Sunday, February 15, 2015

Record Cement Sales Raise Hopes of Pakistan Economic Recovery

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. Domestic sales of 2.5 million tons a month translate to about 160 Kg per capita consumption of cement, the highest level in Pakistan's history.

Pakistan saw its domestic cement consumption double from about 11 million tons in 2003 to 22 million tons in 2008 on President Musharraf's watch. It remained essentially flat from 2009 through 2011 before rising to a new high of 24 million tons in 2012. With expected GDP annual growth to average 4.5-5.5 per cent over the next 3 years, local cement sales could rise by 9 per cent on average annually to reach 34 million tons per year by 2017 and exports to 8 million tons per year.

Cement sales and building activity indicators are an important sign of the strength or weakness of the broader economy, due to construction's important role in the economic sector. If individuals and businesses are willing to invest in new construction, it is a sign that the economy is doing well or poised to recover. If they aren't, the economy may be weak or headed for trouble. Construction is a very labor-intensive activity which creates many new jobs. Higher employment drives consumer spending which further stimulates the national economy.

In addition to rising demand for housing and new commercial real-estate, major infrastructure and energy projects related to the China-Pakistan Industrial Corridor are expected to significantly boost domestic cement consumption and create millions of new jobs over the next several years.

Related Links:

Haq's Musings

State Bank: Pakistan's Actual GDP Higher Than Official Figures

Investors Bullish on Pakistan Cement Sector

Pakistan Ranks in the Middle For Infrastructure and Logistics

China-Pakistan Industrial Corridor

India Fudging GDP to Claim Faster Growth Than China?

India-Pakistan Economic Comparison 2014


Sikander said...

Last year you did a similar story but the GDP growth rate did not change that much. Lot of cement is being exported even to India. Many companies want to export more to South Africa and Middle East because of rapid construction there.

Do you know how much cement is produce in other countries?

Riaz Haq said...

The State Bank of Pakistan (SBP) submitted its first quarterly report of fiscal year 2014-15 (FY15) titled “The State of Pakistan’s Economy” to parliament on Tuesday.
The report says that Pakistan’s economy faced several challenges in the initial months of FY15 as the fourth review of the Extended Fund Facility (EFF) could not be finalised in early-August meetings with the International Monetary Fund (IMF).
The report also refers to political events in mid-August in Islamabad that impacted economic activity in the country. In September, floods inundated a large part of agriculture land in Punjab. It was feared these losses may push the price of perishable food items up, which fuelled inflationary expectations.
“Against this backdrop, key macroeconomic indicators could not follow up positive developments observed in the second half of FY14,” says the report. “1QFY15 saw higher deficits in the current and fiscal accounts, which had to be financed via domestic resources.”
However, there has been a marked improvement in the economy during the second quarter of FY15, which is likely to persist through the rest of the year.
Highlighting developments in the external sector during 1QFY15, the report says, “Overall trade deficit increased by $1.6 billion in 1QFY15, compared to the same period last year.” This increase was partly compensated by a $765 million increase in home remittances during the quarter.
The report avers that the rising current account deficit, coupled with the uncertainty in the foreign exchange market, was one of the key factors that guided the SBP’s decision to keep the monetary policy tight during July to September 2014.
Government borrowings remained lower during 1QFY15 compared to last year because loans were taken from other sources like PIBs and National Savings Schemes. “Within the banking system, instead of borrowing from the central bank, the government borrowed from commercial banks, which also remained lower than the same period last year.”
The industrial sector is presenting a mixed picture. “Higher cement dispatches, steel imports and strong PSDP spending suggest a pick-up in construction activity in 1QFY15,” said the report.
“In contrast, LSM (large-scale manufacturing) growth showed a decline, as local manufacturers faced gas shortages (especially in fertiliser, textile, paper, glass and leather sectors).
Furthermore, textiles also remained dull on account of lower demand for yarn and fabric from China and Bangladesh. The fall-out of a weak commodity-producing sector can also be seen in wholesale and retail trade activity. However, the vibrancy in finance and insurance, and telecommunications, appears to have provided services a boost this year.
While discussing the outlook on the economy, the report maintains that the external sector would benefit the most from the decline in oil prices, as petroleum directly makes up nearly 35% of the import bill. Inflation is also likely to end up much lower than initial expectations, as the government has steadily been reducing retail petroleum product prices in line with international rates.

Riaz Haq said...

From Wall Street Journal: "Pakistan Close to Agreement With Qatar Over LNG Supplies for Power Plants"

ISLAMABAD—Pakistan is close to striking a long-term deal worth potentially $22.5 billion or more to import liquefied natural gas to help fuel the country’s power stations and ease its crippling electricity crisis, Pakistan’s top energy official said.

“We are negotiating with Qatar and a few other sources,” said Pakistani Petroleum Minister Shahid Khaqan Abbasi in an interview with The Wall Street Journal. “The deal will be very competitive and very beneficial for Pakistan.”

An agreement with Qatar is expected by early March, Pakistani officials say.


The deal with Qatar would provide supplies over 15 years, Pakistani officials say. Pakistan is looking to import 3 million tons of LNG a year, beginning this year, with much or all of that coming from Qatar.

The country’s overall LNG imports are expected to rise to around 7 million tons annually within three years. It isn’t clear as yet how much of that higher total would be provided by Qatar.

Importing 3 million tons of LNG would cost around $1.5 billion annually, or some $22.5 billion over 15 years, given current global oil and gas prices, analysts say. That cost will fluctuate with the price of oil, which is also used to price LNG.

The Pakistani conglomerate Engro has built a terminal to import LNG at Port Qasim, on the edge of the southern city of Karachi, set to become operational at the end of March, officials say. Bidding is now under way to construct a second LNG terminal at Port Qasim.

Pakistani officials have been negotiating for months with state-owned Qatar Gas. The government of Qatar and Qatar Gas didn’t respond to requests for comment.

Pakistan’s electricity crisis has been caused partly by its reliance on importing furnace oil and diesel to fire its power stations, both relatively expensive fuels that will be replaced by the LNG. “LNG is more efficient and cleaner for the environment than the alternatives,” Mr. Abbasi said. “This is a major shift in our energy mix.”

According to Mr. Abbasi, LNG imports of 3 million tons would yield cost savings worth an annual $300 million. By using LNG, Pakistan will be able to between 7% and 9% more power, as a result of its greater efficiency and by bringing currently dormant gas-fired power stations back to work, Mr. Abbasi said.

Pakistan’s electricity shortage results from a failure to build power stations to keep pace with demand, a dependence on burning relatively expensive fuels and the swelling of debt in the sector that has led to some plants being shut down.

The deal would mark the first time that Pakistan will import natural gas. It would be the biggest financial commitment made by Pakistan to date, analysts say.

“This would be a positive development for Pakistan’s energy security. Qatar is a reliable and credible supplier,” said Anthony Livanios, head of oil and gas consultancy Energy Stream CMG. “For Qatar, this will help it diversify its customer base. So it’s a win-win situation for both countries.”

Qatar is the world’s biggest producer and exporter of LNG.

Pakistan is also considering shorter-term deals and open-market transactions to source some of its LNG needs from other countries, including Brunei, Malaysia and China, which isn’t a producer but may have excess imports that it can resell.

Nicholas Browne, a senior manager at Wood Mackenzie, an oil and gas consultancy, said typical pricing for Qatari LNG would be 14% to 15% of the price of oil. At 14%, Pakistan would be acquiring the fuel at $7 per million BTU, an attractive price, said Mr. Browne.

“From a buyer’s perspective, it is a great time to be in the market for LNG, in terms of both price and availability,” said Mr. Browne, because the price of oil has fallen and there is a substantial increase in supply expected in the next couple of years, as Australia and the U.S. bring new output onto the market.

Riaz Haq said...

From IHS Jane's 360:

Chinese foreign minister Wang Yi reiterated calls for the implementation of the China-Pakistan Economic Corridor (CPEC) to be expedited during his two-day visit to Pakistan on 12 February.

As part of China's wider plans to increase connectivity in Asia, the CPEC is planned to connect Gwadar port in Pakistan's Balochistan province to Kashgar in China's western Xinjiang province through road infrastructure, railways, and oil and gas pipelines. In November 2014, the Chinese government committed to investing USD45.6 billion until 2020 for the various projects included under the CPEC, of which USD15 billion will be spent on renewable energy projects to alleviate Pakistan's energy shortages.

However, the CPEC's route has been the subject of intense domestic debate in Pakistan over the past month, resulting in two walk-outs from parliament. The Khyber Pakhtunkhwa and Balochistan provincial governments have accused the Pakistan Muslim League - Nawaz (PML-N) federal government, which draws its support primarily from Punjab, of altering the CPEC's road transportation route away from the two comparatively underdeveloped provinces. The PML-N government on the other hand argues that it plans to use the existing road network in Punjab and Sindh on an interim basis while the route through Khyber Pakhtunkhwa and Balochistan is developed, which could take as many four years according to current government estimates.

While the intensity of debate indicates the CPEC's likely initiation, the possibility of losing the broader development that it represents underpins the risk of protests and riots in Khyber Pakhtunkhwa and Balochistan in at least the three-month outlook. Already in Quetta, Balochistan's provincial capital, traders went on general strike backed by local political parties on 13 February. Protests are likely to remain relatively peaceful and cause less than 24 hours of disruption, unless a major political party intensifies its opposition. The most likely is Imran Khan's Pakistan Tehreek-e-Insaf (PTI), which heads the Khyber Pakhtunkhwa government. The party has already launched two major protest movements, including a four-month anti-government sit-in that ended in December 2014 as well as a cargo blockade in Khyber Pakhtunkhwa from November 2013 to February 2014.

Stephen said...

as the oil prices are dumping to the lowest in 10 years ( correct me if I am wrong ) .. why cant they maintain a constant value??? say 65$ fixed irrespective of the oil production ... that way we can save some companies going bankrupt and laying off many jobs in northern sea ( BP ) .... a month back we saw a sharp dipping of oil prices below the $50 but past few days oil prices got some momentum and reached $62+ place .... but stock data from US shown increased level crude oil forced the prices to push down to below $61 .. this inconstancy is helpful for some countries which are importing crude oil but its no good to the countries which are producing ....

Riaz Haq said...

Billionaire Mian Muhammad Mansha’s D.G. Khan Cement Ltd., Pakistan’s third-largest maker of the construction material, plans to build an $300 million plant near Karachi as economic growth boosts demand.
“There will be a shortage domestically in three years if there is 10 percent growth in demand each year,” Chief Financial Officer Inayat Ullah Niazi said in an interview at the company’s headquarters in Lahore on Thursday. The company’s two cement plants have operated near full capacity in the past two years.
The company is building its first plant since 2007 to tap economic growth that Prime Minister Nawaz Sharif’s government forecasts will be the fastest in seven years, even as the nation grapples with an electricity supply crisis and terrorism. Pakistan’s output is projected to expand 4.3 percent in the year ending June 30 and 4.75 percent in the following fiscal year by the International Monetary Fund.
The new plant near Hub, a city west of Karachi, will produce about 2 to 2.5 million tons of cement a year, Niazi said. Construction is targeted for completion late in 2018. The plant will be financed 40 percent through internal cash and the rest through debt, Niazi said.
“Expansion means the company will enter the southern region of the country,” Tahir Abbas, an analyst at brokerage Arif Habib Ltd. said by phone in Karachi. “This will impact the entire industry and could start a price war.”
Earnings Forecast
D.G Khan shares rose 2.9 percent to 128.63 rupees in Karachi Thursday. The stock has gained 48 percent over the last year, compared with a 32 percent gain in the benchmark KSE100 Index.
Cement sales in Pakistan rose to a record 34.3 million tons in the year ended June 30, 2014, according to the cement manufacturers’ association. Sales are on track for another record this year.
D.G. Khan is spending $30 million to generate electricity from coal to run its plant in Punjab province to decrease reliance on natural gas. South Asia’s second-biggest economy is struggling to meet gas demand and plans to import liquified natural gas.
The company forecasts net income will rise 25 percent to rise to 7.5 billion rupees ($74 million) in the year ending June 30, Niazi said. Domestic sales with higher margins than exports will contribute to the projected gain. Net income was a record 5.99 billion rupees in the last fiscal year.

Riaz Haq said...

The Pakistani government expects to raise about $600 million next month selling a stake in Habib Bank Ltd., the nation’s biggest lender by assets, before undertaking deals for electricity distribution companies and Pakistan International Airlines Corp.
The government owns 609 million shares of Habib Bank, or a 42 percent stake, and it will offer a minimum of 250 million shares, Privatization Commission Chairman Mohammad Zubair said in an interview in London on Friday.
“People are taking much more interest because the government is coming up with transactions every two months,” Zubair said.
Prime Minister Nawaz Sharif aims to raise $2 billion from asset sales in the year ending June 30 to meet conditions attached to a $6.6 billion International Monetary Fund loan. He wants to curb his budget deficit and bring greater efficiency to state-owned companies.
Habib Bank shares fell 0.2 percent to 205.05 rupees in Karachi on Feb. 20. The stock has gained 40 percent in the past year, compared with the 33 percent advance in the Karachi Stock Exchange 100 index.
A decision on the discount the shares will be offered at won’t be taken until just before the actual sale in late March, Zubair said. Pakistan sold a stake in United Bank Ltd. last June at a 7 percent discount and shares in Allied Bank Ltd. in December at a 3 percent discount, Zubair said.
Electricity Distribution
His focus then will turn to selling the first of nine state-owned power distribution companies. Zubair said he aims to invite bids for the electric supply company in the city of Faisalabad within about six weeks, with a goal of completing the deal by the end of September.
“There are buyers out there,” Zubair said. Pakistani and Chinese companies are among those who have expressed interest, he said. The appeal of the companies is “clear. There is known demand, and it is growing. The challenge is to collect revenue,” he said.
The intention is to complete the sales of all nine distribution companies by June 2016, Zubair said.
“We believe that unless you take them all together, it would be difficult to complete the process,” he said. Financial advisers already have been appointed for the first four of the companies.
The government also will seek to complete the sale of a stake in Pakistan International Airlines Corp. by March 2016, Zubair said. The transaction will focus only on the “core” airline unit, with other operations such as ground-handling and catering being kept by the state, he said.
The asset sale program experienced a setback when political turmoil and falling oil prices prompted the government to suspend its sale of shares in Oil & Gas Development Co. Ltd. in November. A month later, the government sold an 11.4 percent stake in Allied Bank for $144 million.
“We are well on track to achieve the $2 billion” target for this fiscal year, Zubair said. “When we were given it, we thought it was conservative. Now, it looks much more challenging because a number of transactions got delayed. We expect to achieve it.”
To contact the reporters on this story: Khurrum Anis in Karachi at; Guy Collins in London at
To contact the editors responsible for this story: Arijit Ghosh at Dick Schumacher

Riaz Haq said...

KARACHI: As the country continues to take steps in an attempt to tackle the persistent energy crisis, Commerce Minister Khurram Dastgir Khan on Wednesday said the government intends to approve 10,400-MW projects that fall under the Pak-China Economic Corridor by March.
He said this while talking to media during his visit to the head office of Federation of Pakistan Chambers of Commerce and Industry (FPCCI).
“Prime Minister Nawaz Sharif has decided to expedite the work on energy projects to overcome the energy crisis,” he said, while declaring 2017 as the year in which the nation will see huge changes on both fronts — terrorism and energy crisis.

The commerce minister’s visit to FPCCI was part of the events scheduled to take place on the inauguration of the Expo Pakistan 2015 – the biggest annual trade fair of the country.
The event will be held at the Karachi Expo Centre from February 26 to March 1.
“I am here to take the business community in confidence so that they can plan their investments well before 2017,” said Dastgir, “Because with the help of recent steps to overcome terrorism and energy issues, Pakistan’s economy will get a massive boost in 2017.”
The Expo Pakistan 2015 has given the government confidence to display a strong image of Pakistan through its exportable goods, he said, adding that it has also planned a single country exhibition this summer in the United Kingdom to get business orders for our industries.
Replying to a question, Dastgir said that he was not promising to end load-shedding in 2017. “What I am saying is that Pakistan will be able to considerably resolve its energy crisis,” he added.
He said that his visit to FPCCI is also linked with the government’s efforts to start collecting budget proposals for the upcoming federal budget.
Speaking on a specific question on slow tax reforms in the country, he said that Pakistan definitely needs innovative solutions to overcome its problem of low tax-to-GDP ratio.
The minister also faced tough questions on why the government was not taking all provinces on board on the Pak-China economic corridor.

Riaz Haq said...

The country expects to received an overall business of $1.3 billion from the four-day Expo Pakistan 2015 that concluded on Sunday, according to a Trade Development Authority of Pakistan (TDAP) release.
A large number of serious buyers have established contact with major exporters in Karachi, Lahore, Sialkot and Faisalabad. The buyers are either negotiating new orders or have increased the volume of existing orders after visiting factories in different cities.
The estimated value of such business negotiations is estimated at $500 million, based on the feedback received from Pakistani companies and foreign buyers themselves.

The gems and jewellery sector was able to get orders worth $20 million, while a large number of serious buyers are visiting factory premises in Lahore, Sialkot and Faisalabad for further negotiations.
A Russian buyer has contacted Forward Sports and to discuss the prospects of supplying footballs for the next football world cup in Russia. A Bangladeshi firm has also signed a Memorandum of Understanding (MoU) worth $2 million with Sialkot based firm, Malik Sports.
Japanese companies have shown an interest to invest $25 million in pharmaceuticals, organic food items and sports goods.
Over 571 leading exporters of Pakistan had setup stalls in the exhibition which was attended by more than 750 foreign buyers and importers from 77 countries, said TDAP officials.
A Dubai based company has finalised a deal with a Pakistani slaughterhouse to import meat worth AED 15 million per annum. Similarly, an Abu Dhabi based company has also struck a deal with a Pakistani slaughterhouse to import meat worth $10 million annually.
Another Dubai based supplier to the UAE government has given a contract order to purchase uniforms and office accessories worth $1 million.
A Dubai based special purpose theme based facilities is investing $4 billion in Dubai over the next three years. For this purpose, it has indicated to bring a large delegation to conclude an MoU for the supply of materials and manpower worth $1 billion over the next three years.
Prime Minister Nawaz Sharif inaugurated the Expo Pakistan 2015 on February 26 and also conferred awards to top exporters.
The Federal Commerce Minister and top TDAP officials met with almost 33 country delegations led mostly by presidents of foreign trade chambers or associations consisting of foreign buyers.

Riaz Haq said...

From Wall Street Journal: Pakistan’s Economic Management Gets Thumbs Up From IMF

Pakistan’s economy has improved, thanks to prudent monetary and fiscal policies, strong capital inflows, robust remittances from abroad and lower oil prices, the International Monetary Fund said on Wednesday.

“The authorities have made progress with consolidating macroeconomic stability, strengthening public finances and rebuilding foreign-exchange buffers,” Masood Ahmed, director of the IMF’s Middle East and Central Asia department, said in a statement following a recent visit to Islamabad and Lahore.

As a result, economic growth is strengthening and inflation is slowing, he added.

Pakistan’s central bank slashed its key interest rate in January by a full percentage point, to 8.5%, citing a slowdown in inflation, among other factors, amid plummeting oil prices and declining global prices for other commodities. January’s interest-rate cut came after a half-percentage point easing in November.

Mr. Ahmed called on Pakistan’s government to further bolster revenue by broadening the tax base and improving compliance, which would allow it to further reduce public debt while increasing spending in key areas such as health and education.

The Pakistani government should also “reinforce and build on recent stability gains to work towards achieving higher, sustainable and inclusive economic growth.”

Priorities for the government should include addressing longstanding imbalances in the energy sector, restructuring and privatizing public-sector enterprises, proceeding with investment-climate and trade reforms as well as continuing with financial-sector reforms, the IMF official noted.

Riaz Haq said...

Bombs, Protests and Blackouts Fail to Cripple Pakistan Economy

Lower oil prices, higher remittances and increased consumer spending are pushing (Pakistan economic growth) growth toward a seven-year high. Corporate earnings are soaring, stocks have surged and the currency is among the world’s top performers.
The steady economic upturn as growth prospects weaken in many emerging markets has underpinned Sharif’s political support, with his party gaining in a Senate election held this month. While much more needs to be done to fix an economy dependent on financing from the International Monetary Fund, the perception of Pakistan is starting to change.
“Sharif’s government has improved things with the help of the IMF,” Sayem Ali, head of investments strategy and advisory at Standard Chartered Plc’s Karachi unit, said by phone. “They have put Pakistan back on the radar in terms of international investors.”
When Sharif took power in May 2013, he faced a balance-of-payments crisis that forced him to seek help from the IMF. Foreign exchange reserves have doubled in the past year to $16 billion, the budget deficit has narrowed and inflation is easing as global oil prices fall.
Pakistan last month said it regained its eligibility to borrow from the International Bank for Reconstruction and Development, making it eligible for $2 billion of credit over the next four years. The IMF also is optimistic it will meet the conditions of the $6.6 billion loan it received two years ago.
‘Good Foundation’
“I see Pakistan breaking with past precedent of failed IMF programs and half-completed reforms, which set the stage for a crisis,” Jeffrey Franks said last month, when he was IMF mission chief. The country has a “good foundation” for further growth, a delegation led by his successor said on March 9.
The IMF forecasts Pakistan’s economy to expand 4.3 percent this year, compared with the five-year average of 3.6 percent. Pakistan’s moves to bolster its public finances are credit positive, Moody’s Investors Service said in a report on Monday.
“It is striking that reforms have continued despite disruptive domestic political challenges over the last year, and heightened security threats from Islamist terrorism,” Moody’s analysts wrote.
Pakistan’s middle class more than doubled to 84 million in 2002-2011, according to a study by Jawaid Abdul Ghani, a professor at the Karachi School for Business and Leadership. That’s brought almost half the nation into that segment for the first time, boosting profits at Nestle Pakistan Ltd. and Lucky Cement Ltd. to record levels.
Stocks Surge
Sharif is aiming to raise $2 billion from asset sales in the year ending June 30 to meet conditions attached to the IMF loan. Up for grabs in the next few years are stakes in Habib Bank Ltd., the nation’s biggest lender by assets, and Pakistan International Airlines Corp., the national carrier.
The benchmark KSE100 stock index has rallied 63 percent since Sharif took office, the sixth-best performance among 93 world gauges tracked by Bloomberg. Over the past six months, Pakistan’s rupee has outperformed every major global currency.
“The private sector is coming into play,” said Nadeem Siddiqui, Pakistan head at the International Finance Corp. “But the main problem will not be solved overnight.”

Riaz Haq said...

Pakistan cut its benchmark interest rate to the lowest in almost 13 years as a decline in global oil prices helped slow inflation in a nation wracked by political protests and terrorism.

State Bank of Pakistan Governor Ashraf Mahmood Wathra reduced the discount rate for a third straight month to 8 percent from 8.5 percent, the central bank said on its website on Saturday. Nine of 11 economists in a Bloomberg survey predicted the reduction, two estimated the rate being cut to 7.5 percent.

The lowest borrowing cost since December 2002 will help Prime Minister Nawaz Sharif encourage companies to expand in the nation that’s recovering from the worst fuel shortage in recent memory and a school massacre that killed 152 people most of them children. Consumer prices last month rose at the slowest pace since Bloomberg started compiling data in 2009.
“The decision will help improve consumer confidence and we will see private sector borrowing rising,” Yawar-uz-Zaman, vice president at Shajar Capital Pvt. in Karachi said by phone. “We forecast another 50 to 100 basis point reduction as inflation slows.”

When Sharif took power in May 2013, he faced a balance-of-payments crisis that forced him to seek help from the International Monetary Fund. Foreign exchange reserves have doubled in the past year to $16 billion, the budget deficit has narrowed and inflation eased to 3.24 percent in February.
Pakistan’s benchmark stock index has risen more than 60 percent in the period. The IMF forecasts Pakistan’s economy to expand 4.3 percent this year, compared with the five-year average of 3.6 percent.
Political Protests
“Owing to recent foreign exchange inflows and lower oil prices, external sector outflows continue to improve,” the central bank said in the statement. “The trend moderation in inflation is broad-based with food and non-food inflations receding.”
Political protests last year to oust Sharif threatened to disrupt an economic overhaul. The slaughter of 134 students in December underscored the ongoing risk from Taliban militants, part of an insurgency that has killed more than 50,000 people since 2001.
Sharif canceled a trip to the World Economic Forum in Davos in January as fuel shortages left motorists stranded across the country. Shortly afterward, a terrorist attack triggered a blackout that left 80 percent of the country without power.

Riaz Haq said...

Moody’s Raises #Pakistan Outlook as Economy Improves Under #PMLN #NawazSharif via Kyrgyzstan Business Information​
Pakistan’s credit rating outlook was raised to positive from stable by Moody’s Investors Service, signaling an upgrade is possible for the first time since 2006 as the economy steadily improves.
The new outlook “is based on a strengthening external liquidity position, continued efforts toward fiscal consolidation, and the government’s steady progress in achieving structural reforms under the IMF program,” Moody’s analyst Anushka Shah said in a statement on Thursday.
The company maintained its non-investment-grade Caa1 foreign currency rating and said implementation of more reforms, successful completion of the International Monetary Fund program or better finances could trigger an upgrade.
Prime Minister Nawaz Sharif is using lower oil prices, higher remittances and more consumer spending to push growth toward a seven-year high. Even so, a large budget deficit, high debt costs and dependence on external funding leaves Pakistan vulnerable to political and economic risks, Moody’s said.
When Sharif took power in May 2013, he won a $6.6 billion loan from the IMF to avert a balance-of-payments crisis. Since then, the country has cleared six program reviews and has also regained eligibility to borrow from the International Bank for Reconstruction and Development.
“Fundamentals of the country are improving,” Hedi Ben Mlouka, chief executive officer at hedge fund Duet Mena Ltd., said in a March 18 phone interview from Dubai. Even a “marginal improvement will make a very big difference and make it an attractive investor destination.”
The benchmark KSE100 stock index has rallied 56 percent since Sharif took office, and the rupee has outperformed every major global currency over the past six months.
Foreign exchange reserves have doubled in the past year to $16 billion and the IMF forecasts Pakistan’s economy to expand 4.3 percent this year, compared with the five-year average of 3.6 percent.
The nation’s central bank last week cut its benchmark interest rate to the lowest in almost 13 years as lower oil prices slowed inflation.

Riaz Haq said...

Ambassador of Pakistan to Afghanistan Syed Abrar Hussain on Monday said that Pakistan had planned to construct a motorway from Peshawar to Kabul and a feasibility study about the project would soon be commissioned.

Ambassador expressed these views after hoisting National flag on the occasion of National Day at the Pakistan embassy in Kabul. He said that the motorway project will not only improve connectivity between the two neighbours and Central Asian States but would also bring economic prosperity to Afghanistan, said a press release.

He also underscored the need for intensifying bilateral cooperation between the two countries in the areas of trade, economy, culture and defence. He said that Pakistan attached utmost significance to its ties with the brotherly country and would like to see a strong, stable, peaceful and prosperous Afghanistan.

Talking to efforts to enhance trade with Afghanistan, the ambassador said that Pakistan had removed several trade impediments so as to facilitate and encourage bilateral trade. He stated that Pakistan had executed various projects in health, education and infrastructure sectors in Afghanistan which would tremendously benefit the Afghan people.

Pakistan day was celebrated in the Embassy of Pakistan, Kabul, with great enthusiasm and national fervor to commemorate the passage of historical Lahore Resolution on March 23, 1940 which played a vital role in determing the destination of the Muslims of sub-continent. The Pakistan Day ceremony started with national anthem and hoisting of flag by the Ambassador.

Addressing the participants, he highlighted the historical significance of the day and paid tributes to the founding fathers who had rendered immense sacrifices for achieving a separate homeland. He said that the Pakistan's Resolution of 23rd March 1940 laid the foundation stone of an independent country.

He also paid homage, in his address, to the Father of Nation, Quaid-e-Azam Muhammad Ali Jinnah, whose relentless struggle led to the creation of Pakistan on August 14, 1947. The ceremony was attended by members of Pakistani community including educationists, engineers, doctors, senior executives and businessmen.

Riaz Haq said...

Last year, the world produced 3.6 billion tons of cement—the mineral mixture that solidifies into concrete when added to water, sand and other materials—and that amount could increase by a billion tons by 2050. Globally, the only substance people use more of than concrete, in total volume, is water.

Cement’s virtues, Vlasopoulos says, have long been plain: It is inexpensive, pourable and, somewhat inexplicably, becomes hard as a rock. But one other important detail is seldom acknowledged: Cement is dirty. Not dirty as in it won’t come off your clothes—although that problem has dogged construction workers for centuries. The key ingredient is limestone, mostly calcium carbonate, the remains of shelled marine creatures. The recipe for making cement calls for heating the limestone, which requires fossil fuels. And when heated, limestone sends carbon dioxide gas wafting into the atmosphere, where it traps heat, contributing to global warming. Cement production is responsible for 5 percent of the world’s human-produced carbon dioxide emissions; in the United States, only fossil fuel consumption (for transportation, electricity, chemical manufacturing and other uses) and the iron and steel industry release more of the greenhouse gas. And with booming countries such as China and India using cement to construct their rise, cement’s dirtiness looms as one of the foremost downsides of globalization.
People have been trying to build a better cement since just about the beginning of history. More than 2,000 years ago, the Romans devised a mixture of lime, volcanic ash and chunks of stone to form concrete, which was used to make harbors, monuments and buildings—the glue of early cities—including the Pantheon and the Colosseum. In the 1820s, in Leeds, England, about 200 miles from Imperial College, a stone mason named Joseph Aspdin invented modern cement. Aspdin heated a concoction of finely ground limestone and clay in his kitchen. After he added water, the mixture hardened. VoilĂ —the building block of the Industrial Revolution was born. Because the material looked like a popular building stone from the Isle of Portland, Aspdin called his invention Portland cement. The patent, issued in 1824, was for “an improvement in the mode of producing an artificial stone.”

The Australian developers had tried a new recipe, mixing Portland cement with magnesium oxide. They hoped to reduce carbon emissions because magnesium oxide can take the place of some of the limestone, and magnesium oxide does not have to be heated at such a high temperature. Limestone must be heated to 2,600 degrees Fahrenheit, but magnesium oxide can be prepared for cement at 1,300 degrees, a temperature that can be attained with biomass and other fuels that release less carbon, cutting down on fossil fuel consumption.

But Vlasopoulos quickly discovered that the blend did not reduce overall carbon dioxide emissions. In some tests, the emissions nearly doubled, because magnesium oxide itself is produced by heating magnesium carbonates, a process that releases carbon dioxide.

“I remember feeling very disappointed because when you see that the project you’re working on is not actually what you thought it was going to be, you lose motivation,” he said. “But we felt it was a very worthwhile project, a worthwhile idea, so we tried to find another way to solve the problem.”

At the time Vlasopoulos took up the question, in 2004, big cement firms around the world were looking for new ways to make Portland cement more environmentally palatable. The producers added steel byproducts, such as slag; coal residues, such as fly ash; and other materials, such as magnesium oxide, to bulk up the cement mixture, requiring less Portland cement. They experimented with mineral additives to reduce the temperatures needed to prepare the materials.

Read more:

Riaz Haq said...

#Pakistan first REIT (real estate investment trust) set for $55 million IPO at Karachi's KSE market$55m-ipo

Bookbuilding kicked off for Pakistan and south Asia’s first real estate investment trust (Reit) on June 8, as the long-awaited Dolmen City Reit’s Prp5.56bn ($54.55m), listing on the Karachi Stock Exchange, blazes a path for the asset class.

The shariah-compliant Reit, which has whet local investors’ appetite since plans were made for it earlier this year, is selling 555.93m units, or 25% of its total fund size, to institutional and retail investors. The former are allowed to bid for 416.94m units, or 75% of the ...

Pakistan’s first Real Estate Investment Trust has been launched at Karachi Stock Exchange, which is a joint venture between Arif Habib Dolmen REIT Management Limited, Arif Habib Group and the Dolmen Group.

The properties will generate rental income that will be distributed by the REIT Scheme among unit holders in the shape of dividends. Any possible appreciation in the value of the property will be an added benefit. Syed Murad Ali Shah, Advisor to Chief Minister for Finance, the Chief Guest at the event rang the Gong and said, “The launch of Dolmen City REIT is a matter of great pride for all of us, as this is not just Pakistan’s first REIT scheme but also the Subcontinents’.

I congratulate Arif Habib Dolmen REIT Management Limited and the Karachi Stock Exchange on this monumental accomplishment. A REIT is modeled after mutual funds and provides investors with regular income streams, diversification and long-term capital appreciation. I expect an enthusiastic participation from investors during the Book Building which is on the 8th and 9th of June and also from the General Public who can participate in the IPO on the 12th of June.”

Riaz Haq said...

Pakistan’s consumption up 8%, but exports fall
While Pakistan’s cement industry recorded strong domestic growth of 8.07 per cent in cement consumption during May, there was also a steep decline in exports and the sector is not performing to full capacity.

The decline in exports during May was 26.13 per cent which led to an overall decline of 0.39 per cent in the cement despatches compared with May 2014.

A spokesman of the All Pakistan Cement Manufacturers Association (APCMA) said the cement industry was still operating below capacity despite almost 7.98 per cent growth in the domestic consumption during the first 11 months of this fiscal. He said overall decline in exports in the first 11 months of 2014-15 was 10.82 per cent that restricted the total growth in the industry to only 3.47 per cent.

Pakistan’s cement industry despatched 25.492Mt of cement for domestic market during July-May period of this fiscal against 23.608Mt despatched during the corresponding period last year, according to the APCMA.

The government has moved to protect the cement industry with its federal budget that has some direct and indirect incentives for the domestic cement industry for next FY15-16 (July – June), which will increase demands for cement in country.

Finance Minister Ishaq Dar said the duty on cement imports as "preemptive action" to promote the local industry and avoid cement dumping. The minster has proposed enhancement of duty on import of cement, rationalisation of tax structure for construction industry/ housing development, a significant rise of 27 per cent in Public Sector Development Programme (PSDP) allocation, a five-year tax holiday for establishing new manufacturing facility in northern province and reduction in corporate tax by one per cent are positive steps for industry.

However, the government also proposes increase in duty on import of coal. According to finance bill, coal attracts one per cent customs duty. Since all other fuels attract higher duty rates, it is proposed that customs duty on Coal be increased from one to five per cent. The industry will comfortably pass on PKR2.0/bag (US$0.019) -PKR3.5/bag (US$0.034) to end consumers.

Riaz Haq said...

In 'Best Hidden' Frontier Market, a Boom Signals a #Pakistan Revival. #Karachi via @business

Dwarfing the (Ghazi) monument today is a gleaming 62-story highrise, coming up right next door. The building is one of at least half a dozen projects springing up in the locality as developers from Dubai’s Emaar Properties PJSC to local tycoons change the face of Pakistan’s financial hub and the skylines of many smaller towns.
The construction boom also marks the nation’s emergence as a frontier market after Prime Minister Nawaz Sharif averted a balance-of-payments crisis with help from the International Monetary Fund and resumed selling stakes in state companies. He is boosting infrastructure spending as the $232 billion economy expands at the fastest pace since 2008 amid the cheapest borrowing costs in 42 years.
“It is the best, undiscovered investment opportunity in emerging or frontier markets,” said Charlie Robertson, London-based chief economist at Renaissance Capital Ltd. “What’s changed is the delivery of reforms -- privatization, an improved fiscal picture and good relations with the IMF.”
Shrugging off sectarian violence, bombings, killings and kidnappings, the benchmark KSE100 stock index has advanced about 16 percent in the past 12 months, featuring among the world’s top 10 performers.
D.G. Khan Cement Co., controlled by billionaire Mian Muhammad Mansha, and Cherat Cement Co. have announced expansion plans, while steelmakers are selling shares.
Steel IPOs
Amreli Steels Ltd., the nation’s biggest maker of steel bars used in construction, is planning a share sale to help double capacity. Mughal Iron & Steel Industries Ltd. completed an initial public offering in April.
Pakistan’s cement industry has rallied 57 percent in the past year, more than triple the gains by the benchmark, according to data compiled by Bloomberg. D.G. Khan Cement, the third-largest maker of the construction material, has jumped 62 percent and Maple Leaf Cement Factory Ltd. has surged 161 percent and Fauji Cement Co. Ltd. has gained 81 percent.
“The construction industry is seeing a boom, and there is still juice left in the cement rally,” said Mir Muhammad Ali, chief executive officer of UBL Fund Managers Ltd. that handles about 56 billion rupees ($550 million) in stocks and bonds in Karachi. “Overall economic improvement has also helped.”
Violence, mostly from Taliban-linked insurgents who want to impose their version of Islamic law, has claimed more than 60,000 lives since 2001. Sharif survived a scare last August when opposition parties demanded his resignation over accusations he rigged the elections in 2013. He denied the allegation but agreed to a probe by a tribunal.
Standing by Pakistan is the nation’s long-time strategic ally. In April, Asia’s biggest economy, China, signed deals for $28 billion of investments in Pakistan as part of a planned $45 billion economic corridor that includes power plants and dams.
The development in cities and smaller towns is trickling down and is good news for smaller contractors as well .
“Business has been very good, and there’s no doubt my work has tripled in five years,” said Mohammed Hassan Bakshi, 43, a builder in Karachi. “There’s huge demand from the middle class for affordable housing.”
Builders in Pakistan are seeking technology from China to help cut down construction and project execution times to as little as six months from as long as five years, he said.
The nation’s construction sector grew by 11.3 percent in the year through June 2014, almost double the 5.7 percent target, according to central bank data. Pakistan is a reform story like neighboring India’s, but only better, said Renaissance’s Robertson.
“All of this is a big change on 2013,” he said. “Credit rating agencies are beginning to recognize this.”

Riaz Haq said...

#Pakistan real estate Boom: #Karachi and #Islamabad markets record gains …

When prices of real estate stagnated in 2014, all eyes were focused on the next year with hopes that it would bring along some momentum in the market. Truly, the much-needed activity emerged, though in part, in the first half of this year.

In almost all popular localities in Karachi and Islamabad, property prices went up over the six-month period from January to June 2015, showed data released by, a property portal of the country.

Lahore, however, continued to record sluggish activity with prices remaining static this year as well. But this is not a worrying sign. The property market of Lahore often slows down when investors pay more attention to real estate developments in the country’s capital as well as in Karachi.

In an encouraging development, several new projects are on the cards in Lahore, including the 60,000-kanal LDA City and the 40,000-kanal DHA Phase IX. These and other projects are widening the scope of investment opportunities in the city, which will help steady the property market in the long run.

In the first half of 2015, one of the top localities in the city, Lahore Cantt, registered a decline of 9.29% in prices while real estate markets in DHA Lahore, Bahria Town and LDA Avenue-I remained stable.

Average price for a one-kanal plot went down only 1.02% in DHA Lahore in the first half whereas in Bahria Town the same plot cost 3.26% more over the same period.

Similar stability was noted in LDA Avenue-I, where average price for a one-kanal plot edged up a negligible 1.05%.

Though Johar Town continued to offer one of the highest rental yields at 4.26%, DHA Lahore and Lahore Cantt remained the more expensive neighbourhoods. On average, a one-kanal house in the localities cost Rs36 million and Rs37.5 million respectively.

Here, three of the four popular localities recorded decent gains in the first half, with Bahria Town the only top locality posting a slight drop in property prices. In comparison to the miserable second half of 2014, this was a good turnaround for the real estate market in the capital.

A moderate growth was noticed in Sector F-11 and DHA Islamabad as prices of one-kanal plots rose 6.05% and 6.96% respectively. There was also a modest growth of 6.39% in plot prices in Sector E-11.

Bahria Town, however, remained stable with a slight dip of 1.20% in one-kanal plot prices in the first half of the current calendar year.

Sector F-11 was one of the most expensive areas for buying one-kanal houses in Islamabad with an average price of Rs68.2 million. It was closely followed by Sector E-11 where average prices were Rs62.9 million for a one-kanal home.

However, Bahria Town, despite a slight dip in average prices, offered a high rental yield at 4.35%.

With investor focus squarely on Karachi for several months now, the city’s top localities have seen decent rises in prices as well as hectic activity in the first half despite Ramazan and a deadly heatwave.

Gulshan-e-Iqbal and DHA City Karachi recorded handsome price increases whereas DHA Karachi and Bahria Town also posted healthy gains to play their part in a very encouraging overall performance.

Prices of a 500-square-yard plot in DHA Karachi showed a restricted – by Karachi standards – growth of 6.09% while Bahria Town posted a healthy rise of 9.85%.

Prices went up 12.36% in Gulshan-e-Iqbal and 12.23% in DHA City Karachi, indicating a satisfactory and controlled growth.

DHA Karachi was one of the costliest neighbourhoods for buying homes with average sale price of Rs58.9 million for a 500-square-yard house.

Though Gulshan-e-Iqbal offered a relatively higher rental yield at 5.01%, average house prices stood at Rs37.4 million in the locality, well short of the prices prevailing in DHA Karachi.

Riaz Haq said...

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.

Riaz Haq said...

Goldman Sachs Bullish on #Pakistan, #Vietnam, #Philippines, #India. #EM #FM … $EEM $PAK $VNM $VNMHF $VCVOF $INDY $EPHE

Vietnam, Pakistan, The Philippines, and India are superior destinations for investment in Asia.

A rebound in copper prices provides opportunity for Chile, which has a strong banking industry and is achieving moderate growth.

Nigeria and Colombia should be considered as options to profit from a recovery in oil prices.

I am extremely bullish on frontier and emerging markets, which have quite frankly taken a beating in some areas. Filtering between what is good value in emerging markets provides ample potential, and this is achieved both through the selection of superior countries and superior funds or companies in these countries. Investors should generally only focus their attention on frontier and emerging markets with high growth and low FX losses, and consider the superiority of actively managed funds, which are able to outperform ETFs. Fundamentals are superior to price movement, and the irrational loss of investor confidence in emerging markets has created a large number of buy opportunities. Investors negative sentiment towards a country is fortunately not able to deter the strong economic growth of countries and the high earnings of international companies. The economic and earnings growth both present the ability for investors to construct a portfolio that is good value despite volatility, and to profit if willing to take a long term horizon.

The iShares MSCI Emerging Market ETF (NYSEARCA:EEM) has had a YTD loss of 10.59%, yet using this fund's performance as a representation drastically relegates the potential of emerging markets, as there are certainly superior approaches towards investing in emerging markets. One fund can certainly not represent an emerging market, and each emerging market has a strategic buy and sell time, due to the strong volatility and varying factors that are causing the funds to drop. Therefore, I respectfully suggest the most superior way to capture the growth of emerging markets is to buy into several funds or companies, and to choose actively managed funds when possible.

Riaz Haq said...

Improved Security Situation Drives Property Boom in #Karachi #Pakistan. 22% jump in prices #KarachiOperation

Anyone who bought property during the bloody carnage in Pakistan’s biggest city over the past few years is now cashing in.
Property prices are growing faster in Karachi than in any other major Pakistani city this year as the streets become safer following a security blitz that began in September 2013. Police have counted 68 murder-free days from August 2014 until early December, and the average number of daily killings has dropped to four from about seven.

“Karachi’s market, especially, has us on the edge of our seats,” said Zeeshan Ali Khan, chief executive officer of, which claims to run Pakistan’s largest property website. Sales have “grazed peak after peak” following the security operation, he said.
The safer streets reflect efforts by Pakistani authorities to clamp down on terrorism and organized crime that has deterred investment. More commerce in one of the world’s fastest-growing megacities will also help the national economy: Karachi generates about half of Pakistan’s tax revenue and is home to the country’s stock exchange and central bank.
“Now people have hope things will get better, and Karachi is the place they should be investing,” Arif Habib, chairman of Karachi-based conglomerate Arif Habib group, said in a Dec. 7 interview. “One year ago people were concerned to invest in their businesses in such a situation, or even expand.”
22 Percent Jump
Average property prices in Karachi increased 22 percent to 7,234 rupees ($70) per square foot in October compared with a year earlier, according to By contrast, real estate prices rose 14 percent in Lahore and fell 5.5 percent in Islamabad, the capital.
A reduction in extortion is helping to drive demand in middle-class neighborhoods of Karachi, according to Faraz Arif, head of research and marketing at Arif Habib Dolmen REIT Management Ltd. Previously, some potential buyers would have to pay about 20 percent of the purchase price to gangs in cash, he said.

“For them the difference is significant," Arif said in an interview. “Now those people are more confident.”
Pakistan’s economy is forecast to expand 5.5 percent, the most in nine years, as Prime Minister Nawaz Sharif and a more assertive army chief take steps to tackle power shortages and Islamic militancy that have held back growth. His government is also seeking to narrow the fiscal deficit and sell stakes in state-run companies to meet conditions on a $6.6 billion International Monetary Fund loan.
Army Chief
Better security in Karachi is key to Pakistan’s long-term growth prospects. The city once served as the base for Khalid Sheikh Mohammed, the self-proclaimed mastermind of the Sept. 11, 2001, attacks in New York. Wall Street Journal reporter Daniel Pearl was murdered here in 2002. More than 13,000 people were killed in Karachi since January 2011 -- almost double the number of U.S. military personnel that died in the Iraq and Afghan wars.
While Nawaz Sharif’s government authorized the police in Karachi and paramilitary forces to clean up the city, much of the credit for the improved security has gone to army chief Raheel Sharif, no relation to the prime minister.

Since Taliban militants killed more than 130 students at a military school last December, the military has stepped up a campaign to flush them out of areas along the Afghan border. In Karachi, authorities have also gone after criminal gangs and political parties in a bid to stop turf wars that fomented the violence.
Muttahida Qaumi Movement, Karachi’s biggest political party known as MQM, has accused security forces of targeting its members instead of militant groups like the Taliban and Islamic State.
Outlook Mixed
“The operation should be focused on them," said Aminul Haq, an MQM spokesman. He added that his party was the first to support the crackdown and fully respects the army, paramilitary forces and police.

Riaz Haq said...

#Pakistan #cement sales surge 15.6 percent in July 2015 to Jan 2016. #CPEC #Economy via @sharethis

The data showed that local cement sales surged 15.57 percent to 17.9 million tons in July-Jan 2015/16. However, cement exports slid 24.98 percent to 3.4 million tons.

Cement manufacturers expressed dismay over the indifference shown by the economic planners towards rapidly declining exports.

“Substantial reduction in exports has drastically affected foreign exchange earnings of the country and cement makers are finding it difficult to maintain their existence in the export markets due to high cost of doing business in Pakistan and non-availability of incentives,” said APCMA spokesman.

In July-Jan 2015/16, factories located in north dispatched 14.776 million tons in local markets as against 12.948 million tons in July-Jan 2014/15.

The south-based factories registered a 23 percent growth in domestic sales in the period under review as their local sales stood at 3.12 million tons as against 2.53 million tons earlier.

The north-based mills registered a 22.35 percent decline of exports to 2.16 million tons in the first seven months of this fiscal year. South-based cement manufacturers recorded 29.17 percent exports fall to 1.243 million tons.

The industry dispatched 3.085 million tons of cement in January compared with 2.898 million tons dispatched in the same month a year ago, showing a growth of 6.47 percent.

Again this was mainly attributed to healthy domestic sales. In January, the local sales were 2.699 million tons as against 2.419 million tons earlier, up 11.54 percent.

In January, exports dropped to 386,562 tons from 478,000 tons in the same month a year ago, showing a decline of 19.19 percent.

The APCMA spokesman said despite several reminders on significant issues, which have been eroding export volumes, apparently no interest has been shown by the government to address them.

“Government must take immediate steps to stop smuggling of Iranian cement into the country,” he added.

He further said the government should also give due attention to reduce energy costs by removal of gas infrastructure development cess, reduction of custom duty on coal to zero percent and announcing additional incentive of five percent on cement export by sea in order to reduce the overall cost of operations to make the Pakistani cement industry competitive globally.

- See more at:

Riaz Haq said...

#UAE expats drive up house prices in #Pakistan as #Dubai real estate values fall 15-20% …

According to a Dubai ann­ual market update issued in mid-December, ave­rage residential property prices have fallen 16 per cent and 14 per cent year on year for apartments and villas, respectively, while overall unit transactions declined by 33 per cent.

A soft Dubai property market is encouraging Pakistan expatriates in the UAE to invest back home. This, in turn, is pushing up property prices in Pakistan, resulting in values almost doubling in some areas.

Higher demand, especially in Karachi and Islamabad, was driving prices higher on a daily basis, according to property brokers and developers quoted in a report that appeared on In contrast, residential prices in Dubai have fallen by up to 15 to 20 per cent in recent months.

According to a Dubai ann­ual market update issued in mid-December, ave­rage residential property prices have fallen 16 per cent and 14 per cent year on year for apartments and villas, respectively, while overall unit transactions declined by 33 per cent.

"Ample liquidity for property investment is pushing prices up everywhere, particularly in Karachi and Islama­bad," said Ashraf Hameed, the director of property developer Value Housing.

He cited closer monitoring of the cross-border movement of money and improved law and order situation as reasons behind the uptrend. "We have no problem of law and order in Islamabad while the situation in Karachi has also improved significantly," he added.

M. Anwar, a private investor in Karachi, said: "Property prices in Dubai have dropped 15 to 20 per cent in commercial and semi-commercial areas, and five to 10 per cent in posh areas."

Pakistanis have been among the leading investors in the Dubai property sector. Most of them were businessmen, politicians, government officials and those who migrated to other countries and shifted their property to Dubai for better returns.

Riaz Haq said...

Dailytimes | #Pakistan cement industry focusing on captive power generation plants & sell excess - via @Shareaholic

The cement industry of Pakistan is turning towards power generation, which would not only cater to their needs but would also supply electricity to the national grid.

The outlook for the Pakistan cement industry is positive with expansion expected over the next few years. Key reasons include improved sector fundamentals backed by higher demand, cost efficiencies driven by lower international coal prices and captive power generation reducing energy costs, capacity expansions and low to minimal risk of cement price destabilisation. As a result, cement demand is forecast to grow by at least eight percent over the next five years (FY16-21) on the back of an average GDP growth of 4.7 percent.

The Invest and Finance Securities Limited, while reviewing the performance of seven local cement companies, stated that on the flip side, weakening exports (16 percent of total cement dispatches during 9MFY16) and electricity/gas tariff hikes have marginally impacted the industry dynamics. As part of the China-Pakistan Economic Corridor initiative and an increased focus on infrastructure spending by the Pakistani government, around $44 billion in transport infrastructure and energy-related construction in the next 15 years - cement demand is predicted to be robust.

Pakistan currently has a cement production capacity of about 45Mta (with current capacity utilisation rates at 83 percent), which is expected to rise to around 52.5Mta
by FY19. Lucky Cement is setting up a 2.4Mta plant in Punjab, reflecting an investment of around Rs 21 billion. Acquisition of land and supplier confirmation is expected to conclude by the end of FY16. The expansion would take the company's existing capacity to over 10Mta. It would also bring a further 10MW waste heat recovery (WHR) power plant online by the end of 2016 besides expanding its international footprint in Congo and Iraq.

Meanwhile, DG Khan Cement is currently undertaking expansion in the southern zone with a 2.6Mta cement plant that is expected to come online in FY19. The company would also bring a 30MW coal-fired power plant and pursue further expansion in the south by FY18. Maple Leaf Cement, which has a cement production capacity of 3.4Mta in Iskanderabad District, Mianwali, is expected to bring a 40MW coal-fired power plant online by the end of FY17.

Fauji Cement Company's 3.4Mta plant is situated near Jhang Bahtar village, tehsil Fateh Jang, District Attock. The company started power generation from its 12MW WHR plant back in May 2015 and would reduce the cement producer's reliance on the national grid for its power supplies.

Cherat Cement Company Limited is currently carrying out a 1.3Mta expansion at its 1Mta plant at Lakrai Village, Nowshera. Following commissioning in FY17, the project would take the total nameplate capacity to 2.3Mt. In addition to its existing 6MW WHR plant, the company is undertaking installation of another 6MW WHR plant at its new production site.

Pioneer Cement Limited announced plans to install a 12MW plant at Chenki, Khushab, which would have an installed capacity of 2Mt. The company announced its plan to install a 12MW WHR plant at an estimated cost of Rs 1.5bn. The plant is expected to meet around 38 percent of the company's total electricity requirement resulting in enhancement of the margins.

Riaz Haq said...

#Pakistan #cement industry continues growth. Per capita consumption to rise from 147kg in 2015 to 250kg in 2020.

Pakistan’s cement industry will continue to grow over the next few years due to strong pricing power and contraction in supply and demand gap, a Topline Securities report said on Tuesday.

The capacity utilisation of Topline Cement Universe – a sample of cement companies listed on Pakistan Stock Exchange (PSX) – is likely to reach 96% in fiscal year 2018 from 78% in fiscal year 2015.

Gross margins of Topline Cement Universe will reach 47% by fiscal year 2020 (which were 34% in fiscal year 2015) while earnings before interest, taxes, depreciation, and amortisation (EBITDA) margins will reach 46% by fiscal year 2020 (34% in fiscal year 2015).

Resultantly, Topline Cement Universe’s profitability is expected to grow at 4-year (fiscal year 2017 to fiscal year 2020) Cumulative Annual Growth Rate (CAGR) of 24%.

Pakistan’s cement industry has entered into a new paradigm. The turnaround in macroeconomic fundamentals, mega projects under the umbrella of China-Pakistan Economic Corridors (CPEC) and booming private sector spending are accelerating local cement demand.

“We believe economic recovery will continue to bolster domestic demand. Based on past trend, we have applied a factor of 2 times to our average real GDP growth forecast of 6% during fiscal year 2017 to fiscal year 2020 in order to arrive at average local cement growth forecast of 12% during the same period,” the report said.

This should take per capita cement consumption of Pakistan from 147kg in fiscal year 2015 to 250kg in fiscal year 2020.

Major capacity additions of 19 million ton (42% of current capacity) worth around Rs192 billion are in pipeline (from fiscal year 2017 to fiscal year 2020) in Pakistan. “Despite these additions, we see no price war risk as additional capacities will easily be absorbed due to buoyant cement demand.”

The government in budget for fiscal year 2016-2017 has changed the federal excise duty (FED) on cement bags from variable 5% of retail price to fixed Rs50 per kg while duty on imported coal is reduced from 6% to 5%. “Thanks to strong pricing power, we believe that, the net impact of Rs33 per bag will be gradually passed on,” the report added.

However some developments can change the present scenario including price competition, imported cement, higher than anticipated rise in gas tariff, delay in construction projects and change in economic policy

Riaz Haq said...

A significant rise in infrastructure projects in the wake of China-Pakistan Economic Corridor (CPEC) is also expected to accelerate demand for iron, steel and cement.
“Imports of both steel scrap and steel products increased by 27.3 per cent and 30.1 per cent, respectively, during July-March FY16,” said the SBP report.
“The imports posted extraordinary growth despite imposition of anti-dumping duties for four months on import of cold-rolled coils and sheets from China and Ukraine,” said the report.

The country produces six million metric tons of steel per year, as per a report published by the State Bank of Pakistan (SBP).

This includes raw products, iron ore and scrap flat products, sheets and plates used in the automotive sector, and long products (steel bars, wire rods, rails, and structures used in infrastructure development, and tubes and pipes).

However, per capita steel consumption in Pakistan is very low at 23.5 kilograms against 58.6 kilograms in India, as well as the Asian average of 261.3 kilograms and the global average of 216.9 kilograms, the report added.

Riaz Haq said...

#UK company to invest $400 million to build #cement plant in #Pakistan. #CPEC #economy

UK company, Asian Precious Minerals (APML), is to build a new cement plant in Pakistan, according to local news reports, with an investment of US$400 million.

The plant is to be built in the province of Khyber Pakhtunkwha in the northwestern region of Pakistan. The investment was announced at a meeting between APML officials, the Chief Minister of Khyber Pakhtunkwha, Pervez Khattak, and officials from the British High Commission.

“We are delighted to be investing in a new cement plant in Khyber Pakhtunkwha,” said Nadim Khan, CEO of APML. “We look forward to constructing a model, state-of-the-art and environmentally friendly cement plant.

Khan also praised the provincial government for improving the security situation in Khyber Pakhtunkwha, which borders Pakistan’s tribal region and Afghanistan, as well as its “pro-business stance and good governance policy”.

“This British investment will help create local jobs and stimulate the local economy,” said Chief Minister Khattak. “I am glad to see that the UK recognises the dramatic improvements in the province and I look forward to welcoming more British companies in future.”

Pakistan’s cement sector is currently booming with utilisation rates at cement plants reaching over 90%, according to the All Pakistan Cement Manufacturers Association. In the six months to the end of 2016, cement shipments in the country grew to 19.896 million t on the back of local demand growth of 11.07%.

“Pakistan growth is being driven by the Economic Corridor with China (CPEC),” according to cement industry analysts, IA Cement.

“The CPEC allocates US$11 billion to infrastructure projects and US$35 billion towards new power projects and has already led to a strong double-digit growth in cement demand in 2016.In 2017, many projects will either reach completion or be in the full construction phase [and] we therefore expect another year of strong growth with cement demand rising 8 – 10%.”

Riaz Haq said...

#Pakistan: domestic demand for cement up 6.7% in Feb 2017. First 8-month FY17 domestic cement consumption up 9.12% …
Total cement sales in Pakistan in February 2017 were 3.435Mt, down by 0.41 per cent from 3.449Mt during the corresponding month of last year, according to the All Pakistan Cement Manufacturers Association (APCMA).

Domestic cement sales reached 3.181Mt, up 6.7 per cent YoY. While domestic sales rebounded in February, exports saw a 45 per cent drop. Exports reached 0.254Mt, representing a 45.7 per cent fall when compared with February 2016.

On cumulative basis, during the first eight months of the fiscal year the country dispatched 26.339Mt cement, showing an overall growth of 6.4 per cent over the corresponding period of last fiscal. During this period the domestic consumption increased by 9.12 per cent, but exports declined by 8.54 percent.

APCMA once again urged the government to take effective steps to stop the penetration of Iranian cement in Pakistani markets on the strength of significant under-invoicing and misdeclaration. A proper vigilance and accountability system needs to be put in place to stop cement smuggling into the country. Government should also increase import duty for import of clinker and cement to protect the local industry, said APCMA.

Riaz Haq said...

#Pakistan #cement capacity reaches 47 million tons. Utilization at 87% with shipments at 41 million tons. #CPEC

The capacity utilisation of the cement industry was high at 86.46 percent in July 2017, while the annual cement despatch capacity of the industry has increased to 46.94 million tons.

Local dispatches from units based in northern region of the country were 2.423 million tons while their export despatches were 0.338 million tons in July 2017 as opposed to 1.516 million tons local and 0.306 million tons export despatches in July 2016. The turnaround after a dismal performance in June 2017 took the industry by surprise and the sharp increase in despatches in July 2017 revived hopes for the sector. The despatches were achieved despite political turmoil in the country and unprecedented rains throughout the country which depicts the maturity of the construction sector of the country. South based mills also recorded a growth in local despatches which increased from 0.352 million tons in July 2016 to 0.483 million tons in July 2017; whereas, exports took a hit going down to 0.138 million tons from 0.159 million tons in July 2016. A spokesman of All Pakistan Cement Manufacturers’ Association said that the despatch figures for July are most encouraging. However, he said that this does not mean that the economic planners ignore the genuine difficulties faced by this sector.

He said the industry is performing in stiff regulatory environment and is only surviving because it has upgraded its technology that has provided it the strength to take any challenge head on.

Riaz Haq said...


With the commissioning of a new factory for mortar products and concrete admixtures, Sika has expanded its manufacturing capacity in Pakistan and is responding to the country's construction boom. Demand in the infrastructure and residential construction segments in particular is enormous. With its rapidly growing population of over 200 million, Pakistan is one of the world's most populous countries.

The new factory for concrete admixtures and mortars is located in Pakistan's second biggest city - Lahore, in the north of the country and one of the world's largest metropolitan regions. With the new investments and the simultaneous relocation of an existing mortar manufacturing facility from Lahore to Karachi in the south of the country, Sika is creating the basis for future growth in a booming market. It is estimated that the construction industry in Pakistan will grow on average by 12% a year between now and 2020.

Ivo Schädler, Regional Manager EMEA: "Our expansion of local production capacities is in response to existing bottlenecks. The new facility in the north and the expansion of our location in the south will enable us to continue to grow significantly faster than the construction market in Pakistan, and hence to strengthen our competitive position thanks to local production. Our focus in Pakistan is on the Concrete, Refurbishment and Flooring target markets, in which we want to continue driving forward our business activities."

Riaz Haq said...

Construction sector records impressive 9% expansion

The construction sector has once again posted a strong growth of 9% in the outgoing year, lower than the 14.6% increase in 2016, but much higher than the average growth of the past five years, according to the Pakistan Economic Survey 2016-2017.

Excluding the exceptional growth of 2016 and 2017, the average growth in the construction sector up to 2015, since FY12, was just 4%. Construction industry officials believe the recent growth is encouraging for the industry as well as the country because this will create new jobs.

According to government estimates, construction-related activities will gain further momentum on the back of increased public sector development spending coupled with infrastructure and power sector development projects under the China-Pakistan Economic Corridor. The construction sector contributes 2.4% to Gross Domestic Product, according to government assessments.
The robust construction activities also led to an increase in demand for steel and allied products, according to the survey.

“Cement growth derived from robust domestic demand, which allowed manufacturers to enhance their capacity utilisation. The outlook is encouraging on account of firm demand due to flourishing housing schemes and rising development spending along with anticipated CPEC-related projects,” it added.

Govt may withdraw special income tax

Despite extraordinary growth, the government is upset as it did not achieve its tax collection target from the sector in the outgoing fiscal year. “It is true that we could not collect the targeted amount from the real estate sector in this year,” said Finance Minister Ishaq Dar on Thursday.

However, he said that tax collection increased after the implementation of the new property valuation methodology by the Federal Board of Revenue in 2016.

Dar also said that construction industry officials requested the government to gradually implement the new tax regime, otherwise it could hurt the current high growth of the industry. Revenues from the construction sector dipped to a meagre Rs112 million in the outgoing fiscal year against conservative official annual estimates of Rs8 billion.

The representatives of builders and developers committed to tax authorities that the industry would pay up to Rs28 billion in income taxes under the new final tax regime, which was implemented in mid-2016.

Riaz Haq said...

Cement sales touch record high at 4.2 million tons in October

By Our CorrespondentPublished: November 4, 2017

Propelled by demand from new infrastructure projects in the country, overall cement sales touched a new peak at 4.222 million tons in October 2017, up 19.71% from the offtake of 3.526 million tons in the same month of the previous year, according to statistics released by the All Pakistan Cement Manufacturers Association on Friday.

Total sales in the first four months (Jul-Oct) of fiscal year 2017-18 reached 14.570 million tons, which was 16.53% higher than dispatches of 12.503 million tons in the corresponding period of previous year.

The increase came from the surge in domestic demand, though exports stood unimpressive and dropped 16.16%.
Domestic cement consumption rose 25.61% to 3.779 million tons in October 2017 whereas exports continued to decline as they went down 14.55% to 0.443 million tons.

“Higher cement consumption in the country is a sign of growing economy that is having positive impact on over three dozen industries connected with the construction sector,” an association spokesman commented.

However, he said exports were below par which was a cause for worry because the industry still had idle capacity. “Almost all the decline in exports is via sea; shipments to India have also been affected but not to that extent,” he said.

The spokesman pointed out that demand in the north zone stood surprisingly very high as consumption in the region hit 3.148 million tons in October 2017. “It is for the first time that the north zone has consumed more than three million tons in a month.”

In October 2016, the consumption in the north zone totalled 2.489 million tons.

Cement demand in the southern region increased from 0.519 million tons in October 2016 to 0.631 million tons in October 2017.

Owing to the robust growth in domestic cement consumption in the first four months of FY18, the industry utilised over 93% of installed capacity.

“This is the highest capacity utilisation in the past 20 years, however, 1.08-million-ton capacity is still sitting idle,” he said, suggesting this could have been consumed by exports had government policies been export-friendly.

He cautioned that higher cement consumption did not mean economic planners should ignore the challenges faced by the industry.

Among the challenges, he cited the country’s tough regulations and said the industry was surviving because it had upgraded its technology that provided the strength needed to take any challenge head-on.

“Our quality is the best in the region. No cement can compete with Pakistani cement if imported at real and fair value after paying all levies. However, weak border controls and lax customs vigilance allow cement from across the border at unfair valuations,” he added.

The spokesman asked the government to cut the rate of excise duty in order to give a further boost to demand. Similarly, the duty on coal imported by the sector should be brought on a par with other sectors.

Riaz Haq said...

Cement sales likely to post 8-year high growth of 14 percent in FY2018

Local cement sales stood at 40.8 million tons in the last fiscal year, while its exports marginally rose 0.9 percent to 4.7 million tons, bringing the total cement dispatches 12.9 percent up to 45.5 million tons.

“Growth in local and export dispatches fared better… thanks to higher infrastructure demand from CPEC- (China-Pakistan Economic Corridor) related projects, real estate construction activities across Pakistan and increase in exports from Lucky Cement and Attock Cement new cement lines that came online in 2HFY18,” analyst Nabeel Khursheed at Topline Securities said in a report.

“Moreover, due to expected increase in competition in south region owing to upcoming capacities, players are tapping into new export markets that also supported export growth.”

Khursheed said construction sector reported nine percent growth in FY2018, which was in line with the last 5-year average growth rates.

“This was on the back of economic recovery and booming real estate sector. Credit to construction sector as of May 2018 stood at Rs156 billion, up 21 percent,” he added. “After being in the doldrums in 1HFY18 (witnessing average 16 percent year-on-year decline), exports recovered in the second half, recording stellar average growth of 37 percent thanks to higher exports from Lucky and Attock Cement’s new cement lines in the South region as well rupee devaluation.”

There are 24 cement manufacturers operating in the country with Lucky Cement Limited having the biggest production capacity of nearly five million tons. Bestway Cement, Maple Leaf Cement, Attock Cement Pakistan, Kohat Cement Company are also the major producers with two to four million tons of operational capacity.

Industry utilisation stood at 95 percent in FY2018 as compared to 87 percent in FY2017, 85 percent in FY2016, 78 percent in FY2015 and 75 percent in FY2014.

“The utilisation this year will be a 2.5 decade high. The highest utilisation of 92.7 percent was recorded in FY1996,” Khursheed said.

The analyst said pricing remained a big concern for the industry despite outstanding domestic consumption during the year. Cement industry shed 42 percent during the last fiscal year due to rising input cost and increase in production capacities.

“Producers’ ability to pass on any hike in input cost (higher coal prices and rising transportation cost due to increase in international oil prices) going forward will depend on growth in local demand,” he added.

Cement prices in northern region averaged Rs529/bag in FY2018 versus Rs534/bag in FY2017. Cement prices in the northern region started to decline as low as Rs496/bag on an average after August last year. But, prices posted a recovery after March when cement makers passed higher coal cost and impact of federal excise duty on to consumers. Khursheed said free-on-board ‘Richards Bay’ coal prices increased 20 percent to $93.6/ton in FY2018. It is currently hovering at around $104.25/ton.

“If coal prices remained at this level, manufacturers may find it difficult to pass on the cost owing to upcoming cement capacities.”

In June, cement sales are likely to fall 30 percent month-on-month and rise three percent year-on-year to 2.5 million tons due mainly to Ramazan and Eid holidays. Cement exports, however, are expected to decrease 10 percent month-on-month and increase 10 percent year-on-year.