March 21, 2003	Friday	Muharram 17, 1424

ISLAMABAD, March 20: The government has decided to establish Pakistan Infrastructure Fund (PIF) through issuance of government-guaranteed bonds of 5-20 years of maturity period for developing strategic infrastructure projects, the Ministry of Commerce sources told Dawn.

Commerce Minister Humayun Akhtar Khan when contacted confirmed that Prime Minister Mir Zafarullah Khan Jamali has approved a proposal on PIF which he had presented to the latter recently.

The prime minister has constituted a permanent cabinet committee on economic revival comprising ministers for commerce and industries, advisers to the prime minister on finance and investment & privatization and the governor State Bank. The committee has been asked to finalize the technical details of the PIF, he said.

The committee, led by the commerce minister, has already started discussions on an economic revival package with special focus on industrial revival, institutional reforms, improvements in balance of payments and higher growth.

The sources said the Pakistan Infrastructure Fund would be participated by the federal and provincial governments, the government owned and private sector financial institutions and the international financial institutions.

The existing Pakistan Energy Fund (PEF) has also been proposed to be converted into the PIF. The idea is that project specific bonds be issued under the PIF so that investor remained clear about the viability and expected return on investment.

The provincial and local governments would also be allowed to float infrastructure bonds for a similar period (5-20 years) through a company which would invest in infrastructure projects.

The proposed bonds would be provided with same tax treatment as currently available on Term Finance Certificates (TFCs).

On the same line, special funds would be created for rural and urban social and physical infrastructure development with the cooperation of multilateral agencies, including provincial governments. A separate incentive package would be offered to encourage investments in the hospitals and educational institutions.

The set of measures are under consideration to upgrade industrial technology to meet the challenges of post-quota elimination scenario, including reduction in input costs, which are higher in the region and could impede human resource development.

Another committee would be constituted in the next few weeks that would comprise representatives of ministries of commerce and communication and Board of Investment to analyse reasons for higher sea freight rates and port charges in Pakistan.