July 4, 2003	Friday	Jumadi-ul-Awwal 3,1424

ISLAMABAD, July 3: The government is considering to establish Pakistan Infrastructure Fund (PIF) through issuance of government-guaranteed bonds of 5-20 years of maturity period to develop strategic infrastructure projects, commerce ministry sources told Dawn.

Simultaneously, institutional investors like insurance companies, provident funds, pension funds, etc., would also be activated for investment in housing sector and real estate related equities foreseeing that an incentive package announced in the budget 2003-04 would give a boom to this sector.

These are the recommendations of a permanent ministerial committee led by Commerce Minister Humayun Akhtar Khan constituted by the prime minister. The committee on economic revival comprised ministers for industries, finance, investment and privatization and governor State Bank of Pakistan.

The committee has so far identified certain areas for economic revival with special focus on industrial revival, institutional reforms, improvements in balance of payments and higher growth.

The federal and provincial governments, said these sources, would also participate in the proposed fund along with the private sector financial institutions and international financial institutions.

The existing Pakistan Energy Fund (PEF) has also been proposed to be converted into PIF. The idea is that project specific bonds be issued so that investors are in clear picture regarding viability of 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 incentives package is being developed for market diversification and value addition through various tax breaks and exemptions. This package is expected to be made part of the trade policy to be announced later this month.

These sources said that commerce minister has also proposed new sectors including agriculture, services and telecommunication for special attention for rapid growth in future.

In agriculture sector, it was proposed that logistical chains should be established and technical know-how and monetary support be extended to the farmers, besides encouraging the multinational companies.

In telecommunication sector, the Commerce Ministry is of the view that with the expiry of PTCL’s monopoly, there was a need to have a deregulation policy with minimum entry barriers and to export information technology. The government would simplify property registration procedures, rationalize rent control laws, reduce taxation on property transactions.

Another package would be offered to encourage investments in the hospitals and educational institutions. This has two objectives: to bring into economy the big savings now available with the banks and promote health and education sector.

A 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.

The ministries of communication and commerce and Board of Investment have been asked to analyze reasons for higher sea freight rates and port charges in Pakistan.

Pakistan would negotiate Free Trade Agreements (FTAs) and Regional Trade Arrangements (RTAs) with countries in South Asia, Central Asia, Africa, Middle East and Asean.

The role of Pakistan embassies is being made pro-active, commercial and heads of the embassies would be made responsible for commercial work as well. For this purpose, a committee of ministries of commerce and foreign affairs would recommend the tasks for the embassies to enhance trade.

The commerce minister has been saying that utility tariffs (electricity, gas) have made Pakistani products uncompetitive in the global markets and was an obstacle in industrial growth. He recently held meetings with Chairman Wapda to evolve a mechanism to reduce power rates for the industrial consumers and bulk consumers including other consumers, consuming more power in off- peak hours.

The committee is suggesting that hydle and coal based projects of 40,000 megawatt should be initiated simultaneously in a coordinated manner to meet electricity requirements that would arise in view of economic revival.