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'Infrastructure, power and agriculture sectors need heavy investment'

10 July, 2007

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KARACHI: National Bank of Pakistan (NBP) President Syed Ali Raza has said that three critical sectors, including infrastructure, power and agriculture, badly need heavy investments to attract maximum foreign capital in the country.

Giving a lecture on the "Regional bilateral investment opportunities" at the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) on Monday, he observed that during the last 10 years, the rapid globalisation had given new shape to capital market in the world.

He said that Pakistan had a major geo-political position in the region, terming this a source for strengthening economy, and stressed on the need to capitalise on the opportunities in the context of trade with neighbouring countries via trade corridors. "Policies are needed to encourage the flow of investment into the capital market of the country," he pointed out.

Broadening and deepening the capital market of the country, the BNP President stressed the need for huge investment in education sector, besides development of human resources on priority basis. He pointed out that galloping trend of globalisation had brought about the rapid growth of the multi-national companies (MNCs) around the world, which dominated the capital market with huge flow of capital.

"Globalisation in last 10 years had changed the businesses, helped them grow with the advent of technology and media's impact on the capital market," said the NBP President.

Syed Ali Raza said that globalisation had freed the capital market from governments' influences and control, giving rise to the new challenges in the face of stiff competitions.

He said: "The era of market control has gone, and we as a country in this very world can compete," he added.

About the deteriorating global environment due to industrialisation, the NBP President hoped that capital market would not get disturbed of such changes, though they were rapid in pace, adding that the US had also backed the earlier opposed Kyoto Protocol on environment protection.

On regional scenario, he said the Middle East, China and South Asian countries were affecting Pakistan in a larger context, he said, adding that the Middle Eastern countries had huge reserves well beyond of their needs in surplus, which needed to be diverted to the country's local capital market.

"China's capital reserves are inflating further as it has presently 1.2 trillion dollars," he maintained.

About the Central Asian countries, the NBP President said that they had huge hydrocarbon resources, which had not yet been scratched out and could be a source for the power generation.

He observed that the post 9/11 era was the vibrant capital market and the need of the day for the country to compete with the emerging capital market challenges.

Regarding NBP's constraints, he pointed out that it also provided services with the three billion pensioners without any charges, which scaled down its commercial businesses. "Other banks charge on service provisions, whereas the NBP is still providing services to the government employees and pensioners free of cost," he pointed out. He demanded of the government to set up service branches for pensioners so that the NBP could concentrate on commercial businesses.

About the President's Rozgar Scheme, Syed Ali Raza said that it was boosting up, and hoped to provide maximum benefits to the poor of the society. Earlier, FPCCI President Tanvir Ahmed Sheikh said that the banks' high mark-up rates were badly hitting the industrial production and growth.

He pointed out that during the last three fiscal years, banks had provided massive credit of Rs 1.04 trillion to private sector.

He said that during the first 10 months of the 2006-07 fiscal year, the volume of bank credit to the same sector had gone down by 22 percent to Rs 266 billion against Rs 340 billion in the corresponding period of the 2005-06. He suggested moratorium to be provided to the textile industry for two years on repayment of the principal amount of loan to the industry.

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