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-----Original Message-----
From: "Khoaja Naveed Uddin" <Naveed@aljazera.com>
Date: Fri, 28 Dec 2007 13:58:37
Subject: FW: Pakistan rating reflects unstable politics: Moody's
Pakistan rating reflects unstable politics: Moody's
The news
NEW YORK (Dec 28, 2007): Pakistan's credit rating is not expected to change in light of the assassination of opposition leader Benazir Bhutto, Moody's Investors Service said on Thursday, if the country's economic policy framework does not change.
Moody's rates Pakistan "B1" with a negative outlook, similar to the "B+" rating with a negative outlook from Standard & Poor's. Both ratings are four notches below investment grade. "As long as these unfolding political events do not have a direct negative impact on the policy framework or on external financial support, we don't think that the fundamental credit worthiness of Pakistan is affected at this stage," said Aninda Mitra, sovereign analyst at Moody's Investors Service in New York.
"This is not to say that the balance of risks to the (economic) policy framework are unlikely to change. They remain uncertain but that is captured by the negative outlook that we currently maintain on the `B1' foreign currency bond ratings," Mitra said.
"Although emergency rule has subsequently been lifted, the political damage remains. The damage to the prospects for political stability were done back then and what we are seeing right now is some of this uncertainty playing out," Mitra Said.
Business Recorder
December 27 tragedy may hit country's economy
RIZWAN BHATTI & ANWAR KHAN
KARACHI (December 28 2007): The recent waive of violence is feared to hit the country's economy badly, which will scale down the foreign investment, inflows of remittances and exports orders significantly in its wake, economists said in a reaction to Benazir's assassination in Rawalpindi on Thursday.
Talking to Business Recorder soon after the suicide attack on former prime minister Benazir Bhutto that also left several others dead, they dubbed the recent violence, as a direct attempt on the country's stability and its growth of economy.
Shahid Hassan Siddiqui, an economist, said the inflows of remittance would significantly decline, besides huge cancellation of export orders. He suggested the government should reduce its import bills forthwith to avoid collapse of foreign reserves after this incident, which was inevitable to occur. Calling upon the government, he said it should immediately initiate 'serious economic plan' to successfully avert economic crisis in the country.
The December 27 mayhem has been shown negatively by the world media intended to give impression about the country had been made hostage by the militants and the militancy was on the rise, which will put a negative impact on the foreign investment coming into the country, he observed.
"Now, the country will face fresh and stern pressure from the world community for intensifying crackdown on militants, which is also feared to trigger series of violence in a chain reactions by the militants across the country," Shahid maintained.
Another economist, Muzamil Hussain, sees the latest waive of violence as a huge setback to the country's growing economy, saying that foreign investment was feared to scale down. He said that foreign investors were planning to come to Pakistan, but now it would be very difficult to assess their future plan.
Transaction toward democracy after January 2008 general election was being seen significant by the foreign investors keeping in view a political favourable change for them, but recent incident will certainly make them review their plans, he observed.
"At least, for three to six months foreign investment could remain disturbed," he said, adding that foreign investment in the first half of the current fiscal year was already low and its pace may further slow down after this incident in the next half. Experts expected that in the second half of the current fiscal year, the foreign investment would go up, but now it was being seen impossible to hit the desired level, he added.
Muzamil, however, expressed optimism over the GDP growth that would not be affected by the recent bloodshed in the country in the 'short-term'. About the industrial activities, he said they would remain, at least for a week, suspended. They would also put a negative impact on the country's economy.
Haroon Agar, vice-president, Karachi Chamber of Commerce and Industries (KCCI) expressed concerns over the possible cancellation of export orders, saying that recent terrorist attack would testify the apprehensions of panicked foreign buyers and investors about Pakistan was not a safe haven for investment.
He said that local exporters would now again spend huge money on travelling to foreign countries for placing orders, because foreign buyers may not visit the country in future.
Dawn:
Pakistan enters world cement market in a big way
By Parvaiz Ishfaq Rana
KARACHI, Dec 27: After remaining a traditional supplier of cement to Afghanistan for the last so many years, Pakistan has now entered the world market in a big way.
Shortage of cement in India and strong demand from North African countries, including Yemen, has compelled three major players in cement to further expand their production capacities within a short period of one year.
Industry sources disclosed that Bestway is further expanding its capacity by 4,000 tons per day, and the plant would come into production next year.
Similarly, Lucky Cement is also setting up another plant with a capacity of 6,000 tons per day and D G Khan is reported to be also working on similar plans.
So far around three million tons have been exported to these countries but exporters have yet to fully explore Indian market where annual demand stands at around five million tons.
Presently, India faces an acute cement shortage in its Southern states of Tamilnado and Madras and in north Punjab. However, reports indicated that the Indian industry is also working on a fast track to expand their capacity in these regions to off-set the shortfall.
In the meantime, Pakistani exporters were exporting cement to Iraq but due to acute port congestion, it remained irregular though there was great demand for cement after the war for reconstruction work.
However, cement units in northern areas of the country continued to feed the traditional Afghan market by supplying up to 2.5 million tons.
Similarly, strong demand for cement from North African countries, including Sudan, Ethiopia, Algeria and some other states, made its way through the Red Sea port of Djibouti.
On average, cement exports to African countries fetch between $110 and $115 per ton C&F.
Early this year, India began to face cement shortage and it immediately began to look around to supplement cement supplies which could have badly hampered its on going projects.
Consequently, Pakistani exporters taking clue began to explore the non-traditional Indian cement market, but to their utter dismay, they soon came to know that a number of non-tariff barriers (NTB) were hampering their export commitments to India.
Nevertheless, exporters did not lose heart and keep facing odds in order to capture Indian cement market, particularly at a time when trade balance is fully in favour of India.
Out of total trade between the two countries, presently 75 per cent are imports and only 25 per cent exports from Pakistan.
It took four to five months for Pakistani exporters to get registration and certification from the Bureau of Indian Standard (BIS).
A team of BIS experts also visited a number of cement manufacturing facilities. The issue was, however, decided in July during secretaries-level meeting of the ministries of commerce of both the countries.
After intense lobbying by the PHD (Punjab, Harriana and Delhi) Chamber of Commerce and some Pakistani exporters, it was also decided to allow cement exports through road.
Former president of Karachi Chamber of Commerce and Industry (KCCI) Amjad Rafi, who also attended these meetings, told Dawn that it was also agreed that both the sides would allow trucks to move into each other's border up to half or one km and construct truck terminal.
However, the National Logistic Cell (NLC) has already developed a truck terminal at Wagha with a capacity to accommodate about 100 truck lorries, but India has yet to construct the facility on its side at Attari border.
As a result of this, cement which is a bulk commodity, could not be exported through road.
Consequently, actual export of cement to India began late September or early October and according to industry sources, around 0.2 million tons have been exported, so far. However, a substantial quantity is in the pipeline because many loads are in high seas and some exporters are holding L/Cs.
Most cement exports to India had, so far, been through sea or by railway. The Pakistan Railways have doubled cement loading capacity to India.
However, exporters complain that railways freight charges for carrying cement from Lahore city to the border are Rs500 per ton ($8 per ton) while it covers only 35 km. Against this, they say on the Indian side, the freight is only $3 per ton for bringing goods from Chundrigar to the border area.
Exporters said cement exports to India through sea on an average earned $85 per ton C&F, and from Wagha border it remained little less. However, all these deals and transactions are finalised through Dubai where L/Cs are negotiated and are opened. There is also huge demand for cement by large Indian state-owned corporations and recently a delegation also visited Pakistan to seek shipment of around two million ton exports on government-to-government basis.
However, exporters lamented that they had been facing a number of problems with regard to cement export to India but no government department or agency had come forward to their help.
They said that the Trade Development Authority of Pakistan (TDAP) had been claiming to support non-traditional items and non-traditional markets, but they did not extend any help to capture the Indian cement market.
Amjad Rafi is highly critical of the TDAP role and said on many occasions, the FPCCI approached the authorities over the issue of cement export to India, particularly with regard to BIS registration and certification, but they did not even took the pain of replying to these communications.
He further said the TDAP had been giving freight subsidy to many non-traditional items and markets but did not take any interest in this non-traditional commodity which is being exported to a non-traditional market.
He said presently cement exports have been badly hit by high freight being charged by tucks and also by foreign shipping companies for the haulage of cement from Pakistan to India.
Zulfikar Thaver, president Union of Small and Medium Enterprises (Unisame), said small and medium exporters are not getting vessels for export of cement because there was little chartering arrangements.
Consequently, cement exports is only going through containerised vessels.
He said if adequate chartering is made, cement exports could be doubled as large-scale enquiries are being received by exporters.
Mr Thaver said that fresh enquiries have been received from Russia and buyers are quoting very attractive prices as Pakistani cement quality is of very high standard and holds good strength.
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