Updates

Articles Newly Added

0- Insurance Companies of Pakistan  (Latest Feb 2013)

0- Pakistan: Why Deficit Financing has not worked and Alternative Strategies (Latest May 2011)

0- The Realistic Prospects for Investment in Pakistan (Latest May 2011)

0- World Financial Crisis

0- JF-17 Thunder

0- Budget 2011-12  (latest)

0- Economic way forward for Pakistan – written by ex- PM Shaukat Aziz 

0- Communication Industry

0- CNG Industry

0- Textile Industry

0- Automobile Industry (updated Jan 2010)

0- Pakistan’s Hydroelectric Power Development

0- Pakistan’s Defense Industry goes UAV (updated Jan 2010)

0- Cement Industry

0- Musharraf Era: Pakistan Flourishes (updated)

0- Education Sector: Revolution Imminent (Latest)

Note: Kindly note that the links to all articles (Textile, CNG, Automobile, IT, etc)  have been updated! Articles may not turn up in google searches currently. Scroll below to view the Articles - Thanks!

PAKISTAN: Why Deficit Financing has not worked and Alternative Strategies

Courtesy: VISION21

By, Afreen Baig

The World financial crisis of 2008 – 2010, exposed the weaknesses in the several of the first world economies, which were earlier considered to be the paradigm of economic success. Failure of the banking system, collapse of sub-prime mortgage business, ascending debt-to-GDP ratio, unpredictable unemployment and bankruptcies declared by several established businesses, raised serious doubts regarding the foundations of those economies.

Pakistan and most of the Middle Eastern economies have remained safe from the domino effect of the world financial crises, both for entirely separate reasons. The problems confronting Pakistan’s economy are due to economic mismanagement, living in quandary regarding policies, misplacement of priorities and corruption – not worldwide recession.

While the first world countries continue to have the resources and finances to deficit finance their economies out of recession, to push start the cycle and to increase the aggregate demand – third world and smaller economies like Pakistan have few viable options to exercise, these options being more functional and realistic. 

Economic Indicators 1999-2009

Updated June 2010!

 

Compiled by: Mirza Rohail B and Afreen Baig

 

Pak Economy in 1999 was: $ 75 billion (Source)
Pak Economy in 2007 is: $ 160 billion (Source) and (Source)
Pak Economy in 2008 is: $ 170 billion (Source) and (Source)

GDP Growth in 1999: 3.1 % (Source)

GDP Growth in 2005: 8.4 % (Source)

GDP Growth in 2007: 7 % (Source) and (Source)

GDP Growth in 2009: 2 % (Source) and (Source)

 

GDP Purchasing Power Parity (PPP) in 1999: $ 270 billion (Source)
GDP Purchasing Power Parity (PPP) in 2007: $ 475.5 billion (Source)
GDP Purchasing Power Parity (PPP) in 2008: $ 504.3 billion (Source)

 

GDP per Capita Income in 1999: $ 450 (Source)
GDP per Capita Income in 2007: $ 926 (Source)

GDP per Capita Income in 2008: $1085 (Source)

 

Pak revenue collection 1999: Rs. 305 billion (Source)
Pak revenue collection 2007: Rs. 708 billion (Source) and (Source)

Pak revenue collection 2008: Rs. 990 billion (Source)

Pak revenue collection 2009: Rs. 1150 billion (Source) and (Source)

 

Pak Foreign reserves in 1999: $ 1.96 billion (Source)
Pak Foreign reserves in 2007: $ 16.4 billion (Source) and (Source)

Pak Foreign reserves in 2008: $ 8.89 billion (Source)

Pak Foreign reserves in 2009: $ 14.3 billion (Source)

 

Pak Exports in 1999: $ 8 billion (Source) and (Source)
Pak Exports in 2007: $ 18.5 billion (Source)

Pak Exports in 2008: $ 19.22 billion (Source) and (Source)

Pak Exports in 2009: $ 17.78 billion (Source) & (Source) & (Source)

 

Textile Exports in 1999: $ 5.5 billion
Textile Exports in 2007: $ 11.2 billion (Source)

 

KHI stock exchange 1999: $ 5 billion at 700 points
KHI stock exchange 2007: $ 75 billion at 14,000 points (Source)
KHI stock exchange 2008: $ 46 billion at 9,300 points (Source) and $ 20 billion at 4,972 points (Source)

KHI stock exchange 2009: $ 26.5 billion (Source) at 9,000 points (Source)

 

Foreign Investment in 1999: $ 301 million (Source)
Foreign Investment in 2007: $ 8.4 billion (Source)

Foreign Investment in 2008: $ 5.19 billion (Source)

 

Large Scale Manufacturing (LSM) in 1999: 1.5% ( Source)

Large Scale Manufacturing (LSM) in 2005: 19.9% (Source)

Large Scale Manufacturing (LSM) in 2007: 8.6% (Source)

Large Scale Manufacturing (LSM) in 2008: 4.8%  (Source)

Large Scale Manufacturing (LSM) in 2009: (-8.2 %) (Source)

 

Debt (External Debt & Liabilities) in 1988: $ 18 billion

Debt (External Debt & Liabilities) in 1999: $ 39 billion (Source)  (Source)  (Source)

Debt (External Debt & Liabilities) in 2007: $ 40.5 billion (Source) and (Source)

Debt (External Debt & Liabilities) in 2009: $ 52 billion (Source) & (Source)

 

Data: Board of Investment

Foreign Investment: 

 

2001-02: $475 million

2002-03: $820 million

2003-04: $922 million

2004-05: $ 1.677 billion

2005-06: $ 3.872 billion
2006-07: $ 8.417 billion
2007-08: $ 5.193 billion

 

Exports – Imports = Trade deficit/surplus 

 

2001-02: $ 9.13 bn — $10.34 bn = $1.2 billion

2002-03: $11.16 bn — $12.22 bn = $1.06 billion

2003-04: $12.31 bn — $15.59 bn = $3.28 billion

2004-05: $14.39 bn — $20.6 bn = $6.21 billion

2005-06: $16.47 bn — $28.58 bn = $12.11 billion

2006-07: $17.01 bn — $30.54 bn = $13.53 billion

2007-08: $19.22 bn — $39.96 bn = $ 20.74 billion

 

 

IT Industry overview

The IT and IT-enabled Services (ITeS) marketplace offers lucrative opportunities for developing countries to join the  ranks of the developed world. The scale and pace of growth in this sector is faster than in any other industry, and a number of developing countries are attempting to emulate the success enjoyed by countries such as China, Thailand and India.

Future IT Tower KHI

The Government of Pakistan has been proactively developing the IT sector in Pakistan since the last few years. A few of the incentives offered include tax exemption till 2016, establishment of IT Parks with low rent, foreign ownership of equity invested in IT and 100% repatriation of profit allowed to IT companies.

State Bank Reporting Earnings	Estimated Total IT Industry Export Revenue	Estimated Total IT Industry Size
US$ 116m	US$ 1.4b	US$ 2.8b

 

Cement Industry

Compiled by: Mirza Rohail B 

History & Introduction

 Growth of cement industry is rightly considered a barometer for economic activity. In 1947, Pakistan had inherited 4 cement plants with a total capacity of 0.5 million tons. Some expansion took place in 1956-66 but could not keep pace with the economic development and the country had to resort to imports of cement in 1976-77 and continued to do so till 1994-95. The industry was privatized in 1990 which led to setting up of new plants. Although an oligopoly market, there exists fierce competition between members of the cartel today.

The industry comprises of 29 firms (19 units in the north and 10 units in the south), with the installed production capacity of 44.09 million tons.  The north with installed production capacity of 35.18 million tons (80 percent) while the south with installed production capacity of 8.89 million tons  (20 percent), compete for the domestic market of over 19 million tons. There are four foreign companies, three armed forces companies and 16 private  companies listed in the stock exchanges. The industry is divided into two broad regions, the northern region and the southern region. The northern region has around 80 percent share in total cement dispatches while the units based in the southern region contributes 20 percent to the annual cement sales.   

Textile Industry

Compiled By: Mirza Rohail B

Historically, Pakistan’s textile industry and clothing sector has always been a major contributor to the foreign exchange  earner and still contributes about 55% to the total export proceeds.

The Economist reports that Pakistan is the 4th largest producer of cotton in the world and the 6th largest importer of raw cotton, the 3rd largest consumer of cotton, and the 1st largest exporter of cotton yarn. Over 1.3 million farmers, out of total of 5 million are involved in cultivation of this crop.

Textile exports in 1999 were $5.2 billion and rose to become $10.5 billion by 2007. Textile exports managed to increase at a very decent growth of 16% in 2006. In the period July 2007 – June 2008, textile exports were US$ 10.62 Billion.  Textile exports share in total export of Pakistan has declined from 67% in 1997 to 55% in 2008, as exports of other non-textile sectors grew.

Pakistan’s Defense Industry goes UAV

Updated Jan 2010! Courtesy: South Asia Investor Review and Pakistan Daily

U.S. Army Gen. William Westmoreland is reported to have said: “On the battlefield of the future, enemy forces will be located, tracked and targeted almost instantaneously through the use of data links, computer-assisted intelligence and automated fire control. … I am confident the American people expect this country to take full advantage of its technology–to welcome and applaud the developments that will replace wherever possible the man with the machine.” It seems that this vision from the 1970s is being realized today. One manifestation of it is the development and deployment of unmanned aerial vehicles by many nations, including Pakistan.

Pakistan’s indigenously developed unmanned aerial vehicle, Uqaab, whose final flight was tested and successfully conducted in March 2008. All design parameters were successfully validated, and the performance of Uqaab can be compared to any modern state of the art UAV, according to an army statement. Flight test was preceded by a series of trials in 2007 and is a reflection of Pakistan’s technical prowess in the field of UAV technology.

The Pakistan Aeronautical Complex (PAC) has handed over one dozen Predator-type unmanned aerial vehicles (UAVs) to the Pakistan Air Force (PAF), PAC Chairman Air Marshal Khalid Chaudhry said in January 2009. He said Pakistan had acquired the capability to manufacture UAVs and had initiated indigenous production.  “We will manufacture more UAVs indigenously, keeping the PAF’s requirements in mind”. [Link]

  

Economic way forward for Pakistan

 Written By: Honorable Shaukat Aziz, ex-Prime Minister of Pakistan  

2009:  When I was asked to write a piece on the economic way forward, I hesitated at first because I felt that with a new government in place it is better that we leave the way forward to the new economic  managers, rather than play the role of back seat drivers and provide unsolicited advice. But the  mountain of criticism of the previous government policies from all sorts of arm chair critics, ranging from retired bureaucrats and economists of the cold war era, who still  believe in the supremacy of state management of the economy and for whom Venezuela and Bolivia are the new role models, to Islamists who  feel that the entire western global economic system is doomed and we need to chalk out a new paradigm – convinced me that perhaps the time  had come to analyze the past and set the record straight, assess the current situation and contribute to the debate on the way forward.

Now that we have the political parties of the nineties back in power it can be instructive to examine a few economic indicators of the nineties with the past eight years and draw inferences. Since the economic growth numbers have been challenged by the critics.  I will use numbers that are not subject to disagreement. So for example, if the GDP growth numbers are being challenged, than other growth indicators that the public can understand can show the reality. The official GDP growth from around US $ 65 billion in 1999-2000 to US$ 165 billion in 2007-08 (a factor of 2.5 times) is challenged as being fudged, but growth of credit to the private sector over the same time period from Rs 1 trillion to Rs 2.5 trillion, again a factor of 2.5 times, cannot be challenged.

Pakistan’s Financial Services Sector

Courtesy: South Asia Investor Review

Pakistan has been ranked 34 out of 52 countries in the World Economic Forum’s first Financial Development Report, which was released in Pakistan through the Competitiveness Support Fund (CSF) in December, 2008.

The report is a comprehensive analysis of financial systems and capital markets in 52 countries that explores key drivers of financial system development and economic growth in developing and developed countries and serves as a tool by which countries can benchmark themselves and establish priorities for financial system improvement.

Pakistan’s Banking sector turned profitable in 2002. Their profits continued to rise for the next five years and peaked to Rs 84.1 ($1.1 billion) billion in 2006.

Arthur Bayhan, Chief Executive of the Competitiveness Support, told the media: “I am very happy to see that financial system in Pakistan is well reformed and competitive vis-à-vis Asia and Europe. Pakistan is ranked ahead of the Russian Federation (35), Indonesia (38), Turkey (39), Poland (41), Brazil (40), Philippines (48) and Kazakhstan (45).”

The United States narrowly edged the United Kingdom to take the top position in the Financial Development Index. The United Kingdom was second while China ranked 24 and India 31.

Banks and Financial Institutions of Pakistan

Banks State & Private 

• 1. State Bank of Pakistan
• 2. First Women Bank Limited
• 3. National Bank of Pakistan
• 4. Allied Bank of Pakistan, Karachi
• 5. Arif Habib Bank Limited, Karachi -
• 6. Askari Bank, Rawalpindi

List of Insurance Companies in Pakistan

  10 February 2013

I. Public sector 

• 1. National Insurance Corporation                                                         
• 2. Pakistan Reinsurance Company Ltd.
• 3. Postal Life Insurance
• 4. State Life Insurance Corporation Ltd.

Pakistan’s Hydroelectric Power Development

Courtesy: South Asia Investor Review

Pakistan and Germany have initiated serious discussions of German funding of eight ongoing and new hydropower  projects worth billions of dollars. These talks are taking place in Islamabad between visiting German Minister for Economic Co-operation and Development Ms. Heidemaire Wiegoreak Zeul and Pakistani Prime Minister’s Adviser on Finance Mr. Shaukat Tarin, according Business Recorder newspaper.

The projects currently under discussion include 621 MW Palas hydropower project, 567 MW Spat Gah hydropower project, 28 MW Basho hydropower project, 33 MW Harpo hydropower project, 70 MW Lawi hydropower project, Naigaj hydropower project and 300 KW Hingol hydropower project, 43 KW Kurram Tangi Dam. As a start, the German Economic Minister said her country had already committed finances for Keyal Khwar hydropower project located in NWFP on river Indus at Dasu. The project would generate 130 MW power. The focus of many of these development projects are the rural areas in the North West Frontier Province and the least developed federally administered tribal areas of the country affected by insurgencies.

Pakistan LoI to IMF

Pakistan: Letter of Intent, Memorandum of Economic and Financial

Policies, and Technical Memorandum of Understanding to IMF

 

 

November 20, 2008

 

 

1.    In the last decade, Pakistan’s economy witnessed a major economic transformation.

 

Ø  The country’s real GDP increased from $60 billion in 2000/01 to $170 billion in 2007/08 (fiscal year starts July 1st).

 

Ø  Per capita income rising from under $500 to over $1,000.

 

Ø  The volume of international trade increased from about $20 billion to nearly $60 billion.

 

Ø  Real GDP grew at more than 7 percent a year with relative price stability.