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Pakistan In Focus

Are we doing enough digitalisation?

While the world rushes towards increased adoption of digitalisation, Pakistan is still lagging far behind. In the “new world” of Covid-19, people are progressively becoming more comfortable with distant learning, virtual meetings and online purchasing. Developed countries’ experience shows the transformative impact of digitalisation. Internationally, there is a lot of discussion that countries should make structured efforts for creation and harnessing benefits of digital economy. There are increasing returns and prospects of long-run growth with the help of digitalisation. But what is digitalisation? This concept is constantly evolving due to its multifaceted and dynamic nature. Digital economy is also referred to as internet economy, “new economy”, or web economy.

Energy consumers to pay Rs1.1tr

The honest power consumers are likely to pay an additional Rs1.1 trillion to the powerful independent power plants (IPPs) including idle generation companies on account of rising capacity payments. The capacity payments have continued to increase and are expected to touch a high of Rs1.6 trillion in 2023. During the tenure of Pakistan Tehreek-e-Insaf (PTI) government, the capacity payments have swelled 53% from 2018 to 2021. The capacity payments stood at Rs500 billion in 2018, the year when the PTI came to power. This has jumped to nearly Rs950 billion in 2021, registering an increase of 53% or Rs450 billion. This amount has been billed to the honest consumers who are paying their electricity bills every month. The government has taken different measures to curtail the skyrocketing circular debt, which touched the Rs2.3-trillion mark in January this year. The government has also struck a deal with the IPPs. However, the deal has come to a halt now following action taken by the National Accountability Bureau (NAB).

Iran permits kinnow import from Pakistan

After nine years, Iran has lifted restrictions on the import of Pakistani kinnow. Taking to his official Twitter handle, Minister of Foreign Affairs Shah Mehmood Qureshi tweeted, “I am pleased to share some good news for our citrus farmers. Following discussions, (I am) happy to announce that Iran has lifted restrictions on the import of Pakistan’s kinnow.” Qureshi met with Iranian President Hassan Rouhani at the presidential palace on Tuesday. He also met with Pakistani diplomats in Tehran to discuss ways of strengthening economic and trade relations between Pakistan and Iran. “After nine years, Iran’s market will be open for kinnow season of 2021-2022,” said All Pakistan Fruit and Vegetable Exporters and Importers Association (PFVA) Patron-in-Chief Waheed Ahmed. Federation of Pakistan Chambers of Commerce and Industry (FPCCI) former chief of horticulture exports Ahmad Jawad said that it was great news for the kinnow export industry that finally Iran had lifted its longstanding ban, which had been placed in 2012.

Monthly circular debt reporting introduced

The Power Division has introduced monthly circular debt reporting, which indicates the factors contributing to its build-up. During a briefing, Federal Minister for Energy Muhammad Hammad Azhar was apprised of the current stock of circular debt, which stood at around Rs2.3 trillion. The minister was briefed about the ongoing development projects under the Power Division, which included major transmission and distribution improvement schemes. The Public Sector Development Programme (PSDP) portfolio of the Power Division for fiscal year 2020-21 is Rs74.5 billion, of which a major portion is contributed by distribution companies (DISCOs) and National Transmission and Despatch Company’s (NTDC) own resources. Major transmission projects include CASA-1,000, 4,000-megawatt Matiari-Lahore high voltage direct current (HVDC) transmission line and Dasu transmission line.

Customs launches new cargo scanning system

The Federal Board of Revenue’s (FBR) Customs wing has introduced a new automated process in the WeBOC system for scanning containerised import consignments of industrial raw material for their speedy clearance at ports. The non-intrusive inspection system by the Customs was a long-awaited initiative aimed at replacing the physical inspection of cargo and reducing the dwell time at ports by using the latest scanning technology in line with the international best practices, said a statement issued by the FBR on Wednesday. Karachi Port and Port Qasim have Customs scanning facilities installed with the assistance of Japanese government under the Japan International Cooperation Agency (JICA) programme in addition to the scanners of terminal operators.

Government to inject Rs92b in road project

The Public Private Partnership Authority (PPPA) board on Wednesday approved the provision of Rs92 billion from the budget and through toll charges to make the Hyderabad-Sukkur motorway project financially viable and attractive for private parties. Based on the new financing structure, the cost of the project may jump from the originally approved Rs165 billion a year ago to Rs201 billion. Minister for Planning and Development Asad Umar chaired the PPPA board meeting. The contractor will collect the toll from commuters for 25 years and the first year toll rate will be Rs860 per car, which the contractor will be allowed to increase 7.5% annually. PPPA has authorised the viability gap fund and transaction structure for the Hyderabad-Sukkur motorway project, said Umar. This motorway would be the biggest project in the Sindh development package announced by the PM last week, he added.

Pakistan’s auto industry: growth comes at a high cost

Last week when auto sales data was released, everyone jumped with joy. Why shouldn’t they? Sales figures for March 2021 increased 27% month-on-month, and since year-on-year comparison really isn’t fair due to the lockdown in 2020, everyone saw this as a delightful development for a sector that has various industries associated with its recovery. Figures for the nine-month period – between July 2020 and March 2021 – were even better with sales amounting to near 135,000, a 36% increase year-on-year. Now this figure is worth celebrating even more because, in the strictest sense, it takes away the months of inactivity due to the pandemic, and gives a closer picture of how much the auto sector has recovered. It compares the nine months during the time when interest rates were higher, economic activity was lower, and inflation was keeping citizens on their toes.

Significance of investment in quality infrastructure

Investment in infrastructure is an important element for economic prosperity. Investment in infrastructure provides ground for sustainable, balanced and inclusive growth.

The demand for infrastructure investment has not been met with adequate supply, resulting in a huge gap in financing new and existing infrastructure needs. The Asian Development Bank (ADB) has estimated that $1.7 trillion a year is needed by 2030 to bridge the infrastructure gap in Asia alone. While huge emphasis has been laid on bridging the infrastructure gap, there also needs to be equal, if not more, attention paid to investment in quality infrastructure. Climate change-related frequent natural disasters reinforce the need for quality infrastructure. The 2019 Osaka summit focused on quality infrastructure investment and devised certain rules, which were adopted by G20 nations, but are generally applicable to any country.

Autonomy with answerability

The bill entailing provisions of autonomy for the State Bank of Pakistan (SBP) has stirred conversation on the role and independence of the central bank. The full draft has not been made public. The lack of transparency on the part of the government is questionable and gives a chance to many to instill fear. It is crucial for any regulator to have autonomy to perform effectively. However, such autonomy has to come with appropriate frameworks for performance accountability. The economy and the public sector of Pakistan face issues of informal processes. On the ground, processes are carried out differently than the prescriptions on the piece of legislation.

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