July-February: Country receives 18% more foreign investment

More significantly, FDI increased sharply in February as it amounted to $79.2 million. CREATIVE COMMONS

KARACHI: 

Foreign direct investment (FDI) in Pakistan rose 17.9% in the first eight months of the current fiscal year, standing at $606.3 million compared to the corresponding period of previous year, according to data released by the State Bank of Pakistan (SBP) on Friday.

More significantly, FDI increased sharply in February as it amounted to $79.2 million. In contrast, there was an outflow of $14 million in the same month of the preceding fiscal year.

In the first half of 2013-14, FDI stood at $416.1 million, which was 26.8% lower than the amount invested in the corresponding six months of previous year.

Pakistan received FDI worth over $1.4 billion in 2012-13.

The oil and gas sector attracted the highest amount of FDI in the July-February period. It attracted a net investment of $296.2 million. However, it was 12.8% lower than the investment of $339.7 million it got in the corresponding period a year earlier.

Sectors of the economy that received major FDI inflows during the last eight months include financial business ($102.8 million), chemicals ($71.6 million), tobacco and cigarettes ($55.5 million), food ($75.1 million) and beverages ($23.7 million).

In contrast, a major dip in FDI was registered in the telecommunications sector, where the net outflow of investment was $131.4 million. Other sectors that recorded a considerable net outflow were petroleum refining ($11.6 million), electrical machinery ($11.3 million), trade ($8.5 million) and transport ($5.2 million).

As for foreign portfolio investment (FPI), which includes foreign public investment, Pakistan attracted $118.3 million during the July-February period, down 28.8% from $166.2 million in the comparable period of previous year.

Countries that brought significant amounts of FDI into Pakistan during the period under review include Switzerland ($178.3 million), United States ($161.9 million), Hong Kong ($144.9 million), United Kingdom ($76.2 million), Italy ($50.8 million), France ($47.6 million), Oman ($35.3 million) and Austria ($32.2 million).

Countries that took major investments out of Pakistan are Norway ($47 million), Qatar ($38.9 million), Saudi Arabia ($32.8 million) and Singapore ($31.1 million

National carrier: Selling 26% shares is not privatisation, says secretary

The national flag carrier will phase out old Airbus 310s as it inducts newer planes like the B-777s so there are planes for longer routes. PIA will also need at least 20 narrow-bodied planes. PHOTO: FILE

KARACHI: 

Pakistan International Airlines (PIA) is not being privatised, but only a small stake will be sold to a strategic investor, insisted Aviation Secretary Muhammad Ali Gardezi on Friday. 

“We have nothing to do with it (privatisation),” said Gardezi, who is also the chairman, on the sidelines of an event held to open bids for new planes before newsmen. “Yes, the management will also be given to the investor, but the government will still hold 74% shares in the airline.”

Repeated insistence by the aviation ministry and PIA’s management that the government is not privatising the national flag carrier is in stark contrast with what senior government officials have been saying all along.

Pakistan Telecommunication Company Limited (PTCL) was also ‘privatised’ in a similar manner when government sold 26% stake in landline telephone monopoly.

Tender requirement not met

PIA is most likely to reject the bids it received on Friday for lease of four twin-aisle and as many ATR aircraft because it was offered much older planes than what the tender asked for, airline officials said on Friday.

Five bids received in response to the February 12 tender were opened in front of Gardezi, senior PIA officials and newsmen.

Bids came from Standard Chartered Bank, DV Bank, Bank of China, Aircraft Leasing and Dubai Aerospace but none of the planes met the tender requirement of being manufactured in year 2010 or later.

“PIA director technical will now review the bids in detail and then decide what to do,” PIA Managing Director Junaid Yunus said. “But apparently the bids will be disqualified.”

In case that happens, PIA will issue another tender.

Some of the planes offered for lease have been built in 1999. PIA wants to induct newer planes into its fleet to bring down fuel cost, which eats up more than 50% of its revenue.

Gardezi said that the national flag carrier will phase out old Airbus 310s as it inducts new planes. “We are trying to get the B-777s so we have planes for longer routes.” PIA will also need at least 20 narrow-bodied planes, he said.

PIA is slowly increasing sales to meet the deficit, he said. “Monthly expense of the airline is around Rs13 billion. We have been able to increase the revenue to between Rs9.1 billion and Rs9.5 billion a month. Our aim is to reach the break-even point at any cost,” said Gardezi.

Fuel expense, which eats up 56% of airline’s revenue, is being brought down, he said. “Ultimately, we would want to take it down to 35%.”

In response to a question, he said there is need of building second and third hubs for PIA in Lahore and Islamabad. “Ultimately, we will need multiple hubs. Financing for that remains an issue,” Gardezi said.

Leasing more aircraft will add to PIA’s already huge long-term liabilities of over Rs70 billion. Yunus said the debt has to be restructured to help PIA come out of the red. “This does not mean we are seeking equity injection from government. We can do that on our own.”

Business summit: From conformance to a leadership role

was attended by more than 600 professionals from the finance and business communities. PHOTO: FILE

LAHORE: In the contemporary business environment, the role of the Chief Financial officer (CFO) has advanced — from a traditional role of providing financial insights and analysis to a supporting one where strategies are shaped and key business initiatives are taken as the financial leader.

This was stated by financial experts at the Chief Financial Officer (CFO) Conference, organised by the Institute of Chartered Accountants of Pakistan (ICAP), which was attended by more than 600 professionals from the finance and business communities.

ICAP’s professionals constitute a vital part of the industry and it is incumbent for the institute to cater to their needs and expectations, said ICAP President Naeem Akhtar Sheikh. The ‘CFO Conference’ over the years has emerged as a platform where professionals in business and industry meet to explore, confront and look for solutions to meet the challenges and issues of modern business era.

He also discussed the emerging role of CFOs as value integrators at large, expanding their influence beyond financial decisions to broader strategic choices about their business, citing the challenge to balance and achieve excellence in all roles.

Sheikh supported the significance of governance in the system and training finance teams with modern technology. He pointed out the qualities CFO must possess like patience, flexibility, strategic orientation and independent thought.

Kamran Mirza, CEO Pakistan Business Council, while emphasising the role of CFOs as a strategic partner to the CEOs, said that transformational leadership will result in creating synergy and building strong teams. He added that CFOs need to apply vision, determination and, above all, a steady and methodological pace to reap the benefits across the organisation. To be effective, continuous education is a must.

Abdul Aleem, Secretary General Overseas Investors Chambers of Commerce and Industry, elaborated on how to create an enabling environment for growth in the Pakistani economy.

“Our resilient economy has absorbed multi-dimensional shocks over the years,” he said, adding that the government has to have a national economic agenda to steer the country out of the crisis, for which a robust political will and commitment are needed.

Panel discussions were also held on different topics like the role and expectations of a CFO – preparing accountants for finance leadership, ROI-value versus profit among others.

Malaysian plane could have been hijacked to Pakistan: US media

WASHINGTON

The missing Malaysia Airline flight MH370 could have flown for an extra four hours after it lost contact with air traffic controllers and could had been hijacked and landed in Pakistan, according to American media reports.
In another dramatic twist, aviation experts believe the plane flew for a total of five hours under radar.
The possibility means the plane could have travelled for another 2,200 miles to Pakistan or Mongolia, according to the Wall Street Journal.
The plane could had been hijacked and taken to an unknown location – one of many theories as to what may have happened to the disappearing plane.
The journal said it is not clear whether investigators have evidence of a hijacking – but they have not ruled the possibility out.
US investigators are looking into the prospect and counterterrorism officials are investigating the idea that the plane’s transponders were turned off intentionally and the aircraft was diverted when an image appeared to show debris.
It is based on data automatically downloaded and sent to the ground from the aircraft’s Rolls Royce engines as part of a standard monitoring programme.
The Boeing 777 jetliner vanished six days ago with 239 people on board. The Beijing-bound flight left Kuala Lumpur at 4.41pm GMT, but less than 50 minutes later it lost communication with air traffic control. But a senior Malaysia Airlines official told media that no such data relating to the potential extra flight time existed, while a second official said he was unaware of it too.
A spokesperson for engine manufacturer Rolls-Royce had no immediate comment. Malaysia Airlines said previously the engines stopped transmitting monitoring signals when contact with the plane was lost. The engines should transmit live data to the ground every 30 minutes.
Hopes were raised when a Chinese state agency released satellite images of three pieces of large debris floating near the plane’s last recorded position in the South China Sea but found nothing.

LNG terminal contract: Prime minister refuses to give his seal of approval

The ECC on February 28 had approved, in principle, to award the contract to ETPL subject to getting the go-ahead from the prime minister. PHOTO:FILE

ISLAMABAD: The prime minister has refused to approve award of the multi-million-dollar liquefied natural gas (LNG) terminal contract to Elengy Terminal Pakistan Limited (ETPL) and has instead told the Ministry of Petroleum and Natural Resources to seek the nod of federal cabinet, sources say.

The directive came after the Ministry of Petroleum sent a summary to Prime Minister Nawaz Sharif for approval of the LNG terminal contract, which would lead to gas imports from November this year.

“However, the premier has sent back the summary to the ministry, directing that approval should be sought from the federal cabinet,” a source in the Prime Minister’s Office said.

The Economic Coordination Committee (ECC) of the cabinet, in a meeting held on February 28, had approved, in principle, award of the contract to ETPL subject to getting the go-ahead from the prime minister.

During the deliberations, the Law Division said Section 21 of the Ogra Ordinance 2002 empowered the federal government to issue policy guidelines to the Oil and Gas Regulatory Authority (Ogra). After the 18th Amendment to the Constitution, the definition of “federal government” had been changed and now the federal government or prime minister could give policy guidelines directly or through a federal minister, it said.

ETPL, a subsidiary of Engro Corporation, had been declared the successful bidder as it quoted a tolling fee of 60 cents per million British thermal units (mmbtu). In the first phase, the government plans to import 200 million cubic feet of LNG per day (mmcfd) from November this year and increase the quantity to 400 mmcfd in 2015.

According to officials, the price quoted by ETPL has been approved by the consultant. The price had been evaluated keeping in view the regional tolling rates for terminal handling and that’s why the federal cabinet was being asked to approve the contract.

However, the ECC was upset about payment of millions of dollars in capacity charges to ETPL on account of tolling fee by Pakistan State Oil (PSO) even if it was unable to import LNG. Economic managers suggested that PSO should carry out due diligence before issuing a letter of comfort to Sui Southern Gas Company for LNG import from Qatar.

“Since the federal government controls PSO, the letter of comfort would have a bearing on taxpayer money. Therefore, before issuing the letter, PSO should carry out due diligence,” the ECC said.

It also noted that the LNG services agreement was a commercial contract between two commercial entities including SSGC and ETPL and their boards of directors were competent enough to grant approval in respect of the agreement.

Govt to spend $1.2 billion on Gwadar port, says minister

The port and shipping minister strongly refuted a news item telecast by a private TV channel that the Gwadar Port Authority wants to cancel the contract of a Chinese company. PHOTO: AFP/FILE

ISLAMABAD: Prime minister Nawaz Sharif has approved nine projects worth $1.2 billion for Gwadar port, the Federal Minister for Ports and Shipping Senator Kamran Michael said on Friday.

The projects include an airport, schools, hospital, vocational training institutes, projects for uplift of fishermen and fish industry, and upgradation of Gwadar’s infrastructure.

The government will invest $1.2 billion on the port between 24-36 months, he said.

Michael said that a Chinese delegation had just completed a three-day visit to the port. He said that the outcome of the talks with the chief executive of the Chinese company involved have been very positive and optimistic.

The Ministry of Ports and Shipping is hoping to sign memoranda of understandings with various Europeanc countries by the end of March for new avenues of cooperation.

The port and shipping minister strongly refuted a news item telecast by a private TV channel that the Gwadar Port Authority wants to cancel the contract of a Chinese company.

Gaza ceasefire agreed after two-day flare-up

JERUSALEM/GAZA : Egypt brokered a ceasefire on Thursday aimed at ending a flare-up of rocket attacks from Gaza on Israeli towns and Israeli air strikes in the Palestinian enclave, the Islamic Jihad group said.
There was no immediate word from Israel, but a senior Defence Ministry official said earlier in the day he expected the fighting to die down soon.
“Following intensive Egyptian contacts and efforts, the agreement for calm has been restored in accordance with understandings reached in 2012 in Cairo,” Khaled al-Batsh, an Islamic Jihad leader, wrote on Facebook, referring to a truce that ended an eight-day Gaza war two years ago. Batsh said Islamic Jihad, which began launching rockets into Israel on Wednesday after Israeli soldiers killed three of its fighters a day earlier, would hold its fire as long as Israel did the same.
Minutes before Batsh posted word of the truce on Facebook, Israeli aircraft struck targets in Rafah, in the southern Gaza Strip near the border with Egypt, wounding three Palestinians, witnesses said. The Israeli military said “seven terror sites” had been hit.
Hours earlier, sirens sounded in the southern Israeli towns of Ashkelon and Ashdod. Police said rockets had landed in open areas, causing no casualties.
On Wednesday, the Israeli military carried out 29 air strikes and fired tank shells at targets in Gaza after Islamic Jihad launched 60 rockets towards Israel in the heaviest such barrage in nearly two years.
No casualties were reported on either side of the frontier in Wednesday’s incidents.
Prime Minister Benjamin Netanyahu said in a statement that Israel would “hit back with increasing force” against anyone who tried to ruin celebrations over the next few days of the Jewish holiday of Purim.
Palestinian sources noted that Gaza’s ruling Hamas Islamist movement had not joined in the rocket attacks - a sign that it hoped to avoid widening the conflict.
But, the sources said, Hamas also had not moved immediately to try to stop the launchings, apparently concerned it would be seen by Palestinians as less committed than Islamic Jihad to confronting Israel.
Islamic Jihad has strong ties with Israel’s arch-foe Iran and is the second largest faction in the enclave.
Last week Israeli forces seized a ship in the Red Sea which it said was carrying missiles to armed groups in Gaza. Officials said the arms may have been intended for Islamic Jihad.