2016: Pakistan’s resurgence on the economic front
Number-crunchers are of the view that Pakistan has traversed the road from a difficult situation to a vigilant position.
Our economic policies have had a better pay-off in terms of restoring the confidence of economic actors and investors in Pakistan. Pakistan’s achievements in financial sector are an ongoing process and cannot be gauged year-wise. However, the positive and suitable environment has drawn world investors’ attention in the recent years, especially in 2016.
The political situation, which deteriorated post-9/11 attack, in Pakistan has become stable. Anti-terrorism drives launched in different regions of Pakistan with different names have yielded positive results.
Our economy grew by 4.7 percent in financial year 2016, which is the highest growth rate in the last eight years. Inflation remained subdued, below 3 percent average. Foreign exchange reserves of $24 billion are the highest in the history of Pakistan.
Some of the significant financial achievements made by Pakistan in 2016 are as follows:
The game-changer: China Pakistan Economic Corridor
The China Pakistan Economic Corridor (CPEC) project is an economic corridor comprising a collection of projects currently under-construction at a cost of $51 billion.
CPEC aims to facilitate trade route that connects Kashgar and Gwadar through a network of highways, railways, and pipelines.
It is the first and most important corridor out of six proposed corridors of China’s ambitious One Belt, One Road (OBOR) initiative to reach out to global markets through shorter routes. This corridor is about securing China’s trade routes and allowing it to position itself in the Arabian Sea.
The project is predicted to create upwards of 700, 000 direct jobs and add 2 to 2.5 percentage points to the country’s annual economic growth. This will improve the lives of people of Pakistan and China by promoting bilateral connectivity, construction, explore potential bilateral investment, trade, logistics and people-to-people contact for regional connectivity.
CPEC would have positive impact on the whole region specially neighboring countries including Iran, Afghanistan and India.
Gwadar Port, the keystone of the flagship CPEC project, has been inaugurated with the first outgoing shipment of containers carrying Chinese goods on November 13, 2016.
Prime Minister Nawaz Sharif on December 14 inaugurated a 448-kilometre-long Sorab-Hoshab road, an essential segment of the western route of CPEC.
On this occasion, Nawaz Sharif said the dream of Balochistan’s prosperity being realized with completion of several development projects, ensuring a new Pakistan in the making.
This partnership is believed to place Pakistan’s economy on a more sustainable path. As China targets Central Asia, the Middle East and Africa as part of its strategy, it cannot afford to have an economically unstable partner.
So far, projects worth $30 billion have been implemented under CPEC, officials said.
Pakistan Stock Exchange emergence
Karachi, Lahore and Islamabad stock exchanges were merged into the Pakistan Stock Exchange (PSX) on 11 January this year. PSX has its trading offices in Karachi.
The integration was made to help reduce market fragmentation and create a strong case for attracting strategic partnerships necessary for providing technological expertise and assistance.
A Chinese consortium under a bidding process in December, has won 40pc strategic shares of the Pakistan Stock Exchange (PSX).
The winning team comprised three Exchanges led by China Financial Futures Exchange Company Limited and supported by the Shanghai Stock Exchange and the Shenzhen Stock Exchange.
MoUs to remember
2016 has proved to be prosperous for Pakistan in terms of deals, agreements and memorandum of understandings (MoUs) with foreign countries including China, Turkey, Iran, Sri Lanka and Belarus.
‘Weapons for peace’
Several important MoUs were signed on the first and ongoing second day of the ninth International Defence Exhibition and Seminar (IDEAS) 2016 held last month at Expo Centre in Karachi.
Minister for Defence Production Rana Tanveer Hussain said Ukraine has agreed to provide engines to Pakistan for 200 al-Khalid II tanks.
The minister hailed the agreements signed with Turkey and other countries as a ‘breakthrough’ for Pakistan’s defence capabilities.
Pakistan also signed an agreement with Turkey to sell 52 Super Mushak basic trainers and is preparing Super Mushak jets for Nigeria and Qatar as well.
Pakistan Air Force (PAF) signed an MoU with a French company on technical collaboration in production of JF-17 Thunder jets at IDEAS.
The French company under this MoU will provide technical aid to PAF for electrification of JF-17 Thunder jets.
The MoUs signed with other countries are as follows:
Seven agreements and 17 MoUs were signed with China only by Chief Minister of Punjab (CM) Shehbaz Sharif on his two-day visit to China in July.
According to Chinese state media, the agreements are related to energy, textiles, water treatment, steel, establishment of industrial estates, training of master trainers in different skills and the promotion of trade fairs and exhibitions.
Among several agreements and mutual understandings to strengthen bilateral ties during President of Turkey Recep Tayyip Erdoğan’s two-day visit to Pakistan in November, Pakistan and Turkey agreed to develop a comprehensive, long-term and forward-looking framework for the bilateral defense cooperation.
Turkey announced to give Pakistan 40 modern fighter helicopters of worth two billion dollars. Erdogan said that his country will also provide Pakistan light assault rifles of worth one million dollars.
Both the countries committed to further enhancing bilateral cultural collaboration and people-to-people contacts through tourism; cultural and educational exchanges; collaboration with regard to preservation and restoration of archaeological and historical sites; and promotion of Turkish and Urdu languages and literatures in the two countries including through the cultural centers being established.
During Iranian President Dr Hassan Rouhani’s visit to Pakistan in March, Pakistan and Iran signed six MoUs to strengthen cooperation in health, commerce, finance and foreign services.
Pakistan and Sri Lanka in January inked eight MoU during Prime Minister Nawaz Sharif’s visit to Sri Lanka.
The MoUs and agreements for cooperation were signed in the fields of health, education, trade, science and technology, tourism, gem and jewelry, during delegation-level talks between the two countries.
During visit of President of Belarus Alexander Lukashenko to Pakistan in October, Belarus signed 14 agreements and MoUs in the fields of trade, finance, science and technology, vocational training, education and culture.
The ‘All is Well’ report by the SBP
During the financial year 2016 (FY16), Payment Systems in Pakistan have shown significant growth in key performance indicators, a State Bank of Pakistan (SBP) statement said.
“It is encouraging to witness consistent upward trend in volume and value of payments through digital/electronic channels which compliment the SBP vision to promote digital payments in the country,” it said.
SBP said the volume and value of Large Value Transactions through RTGS reached 930,501 and Rs231.7 trillion respectively during FY16 showing an increase of 21% and 29% in volume and value respectively from the FY15.
“Though the volume of paper based transactions have decreased by 6 % during the year, they still constitute around 38% of volume of total retail payments. On the other hand, the use of e-Banking channels has shown bullish trend as evident from increase of e-Banking transactions by 16% in volume and 4% in value.
“Likewise, Real-time Online Banking transactions also rose 135.4 million by volume and Rs. 32.3 trillion by value showing an increase of 19% in volume and 2% in value of e-banking transactions during the period under review,” the press release said.
‘Pakistanis to use high-quality petrol now’
You must have lately noticed petrol color changing from murky orange to green. This is for you have started using more efficient and good mileage petrol for the last two months.
Earlier, Pakistan had been importing RON 87 standard petrol, which has been replaced by RON 92 standard petrol.
French carmaker agrees to assemble cars
French carmaker Renault this November confirmed to invest in a local assembly plant in Pakistan.
“As a result of the Finance Minister Ishaq Dar’s efforts and persuasion, Renault has decided to invest in Pakistan,” a statement from Prime Minister Nawaz Sharif’s office said.
“They will start assembling cars in Pakistan by 2018.”
Dar met with Renault executives in France in September, the statement read.
A Renault spokesman in Paris confirmed the plans, saying “Renault has entered into exclusive negotiations with Gandhara and Al Futtaim Groups to develop the Renault brand in Pakistan, including a manufacturing plant on the Gandhara site in Karachi.”