
Back to the present, the Pakistan cement industry appears to be booming. One motor is the China–Pakistan Economic Corridor, a collection of infrastructure projects worth US$54bn. There is some disagreement at this point about how the usage levels of cement breakdown, with the chief executive of Thatta Cement placing it at 60% for infrastructure and 40% for housing but with other commentators placing it at 70% for housing and 30% for infrastructure. If the latter is true then Pakistan’s cement producers may receive an even bigger payday. The emphasis on housing shouldn’t be underestimated though as the country’s production capacity per capita, below 200kg/capita, is low by international standards. Either way, things are looking good for the local producers.
New Faldo #golf course in #Pakistan set for official opening in #Multan. The layout, which is over 7,500 yards from the back tees, has 3 distinct sections, characterised by desert, trees & a water storage lake in the middle. #Sports #Recreation #Punjab
https://www.golfcoursearchitecture.net/content/new-faldo-course-in-pakistan-set-for-official-opening
Rumanza Golf Club in Multan, Pakistan, will officially open its new Faldo Design course this week.
The club, part of a new 9,000-acre community developed by the Defence Housing Authority of Multan, will also have a six-hole par-three layout and a practice range.
“The course should challenge the top players from the back tees but be eminently playable for all other standards of golfer from the other tees,” said Andy Haggar, lead architect at Faldo Design. “The forward tees will make the course short enough for beginners and juniors. Fairways are quite generous to help golfers keep the ball in play, whilst at the same time, the shaping of the fairways and placement of the hazards challenge the better players to put the ball in the right place.
“The greens are designed within the entire strategy of the hole they belong to. Often the strategy of the hole is created with the green’s design as the starting point. Here, each green features a range of pin placements that will be either hard, medium or easy. There is noticeable movement in the greens, but the surface areas are large enough to accommodate that movement. As with the fairways, it is about being in the right place on the green to give yourself the best chance of a good score.”
The layout, which is over 7,500 yards from the back tees, has three distinct sections, characterised by desert, trees and water. The latter revolves around a water storage lake at the centre of the course.
Faldo Design has worked with GEO Foundation to make the development sustainable. The design team has for example, retained existing fruit trees and deras (mud brick dwellings) to ensure the course has a strong local identity.
Read more: “The closing three holes will be spectacular,” Haggar told GCA during construction in 2020.
“On the playing side, we wanted to create an interesting, strategic and memorable golfing experience,” said Haggar. “Once we had scraped off the top surface of material on this very flat site, we found pure sand. That moved us towards creating something of an inland links-style golf course. Alongside some links-like shaping, revetted bunkers seemed the obvious choice.
“The bunkers are revetted in traditional style using EcoBunker, with turf rolled down over the edge. We also used EcoBunker to create a revetted edge to certain sections of the waste areas adjacent to the fairways, which provides another nice feature of the course, and which complements the bunkering.”
Sir Nick Faldo will, along with tour pros Rafa Cabrero-Bello, Charley Hull, Graeme McDowell and Mel Reid, attend the official opening event on 25 February.
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