Newsletter 185

Newsletter

Publication 185

15th Oct 2024

The recent signing of a Memorandum of Understanding (MoU) on barter trade between Pakistan and Russia marks a significant milestone in their economic relationship. This historic agreement aims to enhance bilateral trade, with over 60 Pakistani companies participating in the Pakistan-Russia Trade and Investment Forum in Moscow. These companies, representing diverse sectors such as textiles, leather, sports goods, pharmaceuticals, food, agricultural products, logistics, and tourism, are eager to explore new business opportunities and strengthen economic ties. The collaboration between the two nations symbolizes a promising future for trade alliance, with an export value exceeding $500 million at stake.

Pakistan & Russia Signed Barter Trade Deal

Pakistan Aims to Increase Rice Export to Europe

Rice exports are crucial to Pakistan’s economy, ranking second in export value after cotton. With the government targeting an increase in rice exports from $4 billion to $6-7 billion, the Rice Exporters Association of Pakistan (REAP) is set to propose actionable strategies to achieve these goals within the next year. A key focus on addressing food safety concerns, particularly in the European Union, where standards are becoming more stringent. Pakistan currently holds a 25% share of the European rice export market, outperforming India’s 16%. To maintain this competitive edge, collaboration between the government and exporters is essential. Pakistan is committed to improving its standards to meet international food safety requirements. While the country is considered one of the lowest-risk nations regarding food safety, there are concerns about the potential impact of negative campaigns on its export reputation. Educating farmers on enhancing rice production quality is vital to reducing alerts and maintaining consumer confidence. Baluchistan, despite its small rice production, is known for cultivating some of Pakistan’s best organic rice. A collaborative effort among stakeholders is needed to develop a five-year strategy aimed at boosting Pakistan’s rice export capacity and ensuring compliance with international and to secure Pakistan's position in the global rice market.

PPL Asia E&P B.V. (PPL Asia), a subsidiary of Pakistan Petroleum Limited, has successfully reached a settlement with the state-owned Iraqi oil company, Midland Oil Company. This agreement resolves all issues related to the Exploration, Development, and Production Service Contract (EDPSC) for Block-8 in Iraq. Officially signed on October 6, 2024, in Baghdad, the settlement stipulates that Midland Oil Company will make a net payment of $6 million to PPL Asia through a third party. The accomplishment of this MoU is the peak of sustained negotiations with Iraqi authorities and represents a significant milestone for PPL Asia, allowing the company to conclude its contract for Block-8 while safeguarding its financial interests.

PPL Asia E&P B.V. Signed MoU with Midland Oil Company

Pakistan Is Poised to Lift Ban on Commercial Export of Livestock

Pakistan is set to lift its long-standing ban on the commercial export of sheep and goats, a restriction that has been in place for over a decade. This decision responds to increasing demand from Gulf countries such as Saudi Arabia, Kuwait, and the UAE. The ban, initially imposed by the Economic Coordination Committee (ECC) in 2009, aimed to address concerns about smuggling across the Afghan border, which had led to local shortages and price instability. The Executive Committee of the Special Investment Facilitation Council (SIFC) has reviewed the situation and agreed to lift the ban on live animal exports. With the lifting of this restriction, domestic investors have begun establishing small- to medium-scale feedlot fattening farms, expected to produce a surplus of sheep and goats in the coming years. The Ministry of National Food Security and Research (MNFSR) has reached out to Gulf nations to attract investment in these farms, with investors from Saudi Arabia, Kuwait, and the UAE showing significant interest. Pakistan's livestock sector is robust, producing approximately 70 million tonnes of milk and 3.447 million tonnes of meat annually, which includes 2.630 million tonnes of beef, 0.917 million tonnes of mutton, and 2.363 million tonnes of poultry meat. This move to lift the export ban is anticipated to enhance the country’s agricultural economy and meet international demand.

The Diamer Bhasha Hydropower Project (DBHP) is set to be integrated into the China-Pakistan Economic Corridor (CPEC) framework, with relevant authorities advocating for its inclusion in the $8 billion initiative. Chinese company PowerChina, which is currently constructing the Roller-Compacted Concrete (RCC) dam component, is also bidding for the second phase, which will focus on the underground powerhouse and associated power generation facilities. PowerChina has committed to ensuring the timely and high-quality completion of the project by leveraging its existing resources and equipment on site. The Diamer Bhasha project is being executed in two phases: dam construction and the development of power generation facilities. The Executive Committee of the National Economic Council (ECNEC) approved the initial PC-I for the dam in 2018, with an estimated cost of Rs480 billion. The second revised PC-I for land acquisition and resettlement, valued at Rs175 billion, received approval in September 2021. In April 2023, the PC-I for the power generation facilities was approved at a total cost of Rs1,424.36 billion, which includes a foreign exchange component of Rs715.88 billion (approximately $2.55 billion) and a local component of Rs78.48 billion. The project is expected to significantly enhance Pakistan’s energy capacity and contribute to the country's economic development under the CPEC framework.

Diamer Bhasha Hydropower Project Within the China-Pakistan Economic Corridor

Foreign Investment in The Maritime Sector

Malaysian companies, including Felda Global Ventures and KLK Malaysia, have reaffirmed their commitment to expanding operations through Pakistani ports during a recent meeting with representatives from the Pakistani Westbury Group. This discussion focused on enhancing foreign investment in the maritime sector and explored potential cooperation in various areas, including tourism, agriculture, and defense. Pakistan is poised to extend full support to all foreign investors, particularly from Malaysia. The country remains open to investors and is committed to resolving any hurdles that foreign investors may encounter, emphasizing its dedication to fostering a conducive business environment.

The role of the private sector is crucial in achieving Pakistan's ambitious export target of $100 billion within the next eight years. With the right strategies in place, the country has the potential to exceed this target, particularly with Small and Medium Enterprises (SMEs) poised to contribute $40-60 billion in exports over the next 3 to 5 years. The government is committed to facilitating the SME sector to help realize this potential and achieving the $100 billion target would not only be beneficial for the economy but also essential, as missing this goal could pose significant challenges. To drive this growth, there is a clear need to enhance production and leverage key sectors, including agriculture, manufacturing, information technology, mining, manpower, and creative industries. To support these initiatives, the government plans to collaborate with relevant departments and ministries to develop a comprehensive dashboard that outlines a clear roadmap for growth in these sectors. Some policies and incentives will be designed to encourage the private sector's contribution to national exports, ensuring a collaborative effort to strengthen Pakistan's economic landscape.

Small Medium Enterprises (SMES) Had the Potential Of $40-60 Billion Export

Pakistan And Saudi Arabia Seal Over $2 Billion

The recent signing of several memorandums of understanding (MoUs) with Saudi Arabia marks a momentous step in enhancing trade and economic cooperation, securing over $2 billion in bilateral investment. This investment is set to strengthen the already robust ties between the two nations, with the government reaffirming its commitment to facilitating the implementation of these agreements. Economic relations between Pakistan and Saudi Arabia, built on decades of brotherly ties, are poised to flourish further. The agreements cover a diverse range of sectors, including a $70 million investment in agriculture, advanced semiconductor chip manufacturing, and the establishment of a textile industry. Additionally, they include a white oil pipeline project, initiatives in hybrid power and transformer manufacturing, as well as cybersecurity measures. The MoUs also focus on the export of spices and vegetables from Pakistan and include plans for a manufacturing facility for surgical and dental equipment. The collaborations on digitalization initiatives further highlight the multifaceted nature of this partnership, promising mutual growth and development in various industries.