| 30 September 2004 | Thursday | 14 Shaban 1425 |
Oil price rise
Rawalpindi outbreak
Distributing compensation cheques among the victims of the liquidated Taj Company in Islamabad, Prime Minister Shaukat Aziz said on Monday that he had directed regulatory bodies to investigate the new scam of property and plots as well as advertisements inviting the people to invest in this sector abroad.
Though he did not name anyone, he was obviously referring to housing schemes launched by different sponsors in Dubai in collaboration with local associates, with an attractive offer of residency visas tagged onto it.
Noting that in the past the country has faced frauds involving finance companies, cooperative societies and recently foreign exchange companies, Mr Aziz promised to take strict action against illegal companies out to cheat investors.
He also advised the people to be vigilant against unscrupulous elements. It is reassuring that regulators like the State Bank and the Securities and Exchange Commission have recently been more alert in curbing undesirable practices as in the case of illegal foreign exchange companies.
However, the task of the regulators has become more difficult in an emerging market where caution has to be exercised so that upbeat business sentiments are not adversely affected. More sophisticated methods of handling the problem are required.
Apart from the possible real estate scams, investors in housing projects and schemes too have numerous complaints that need to be looked into even though these are outside the scope and mandate of the regulatory bodies.
The government may consider setting up an ombudsman to look into these complaints. While government investigations into the possibility of a property scam in the making is a welcome move, a much larger issue is that the economy is awash with too much money, unable to find productive channels. Some of it is tainted money.
This has led to speculative investment in stocks, real estate, gold and currency. The moneyed have recently gambled with investments in the Iraqi dinar and burnt their fingers in the process. Although the State Bank issued a rather belated warning, it did help in containing the damage.
The perception of the financial managers that there can be no economic activity without speculation may have its own validity but in this process, one can discern a disconnect emerging between the capital market and the economic fundamentals.
This has to be tackled through a sound development strategy. Yet another problem is that the not-so-well-off are looking desperately for avenues of lucrative investment as their cost of living is going up because of soaring inflation.
The return on national savings, except for widows and pensioners (restricted to government employees) and senior citizens, has plummeted without providing them with suitable alternatives of investment.
If one option is taken away in the overall interest of the economy, it must be replaced by the creation of new opportunities. The government hurried up its delayed economic reforms without examining its possible social effects.
In the process, the national economy is being turned into a breeding ground for speculation and gambling promising easy money. Earlier, leading nationalized commercial banks floated lottery schemes to make bank depositors "crorepatis".
In the face of public criticism the State Bank banned the schemes. Now, the government of the country's biggest province - Punjab - is doing the same. To curb the gambling instinct, governments must themselves set an example of financial prudence. Administrative measures to control unhealthy practices come next.
Oil price rise
The rise in international oil prices to over $50 per barrel this week has made a hike in local oil prices inevitable. For some months now, the government has been absorbing the increases in international oil prices at a heavy cost to itself.
When it started absorbing the increases, world oil prices were around $38 a barrel - as against slightly above $50 per barrel now. The target of collecting Rs47 billion under the head of the petroleum levy may not now be achieved as a result of the subsidy.
This in turn will affect the overall tax collection targets. The government cannot possibly afford any major tax shortfalls as this will impact on overall spending and growth.
This makes the case for raising local petroleum prices unavoidable. However, one hopes that given the fact that petroleum prices have a spread effect, a rise in petroleum prices will be gradual.
There are indications that the price hike will be announced after Eid. The government's over-reliance on the petroleum levy should also be reduced and the tax base widened instead.
Owing to the rise in international oil prices, Pakistan's oil import bill has risen by 35 per cent for July-August 2004 to $640 million now. In actual terms, however, the rise in the imported oil bill was 11 per cent. This is indicative of the volatility of international oil prices.
It is important for Pakistan to consider looking at alternative sources of energy on an urgent basis. Domestic oil production has to be increased from its present level of 65,000 barrels a day.
Over 70 per cent of oil imports are made up of furnace oil, which goes primarily to power generation and the cement industry. More industries have to switch over to natural gas.
The government should also work on a plan to convert public transport to CNG in place of diesel. For gas to take over as the primary fuel in the country, exploration work for finding new reserves has to be stepped up.
Rawalpindi outbreak
Yet another Crimean Congo Haemorrhagic Fever scare has hit a government hospital in Rawalpindi. Since a patient from Attock who was brought to the Rawalpindi General Hospital with CCHF symptoms of fever and bleeding from different parts of the body died last week, one doctor who had attended the patient has now also developed a fever and is in the same hospital.
As in the case of Severe Acute Respiratory Syndrome, people who are at high risk of contracting CCHF are health-care workers in the hospitals. In 2002, a young doctor who had treated a CCHF patient in another public hospital in Rawalpindi died later from the disease herself.
Since the first CCHF outbreak was reported in Rawalpindi in 1976, which had also claimed the life of a surgeon attending the infected patient, subsequent outbreaks have resurfaced from time to time.
Upon initial suspicion of a CCHF case being admitted to the Rawalpindi hospital earlier this week, adequate infection control measures should have been taken immediately to prevent the spread of the disease from the patient to the health-care workers.
The subsequent state of health of the doctor who has now been admitted and kept in isolation, as well as of the 28 other health-care workers in the hospital who are being monitored for the first signs of fever, will reflect somewhat on the preparedness with which the RGH is equipped to deal with CCHF cases and prevent its spread to its employees.
Unfortunately however, whether RGH is actually dealing with an outbreak of CCHF or a false alarm can only be confirmed when the blood test results of the initial patient, and all other health-care workers who had come in contact with him, return from South Africa's National Institute of Virology.
If Pakistan had its own serological testing laboratory, this would have enabled its hospitals to deal more efficiently with the spread of CCHF or any other viral haemorrhagic fever.