WASHINGTON, July 29: The International Finance Corporation (IFC) has committed $9.25 million to an investment in the Karachi Container Terminal, a project at the port of Karachi, where container traffic is increasing at over 7 per cent a year.

With 60 per cent of Pakistan's international trade and 80 per cent of container volume flowing through the port, operational improvements in the container terminal would lead to significant efficiencies throughout the port system.

The World Bank Group regional report states that shipping lines, exporters, importers and other users of the terminal facilities would all be able to benefit from these improvements for their own operations.

It says, "lower transport costs and better service will in turn encourage trade volume and contribute to the overall economic growth." Because a well-functioning infrastructure system is fundamental to economic development and rising living standards, investment in private sector infrastructure projects is a major focus for IFC. It has invested in power, telecommunications, and now in transportation.

Another report says that IFC has made a major investment in Dewan Salman Fibre Limited, Pakistan's largest producer of polyester fibre. The financing, which includes a $30 million loan, a $4 million convertible loan, and a $1 million investment in a preference share issue, will help the company expand its production capacity, refinance its existing debt, and fund its need for permanent working capital.

Because Dewan supplies 45 per cent of the polyester used by the local textile industry, its investment bolsters the competitiveness and long-term sustainability of the industry as a whole.

The regional report states that the investment shows strong support for the corporate sector in Pakistan at a time when access to offshore funding for even the largest corporate borrowers has been tight.

The preference share issue is the first in the Pakistani market and establishes an important new source of equity capital for major Pakistani companies. IFC's support will also encourage other local business groups to pursue refinancing opportunities to bolster their balance sheets and enhance their long-term financial sustainability.

To expand benefits throughout the supply chain, Dewan is also contributing $2.8 million to a fund developed by IFC that will support investment and links with smaller businesses that supply the company with goods and services. This is the first such investment in Pakistan. -APP