Saturday, March 29, 2008

PM announces revolutionary steps in policy speech

Saturday, March 29, 2008
ISLAMABAD: Prime Minister Yousuf Raza Gillani has announced revolutionary steps in his policy speech at the floor of National Assembly after getting unanimous vote of confidence from the house on Saturday.

The prime minister in his landmark speech increased the support price of wheat from Rs. 510 to 625 per 40 kilograms. He announced lifting of ban on student and trade unions, while changed the status of PEMRA to make it a subsidiary of the ministry of information.

Muslim League (Q), Functional League, People’s Party Sherpao and Muttahida Qaumi Movement announced to support the prime minister.

The prime minister in his speech thanked Almighty Allah for his election in this holy month.

He also expressed his gratitude to People’s Party’s slain leaders Zulfikar Ali Bhutto, Benazir Bhutto, party chairman Bilawal Bhutto Zardari, co-chairman Asif Zardari and the party workers, leaders of allied parties Nawaz Sharif, Asfandyar Wali, Altaf Hussain, Pir Pagara, independent members and other parties that voted to him for confidence.

Prime Minister Gillani promised to take along all sides and work for the best interest of the country.

He vowed to strengthen the institutions and to improve law and order in the country. Talking about his government’s priorities he said terrorism and extremism is the most serious problem faced by the country. He called the militants to shun the path of violence and initiate dialogue with the government.

Price hike and unemployment are other key problems faced by the country, he said. The government would provide jobs to jobless, he said.

The prime minister welcomed the COAS decision of withdrawal of the on duty military officers from the civilian departments adding that it has boosted the prestige of the armed forces.

The Prime Minister announced repealing of the draconian Pemra laws of Nov 3, 2007 adding the Parliamentary Reconciliation Committee recommendations will be introduced.

The prime minister said media would be allowed to witness proceedings of the parliament.

Gillani said he would take along the APDM parties with him adding that all provinces have confidence over his government.

Speaking in the National Assembly after taking vote of confidence, he said maintaining law and order in the country would be the top priority of his government for which terrorism needs to be rooted out.

“We are ready to talk to all those who are ready to lay down their arms and wanted peace,” he said.

He said he would announce a special package for tribal areas to give them employment and to remove their backwardness and other social evils.

The Prime Minister also announced to revoke FCR.

He welcomed the announcement of the Chief of the Army Staff that all army personnel from the civil departments will be called back.

“This announcement by the COAS will enhance the dignity, respect and honour of the army.”

He expressed the hope that all the army personnel from civilian departments will be called back within two weeks.

The Prime Minister said his government will take steps for the restoration of deposed judges. As a first step, these judges have already been freed from detention.

Referring to power, flour and water crises in the country, Prime Minister Gilani said these problems were not easy to tackle. He said there was a possibility of more load shedding in the country during the summer season.

He said to overcome the electricity shortage in the country, which at present stands at 3000 megawatt, new power units will be set up and PEPCO has been asked to issue 10 million energy saver bulbs at discounted prices.

The shortage next year, he added, is expected to reach 4000 MW.

He said in the first phase of Thar Coal Project the electricity generation will be 5,000 mw which will increase to 20,000 mw in the next phase.

He said Wapda has been asked to complete the feasibility of large dams and investment in the project of Keti Bandar will be invited again and lighting on government buildings has been stopped.

To save the wastage of water, he added, canals will be brick lined and small dams constructed to ensure supply of water for irrigation and drinking purposes.

He said the budget of the Prime Minister House will be cut by 40 percent and hoped that other departments too will follow the example.

The cabinet members will not use a vehicle of more than 1600 cc and they will only be allowed Economy Plus class during air travel.

He said like many other democratic countries, during the Question Hour the Prime Minister would also be present in the house to answer questions.

To provide employment to the fresh graduates, Prime Minister announced the setting up of Literacy and Health Commission. It will also ensure employment to one person in a household.

He said a Madrassa Welfare Authority will be set up to carry out the audit of the accounts of all madrassas in the country. The authority will be responsible to ensure that curricula of all madrassas are uniform.

The Prime Minister said that every year one million housing units will be constructed in the country. He also announced the launch of 5-marla housing scheme in rural areas for the poor besides provision of houses on 80 square meters and flats in the cities for the general public.

He said all retiring government servants will be given flats or houses and the provinces have also been directed to launch similar schemes for the retired persons.

Friday, March 28, 2008

Rs428m food security project

By Sher Baz Khan

ISLAMABAD, March 27: The Ministry of Food, Agriculture and Livestock and the Rural Support Programme Network (RSPN) have signed a Rs428 million contract to maximise crop production in over 1,000 villages across the country as part of a national food security project.

Under the contract, the ministry and the RSPN will implement the social mobilisation component of the special programme for food security and productivity enhancement of small farmers in 1,012 villages under the Crop Maximisation Project (CMP-II).

The project will be implemented in 26 districts with the aim of ensuring adequate food supply through increased production of food and cash crops. The project is expected to generate employment and provide sustainable livelihood and income in the food-insecure areas.

Officials say that the project’s outreach will be increased to 13,000 villages by the year 2015-16 under a phased programme as part of the government’s Mid-term Development Framework.

Social mobilisation is the centrepiece of CMP-II project because farmers in the target villages will be organised into associations and village organisations which will work with the project staff.

The project will be implemented by the RSPN over a period of four years, starting from April, in partnership with its six rural support programmes — the Aga Khan Rural Support Programme, Balochistan Rural Support Programme, National Rural Support Programme, Punjab Rural Support Programme, Sarhad Rural Support Programme and the Sindh Rural Support Programme.

Two Cheers for Free Trade

by Chris Farrell

March 27, 2008, 7:46PM EST text size: TT

Pacts like Nafta are essential to the health of the U.S. economy, but we could do a lot more to relieve the unpleasant side effects
by Chris Farrell

Remember the "giant sucking sound"? That was 1992 Presidential candidate Ross Perot's colorful auditory description of how multitudes of Americans would lose their jobs to low-wage competitors in Mexico.

Well, it's more than a decade and a half later, and Perot's bĂȘte noir, the Nafta agreement, is once again the subject of heated debate in a campaign for the White House. Democratic Presidential candidates, Senators Barack Obama (D-Ill.) and Hillary Clinton (D-N.Y.) have both criticized the agreement (BusinessWeek, 3/19/08).

But the regional fears Nafta inspired in 1992 have gone global in 2008. In addition to Mexico, most of the world's dynamic emerging markets, including China, India, and Brazil, have become strong players in the global economic arena. Americans worry about competition from overseas companies and workers from other lands emigrating to the U.S., especially with the economy faltering amid falling home prices, tottering financial markets, and shaky consumer confidence.

The case for freer trade and open markets is overwhelming. Economic evidence and economic history alike support the view that freer trade over time invigorates economic growth by encouraging the spread of new commercial ideas, new technologies, and new ways of organizing everyday life. Consumers enjoy lower prices and greater choice. Competition from overseas rivals encourages corporate efficiency and innovation.

The Politics of Trade
To be sure, free trade is a powerful economic medicine that can have some unpleasant side effects, and policymakers could do a better job of ameliorating attendant job losses and other economic dislocations. But the problems associated with free trade are manageable compared to those caused by closed economic borders. (Just ask Messrs. Smoot and Hawley.)

Yet many economists worry that election-year pressure from voters to "do something" about income inequality, stagnant wages, and pink slips is pushing Washington toward protectionism. Invoking the Harry Potter books, Greg Mankiw, Harvard University economist and former head of the White House Council of Economic Advisors, writes in a recent New York Times opinion piece that "no issue divides economists and mere Muggles more than the debate over globalization and international trade." Mankiw sees the crux of the problem as this: "Where the high priests of the dismal science see opportunity through the magic of the market's invisible hand, Joe Sixpack sees a threat to his livelihood."

With all respect to Mankiw, a terrific economist with a best-selling textbook, that's nonsense. First of all, give Joe Sixpack credit. The knowledge gap between the "high priests" and ordinary Americans is exaggerated. It seems to me most voters have a pretty good grasp of the gains from freer trade with the rest of the world. Protectionists and immigrant-bashers garner plenty of media attention, yet voters have handed over relatively little power to the apostles of protectionism over the past three decades or so. Just ask free-trade opponents Ross Perot, Pat Buchanan, and Tom Tancredo, each of whom failed in a Presidential bid. Meanwhile, Bill Clinton and George H.W. Bush each pushed through a number of free-trade agreements during their Presidencies.

Yes, the politics of trade is often a dance with two steps forward and one step back. Yet at the end of the day the embrace of globalization is strong.

Keeping the Faith
Even more important, it's not Joe Sixpack who is at fault. It's economists such as Mankiw who bear much of the blame for the current backlash in many quarters against international competition. As everyone who took Economics 101 knows, the gains from trade are dispersed throughout the economy while the costs are highly concentrated. Too many employees in recent years have felt the downside of "creative destruction." Thanks to the routine corporate restructurings, downsizings, reengineerings—pick your favorite euphemism—in Corporate America, there's little job security and stagnant wages.

Yet the economic priesthood continues to devote enormous intellectual firepower to making the case for freer trade and writing op-ed pieces extolling the benefits while ignoring the downside and dismissing the losers. "They have been quick to denounce opponents of this [free trade] agenda as 'protectionists' who should not be allowed in polite circles," writes Dean Baker, co-director of the Center for Economic & Policy Research in the latest issue of the Real-World Economics Review. "Yet, they rarely acknowledge the unavoidable implication of trade theory—that a large segment of the U.S. workforce will have to endure lower living standards as a result of the current course of trade liberalization."

In the battle of public-policy ideas, American economists do wield influence. It's time to claim victory in the free-trade debate. But if economists want Washington and the general public to keep the free-trade faith they need to get more involved in helping out the "losers." And it doesn't matter whether the culprit is international competition, deregulation, technological innovation, or some combination of the three.

No, protectionism is not the answer. Let's all agree on that, and move on. But preserving the economy's dynamism calls for the considerable brainpower of the economic profession to help come up with ways that offer workers better security in an era marked by rising fears of wage stagnation, job turmoil, long-term unemployment, and underemployment, unaffordable or unavailable health insurance, and increasingly at-risk pension plans. Now that's a challenge worth taking up.

Farrell is contributing economics editor for BusinessWeek. You can also hear him on American Public Media's nationally syndicated finance program, Marketplace Money, as well as on public radio's business program Marketplace. His Sound Money column appears on

Googling the Recession

Monday, Mar. 24, 2008
Googling the Recession
By Bill Tancer,8599,1725242,00.html

The problem with a recession is that due to a lag in the data, you may not know you're in one until it's over. The most interesting aspect of the "R" word as it manifests itself in the form of Internet searches is that despite all of the media attention focused on our worsening economy, most consumers don't understand exactly what a recession is.

I'll admit that even I had to look it up. What I found is that a recession is most commonly defined as two consecutive quarters of decline in gross domestic product (or GDP). In researching this column, I was surprised to discover that consumer spending represents over 70% of gross domestic product. This struck me as ironic because, according to Hitwise search data, consumers searching for "recession" are not even clear on what the term means: they're searching for the definition of "recession," just like I had.

In recent weeks, 24.9% of those searching the term "recession," continued on to, while 9.7% visited the educational site The most common searches for "recession" over the same time period included the terms "recession definition," "what is a recession" and "define recession." In just the last few weeks however, a new term has been rising quickly in the recession list: "surviving a recession." Despite an increase in these kinds of searches, our attention span for looming economic troubles remains remarkably short-lived.

On the week ending January 26, 2008, when the Dow Jones Industrial Average fell by 200 points after the Federal Reserve's interest rate cuts failed to kick-start the economy, the surge in searches for "recession" increased two-fold over searches for the term in the prior weeks of 2008. But as with searches for "gas prices" and "foreclosures," our concerns over the news was ephemeral. By the following week, those same searches decreased by 67%.

But if the bulk of Internet searches during that period focused on what a recession is, one might assume that the spike in these kinds of searches was driven by media coverage of the topic. Searches focused on "recession" may not be the best indicator of an economy in trouble. If we compare searches that contain the term "cheap," "discount" and "budget" during the same time period we might have a better understanding of consumer's economic sentiment.

When we compare searches that might be indicative of price consciousness, searches that contain the term "budget" have increased 4% when compared with the same week last year, while searches for "cheap" and "discount" are actually down 13% and 7% respectively, indicating that consumer concern may not be as great as assumed.

The real indicator might lie in aspirational searches, or those queries for things beyond most consumers reach. Searches for "Ferrari" are down 40% from the same week last year.

The question of whether we are truly in a recession will have to wait for months. Until then, we'll continue with our daily lives, while daydreaming less about that red Ferrari.

Monday, March 24, 2008

WTO members identify barriers in trade with Pakistan


Sunday, March 23, 2008

By Sajid Chaudhry

ISLAMABAD: During Pakistan Trade Policy Review at World Trade Organisation (WTO), many WTO members expressed their observations on Pakistan’s trade and economic policies and suggested ways for improvement.

United States identified book piracy, weak trademark enforcement, lack of protection for proprietary pharmaceutical and agricultural chemical test data and pharmaceutical patents, as serious barriers to bilateral trade and investment.

According to the details released by Geneva-based Pakistan’s WTO Mission, the US representative appreciated the challenging times faced by Pakistan during its political transition. The United States also encouraged Pakistan to submit its 2005 new and full subsidies notification to the WTO for review. It believed trade liberalisation had slowed and the privatisation agenda stalled. Increased government involvement in the economy had burdened the federal budget and created considerable market inefficiencies, it observed. Production and export support had risen, as had monopolistic activities of state-run companies.

Pakistan’s economic fundamentals had improved; persistent structural weaknesses had raised the costs of doing business with Pakistan, thereby impeding productivity and competitiveness. Reducing political uncertainty and continuing trade liberalisation and other productivity-boosting structural reforms to promote economic diversification and sustained growth could best address it. The representative of the European Communities referred to Pakistan’s trade ties with the EC, which remained its first trading partner. The EC appreciated Pakistan’s steps to significantly reduce peak ad valorem tariff rates but they remained on a number of items, including motor vehicles. While the Capital Value Tax on motor vehicle imports had been withdrawn in June 2007, additional restrictions applied to commercial imports of used vehicles. The EC encouraged Pakistan to re-consider its motor vehicle import policy.

The representative of China said the China-Pakistan free trade agreement, which had entered into force in July 2007, would help deepen and broaden their economic relationship. Negotiations on trade in services commenced in April 2007 and were expected to conclude before long.

Although Pakistan has not formally recoginsed Israel, the representative of Israel during trade policy review expressed concerns with several of Pakistan’s policy instruments. In particular, Pakistan did not accord MFN treatment to Israel, banning all imports. Israeli FDI was also prohibited. It sought explanations from the Pakistan delegation on how these measures conformed to WTO requirements on non- discrimination. The representative of India noted areas of concern such as Pakistan’s low level of tax collection, narrow basket of exports, low agricultural productivity, and regional imbalances. Bilateral trade remained relatively small. A major constraint was Pakistan’s continued denial of MFN status to India, with Indian exports restricted to a positive list of 1,802 products. India believed Pakistan’s restrictive trade regime with India sharply reduced the mutual benefits from bilateral trade and prevented the complementarities of the two economies from being realised. It urged Pakistan to reconsider its trade policy regime with India to conform to the GATT, and hoped that implementation of the South Asian Free Trade Agreement from January 2006 would improve the situation.

The representative of Japan cited Pakistan’s many challenges included under-invoicing by importers, which unduly lowered import prices and needed remedying to induce more joint-ventures, and a number of excise tax concessions favouring local content that seemed unjustified under WTO SCM Agreement.

The representative of Singapore said while Pakistan had liberalised, there was scope for improvement in tariffs, services, investment, and the use of anti-dumping measures. The representative of Thailand said Pakistan’s tax refund and rebate procedures for exporters could also be simplified.

The representative of Turkey identified remaining problems to be addressed included the considerable gap between the bound and applied rates, which reduced predictability, some domestic taxes that discriminated against imports, imposition of regulatory duties in addition to tariffs, the complex tax system, and the strong state involvement in trade. Turkey encouraged Pakistan to further reform these areas so as to improve the transparency and predictability of its trade regime.

The representative of Norway said that in order to positive FDI trend to continue it was imperative that domestic political risk and uncertainty be managed. The representative of Australia welcomed indications that it would continue to open services to international competition and that new market access would be reflected in its revised Doha Round offer.

The representative of the Republic of Korea identified that the use of discretionary reference prices had sometimes resulted in friction with importers and delayed clearance. Korea sought an elaboration from the Pakistani delegation on any plans to address this issue and to enhance the transparency of customs procedures.

The representative of Hong Kong and China looked forward to further improvements in Pakistan’s import tariff regime under the current market access negotiations. The representative of Canada urged Pakistan to reduce the complexity of its overall tariff structure, in particular reducing the 15 percent specific tariff rates and generally simplifying the 14 percent ad valorem rates. Regulatory duties on certain imports had recently become less transparent.