Pakistan Business News
On June 5th 2010 Finance Minister Hafeez Shaikh announced the federal budget for the fiscal year 2010-11. The actual budget document is over 1000 pages but Ernst & Young has prepared a 50 page brief to make it easy to understand.
Click here for the EY brief on Pakistan Budget 2010.
We hope it benefits all of you. If any of you can not open the link please contact us and we will email you the document.
Abdul Quayyum Khan Kundi
Pakistan Chamber of Commerce-USA
Pakistan Chamber of Commerce USA (PCC-USA) has been active in creating awareness among Pakistani trade groups about BIT effectiveness and importance.
Pakistan and the United States are scheduled to restart negotiations on Bilateral Investment Treaty (BIT) in the third week of May. The authorities consider it a major success of Trade and Investment Frame Agreement (TIFA) talks held recently in the US.
Sources in the Board of Investment told Dawn that the decision to restart the negotiations on BIT was reached in the recent talks between Pakistan and the US team led by its Trade Representative Ron Kirk.
Sources said that the main issue pertaining to signing of BIT was lack of formal and well-defined arbitration system in Pakistan.
“The US delegation that consisted members of private sector cited examples related to harassment and prosecution of investors in Pakistan,” sources said, adding that due to certain cases in the past the investors were reluctant to invest in the country.
The talks focused on a settlement mechanism and the role of state in case of dispute between the private sectors of both the countries.
The US investors have also highlighted the issue of public registration system in the country that was involving the stakeholders before any major changes are made in the regulations.
The signing of Bilateral Investment Treaty has been pending in the files for almost two years due to inflexible attitude of both sides.
The Pakistani authorities have been resisting the demand of the US officials to provide protection to the investments made by the US investors and the government should be the guarantor of the investments in case of any dispute or mishap damaging the investment.
However, officials of the commerce ministry expressed optimism over the success of the talks.
The US is the largest economy of the world and many countries want to sign Bilateral Investment Treaty with it, said Commerce Secretary Zafar Mahmood, adding that the willingness of the US authorities to negotiate Bilateral Investment Treaty with Pakistan is a good sign.
He said that the bilateral treaty would open the doors for the US investment in the country as the investors would feel more secure, if there is legal protection to them.
However, an official of the finance ministry said that the investment treaty would be a reciprocal move and it would also provide similar facilities to Pakistani investors in the US.
The official said that such a treaty, if made carelessly, could lead to flow of local investment to the United States, while on the other hand if too many incentives are offered to the investors in the treaty, Pakistan might end up being hostage to the investors with the state having no powers to control their activities.
The US trade deficit rose to $39.7 billion in February, as the flow of products into the United States surged, official data showed on Tuesday.
The deficit was slightly more than the $38.5 billion that had been expected by analysts, the Commerce Department said.
Imports of goods and services to the United States totalled $182.9 billion, while exports were worth $143.2 billion.
The deficit rose from a revised figure of $37.0 billion in January. Read the rest of this entry »
The current account deficit kept supporting the traditionally weak external imbalances of the country as the deficit fell by 68 per cent at the end of third quarter of the current fiscal.
The State Bank reported on Monday that the current account deficit at the end of July-March 2009-10 was $2.702 billion. It was vastly against the massive deficit of $8.379 billion during the same period last year.
Since at the end of three quarters of the current fiscal year the trend of low current account deficit still persists, economists believe that the on-going financial year would end up with minimum deficit on external front.
However, the massive inflows of foreign debt mostly from IMF could change the scenario in the next couple of years and even rising prices of oil could tilt the positive trend towards the other side.
Experts have been expressing fear that rising oil price, which has reached over $83 per barrel, could cause an outflow of dollars from the reserves making the situation once again as difficult as it was in 2008.
Pakistan has raised its dollars reserves to over $15 billion till last week but most of it consists of loans from IMF.
The details of the imbalances showed that the trade deficit significantly declined during the nine months period. Exports grew by 0.5 per cent during this period against a decline of minus one per cent in the same period last year.
Imports fell by 8.8 per cent during the same period reflecting the lower oil prices compared to last year and low economic activity in the country. The exportable goods produced in the country consume 34 per cent imported ingredients to sell in the international market.
Low imports also mean low exports but the latter rose slightly, which reflects that Pakistan has been exporting raw and semi-raw material, including agricultural products to fetch higher foreign exchange.
Pakistan sold rice of about $2 billion last year, while bumper cotton crop this year opened a new window to earn dollars by exporting cotton and semi raw material like cotton yarn, and cotton cloth etc. Read the rest of this entry »