Business ambience: ‘No investment allowed to fail in Pakistan’

KARACHI: 

As chairman of the Board of Investment (BOI), Miftah Ismail spends most of his time dealing with large corporations, which are often backed by foreign sponsors. But, he says, the real focus of the government should be on small businesses, accounting for most of the investment.

“Foreign investment is just $1 billion. The rest of the $33 billion invested annually is by local businessmen, some of whom might be the owners of lathe machines,” he said. “They are the ones being ignored.”

To address their issues, which normally involve other government departments, BOI has started to depute its officers to guide the businessmen through the process of getting permits and understanding regulatory requirements.

“Pakistan is ranked 110 on the international index of ease of doing business. We are trying to improve that ranking,” he says, adding that there is no realistic way to introduce the so-called one-window operation for investors.

Yet even in areas where government has directed most of its focus, the projects are moving ahead at a snail’s pace. Beset by a crippling power crisis, Pakistan is offering some of the world’s highest return on investment in power plants. The rate of return could go as high as 30%.

Ismail, who is also the Chief Operating Officer of Ismail Industries, a dynamic confectionary firm that has popular brands like Candyland, says the government is trying its best.

“No investment has been allowed to fail in Pakistan. On the contrary, we have actually bailed out businesses from taxpayers’ money,” he said in an interview with The Express Tribune. “So it’s wrong to assume that absence of protection undermines investment.”

The government-guaranteed return for Independent Power Producers (IPPs) is in the range of 17% to 18%. Depending on efficiency of power plants and the cost they cut on fuel, this could go up to 30%.

But when it comes to Islamabad’s initiative to promote private investment in coal-fired power plants in Tharparkhar district of Sindh or on the outskirts of Karachi in Gadani, infrastructural and security concerns crop up.

“No one wants to get involved in the hassle especially when there are other investment avenues like the stock exchange that offer better return without any inconvenience.”

The BOI also has to deal with salvaging projects like Tuwairqi Steel and Byco’s refinery, which have been facing problems because of indecision of various government functionaries.

Tuwairqi, a project of Saudi Arabia’s Al-Tuwairqi Holdings, has faced commissioning delays for months over a dispute related to price of gas, which is key raw material for it to make steel.

“They want gas for Rs123 per million British thermal units (mmbtu). That is even less than the cost at which gas is being produced in the country. The 35 million cubic feet per day (MMCFD) gas they want also means we have to curtail supply to someone else.”

He disagrees that government had guaranteed gas supply at a fixed price when work on the project started eight years back.

The only way Ismail sees out of the situation is for the company to give at least 5% shareholding to government and commit investment of at least $900 million.

“The BOI can sell this idea to other government functionaries. At Rs123 per mmbtu we will be giving them a subsidy of Rs25 billion over the next four years. That’s the arrangement we have worked out.”

Ismail insists that the present government has not gone back on any of the economic policy initiatives of the previous administration. “We are ensuring continuation of policies.”

Economic chaos: Businessmen oppose calls for civil disobedience

KARACHI: Federation of Pakistan Chambers of Commerce and Industry (FPCCI) President Zakaria Usman has said the country is at a critical economic and political juncture and cannot afford uncertainty at this point.

With Imran Khan-led PTI and Tahirul Qadri’s PAT staging protests and sit-ins in Islamabad, the investment climate has remained uncertain.

“The current political uncertainty has hampered the process of economic and commercial development in the country,” he said in a statement on Monday.

Usman also said that the recent call of the protesting political parties for civil disobedience is not understandable and the business community cannot support it.

He said this movement may provoke the public for non-payment of taxes and utility bills that can have an adverse effect on Pakistan.

“The business community, which is the real political stakeholder, is against any upheaval, including the call of civil disobedience,” said Usman. “The community does not want to close businesses and industries as it cannot afford defaults to the banks and other organisations.”

He suggested protestors to avoid converting their democratic right of peaceful protest into illegal and undemocratic violence-prone activities.

He said that the political scenario should not affect the economic and trade activities. The strikes, mob harassments and destruction of public and private properties are the national losses that this country cannot afford.

He requested both the ruling and opposition parties to keep the economy separate from politics. During the last two weeks, the country has suffered loss of billions of dollars due to political unrest, he added.   The president questioned the compensation of the losses, adding that ultimately, these political parties will revert to the business community for tax collection.

Usman concluded by urging all political forces to settle the current political crisis through dialogue and all political parties should come forward for this important cause.

Without bidding: Kuwaiti firm likely to win more exploration rights

ISLAMABAD: 

The government has decided to offer at a stepped-up pace the hydrocarbon exploration blocks to foreign state-run companies on a strategic partnership basis without going through the hassle of inviting bids.

The decision comes in the wake of poor response from big international oil and gas companies to offers of investment in Pakistan’s petroleum sector.

According to sources, the government is planning to award another exploration block to a state-owned company of Kuwait based on strategic partnership, which will not only attract investment, but will also push other foreign companies to follow suit.

“Kuwaiti government is taking keen interest in the upstream petroleum sector of Pakistan and desires to pour more capital into exploration of oil and gas,” said an official of the Ministry of Petroleum and Natural Resources while talking to The Express Tribune.

“Earlier, the deputy prime minister of Kuwait during his visit to Pakistan had requested for the award of exploration blocks by engaging in strategic partnership.”

The Kuwaiti government through Kirthar BV, a subsidiary of state-run Kuwait Petroleum Corporation, has sought petroleum exploration rights in the Paharpur block in a state-to-state agreement without any bidding.

The Paharpur block is located in Khyber-Pakhtunkhwa and the government in the province has given its consent for the award of the block to the Kuwaiti firm in a strategic partnership arrangement.

As per normal practice, the exploration blocks identified by oil and gas companies are advertised in newspapers and offered through open competitive bidding. However, under the Petroleum Policy of 2012, the government can grant the status of strategic partner to the oil companies representing foreign governments without competitive bidding on mutually acceptable terms and conditions.

In this regard, the Ministry of Law has assessed the memorandum of understanding (MoU), which will be signed between the government of Pakistan and Kuwait Petroleum Corporation and its subsidiary Kirthar Pakistan BV.

Under the MoU, the company has committed to undertaking a minimum work programme valuing $9.5 million including drilling of two exploratory wells.

Pakistan has been grappling with the rapidly widening gap between demand and supply of energy for the past few years, primarily due to depletion of major gas fields and disproportionate new discoveries.

To bridge the gap, the government is undertaking serious steps to create an investment-friendly environment in the oil and gas exploration and production sector to woo foreign investors.

However, no major new exploration firm has expressed interest in the upstream petroleum sector because of a host of challenges including security threats.

To overcome the obstacles and encourage the investors, the government is weighing various options including the award of hydrocarbon blocks on a strategic partnership basis, which may open a new window for foreign countries to follow and invest in the search for oil and gas.

In the last few years, the government has awarded one block each to China ZhenHua Oil Company and Kirthar Pakistan BV based on strategic partnership. Now, it has planned to award another block to the Kuwaiti firm in an effort to attract investment and deepen bilateral relations with Kuwait.

TV Talk: Most anticipated season premieres

The shows that kept us glued to the screen throughout winter 2013 and spring this year are set to return with new twists, drama, action and exciting secrets unraveled. Rounding up the shows that are expected to make 2014 a record-setting year for sheer volume of quality TV, we give you this year’s most awaited TV shows, compiled by totalfilm.com

Boardwalk Empire

Inspired by the book, Boardwalk Empire the American period crime drama television series created by Emmy award winning writer and producer Terence Winter, is set to return this year for its fifth and final season. Ultimately, season 5 promises to live up to its Golden Globe award winning title, with a whole new twist for fans.

The Walking Dead

Frank Darabont’s tale of a post-apocalyptic world full of flesh eating zombies will return for a fifth season on television this October with Scott Gimple, the current show runner returning in it as well. The upcoming season will sure be a treat for thrill lovers. 

Game Of Thrones

The epic fantasy show that has broken rating records and become the most popular TV show in HBO networks history has recently returned with another anticipated and exciting season. Tensions rise in the new season as the kingdoms prepare to battle while the Lannister’s maintain a stronghold over the Iron Throne.

Gunmen attack Saudi prince's motorcade in Paris, rob 250,000 euros

PARIS: Kalashnikov-wielding robbers have attacked the motorcade of a Saudi prince in Paris, making off with 250,000 euros in cash and reportedly stealing “sensitive” documents, French police said Monday.

The theft took place in northern Paris as the motorcade was making its way from the Saudi embassy to an airport in Le Bourget, said police, who confirmed there were no injuries.

The attack took place late on Sunday around Porte de la Chapelle in northern Paris, a police source said.

The car attacked was a supply vehicle that was stolen and later found burned, this source added.

No suspects have yet been apprehended.

According to the local daily Le Parisien, the men also stole documents said to be “sensitive”.

“It’s quite an unusual attack. They were obviously well-informed. It’s true that it’s quite a rare way of operating,” the police source told AFP.

Assange says will leave London embassy 'soon'

LONDON: WikiLeaks founder Julian Assange said Monday he would “soon” leave Ecuador’s embassy in London but his organisation played down the comment, saying he would not depart until there was an agreement with Britain’s government.

A pale and bearded Assange, who sought asylum at the embassy two years ago, told a press conference: “I can confirm I will be leaving the embassy soon.”

His comments came after British media reported, quoting a WikiLeaks source, that he was suffering from the potentially life-threatening heart condition arrhythmia and had a chronic lung complaint as well as dangerously high blood pressure.

Assange, 43, insisted he would not be leaving for the reasons “reported by the Murdoch press” and did not elaborate further on how or when any departure would happen.

But speaking after the press conference, WikiLeaks spokesman Kristinn Hrafnsson indicated that Assange would remain at the embassy until an agreement was brokered in his case.

“What Julian meant is that his plan is to leave as soon as the British government honours its commitment,” he said.

Asked about Assange’s health, Hrafnsson added: “He seemed pretty well to me.”

Assange sought asylum at the embassy in June 2012 to avoid extradition to Sweden, where he faces allegations of rape and sexual molestation which he strongly denies.

He fears extradition to Sweden could lead to him being transferred to the United States to face trial over WikiLeaks’ publication of classified US military and diplomatic documents.

Former US Army private Chelsea Manning — formerly Bradley Manning — was sentenced to 35 years in prison last year for passing 700,000 classified documents to WikiLeaks.

Britain’s Foreign Office indicated that its position on Assange’s case remained unchanged and that it remained “as committed as ever to reaching a diplomatic solution.”

“We are clear that our laws must be followed and Mr Assange should be extradited to Sweden. As ever we look to Ecuador to help bring this difficult, and costly, situation to an end,” a spokesman added.

Assange was accompanied at the press conference by Ecuador’s Foreign Minister Ricardo Patino, who did not mention a plan for Assange to leave the embassy but called for the governments involved in his case to take action.

“The situation must come to an end — two years is simply too long,” Patino said.

“We continue to offer him our protection… we continue to be ready to talk with the British government and the Swedish government to find a solution to this serious breach of Julian Assange’s human rights.”

Britain funds round-the-clock policing at Ecuador’s embassy in London’s upscale Knightsbridge district because of Assange’s presence.

In June, Scotland Yard said it had so far spent £6.4 million ($10.9 million, eight million euros) on guarding the building.

The embassy offers Assange no outdoor space or direct sunlight, making for uncomfortable living conditions.

The WikiLeaks founder spoke of his anger at being stuck in the embassy in an interview with this week’s Mail on Sunday, describing how he could not even “keep a pot plant alive for long in here”.

“My stubbornness is my best and my worst quality. I won’t give up,” he told the newspaper.

Country far from goals of Vision 2025

ISLAMABAD: Pakistan’s policy framework contains a number of exceptional goals and objectives, including improved quality of education, elimination of all types of disparities and imbalances and significantly improved enrolment rates. However, in the current structure, the country is far from achieving the Vision 2025.

The vision has positioned human resource development at the top of national agenda by capitalising on social capital, strengthening it and improving the human skill base to optimally contribute to and effectively benefit from economic growth. But unfortunately, an analysis of the current year’s federal budget reveals how the wellbeing of citizens has been ignored by allocating more than 18% of the budget to defence needs. Even in today’s world of knowledge-based societies, Pakistan’s allocation for health and education is the lowest in the region.

According to the budget 2014-15 document, the education and health sectors have once again not received their due share. An amount of Rs74.031 billion has been earmarked for both sectors, showing an increase of only 1.5% compared to the previous year, which is insignificant considering the population growth and inflation hovering around 9%.

Of the amount of Rs74 billion, only 13.5% goes to the health sector. The development plan consists of ambitious schemes such as Metro bus services, Metro trains and a motorway from Karachi to Lahore.

In the Public Sector Development Programme (PSDP) for 2014-15, major investment is envisaged in the energy sector, followed by transport and communications. Of the programme’s size of Rs1,175 billion, only Rs12.5 billion has been set aside for achieving the Millennium Development Goals (MDGs).

On the other hand, under pillar one of the Vision 2025, the government promises that a larger share of the gross domestic product (GDP), at least 4% to education and at least 3% to health, would have to be allotted to these sectors. The aim is to achieve universal primary education with 100% net primary enrolment, expansion of higher education coverage from 7% to 12% and increase in the proportion of population with access to improved sanitation from 38% to 90%.

The resource allocation does not show any political will to prioritise human development. In its current shape, Pakistan is the embodiment of a security state where human development barely attracts attention.

No close to reality

The budget is far from being poor-friendly. The myth of macro-stabilisation and its consequent trickle-down effect has disappeared. Misplaced priorities coupled with the shotgun approach to allocations will worsen economic slowdown.

At this juncture, the government needs to stabilise the economy, rebuild the eroded credibility, bridge the fiscal gap, re-establish confidence in public institutions and improve the investment climate. In parallel with its macroeconomic stabilisation programme, the government also needs to develop a comprehensive plan of structural reforms.

Pakistan must respond to such challenges effectively. This calls for a change in the mindset to incorporate the quest for excellence.