Sunday, 12 February, 2012

Interview: FICCISecretary, Dr RajivKumar Page 23

profit.com.pk

KARACHI

ISMAIL DILAWAR

T erming financing ofcountry’s fiscal and externalcurrent account deficits as abasic challenge, the central

bank Saturday kept the discount rateunchanged at the pre-2008 level of 12per cent to revive business confidencein the crises-hit country. State Bank, declared achievement of thebudgeted rs1.952 trillion tax collectiontargets as “ambitious” and projectedthat the fiscal deficit was difficult to bearrested at revised target of 4.7 per centand was likely to swell beyond 5.5 percent of the gDP by the end of FY12.Citing provisional estimates, the centralbank said the fiscal deficit for H1-FY12,from the financing side, showed adeficit of rs532 billion or 2.5 per cent ofgDP. given that the fiscal deficit wasalways higher in the second half of afiscal year, at least by 0.5 per centduring the last 10 years, containing theFY12 fiscal deficit close to thegovernment’s revised target would bedifficult. The regulator said given asteady flow of workers remittances, theexternal current account deficit isexpected to remain in the range of $3.5billion to $5.5 billion, or 1.5 to 2.4 percent of gDP, by end-June. “CentralBoard of Directors of State Bank ofPakistan (SBP) has decided to keep theper cent policy rate unchanged at 12 percent,” governor SBP, Yaseen Anwar,announced here at SBP while unveilingthe monetary Policy Statement for thenext two months.Projecting the backbreaking inflation(average) to remain in double-digit,ranging from 11 to 12 per cent, for thecurrent fiscal year, SBP governor saidthere were indications of underlyinginflationary pressures in the economyon account of non-food CPi items.Suggesting the medium TermBudgetary Framework (mTBF) asimperative to check the persistent pricehike, Anwar said, energy-shortagesrelated uncertainties would have to belessened to ensure a sustainableeconomy recovery in the country.“it must be emphasised that sustainableeconomic recovery over the mediumterm would call for a sizeable increasein both the domestic and foreign privateinvestment in the economy. For this tohappen, the businessconfidence needs tobe revived by

reducing

uncertainties due to energy shortages,”the governor said. Against thisbackdrop, he said, SBP’s central boardconsidered the early rate cuts of 200basis points to be appropriate. Aboutthe financial deficits on the domesticand external fronts, Anwar said, the sizeof these deficits may not be consideredlarge, given the current state of fallingprivate sector investment demand inthe economy. A reflection of overall lowaggregate demand could be seen in thedeclining inflation trend, contraction inthe real private sector credit, and fallingvolume of imports.According to SBP governor, lack ofdiversified and sustainable financingsources had resulted in substantialgovernment borrowings from thebanking system and declining foreignexchange reserves. “This has squeezedthe availability of credit for the privatesector and increased the pressure onrupee liquidity.” SBP, he said, had beenproviding substantial liquidity onalmost permanent basis, on averagers230 billion during 1st July–9thFebruary 2012, to ensure smoothfunctioning of the payment system andavoid financial instability.“The continuation of this trend,however, carries risks for effectivelyanchoring inflation expectations in themedium term,” he warned.The uncertain market liquidity flowshave lead to excess volatility in shortterm interest rates and increased thechallenges of monetary management.The main reasons for this uncertaintyinclude, a sharper deterioration in theexternal current account deficit, adeclining trend of foreign inflows, and ahigher currency to deposit ratio.However, other market interest rates,such as KiBOr and Weighted AverageLending rate (WALr), have largelyfollowed the policy rate reductions.A declining interest rate environmenttogether with a relatively better growthin Large-Scale manufacturing (LSm) isexpected to help the pickup in privatesector credit. The LSm sector grew by1.5 per cent during July-november,FY12, which is in contrast to an averagecontraction of 3.1 per cent during thesame period of last three years.moreover, credit to the private sectorhas expanded by rs238 billion during1st July–3rd February, FY12.However, to assess itslikely path, few pointsneed to be kept inmind. First, given the

continuingenergy

shortages, unfavourable law and orderconditions, and an uncertain politicalenvironment, the desired boost inbusiness confidence and thus privatesector credit may not take place.Second, profitability of the textilesector, a major user of private sectorcredit, was better in FY11 due to highercotton prices. This would facilitaterepayments or keep the demand forfresh credit to a minimum in FY12.Third, the utilisation of installedindustrial capacity is considerably lowand continues to decline, which isinhibiting credit demand for fixedinvestment. Fourth, all of the freshcredit disbursement in H1-FY12 wasutilized to meet the working capitalrequirements, which implies that asignificant part of this credit will beretired in H2-FY12. “Thus, the full yearexpansion in credit to the private sectoris expected to remain weak for yetanother year in FY12 despite interestrate reductions,” said the governor. Hesaid its year-on-year growth wasalready negative in real terms andindicated depressed private investmentdemand in the economy. in addition,the governor said, given substantialgovernment borrowings from thescheduled banks together with risingbad debts, the banks were likely tocontinue to avoid lending to therelatively risky private sector.Citing provisional data, he said thegovernment had borrowed rs444billion from the banking system during1st July–3rd February to finance itscurrent year’s fiscal deficit.This includes rs197 billion borrowedfrom the SBP and show a year-on-yeargrowth of 25.8 per cent.moreover, he said, these borrowingswere significantly higher than theyearly financing requirements ofrs293 billion envisaged in the FY12budget. About tax collections, SBPgovernor termed as encouraging theFederal Board of revenue’s collectionof rs840 billion during H1-FY12,showing a strong growth of 27.1 percent, and the announcement ofauctioning 3g licenses in thetelecommunication sector saying thesedevelopments could help countrycontain the potential fiscal slippages.“However, based on the seasonalpattern of tax collections, the full yeartarget of rs1952 billion still seemsambitious,” he viewed.At the same time, Anwar said, there

were indications that theissue

of circular debt in the energy sectorremained and losses of major PublicSector enterprises (PSes) continued toincrease. Thus, the likelihood ofslippages on the expenditure side onaccount of subsidies, over and abovethe budgeted amount, cannot be ruledout. The delay in these subsidypayments may have implications forresolving the circular debt issue. Aboutthe external sector, SBP governor said,the risks to external position had alsoincreased due to worsening terms oftrade, fragile global economicconditions, and continued paucity offinancial inflows.in addition, $1.1 billion werescheduled to be repaid to imF duringthe second half of FY12. SBP’s foreignexchange reserves had alreadydeclined to $12.2 billion as on 9thFebruary 2012 from $14.8 billion atend-June 2011. Similarly, the rupee-dollar exchange rate had depreciatedby 5.2 per cent in FY12, so far.Led by 33.7 per cent growth in importsof petroleum products on the back ofelevated international oil prices, totalimports have increased to $19.7 billionin H1-FY12. The volume of importsremained muted, which indicatesmoderation in domestic demandpressures. given the rising tensions inthe US-iran relations and politicaluncertainty in the middle east region,oil prices are unlikely to fallsignificantly in the near future and mayeven increase. “Therefore, despite lowvolumes, imports are projected to growin the range of 12.5 to 14.5 per cent forFY12,” he said. While the falling cottonprices played their part in sharper thanexpected slowdown in export receipts,$12 billion in H1-FY12, the volume ofexports had also declined considerably.“Assuming that these trends wouldcontinue in H2-FY12, export receiptsare projected to show a decline of 3 to 5per cent in FY12.” Projecting thecountry’s external current accountdeficit at $3.5 billion to $5.5 billion,SBP governor said, the possibility oflimiting the deficit to the lower boundof the range was mainly contingentupon the realisation of CoalitionSupport Fund, $800 million, and theproceeds from the auction of 3glicenses, estimated to be around $850million. “The real challenge is tofinance this projected external currentaccount deficit,” he added. The actualnet capital and financial inflows duringH1-FY12 was only $167 million, due tothe decline in both direct and portfolio

investments andshortfalls in

official flows.

Assuming that all the official flowscontemplated by the government arerealised–$500 million from theissuance of euro bonds, $800 millionfrom the privatisation proceeds ofPTCL, and budgeted loans frominternational financial institutions–thenet capital and financial inflows couldincrease to $3.8 billion by June, 2012.These fiscal and external developments,he said, had resulted in a skewedcomposition of monetary aggregates. inparticular, the increase in net DomesticAsset (nDA) component of m2 wasdisproportionately large while netForeign Assets (nFA) had contracted.given its strong correlation withinflation, the resulting increase innDA to nFA ratio was not awelcoming development, he saidadding the Year-on-Year growth in m2for FY12 was projected to be in therange of 12 to 13 per cent.The changing composition of m2required a careful interpretation. Forinstance, the deterioration in theexternal sector was mostly due toadverse terms of trade developmentsand uncertain official inflows and maynot be a sign of rising aggregatedemand. Similarly, the pressure onaggregate demand due to thegovernment borrowings from thebanking system was being partly offsetby the weak private investmentdemand. These conjectures weresupported by the decline in Year-on-Year CPi inflation to 10.1 per cent inJanuary, 2012. He said the averageinflation in FY12 would increase andwas expected to remain in the range of11 to 12 per cent, due to an increase inelectricity and gas prices, highinternational oil prices, impact ofexchange rate pass-through, increasein support price for the upcomingwheat procurement season, andsubstantial government borrowingsfrom the banking system. mTBF, hesaid, envisaged a systematic reductionin the fiscal deficit to 3.0 per cent ofgDP in FY14, by increasing the tax togDP ratio and stipulates inflationtargets of 9.5 per cent for FY13 and 8per cent for FY14. Decisive reforms inthe energy sector can also go a longway in achieving mTBF targets.These reforms would not only reducethe government’s reliance on thebanking system borrowings, but alsominimise the need to adjust theenergy prices in a sporadic andunpredictable manner.To sum up, he said, despite moderateaggregate demand, pressure on rupeeliquidity was likely to continue due touncertain foreign inflows andsubstantial government borrowingsto finance the fiscaldeficit.

SBP keeps policy rate unchangedg 12 per cent discount rate kept to revive business confidence

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news22Sunday, 12 February, 2012

Pakistan suffers trade deficit with 81 countriesISLAMABAD: Pakistan has suffered a trade deficit of$11.4 billion during July-December period of the currentfiscal year as it faced a trade deficit with 81 countriesincluding the world leaders, like China, Japan and Koreaand also from developing countries like morocco, SouthAfrica, and Belarus. According to experts, the reason fortrade deficit with large number of countries, includingsome least developed, is the absence of engineeringexports, which has nearly 70 per cent share in theinternational trade each year. Pakistan’s exports mainlyconsist of various products of textiles that are largelyexported to USA, eU and Japan which were tapped in dueto the textile quotes before the advent of free trade era in2005. Textile exports increased significantly during thelast fiscal year due to the increase in commodity pricesbecause of the decline in the global cotton production.With higher international cotton yields, the advantage isover. Pakistan needs to invest in the value added sectorand look for markets in Asia and Africa as presenteconomic crisis in eU and US will not help in increasingtextile exports. The government is trying to diversify itsexports, but without developing the huge domesticmarket, its efforts would not yield desire results, as locallysuccessful products and brands could easily make it tointernational markets. Successive governments havefailed to promote the most potential agricultureprocessing industry, as large quantity of fresh vegetablesand fruits could be exported in the food deficient middleeastern countries. Similarly, process grains could beeasily exported to middle east, iran, Afghanistan andCentral Asian States. The meat and dairy sector remainsanother untapped market, whose packed products couldbe exported from a region expanding from east Asianstates to north African states; majority of which are meatand dairy deficient and have huge demand for meat anddairy products, experts said, adding that introduction ofhalal certification could have an catalyst effect to boosttheir exports. Pakistan’s exports of leather, sports goodsand surgical instruments have declined during the last fewyears mainly because of the non implementation ofinternational quality standards and introduction ofcutting edge technologies for processed goods adoptedelse where in the world. IRFAN BUKHARI and AMER SIAL

Kisan Board demands Cane Procurement Receipt statusLAHORE: Kisan Board Pakistan (KBP) has demandedgiving Cane Procurement receipt (CPr) status ofcheque to save the sugarcane growers from theinjustices of sugar mill owners. it also urged thegovernment to ensure payment by mills to the sugarcanegrowers within 15 days of sale of the cane under CaneAct besides abolishing deduction on weight ofsugarcane. These demands were made by KBP generalCouncil which met here on Saturday to discuss theissues faced by the agricultural sector and growers andrecommended a set of proposals for resolving thesehardships hampering the growth of agriculture. Themeeting was chaired by KBP Central President SardarZafar Hussein Khan and was attended by the growers’leaders from all provinces. The meeting also demandedabolishing the permit system for sugarcane growers andconstruction of shed outside sugar mills to save farmersfrom weather related problems. it also demandedprovision of first aid facilities at these sheds. KBPgeneral Council claimed at least five million people inthe country were facing food shortage and Pakistandespite being an agricultural country was headingtowards food crisis. it said poverty incidence wasincreasing day by day and these issues could only becontrolled by improving the production of agriculturalsector. However, it regretted that growth in agriculturalsector remained almost nil from 1999-2011, while in theyear 1949, agriculture had a share of 53 per cent in thetotal gDP. The meeting also demanded that the fertilisermanufacturing companies should be directed to printprice of the fertiliser on each bag, to ensure provision ofnatural gas to these companies and launch aninvestigation into alleged wrong-doings, with regard toimported urea in national Fertiliser marketing Limited(nFmL). STAFF REPORT

Pakistan, India fail to develop consensus on opening trade gateLAHORE: Both india and Pakistan could not developconsensus on opening dedicated trade gate at Wahgaborder. neither Pakistani authorities, nor the indiangovernment issued directions yet, Profit, learnt onSaturday. Speaking to media at The india Show, Federalminister for Commerce makhdoom Amin Fahim alsoindicated that the opening of dedicated trade gate atWagha Border was not yet cleared, as construction workwas underway. it is worth mentioning here that the softopening of dedicated trade gate at Wagha border forbilateral trade between india and Pakistan wasscheduled on monday, February 13, 2012. indianCommerce minister Anand Sharma, along with adelegation of 100 CeOs of top indian companies, hasalso been scheduled to visit Pakistan on February 13.earlier, it was planned that both commerce ministerswould grace the historic event, but now it had beendelayed as both sides were not prepared. STAFF REPORT

ISLAMABAD

AMER SIAL

THe government has decidedto expedite construction ofthe double circuit 500 kVtransmission line between

Thar matiari which is expected to costaround rs20 billion, but will allow theinterconnection of Thar coal based1200 mW engro Power Plant with thenational grid by 2016.

An official source said the projectis expected to be approved at the up-coming Central Development Work-ing Party (CDWP) meeting. PC-i ofthe project will be submitted to theplanning commission and the projectis likely to be financed with the assis-tance of China and Japan.

He said the government decidedto expedite the project, as it was in-formed that there was no way out of

the expensive thermal mix withoutenhancing the power generationfrom hydel and coal resources. Whilea few hydel projects were approved,there was no progress on the Tharcoal. The ministry of Water andPower was given a green signal tosubmit PC-i for the project whichwill be approved by CDWP.

The construction of transmis-sion line is necessary as Sindh engroCoal mining Company Limited(SeCmC), a joint venture betweenthe government of Sindh and engro,has completed the feasibility study.Without the transmission line, thecompany will face difficulty inachieving financial close, set for De-cember this year, he said.

Thar desert contains the world’sseventh largest coal reserves, totallingan estimated 175 billion tonnes of lig-nite grade coal. This is equivalent to

50 billion tonnes of crude oil, morethan iran and Saudi Arabia’s com-bined oil reserves. initially, SeCmCplans to develop a 6.5 million tonneper annum coal mine in parallel with1200 mW power plant, but the pro-duction capacity of the coal mine willbe enhanced to 22.5 mt/a to support4,000 mW of power generation ca-pacity for 70 years. in subsequentphases, chemical and fertiliser plantswould be set-up as part of a megapetro-chemical complex which wouldbe supported by additional coal min-ing. Coal mining and power genera-tion is estimated to start operation byDecember 2016.

The source said, Japan has alsoshown interest to finance the trans-mission line and has stressed estab-lishment of a power house. Japan hasbeen historically averse to coal powerprojects due to environmental issues,

but its stance dramatically changedafter the damage to the FukushimaDaiichi nuclear power plant bytsunami on march 11, 2011.

Keeping in view the possible evac-uation of 10,000 mW from Thar coal-field within next 10 years, nationalTransmission and Despatch Company(nTDC) with the support Asian De-velopment Bank funding has initiateda feasibility study for laying 1300 kmof transmission line to initially dis-perse up to 3000 mW from the Tharcoal field to the national grid.

Pakistan has huge coal reservesmainly in Sindh, estimated at 186 bil-lion tonnes, Punjab 235billion tonnes, Balochistan 217 billiontonnes, Pukhtoonkhwa 90 billiontonnes and Azad Jammu Kashmir 9billion tonnes. These coal reserves canbe used for affordable power genera-tion for about 200 years.

KARACHI

GHULAM ABBAS

PAKiSTAn Steel mills (PSm) which isgoing through severe financial crisis isalso losing local raw material

for manufacturing steel products due to itsduty free exports.As a large quantity of raw material is beingexported by the local producers without anyhindrance, PSm, the country’s only steelmanufacturing institution, is fast losing localsupply, forcing it towards further losses andlower production, sources told Profit.Citing reasons for the increasing exports ofraw material of steel products, they said as theexporters and producers are paid the price andother expenses by the importers without anydelay, they prefer to sale the products outsidethe country. Lack of any duty on exports of thematerial is another factor encouraging moreexports despite the fact that PSm was in dire

need of them under the present situation. Thefinically strapped organisation was nowdepending more on locally produced rawmaterial as it was unable to pay for hugeimports. “india has duty on the exports of thesame material, but in Pakistan the exportersare given a free hand to sale the valued rawmaterial,” they added.While the mill was currently being run onbelow 20 per cent capacity in view of theshortage of raw material, the decrease in localsupply could further force the mill towardsbillions of rupees worth losses in near future.According to sources, the management of PSmhas also requested the concerned authorities totake notice of the increasing trend of exports andcontrol it through imposing duty as done byindia to save the mill from further losses. For thelast three years, PSm was facing raw materialsshortage due to financial crisis. PSm needs coal,iron ore, fine and lump as raw materials whichare mainly imported from Canada,

Australia, germany, india, etc, for making steel.PSm sales and production were graduallydecreasing while loss was increasing because ofacute shortage of raw material and poorperformance of its plants. in order to bringback the mill to a profit giving organisation,sources said, PSm should be given the requiredbailout package besides controlling the exportsof raw material. PSm was facing loss of billionsof rupees. it has to pay off huge bank loans andgovernment taxes. it was, in fact, on the vergeof collapse and bankruptcy and if the rs10-12billion rupees bailout package was not given tothe organisation it was fared that theproduction level could reach to a mere 10 percent. Besides the shortage of raw material therewere many factors for the current crisis in PSmincluding, low capacity utilisation, liquiditycrisis, rise of cost of coal in the internationalmarket, mismanagement on the part of theadministration and political involvement andinterference from the government side.

Govt to expedite approval of Rs20b 500kVThar-Matiari electricity transmission line

PSM losing local raw material for manufacturing steel products

KARACHI

STAFF REPORT

FeDerAL Secretary ministry of Com-merce Zafar mehmood said it is hightime that the government should priva-tise, or outsource the agricultural re-

search and seed development programmes inorder to get maximum benefits for this much-ne-glected sector.

Similarly, the Utility Stores Corporationshould also be privatised for better supplychain scenario in the country, as they have ahuge spread and they will be of much help tothe farmer.

He said so being the chief guest at the Pak-istan Agri Conference held here in Karachi expoCentre on Saturday. While talking about theneed of revolution in the agriculture sector ofthe country, he said the government is spendinga lot on the agricultural research and seed de-velopment programmes since long, but nowthere is a need that the government should givethese programmes to the private sector formuch better outputs.

‘We have neglected value addition in the agri-culture sector, and agri extension series of theprovincial governments are not available to thepoor farmer,’ he said, adding that the role ofprovincial governments in agri exports is mini-mal. ‘The land records should be computeried andtraditional old system should be abolished, so thatthe farmer can spend his time on increasing pro-ductivity of its lands instead of tackling landrecord issues,’ he added.

‘Also, efficient infrastructure development inthe sector has also been neglected, and sincetoday’s world is very competitive i have been re-questing the provincial governments to go forvalue addition and provide the people with effi-cient infrastructure,’ said Zafar mehmood.

Another issue is the agri exports, for which weare not doing enough to get the maximum bene-fits, he said, adding that we still are not able to ex-port mangoes to Japan despite Japan’s plausibleassistance in this regard many years back. eventhe best Kinnows we have in Sargodha regionwere not being exported a few years ago, nowsome 150 latest processing plants have been es-tablished there by, the investors from Karachi,which have resulted in the forex of $100m for thecountry, he added.

Dr Ali Abbas Qazilbash of United nations in-dustrial Development Organisation (UniDO) inhis welcome remarks said that currently the or-ganisation is helping the country through directtechnical assistance and investment and technol-ogy transfer programmes. ‘Pakistan needs to havebetter productivity and value added products inthe sector through the use of latest technology,which can maximise the benefits of high value agriexports,’ he added.

A project Trade related Technical Assistance(TrTA) funded by european Union (eU) is meantfor the support of the country in the areas of agri-culture, fisheries, horticulture, etc, and will helpthe country to have access to the internationalmarkets, he added.

Dean and Director of institute of Business Ad-ministration (iBA) Dr ishrat Hussain while deliv-ering his keynote presentation titled ‘AgriculturalProductivity and economical Development’ saidthat at the time of independence, Pakistan had 75per cent labour associated with the agriculturalsector that was contributing 50 per cent to the na-tional gDP, now it has decreased to 40 per centand 20 per cent, respectively.

‘Through progressive production practices,wheat production in the country can easily wit-ness the growth up to 35m tonnes from the cur-rent production of 25m tonnes,’ he said, addingthat the issue that needs to be addressed include

inefficiently organised land markets (that resultin low production); distorted water market (theinfluential gets maximum water); unequal waterdistribution (the poor farmer has no water); non-liberal retail market; low preference to the agrisector; unavailability of quality certification meth-ods (strengthened quality assurance mechanismsto help both the consumer and the exporter), etc.

Chief executive Officer engro Foods Limited,Afnan Ahsan while addressing the gatheringtalked about the challenges and opportunities thedairy industry of the country is facing. He said thevalue of dairy component of the agriculture sectoris rs500bn which is 15 times higher than themango market, but it is not even in the thoughtprocess of the government policies.

He informed that the demand of the dairyproducts is continuously outpacing the supply, asthe industry requires 11 litres of milk from onecow, which is currently standing at 4 litres; there-fore, this gap has been resulting in a price in-crease. non-commercialised scattered farming isanother issue and adding to it is the export of 11per cent of our female breeding stockto Afghanistan, he added.

‘We are ranked at ninth among the world’sbackward countries that are facing quality issuesbecause in Karachi we have 12m bacteria count inone litre of milk, while in new Zealand, the countis 12 thousands per litre, therefore, we will neverbe able to export milk,’ said Afnan. The govern-ment has to establish a regulatory framework forthis industry, he added.

many technical experts, government officials,high ups of the private sector, scientists, develop-ment mangers of the sectors like sea food and fish-eries, Horticulture, grain & Cereals, meat &Poultry, Dairy, etc. participated in the conferenceand shared their knowledge with the attendees.

The Pakistan Agri Conference ‘AgriculturalCompetitiveness through Value Addition’ wassupported by the Australian Trade Commission,USAiD, United States department of agriculture,Overseas investors Chambers of Commerce andindustry, Federation of Pakistan Chambers ofCommerce and industry, Punjab government, andPunjab Board of investment and Trade, amongmany others.

‘Agri research, seed development,utility stores should be privatised’

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news

Sunday, 12 February, 2012

23

LAHORE

IMRAN ADNAN

I nDiA-PAKiSTAn relations are much biggerthan the trade and commerce between thetwo neighbouring country, but inefficientinfrastructure and militaristic concerns onboth sides of the border are major

impediments in smooth relationship.These remarks were made by the Federation ofindian Chambers of Commerce and industry(FiCCi) Secretary general Dr rajiv Kumar, whilegiving interview to a select group of journalists. DrKumar has come here to participate in the firstsingle country exhibition of indian products, ‘Theindia Show 2012’, which was inaugurated by theFederal minister for Commerce makhdoom AminFahim at Lahore expo Centre on Saturday. Dr Kumar was of the view that both countriescould save billions of rupees spent on account ofdefence and security, if trade relations betweenindia and Pakistan improve. “Both neighboursshould understand that these funds could be usedfor the development of masses,” he underscored.Both countries complemented each othermeticulously, he indicated, “in the period ofshortages, it is in their benefit to import goodsfrom each other as it is cost effective and theeasiest. in addition, once relations are harmonised,integrated production hubs can be set up at bothsides of the border. There is no harm if Pakistanproduces all cement and india produces someother products,” he stressed. responding to aquery, Dr Kumar said that both sides werenegotiating most favoured nation (mFn)agreement, but it could not produce resultsif port infrastructure remained inefficienton both sides of the border. Businesscommunity and media should press theirrespective governments to focus oninfrastructure development, otherwiseit was impossible to enhance tradevolume between the twoneighbours, hemaintained. He,however, pointedout that the mFnstatus wasnecessary togiveconfidenceto state

machinery at both sides. “right now, people sittingat border posts and Customs stations haveperception to discourage trade between india andPakistan. Both sides are not prepared to handleincreased volume of trade due to procedural andinfrastructure hurdles,” he maintained.Highlighting another hurdle in india-Pakistantrade, he underscored that Delhi and islamabadcould never help each other as people sitting inDelhi could not comprehend the potential of india-Pakistan trade, due to its smaller volume. Hebelieved that governments in Pakistani and indianPunjab had to increase liaison and dialog toenhance trade. He pointed out that Chandigarhwas a landlocked area that could benefit the most iftrade relationsbetweenindia and

Pakistan improved. He pointed out that currently ittakes some three days to clear a consignment fromWahga Border, when only 150 trucks were crossingborders. if the volume increased the facility wouldchoke down that would ultimately increase costand result in total loss. He said as things standlarge quantities of perishable commodities werebeing imported through Wahga Border but toliberalise trade both country had to open moreports. Answering a question, Dr Kumar said thatPakistani side had better infrastructure whereasindia could not develop infrastructure at Wahgaborder to facilitate trade. He underscored that non-tariff barriers (nTBs) was merely a buzz word, infact most hurdles had already been removed exceptinfrastructure. He indicated that visa issue had alsobeen addressed. in future, business communitywould get multiple-entry and multiple-city visas.He further said that everywhere in the world,governments issue one visa for the whole country,but in case of india and Pakistan, both countrieswere still stuck up at city specific visas. Bothgovernments needed to address this issue toliberalise trade by augmenting mutual trust, heunderlined. Answering another question, DrKumar said Pakistan was a big market of 180million consumers; if trade relations wereimproved india could get access to Central AsianStates. “i do not see any problem if both countries

move ahead with the same pace traderelations can normalise in two

years or so,” he added.Speaking about energy, hepointed out that inBathinda, gas pipeline wasthere if both countries hadgood relations Pakistancould import gas throughthis facility. “Tajikistanhave some 4,000 mWabandoned hydroelectric

capacity, if relationswere improved bothcountries could

benefit from thisopportunity.

india-Pakistanrelations’ramificationsare muchmore thantrade, it is

only a tip ofthe iceberg,”he concluded.

LAHORE

STAFF REPORT

F eDerAL minister for Commercemakhdoom Amin Fahim has saidboth indian and Pakistanigovernments are determined to

ensure normalisation of economic andtrade relations. The first single countryexhibition of indian products, The indiaShow 2012, is part of these efforts thatindicates that things are being put in theright direction.Federal minister was speaking at theinaugural session of The india Showhere at Lahore expo Centre on Saturday.Fahim said the government was wellaware of the reservations beingexpressed by certain sectors of theeconomy. He urged Pakistanipharmaceutical industry to bring downprices of locally manufactured drugs tocompete with their counterparts acrossthe border.Later, speaking to the press, federalminister said The india Show was just abeginning. Pakistan would reciprocateby showcasing, made in Pakistan Show,in india in the near future. Fahimadmitted that existing infrastructure atWagha border was inefficient to handlethe increased volume of bilateral trade.

However, he pointed out that thingswere improving gradually on both sidesand infrastructure development wasalso underway.He said discussions were underway forthree years multiple visas for thebusiness community. Stakeholders onboth sides of the border weredeliberating to remove obstacles in theway of smooth commerce and trade.However, he underscored that no hastydecision would be made.Federal minister avoided the questionabout non-Tariff Barriers (nTBs) bythe indian government despiteawarding most Favoured nation(mFn) status to Pakistan in 1996. Buthe stressed that the situation was nowheading towards normalisation.indian High Commissioner SharatShabarwal, Federation of indianChambers of Commerce and industry(FiCCi) Secretary general Dr rajivKumar, Lahore Chamber of Commerceand industry (LCCi) President irfanQaiser Sheikh and SAArC Chamber ofCommerce and industry VicePresident iftikhar Ali malik also spokeon the occasion.Addressing the inauguration ceremony,indian High Commissioner SharatShabarwal said india wanted to share its

growth potential with other countries,especially with its neighbours. indiawanted to enhance bilateral trade withPakistan, which would harness theeconomic prosperity. Shabarwal alsopointed out that visa regime remainedthe main obstacle in promotion ofbilateral trade between the twoneighbours, but it was being eased outnow. While highlighting The indiaShow, indian high commissioner saidwide range of products were out ondisplay by indian manufacturers. Theindia Show would pave way for futuretrade and commercial ties betweenindia and Pakistan.Speaking on the occasion, LCCiPresident irfan Qaiser Sheikh said Theindia Show 2012 would lay a newmilestone in the history of trade andeconomic relations of the twoneighbouring countries. The show was arealisation of a dream of the businesscommunity of india and Pakistan tohold single country exhibitions at eachother’s place.Sheikh said Pakistani businesscommunity was in favour of promotionof trade, especially with neighbouringcountries. But, he underlined, it shouldnot be at the cost of domestic industry,which was already struggling to survive

in acute energy shortage, rising inflation,widespread corruption and deterioratinglaw and order situation.irfan Qaiser said there were seriousconcerns and reservations from somesectors, including pharmaceutical,automobile, motorcycle, auto parts,sugar, textiles, cooking oil/ghee, etc.Any step forward without addressingconcerns of the private sector withregard to awarding mFn status toindia would only result in causingmore problems.He said india granted mFn status toPakistan in 1996, but Pakistan was stillcontinuing with a positive list ofimportable items from india. Despite ofthat Pakistan could not take advantagemainly because of nTBs and some otherimpediments on part of indiangovernment. Obviously there werecomplex domestic, political and securitycompulsions on both sides, which werebearing heavily on the existingframework for bilateral trade. Pakistanibusiness community strongly felt thatdespite having granted Pakistan mFnstatus, a great deal of non-tariff andpara-tariff barriers were still in placewhile exporting to india, he maintained.He pointed out that volume ofdocumented trade between india and

Pakistan was around $2 billion,whereas, it was believed that the tradewith india had the potential to beanywhere between $5 and $10 billion.But how much share Pakistan would beable to get out of it, was a big questionmark. He further stated due to tight visaregime, bilateral trade between the twoneighbours remained under $1.7 billionsince past three years through regularchannels. Whereas, overall volume oftrade between india and Pakistanthrough irregular channels, like Dubaiand Singapore ranged around over $3billion per annum. it was high time totake benefit from each other’s strengthand put aside all differences that hadbeen hindering trade, commerce andeconomic prosperity, he stressed.After the opening ceremony, federalminister formally inaugurated theexhibition and took a round of the hall.LCCi Senior Vice President KashifYounis meher, Vice President Saeedanazar, US Consul general in Lahorenina maria Fite, former LCCiPresident mian mohammad Ashraf,former LCCi Senior Vice PresidentAbdul Basit, former LCCi VicePresident Aftab Ahmad Vohra andlarge number of businessmen, werepresent at the occasion.

Indian commerceminister visit to opennew era of relations

LAHORE

STAFF REPORT

THe leadership of SAArC Chamberof Commerce and industry (SAArCCCi) has welcomed the visit of high

powered indian business delegation ledby honorable Commerce minister ofindia, mr Anand Sharma.President SAArC CCi mr Vikramjit SinghSahney, former President mr TariqSayeed and Vice President PakistanChapter mr iftikhar Ali malik, haveregarded this visit as the commencementof new era of relationship between twoleading economies of South Asia, addingthat such initiatives would help defusepolitical tension and bring the twonations closer. This was stated in a pressreleased issued by mr iqbal Tabish,Secretary general SAArC CCi.“The entourage of commerce ministerincludes top indian businessmen andmore than 150 entrepreneurs andexhibitors is a positive reflection, which isinstrumental to further deepen economiccooperation between the two leadingnations of South Asia,” stated mr Sahney,who took presidency of SAArC CCi inJanuary 2012. mr Annisul Huq, immediate pastPresident of SAArC CCi from Bangladeshlauded the political leadership of bothindia and Pakistan for their recent effortsto normalise the relationship througheconomic diplomacy and expressed hisbest wishes for further improvementstating it is drastically required for theregional economic development. mr TariqSayeed, former President SAArC CCiappreciated the recent development inwake of endeavours of both of thegovernments for initiating businesspromotion strategy, which he perceived asan important element for the overallgrowth of South Asia. mr iftikhar Alimalik was certain that the visit of indianCommerce minister, high-powered indianbusinessmen and india Show in Lahorewill not only help normalisation ofbilateral relations, but also generategreater political much required to improvebilateral business environment, which canfacilitate and increase economic growthand expansion of trade. mr Jashimuddin,VP- SAArC CCi (Bangladesh), mr ThinleyPalden Dorji, VP- SAArC CCi (Bhutan),mr mahedra Pramir, VP-SAArC CCi(india), mr Ahmed mujuthaba, VP-SSArCCCi (maldives), mr Pradeep KumarShrestha, VP-SAArC CCi (nepal) and mrKosala Wickramanayake, VP-SAArC CCi(Sri Lanka) have also expressed their bestwishes for the success of the visit.

INTERVIEW

FICCI Secretary, Dr Rajiv Kumarg Inefficient infrastructure, militaristic apprehensions impeding Indo-Pak ties

Federal minister inaugurates The India Show 2012

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