Pak exports may hit by US, EU' financial crisis

The Economic Coordination Committee (ECC) taking a serious notice on decreasing foreign investment in the country and gave a task to Board of Investment and State Bank for constitute for devising a comprehensive strategy for increasing the foreign investment within fortnight.

The ECC met under the chairmanship of Finance Minister here on Thursday. The matter related to decreasing in foreign investment was come under discuss. The Secretary Finance told the ECC that the current decreasing foreign investment can be matter of concern, but this decrease is mainly occurring in portfolio investment. While discussing on this issue, ECC directed the Board of Investment and State bank of Pakistan to come up a brief presentation on foreign investment in next meeting, which will tell the ECC about detailed process of calculating investment in the country, concerns of different companies for non-investment, reasons of low investment and their subsequent remedies for revival of investment.

The secretary gave a brief presentation about the key economic indicators and informed the meeting that Inflation is decreasing with overall Consumer Price Index (CPI) in Oct, 2011 is 11.0 percent as compared to previous year’s value of 15.3 percent in same month. Inflation on food items has been decreased from 21.0 percent to 11.7 percent and non food items from 11.9 percent to 10.5 percent in this year. He informed that there is sudden downfall in Sensitive Price Index (SPI) with a latest value of 5.70 percent.

He told that prices of the most of food items have been decreased except Rice. He highlighted that Large Scale Manufacturing has shown a great performance during the current year but the country’s export may come under pressure in the coming months because of the current economic crisis in Europe and US. Foreign Exchange Reserves stands at $16.90 Billion on 28^th November 2011.

The ECC also stressed that this current decreasing trend of inflation is not being projected among the general public properly. There is a dire need that this information gap should be reduced, so that people would also be informed about all positive changes as well.  In this regard, media should play its role and inform the public about this positive news.

The ECC deliberated on the summary proposed by Ministry of Petroleum and Natural Resources regarding of laying 50 km new pipeline from Latif field to Sawan plant where surplus capacity is available that can be used for processing Latif Gas. The summary states that if new avenues to process raw gas from Latif field are not fund out then the gas network will lose additional gas availability to the tune of 50-70 MMCFD. ECC was informed that the other companies (Kandanwari Joint Venture) has refused to work on it due to low earning, so SSNGPL and SSGPL be allowed to accept Latif gas into system by laying 50 km pipeline of cost Rs. 2.308 billion with certain modalities.   ECC approved in-principle the said proposal to go ahead and formed a sub committee comprising Deputy Chairman Planning Commission and representatives from Finance division, Petroleum division and Oil and Gas Regulatory Authority each. This sub committee will meet again shortly and put forwarded their recommendation to ECC regarding the detailed enabling steps of said proposal and its provisions and adjustments with the petroleum policy.

ECC deliberated on the recommendations of Ministry of Industries regarding purchase of 0.2 million tons of sugar from local market in order to continue the supply of sugar to Utility Stores in coming months and also to store sugar as a strategic reserve. ECC agreed to purchase sugar but with a strict provision that this sugar will not be purchased at the cost higher than the prevailing market value. In this regard, a sub committee comprising Finance, Industries and Commerce Secretaries, was formed which will formulate any mechanism including the negotiations with the sugar mill owners to purchase sugar below the market prices.