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 ACHIEVEMENTS IN MUSHARAF'S REGIME

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MAJOR(R)KHALID NASR
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PostSubject: ACHIEVEMENTS IN MUSHARAF'S REGIME   Tue Dec 25, 2007 9:16 am

ACHIVEMENTS IN MUSHARAF 'S REGIME : Can anybody deny the below mentioned achievements of President Musharraf!During the last 7 years of President Musharraf rule, Pakistan has undergone remarkable and significant economic and open market transformation stages, never experienced before in the history of the country. Sound macroeconomic management, backed by market oriented policies and a conducive incentive regime, together with political stability and effective regulatory framework have enabled Pakistan to emerge as a viable and investment friendly destination in South East Asia. Macroeconomic stability developed by current economic advisers and experts is here to stay. After a period of low fiscal deficits which scaled down to its lowest level (2.4 percent of GDP) in FY04 and emergence of a surplus on external current account, of 4.9 percent of GDP, in FY03 Pakistan opted to concentrate on stimulating broad based growth and dealing with its increasing infrastructure and social constraints that, unless dealt immediately will seriously threaten the growth prospects of Pakistan. The Government launched an all time high and aggressive public investment program of $7.3 billion that constituted 28% of total expenditures. A significant part of these development expenditures was devoted to completing ongoing and launching new development initiatives for physical and social infrastructure. This has happened for the first time in the history of Pakistan that so much money has been allocated for physical and social infrastructure of the country. At the same time, liberal and diversified availability of private sector credit stimulated growth across the board in a number of sectors. The growing investment and consumption demands and requirements have widened trade deficit as imports grew by over 35% in the preceding two years (FY05-06). While macroeconomic imbalances enhanced demand pressures, they have stimulated economic growth to 7.4% on average over FY05-07. Due to strong foreign inflows coupled with effective reserve management Pakistan has over 6 years, built up its SBP reserves, which are set to reach over $14 billion by end June 2007 thereby offering more than 6 months of import coverage. Positive economic developments over the past 7 years have facilitated Pakistan's return to international credit markets. High economic growth is accompanied by structural changes. It is very heartening to know that compared to the rest of Emerging Asia, recent economic growth track record puts Pakistan's GDP growth rate in the top half of the region's fast-growing economies. Capacity enhancement and utilization is at an all time peak. Industrial growth is accompanied by a degree of industrial diversification and emergence of new entrepreneurial class, though more effort is warranted to move Pakistani industry away from its traditional dependence on resource-based and low technology based processes. Excluding crop failures due to bad weather, agriculture grew on average in last 3 years by over 3.8%. According to Food and Agriculture Organization (FAO) Pakistan is ranked 4th in cotton, 5th in sugar, and 9th in wheat and 12th in rice production in the world. Moreover, the intense competition has also reduced call costs, increased outreach and offered increased and better services to the customers. The increasing penetration will invariably play a part towards increasing the market potential of a host of other activities conducted through cell phones such as banking, remittances, trading, etc. Since 1990s, Privatization Commissions has processed 161 privatization transactions resulting in sell off of public assets of Rs 378 billion (equivalent to $6.2 billion @Rs 60.5/dollar). All manufacturing sector, 80% of the banking assets and strategic stakes of utility companies have been sold off to private sector. Banking sector is catalyzing real sector development also. Banking sector reforms are far reaching. Aside from their impact on depth and efficiency of financial intermediation, the profitability of banks has allowed them to earn high returns, which has attracted foreign interest and encouraged existing owners to expand and/or strengthen their businesses. Several Pakistani banks like Union Banks have been bought by international banks like Standard Chartered Bank. Banks have cleaned up their own balance sheets. Consumer financing, which was totally unknown in the past in Pakistan was introduced in Pakistan, whereby an average consumer can afford to buy a car and other items on installments. Banking sector has grown both in size and strength and is positioned well to meet economy's requirements as it grows. Ownership and structural changes in banking system will facilitate this process. On ownership, foreign interest and presence has grown and almost 47% of banking assets are held by foreign banks with 51% foreign stake; fully owned foreign banks backed by global presence now account for 13% of banking assets. Technology is being fast adopted in the banking sectors and majority of bank branches are connected with head office, along side growth in ATMs, debit and credit cards. Foreign investment is flowing in a big way. Economic activity has and will be further boosted by efficiency gains once the full impact of foreign investment is realized after the completion of projects financed by FDI. During the years of 04-06, Pakistan has cumulatively attracted $8 billion foreign investment flows. This is highest in the history of Pakistan. These foreign FDI inflows have come into banking, telecom and oil and gas sectors primarily. Prospects are that Pakistan will attract about US $6.0 billion in FY07 – again an all time high annual flow. Going forward, foreign investment is expected to be more diversified and will support infrastructure development, manufacturing, tourism and hotel industry etc. The strong interest in Pakistan comes from growing investor confidence in the economy, comfort to foreign investors that they are treated at par with domestic investors, high returns on investments as evident from exceptional corporate and banking profitability and supportive and stable policies. Besides full foreign ownership, investors can repatriate their capital, dividends and profits and there is no restriction on the level of royalty payments. Survey conducted by the World Bank on 'Doing Business in 2007.' Pakistan now ranks 51 in the time to import, which has reduced from 39 days to 19 days. Pakistan's real GDP growth rate has risen in recent years, averaging 7.4% in the preceding three years. This is well above the long-term (50 years) average growth rate of 5 percent. The overall poverty has reduced from 34.46% in 2001 to 23.90% in 2005. The percentage of population living below the poverty line in rural areas has declined from 39.2% to 28.1% while that in urban areas has declined from 22.7 percent 14.9 percent. In other words, rural poverty has declined by 11.2 percentage points and urban poverty has reduced by 7.8 percentage points. And growing employment opportunities, viability of Pakistani market is further enhanced as domestic private consumption has been supported by improved incomes and remittances. To ensure sustainable economic growth, Pakistan will need to maintain macroeconomic stability by gradually reducing the twin deficits. Besides prudent expenditure management, this will require broadening of the tax base to effectively finance growing expenditure obligations. Sustainability of external current account deficit calls for raising exports earnings to finance the increasing imports requirement. Imports will remain strong as the economy's requirements for capital and intermediate goods for industry grow. Pakistan offers opportunities to exploit gas and coal reserves suitable for power generation and hydroelectricity generation. The geographical proximity to energy rich regions, Iran and Central Asia, position Pakistan to emerge as a regional hub for energy. Opportunities also exist to enhance production by enhancing productivity, efficiency and economic diversification. To diversify, Pakistan has to make inroads into the medium and high-end technology products such as electronic goods, automobiles, engineering goods etc and to look for newer markets. In agriculture, implementation of mega water resources projects will enhance crop yields. Thus big dams are needed on urgent basis. Besides increasing value-addition, market-based pricing, and development of agro-based industry and processing and packaging of products would further stimulate export of these products to the neighboring Middle Eastern markets. With a strong base of economically active population, Pakistan has an edge as it is a low wage economy - average wage is close to $75-$100 a month for unskilled workers, $100-$200 for skilled and for managerial workers, it ranges from $200-$500 a month. Investment climate will benefit further from the ongoing efforts and strong commitment to rule of law, developing a competent and efficient government sector, less cumbersome regulations and control of corruption. In short, Pakistan offers endless possibilities with its vast untapped resources. The country is set to grow at a rate of 7% to 7.5% per annum which should help to further raise its per capita income from US $847 per annum to US $1557 by 2015. Demand is expected to get stronger as incomes rise further and assuming current population growth trends persist. Pakistan's strategic geopolitical position, due to its proximity to India and China as well as to the oil rich Middle East and untouched central Asia with vast natural resources, potentially carries opportunities which to date have not been properly exploited. Promising for private sector would be the large infrastructure projects which would offer high return in long term but would help enhance access and efficiency in movement of goods within and outside Pakistan. In future, the demand for energy, cement, fertilizer, and leather products is expected to increase. The energy demand over the next five years is expected to grow at a rate of 7.4 percent per annum and over the next 25 years it is expected to be 7 times the present demand. According to Planning Commission, presently the energy demand measured in MTOE was around 50 MTOE in 2004 which will increase to 79 MTOE by 2010 and 361 MTOE by 2030. Thus these sectors remain highly attractive for foreign investors due to strong consumer spending patterns and rising industrial activity depicted by past trends and strong future demand. Banking sector is positioning itself to extend its outreach, which will play a key role in sustainability and in diversifying risks. For long term sustainability and to maximize the development impact, small and medium enterprises should be encouraged and further developed as they will be able to fast restructure themselves as and when warranted and will play a more critical role in country’s employment generation. Increased foreign presence and capital is expected to help Pakistan integrate better globally and regionally, enhance skills and techniques and transfer and increase usage of technology. The private sector participation and foreign investment are going to be the cornerstone of Pakistan future economic strategy as devised by its economic managers under the leadership of Prime Minister Shaukat Aziz and President Pervez Musharraf. Some of the success stories of Pakistan’s economic developments are that Standard Chartered Bank, with 1,400 branches in 50 countries employing 60,000 people representing 100 nationalities, has invested $413 million to buy 81 per cent of Pakistan's Union Bank. Phillip Morris, the world's largest commercial tobacco company and the owner of Marlboro the world's most popular tobacco brand, in a deal valued at $374 million has bought an additional 50 per cent stake in Lakson Tobacco Company, Pakistan's second largest. China Mobile Communications Corporation, the world's largest mobile phone operator with 296 million customers, has bought 89.00 per cent of Paktel, a Pakistani cellular company for $284 million. Some of the projects, which are in the pipeline: Emaar Properties, one of the world's largest real estate companies, has announced plans of investing a colossal sum of $2.4 billion. There's Crescent Bay in Karachi (75 acres; 4,000 residential apartments), Sheikh Zayed Centre in Lahore comprising Hyatt Residency, Grand Hyatt Hotel and a huge entertainment and shopping complex. Then there's Canyon Views in Islamabad; 1,500 acres, 9,000 luxury single family town homes and villas. Temasek Holdings, a Singapore government's investment arm and 100 per cent owned by Singapore's Ministry of Finance, is all set to buy a majority stake in Pakistan Industrial Credit Investment Corporation in a deal valued at $300 million. In 2005, Temasek paid $48.9 million to buy Pakistan's NIB Bank. PSA International, the world's largest container transshipment operator that operates 20 port projects in 11 Asian and European countries with a network of 600 ports and 200 shipping lines in 123 countries, will be investing $550 million for the expansion of Gwadar's infrastructure. Barclays Bank PLC, the third largest bank in the UK, is looking at investing a billion pounds into Pakistan and possibly buying MCB, a Pakistani bank. ABN AMRO the Netherlands-based banking giant with 4,500 branches and 98,000 employees in 53 countries has been eying to buy Pakistan's Prime Commercial Bank for $230 million. HSBC, the largest bank in the world in terms of assets with 284,000 employees, is also looking for an appropriate investment opportunity in Pakistan. Standard Chartered, Philip Morris, China Mobile, Emaar Properties, Temasek, PSA International, Barclays, ABN AMRO and HSCBC are a diverse group of independent international investors with different levels of information and market intelligence. Based on their reliable and authenticated information and market intelligence they are all investing in a big way in Pakistan. Global aggregate opinion is optimistic on Pakistan economic growth for future. Investment decisions taken by Standard Chartered, Philip Morris, China Mobile, Emaar Properties, Temasek, PSA International, Barclays, ABN AMRO and HSCBC are all in fact saying out loud that Pakistan's economy is heading in the right direction under the able leadership of President Pervez Musharraf. Multinational corporate feelings originating in London, New York, Hong Kong, Dubai, Singapore and Amsterdam are all confident of Pakistan's economic future. Collective verdict and wisdom of world renowned MNCs are both buoyant and bullish on Pakistan.
Posted By: Tariq Aziz | December 21, 2007 12:53:14 AM
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