Pakistan for Sale?

While strictly criticizing their predecessors, current coalition government of Pakistan is actually following the foot steps of Shaukat Aziz and company.
  
In last few days, there are news items of new loans, from international institutions as well as friendly countries, streaming in Pakistan for one reason or the other. However, no plans are made public on how to pay back what is already being taken by previous government.

Interestingly, with issues like crisis of power, shortage of commodities, rising inflation, insecurity and political uncertainty, World Bank still considers Pakistan as one of the best investment destinations of the world.

Before we start getting high and jumping to seventh heaven, lets analyze why Pakistan is such an attraction for foreign investors. The News reports that foreign investors find Pakistan an attractive destination because they are allowed to invest in any sector and bid for any privatized enterprise. 
 
Besides, there is no limit to the profit they can make and they can repatriate 100 per cent of the capital anytime and remit their total profits to their countries. This definitely places us in league with free zone countries like UAE, Hong Kong, Mauritius etc.

However, instead of turning the influx of investment towards building sustainable infrastructure and uplifting industries, the government has provided a quick Return-on-Investment scheme to foreign investors. While Pakistan receive large foreign direct investment (FDI), at the same time outflow of profits/dividends in foreign exchange is also raising.

Pakistan for Sale video

As during the FY2006-07, such outflows on account of remittance of profits and dividends to foreign investors’ countries of origin amounted to $804.2 million against $504.4 million in FY2005-06.

So, this means that the investors are coming in for a quick suck, investing in most profitable sectors and taking their returns out, as soon as possible.

Here is what the foreign investors have taken out from various sectors in form of dividends and profit remittances during last Fiscal Year:

    * Power sector (especially thermal): $126.5 million
    * Communication Sector: $88.2 million
    * Financial Business Sector: $52.1 million
    * Oil and Gas Exploration Sector: $60.5 million
    * Petroleum Refining Sector: $48.2 million
    * Chemicals Sector: $29.4 million
    * Tobacco and Cigarettes Sector: $27.3 million
    * Food Sector: $21.69 million
    * Pharmaceuticals and OTC Products Sector: $19 million
    * Transport Sector: $15 million
    * Trade Sector: $14.4 million
    * Transport Equipment Sector (automobiles): $13.8 million
    * Food Packaging Sector: $5.8 million
    * Cement Sector: $5.6 million
    * Storage Facilities Sector: $5.1 million
    * Personnel Services Sector: $2.5 million
    * Tourism Sector: $2.4 million
    * Textiles Sector: $1.4 million

Pakistan for Sale video-2

With private entities like MCB selling 15-20% shareholding to Malaysian MayBank and government considering 10% privatization of Steel Mill, it is clear that national assets and resources of Pakistan are for sale, maybe not to the highest bidder but most favorable one.

$220 Million Bring Alcohol Exports To Pakistan

Pakistan earned $220mn on export of 0.3mn tonnes of alcohol up to October 31 while another 50,000 tonnes of alcohol is expected to be exported during the November-December period.

Pakistan, where alcohol consumption by Muslims is banned by law, produced 2.6mn tonnes of molasses during the 2007-08 sugarcane crushing season and on adding 50,000 tons of carry-over stocks at terminals and an equal quantity at the mills, the total available stocks of molasses stood at 2.761mn tonnes.

Industry and export sources say since conversion ratio of molasses to alcohol stands at 5:1 (five tonnes of molasses required to produce one tonne of alcohol), the estimated requirement of distilleries stood at 1.65mn tonnes for molasses.

The sources said alcohol prices in the world market remained on the upper side during 2008 which enabled Islamabad to earn more foreign exchange through exports. After touching around $800 per tonne, alcohol prices receded back to $600 per tonne.

Consequently, on exporting around 312,000 tonnes up to October 31, 2008, at an average price of $725 per tonne, Pakistan managed to earn around $220mn through export of alcohol. According to industry sources, the country exported 190,585 tonnes of alcohol last year (2006-07) and earned $112mn at an average price $550 per tonne.

“With the advent of each sugarcane crushing season, Pakistan had been exporting millions of tonnes of molasses at throwaway prices to European countries and Japan,” Kasim Hashim, the chairman of the Terminal Association of Pakistan, said. However, for the last several years it is being converted into three grades of alcohol – fuel or anhydrous, neutral or extra neutral and industrial or rectified ethanol Hashim said presently 16 distilleries are operating in Pakistan at 60% capacity although as more and more distilleries are coming up every year, there has been a constant rise in export of alcohol.

$220 Million Bring Alcohol Exports To Pakistan

During 2004, Pakistan exported 99,711 tonnes of alcohol, but in the subsequent year, the figure jumped to 122,104 tonnes. After exporting around 255,812 tonnes last year (2007), Pakistan is now poised to export a record volume of 350,000 tonnes of alcohol this year (2008), he maintained. He said around 9,000 tonnes of alcohol had been exported this year through ISO containers which were the latest method for haulage of liquid cargo.

Hashim said that ISO containers/tank are filled with alcohol from distilleries and loaded on trailers for direct loading on to ships. These tanks are air-tight and expensive because they are first cleaned by steam and are used only after survey is carried out. The industry is encouraging use of ISO tanks because they are fast for haulage of liquid cargo and are also easy to handle. Presently they are mostly reaching Dubai, but in coming years will encourage their use for Middle East and Africa, he added.

$220 Million Bring Alcohol Exports To Pakista-II

Export of alcohol is being hindered by congestion at the Karachi Port where tanker ships have to wait for their turn for several days, resulting in heavy demurrage charges. This is also draining out valuable foreign exchange because demurrage is paid in dollars, TAP Secretary Sultan Ahmed said.