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ONE YEAR PERFORMANCE OF THE GOVERNMENT
AUGUST 2004 TO AUGUST, 2005
ONE YEAR PERFORMANCE
OF THE GOVERNMENT
August, 2004 to August, 2005
PRIME MINISTER SECRETARIAT
GOVERNMENT OF PAKISTAN
ISLAMABAD
Government of Pakistan
ONE YEAR PERFORMANCE OF THE GOVERNMENT
AUGUST 2004 TO AUGUST, 2005
TABLE OF CONTENTS
FOREWORD
EXECUTIVE SUMMARY 2
CHAPTER-I STRENGTHENING DEMOCRATIC INSTITUTIONS 9
CHAPTER-II IMPROVING LAW AND ORDER 14
CHAPTER-III DIPLOMACY AND DEFENCE 20
CHAPTER-IV MAKING GOVERNMENT MORE EFFICIENT 25
CHAPTER-V FOSTERING ECONOMIC GROWTH 37
CHAPTER-VI INVESTMENTS IN INFRASTRUCTURE 47
CHAPTER-VII DISTRIBUTING BENEFITS OF GROWTH 57
CHAPTER-VIII PROMOTING INTER-PROVINCIAL HARMONY 65
CHAPTER-IX PRESERVING CULTURE AND HERITAGE 67
Government of Pakistan
ONE YEAR PERFORMANCE OF THE GOVERNMENT
AUGUST 2004 TO AUGUST, 2005
FOREWORD
The first year of the government was completed on 28th August 2005. It goes without
saying that the period of one year is too short a time to judge the performance of
any government. However, even this short period needs to be judged for its
effectiveness in accomplishing the avowed objectives of the government.
A wide ranging agenda of reforms and progress is before us which aims at
strengthening democracy, enhancing internal and external security, promoting good
governance, accelerating pace of economic development, improving inter-provincial
harmony, distributing the benefits of economic growth to all segments of the society
and preserving the cultural heritage of the country. The main thrust of government
efforts was to maintain continuity and consistency in the policy framework that has
successfully pushed Pakistan into a new era of economic development and political
stability.
In this document we have compiled a resume of the main policies, programs
undertaken during the year in pursuance of our agenda and progress achieved
thereof. It gives me satisfaction to say that during the year headway was made in
accomplishing this agenda. This was made possible by an excellent team effort of
cabinet ministers and government officers. Our challenges are not over. Many more
things remain to be done. However, we are sure that we are working in the right
direction and if we stay the course it will lead Pakistan to even greater heights.
Our endeavors had the fullest support, guidance and encouragement of the
President of Pakistan, General Pervez Musharraf, under whose leadership the on-
going process of reforms and restructuring was initiated some six year ago.
This report should help people make an informed assessment about government
performance and hopefully ensue a constructive public debate. We will appreciate
any comments and suggestions that would be made for further improving the
working of the government.
I pray to Allah that He keeps us on the right path and rewards our sincere efforts in
improving the well being of the people of Pakistan, Amin!
Shaukat Aziz
Prime Minister
Islamabad: 29 August, 2005 Islamic Republic of Pakistan
Government of Pakistan
ONE YEAR PERFORMANCE OF THE GOVERNMENT
AUGUST 2004 TO AUGUST, 2005
EXECUTIVE SUMMARY
T he period of one year is too short a time to judge the performance of any
government. Policy formulation, conception of big development projects and
their implementation take long time to mature and yield desired results. The
present government, which is headed by Prime Minister Shaukat Aziz and assumed
office on 28th August, 2004 is no exception to this rule. The government is working
with a wide ranging agenda of reforms and progress aimed at strengthening
democracy, enhancing internal and external security, promoting good governance,
accelerating pace of economic development and taking the benefits of economic
growth to all segments of the society. The main thrust of government efforts was to
maintain continuity and consistency in the policy framework that was evolved six
years ago under the leadership of the President General Pervez Musharraf. During
the year significant progress was achieved in accomplishing this agenda.
1. STRENGTHENING DEMOCRATIC INSTITUTIONS
Every effort has been made to strengthen the legislative process in the Parliament,
to ensure that both Houses of the Parliament perform their functions effectively in
accordance with the provisions of the Constitution and within the framework of
relevant rules and procedures, and that their proceedings are conducted in the best
traditions of parliamentary democracy. Government took several important
measures to achieve these objectives. First, all vacant positions of Parliamentary
Secretaries were filled. These secretaries play an important role in facilitating
legislative business and replies to assembly questions. Second, the Government
constituted all the remaining standing committees of the National Assembly and
Senate so that all ministries and divisions are covered. Third, the Government
formulated a rich agenda for parliamentary business, including legislative proposals
that demanded greater attention and participation from the legislators. Parliamentary
Secretaries and Standing Committees played an important role in successfully
transacting this agenda. An important area that attracted legislative effort was
empowerment of women so that they can play an effective role in democratic
dispensation. Moreover, in consultation with the Provincial Governments a
comprehensive review of the Local Government Ordinance 2001 was undertaken
and necessary changes were made IN June 2005 to consolidate and further
strengthen the local government in the overall context of the Devolution Plan 2000.
Lastly, The government has fulfilled its promise of holding free, fair and transparent
local bodies elections as per the announced schedule. Soon the new nazims and
naib nazims will take charge of their offices and start discharging their functions as
elected representatives of the people.
II. IMPROVING LAW AND ORDER
A number of new initiatives were undertaken to strengthen the capacity of law
enforcing agencies to provide security to life and property, maintain law and order,
improve access to justice, and further tighten the entry of illegal entrants. The
Government of Pakistan
ONE YEAR PERFORMANCE OF THE GOVERNMENT
AUGUST 2004 TO AUGUST, 2005
government is encouraging agencies to make extensive use of technology and
modern equipment to fight crime. The steps taken include creation of a national
database where data received from various agencies with regard to terrorism, law
and order, and issues of internal security has been collected and centrally stored.
The same is now linked through a computer hub with all provinces. This has made
possible better coordination among law enforcement agencies. National Forensic
Science Agency is being upgraded. By the end of September 2005 national
Automated Finger Prints Identification System (AFIS) will be linked to provincial
headquarters and with 52 districts. Particular attention has been paid to fight
economic crimes by launching special campaigns against copyrights piracy and
manufacture and sale of spurious drugs. Under the Access to Justice Program, the
Government is providing development funds for augmentation of judicial system to
enable judicial officials to perform their functions in an efficient manner. Better office
facilities, provision of necessary equipment, use of technology in management of
court cases and capacity building of court officers are the key elements of this
program. An important institutional reform for improving the administration of
criminal justice is the creation of an independent prosecution service within each
province. In addition, the government is devoting considerable efforts to secure its
borders from illegal entrants. With a view to aligning Pakistan’s passport system with
international standards, Government has launched the project of machine readable
passports, which are widely used throughout the world and provide better protection
against forgery and misuse of this important travel document. The government has
adopted stringent measures to curb human trafficking. Agreements on counter
terrorism were signed with a number of countries. A long existing peculiarity of
administrative structure in the country was the exclusion of certain frontier regions
from the operation of normal laws applicable in the rest of the country. In line with its
declared objective, Government has taken a number of steps to bring these regions
at par with the rest of the country.
III. DIPLOMACY AND DEFENCE
Government made substantial progress towards achieving foreign and defence
policy goals, including enhancing the security of the country, seeking resolution of
outstanding issues, promoting political, economic and trade relations and projecting
the true positive image of the country in the international community. Pakistan
remained a key player in the war against terrorism and promoted the concept of
“Enlightened Moderation”. Over a hundred agreements/MOUs were signed covering
a wide range of cooperation in the political, military, economic, trade, cultural,
technical, scientific and educational spheres. The strong bonds of friendship and
cooperation between Pakistan and China were further strengthened during Premier
Win Jiabao’s visit to Pakistan in April 2005 when the two countries signed a
landmark Treaty of Friendship. Pursuing the composite dialogue process with India,
President Musharraf visited New Delhi in April 2005 which accelerated conclusion of
several confidence building measures between the two sides. Given Pakistan’s
growing prominent role in the region, the Shanghai Cooperation Organization (SCO)
extended observer status in July 2005 in connection with which the Prime Minister
attended the SCO summit in Kazakhstan. Since the designation of Pakistan by the
Government of Pakistan
ONE YEAR PERFORMANCE OF THE GOVERNMENT
AUGUST 2004 TO AUGUST, 2005
US as a major non-NATO ally in 2004, military and economic assistance to Pakistan
has steadily increased with the US clearing the sale of military equipment worth 1.3
billion dollars in November 2004 which was followed by the announcement on the
sale of F-16 aircraft in March 2005. During the visit of the Japanese Prime Minister
to Pakistan in April 2005, Japan announced revival of its Yen loan assistance to
Pakistan after a hiatus of seven years. For the first time in Pakistan’s diplomatic
history, a major initiative was taken by the President to explore new openings for
relations with the leading countries of South and Central America for which resident
visited Brazil, Argentina and Mexico in November/December 2004. Guided by the
conviction that peace can only be achieved through strength, the Government
pursued a defence policy based on maintaining a minimum credible deterrence
through strategic and conventional capabilities. The measures in this regard
included successful flight test of the indigenously developed state of the art cruise
missile and approved co-production with China of JS-17 fighter jet. The indigenous
production of defence equipment also helped the country earn foreign exchange
and reduce dependence on imported equipment.
IV: MAKING GOVERNMENT MORE EFFICIENT
Wide ranging governance reforms have been initiated to ensure that the
government departments and organizations become more efficient and responsive
to the people. The Prime Minister has initiated a series of individual meetings with
every Minister, Minister of State, and Secretary of the Ministry/Division to set precise
goals and targets for their work. As a result of these meetings rolling plans have
been worked out with quarterly targets which are regularly monitored by the Prime
Minister. Cabinet and its various committees are the principal decision-makers.
These forums enable wider consultations among key policy-makers. The collective
wisdom of cabinet members and senior government officials promotes efficient and
coordinated decision-making. With increasing passage of public sector economic
activities to the private sector, government is fully cognizant of the need that
regulatory regimes are strengthened to ensure equity and fairness in the market and
to provide adequate protection to the weaker segments of the society. Many steps
were taken to strengthen the regulatory environment. These steps have afforded
expanded space to the private sector and opened up new avenues of business for
them. The key to service delivery in a society is the existence of an efficient and
accountable cadre of civil servants, who have the right capability and inspiration for
public service. Government is paying extraordinary attention to civil services reforms
by building their capacity, enhancing prospects for career development, improved
compensation and effective monitoring of their performance and accountability. The
process of reinvigorating the public sector through extensive reforms covers such
areas as taxation regime, audit and accounts and working of public sector
organizations.
V. FOSTERING ECONOMIC GROWTH
The economic reforms agenda initiated under the leadership of the President
General Pervez Musharraf laid the foundation of a stable and growing economy.
Government of Pakistan
ONE YEAR PERFORMANCE OF THE GOVERNMENT
AUGUST 2004 TO AUGUST, 2005
These trends were further punctuated during the first year of the present
government. Pakistan’s economy extended its phenomenal economic performance
for the third consecutive year in a row at 8.4% real GDP growth. Per capita income
in dollar term, stood at $736. During the first year of the government, there was a
record harvest of 14.6 million bales of cotton and 21.1 million tons of wheat. Major
crops grew by 17.3%. Reserves touched all time high at $12.6 billion – up from
$12.3 billion last year. Public debt burden continues to decline rather sharply over
the last five years with significant improvement in fiscal situation. Canada, Germany,
Italy and Norway offered Debt Swap arrangements on voluntary basis with regard to
amounts of more than $700 million. Economic assistance to the total tune of $2.9
billion from various multilateral and bilateral development partners was generated.
Pakistan has succeeded in attracting $1.5 billion in FDI during the year as against
$950 million a year ago, showing an increase of about 60 percent. Privatization
program showed remarkable progress. The most notable transaction was for the
sale of 26% shares of PTCL for which an attractive offer of $2.59 was received. The
key to the success of economic policies is continuity and consistency. After a long
time in country’s economic history a policy framework developed six years ago has
remained on track in terms of its direction and thrust. An increasingly greater space
is given to the private sector to shoulder the burden of economic development. To
sustain and accelerate the pace of economic growth, a number of measures have
been adopted. Besides reaffirming its commitment to maintain macroeconomic
stability, these measures include establishment of industrial parks, funding of
technological upgradation, setting up the ministry of textile industry and creation of
textile and garment cities. Additionally, new initiatives for Aik Hunar Aik Nagar, agri-
business development including special initiative on livestock, fund for enhancing
competitiveness, human resource development through investment in higher,
especially scientific education, and improving infrastructure for testing and
certification to meet the WTO standards have been undertaken. On the demand
side, serious efforts to increase market access of our goods have been made with
USA, EU and China and new markets explored. Free Trade Agreement between
Pakistan and Sri Lanka has become operational.
VI. INVESTMENTS IN INFRASTRUCTURE
The pace of current economic development cannot be sustained without a
significant expansion in country’s existing stock of key infrastructure such as water
storage, power generation, roads, railways, ports, airports and telecommunications.
The government is committed to expend requisite efforts to meet these critical
needs of the economy. Apart from revamping the entire development planning
framework and accelerating the pace of budget utilization, the government has
significantly raised the overall size of the development expenditure. The water
sector includes speedy completion of several storage projects, drainage and
irrigation, rehabilitation of existing irrigation networks and lining of water courses.
Provision of safe, reliable, affordable and modern communications is an important
priority engaging government attention. Besides expanding the network of highways,
efforts are made for improving the quality of traffic, safety of usage, effective policing
and prevention of highway crimes. The government is taking steps to ensure that
Government of Pakistan
ONE YEAR PERFORMANCE OF THE GOVERNMENT
AUGUST 2004 TO AUGUST, 2005
the available petroleum resources are optimally utilized to decrease country’s
dependence on imports. The financial commitment for investment in the schemes
for development of natural resources increased from $29 million to $140 million.
OGDCL has initiated oil and gas fields development mega projects comprising 7
oil/gas fields at an estimated cost of $627 million. An agreement has been signed
between PMDC and M/s MCC China for development and mining of Duddar Lead-
Zinc with an estimated investment of $72 million. In addition to that, Alternative
Energy Development Board (AEDB) Ordinance was promulgated on 30th April 2005
to undertake development of alternative energy resources. A separate Ministry of
Ports & Shipping has been set up, thereby bringing a very critical sector into closer
focus for its development and overall expansion. Given its vital importance in
country’s communications network, efforts are also made to revamp and expand the
railways system in country. These include dualization of track, induction of
locomotives and up-gradation and commissioning of new rolling stocks. An
aggressive marketing strategy to attract serious and creditable foreign and local
investors in order to cater for increase in generation capacity required in the future
has been adopted. At Karachi Port another container terminal equipped with modern
gantry cranes has been established to enhance container handling. Furthermore,
existing container terminal expansion project is underway. Work on the construction
of a new deep sea port at Gwadar is nearing completion. Government is according
high priority to the development of telecommunication infrastructure in the country.
The results achieved so far are highly encouraging as operators are rolling out new
projects at an unprecedented rate. Postal service has one of the most extensive
networks of communication in the country. Government is revitalizing the postal
services by investing in technology and expanding the scope of services that the
vast network of postal system in the country can provide. In addition, two green field
airport projects, one for the capital city and the other for Gwadar, have been
planned.
VII. DISTRIBUTING BENEFITS OF GROWTH
One of the main concerns of government’s development efforts is to ensure
distribution of growth amongst the broadest set of people. Such efforts will only
succeed when this objective is approached by attacking the causes that restrict
some people from fully participating in the growth process. Sustainable transfer of
growth benefits requires significant expenditures on investments in education,
health, population welfare, gender balance, protection of environment and access to
credit. Government is working to address the distribution issue through a
comprehensive strategy that addresses all these areas. A number of budgetary
expenditures help the low income groups as the underlying services are largely used
by the members of such groups. Accordingly, government attaches great
importance to preserving and increasing expenditures of on these services. During
the year, poverty reducing expenditures were increased from Rs.256 billion to
Rs.297 billion, reflecting an increase of 14%. Human development is the basic right
of every citizen. Public sector expenditure on education during the year was Rs.133
billion, which was 2.73% of GDP. The second most important cause of human
deprivation is lack of health facilities. Accordingly, government is not only spending
Government of Pakistan
ONE YEAR PERFORMANCE OF THE GOVERNMENT
AUGUST 2004 TO AUGUST, 2005
significant resources to provide curative facilities to people but also undertaking a
number of initiatives to prevent incidence of diseases, especially among the weak
and vulnerable groups. Public Sector expenditure on health during the year was
Rs.31 billion. Program for prevention and Control of Hepatitis has been approved
and launched at a cost of Rs.2.59 billion. One of the most important programs
launched by the government is the Khushal Pakistan Program. Under this program
small development schemes are undertaken on the recommendations of the public
representatives. The main sectors covering the program are electrification of
villages, provision of natural gas, construction of farm to market roads and supply of
drinking water. During the year, nearly Rs.15 billion was spent on these schemes by
the federal, provincial and district governments. A number of social safety measures
were also adopted to mitigate lack of income for the needy.
VIII. PROMOTING INTER-PROVINCIAL HARMONY
Government is striving to forge stronger ties between the two tiers of federation and
ensuring that the provinces are not only given adequate resources but that their
capacity to effectively discharge their responsibilities is enhanced and expanded.
The increasingly improved revenue collection performance by federal government
has enabled it to transfer a much larger amount of resources to the provinces.
Against a revised estimate of Rs.244 billion to be transferred during 2004-05, the
budget for 2005-06 provides for a transfer of Rs.284 billion, representing an
increase of 16%. In addition the federal government provided additional subventions
in the forms of grants to the provinces. Against the revised estimates of Rs.35 billion
for 2004-05, in the budget for 2005-06 grants of Rs.41 billion are provided to the
provinces, representing an increase of 17%. Efforts are underway to reach a
consensus on a new NFC award. A sum of Rs: 55 billion was spent in the provinces
as development outlays. Government provided full assistance to the provinces in
seeking foreign assistance. The federal government also picked up the foreign
exchange risk on these highly concessional loans. Overall the provinces have been
helped to secure nearly $500 million in the shape of concessional loans from foreign
sources. These loans stipulated fiscal discipline measures like increased social
sector spending, restructuring of inefficient provincial departments and privatization
of provincial enterprises. Government is keenly assisting provincial governments to
support the devolution process. The Federal Government through the Devolution
Trust for Community Empowerment (DTCE) has been providing support to build
capacity of the CCBs, thus supporting the process of community empowerment in a
big way. Rs.258 million have been provided under the program out of which Rs 59
million stand utilized by the CCBs at the Union level.
Government of Pakistan
ONE YEAR PERFORMANCE OF THE GOVERNMENT
AUGUST 2004 TO AUGUST, 2005
IX. PRESERVING CULTURE AND HERITAGE
Our cultural heritage is one of the oldest in the world. What is needed is to facilitate
the rehabilitation of our cultural pride as well as to anticipate its future
manifestations so that we emerge as a nation living in modern world with a unique,
distant and proud heritage. In order to fulfill the said mission, the government has
taken many steps. The preservation and restoration work has been carried out at 50
sites and monuments at a total cost of Rs. 46 million. A national monument of
Pakistan is being established in Islamabad with an estimated cost of Rs. 428 million.
A National Arts Gallery is being set up in Islamabad. Liaquat Memorial Hall of the
Ministry of Education has been earmarked for establishment of National College of
Arts at Islamabad. The President of Pakistan opened the campus in July, 2005. The
work on full fledged construction of the new campus is currently in hand. Pakistan is
home to a wide variety of tourists attractions. Conscious of its potential to become
as one of the key exports of the country, government is devoting serious efforts to
promote the tourism in the country. To focus on development of tourism industry in
Pakistan and to create a better image of Pakistan on the world level, a separate
ministry of Tourism has been set up. During the year 2004-05 Rs. 51.0 million were
allocated for development of tourism projects. The year recorded new height for
tourist arrivals in Pakistan by hosting 648,000 tourists, compared to 500,900 tourists
in the previous year, registering a remarkable increase of 29.4%. For the
development of bilateral cooperation in the field of tourism Pakistan signed
Agreements with Italy and Afghanistan. The Government is committed to improve
the well-being of the minorities and to ensure their presence in the mainstream of
the social life. In September 2004, Minorities Affairs Wing of the former Ministry of
Minorities, Culture, Sports, Tourism and Youth Affairs was upgraded as a full
fledged separate Ministry. The Ministry will be working to safeguard the rights of
minorities and to promote their welfare. 55 development schemes were approved by
the government with a total allocation of Rs. 25 million for development of minority
communities. Government also undertook the repair, maintenance, rehabilitation
and conservation of Sikh shrines throughout the country with an amount of Rs.120
million.
Government of Pakistan
ONE YEAR PERFORMANCE OF THE GOVERNMENT
AUGUST 2004 TO AUGUST, 2005
CHAPTER-I
STRENGTHENING DEMOCRATIC INSTITUTIONS
M ost earnest endeavors have been made by the Government for fulfillment of
the national aspirations to bring progress, prosperity and strength to Pakistan,
establishment of rule of law, fortifying foundations of democracy and restoring
supremacy of the Parliament, protecting civil liberties and human rights, providing
citizens socio-economic justice, and promoting a tolerant and vibrant society. An
effective legislature contributes to good governance by performing important
functions necessary to sustain democracy. A democratic society needs a forum for
airing societal differences which is provided by the representative assemblies with
their ties to the people. Efforts have been made to strengthen the legislative process
in the Parliament, to ensure that both Houses of the Parliament perform their
functions effectively in accordance with the provisions of the Constitution and within
the framework of relevant rules and procedure, and that their proceedings are
conducted in the best traditions of parliamentary democracy.
1.1 Review of rules of procedures and conduct of business
A comprehensive review of the Rules of Procedure and Conduct of Business of both
Houses was long overdue in order to bring them in conformity with the changes
made in the Constitution during the last 30 years, especially after the promulgation
of Legal Framework Order (C.E Order No. 24 of 2000), conventions and practices
developed over time with experience and good practices, functions and rules
available in the Parliaments of other countries for providing dignity to the
proceedings of the Houses and conduct of Members. Accordingly, the rules and
procedures of Senate and National Assembly were extensively reviewed, revised,
updated and finally re-drafted. These shall soon be adopted by the Senate and the
National Assembly. These amended rules and procedures will allow the legislative
body to discharge its duties more effectively.
1.2 Appointment of parliamentary secretaries
An important parliamentary tradition is to appoint Parliamentary Secretaries for each
ministry. This ensures that the two houses of the Parliament have ready access to
information about the activities of the ministries. Parliamentary secretaries were
missing for a number of ministries which were promptly appointed. These
secretaries are now attending the business of their respective ministries in the
Parliament and are thus making a useful contribution in the functioning of the
parliament.
Government of Pakistan
ONE YEAR PERFORMANCE OF THE GOVERNMENT
AUGUST 2004 TO AUGUST, 2005
1.3 Constitution of standing committees of parliament
Parliamentary committees play a pivotal role in the legislative process. A good deal
of law making is transacted in these Committees as the time at the disposal of the
Houses is limited. It is not sufficient for the Houses to make a thorough and detailed
examination of the varied and voluminous legislative and other work brought before
the Parliament. Such committees were also missing for a number of ministries and
divisions. This gap was also quickly filled. Today, all the ministries and divisions
have standing committees of the National Assembly and 32 such committees for the
Senate. These committees are rendering valuable services in examining in detail all
proposals for legislation and exercising oversight on the working of their concerned
ministries.
1.4 Legislative achievements
The above measures have enabled the Parliament to accomplish a great deal of
legislative business in a short period of time. The most significant achievement is
reflected in the number of new laws and amendments in the existing laws passed by
the Parliament.
TABLE 1.1
House National Assembly Senate
Number of Sessions 8 6
Number of Days Met 110 69
Number of Bills Passed 23 20
Some of the laws that have a vital bearing on the well-being of our people are as
follows:-
(i) The Export Control on Goods, Technologies, Material and
Equipment related to Nuclear and Biological Weapons and their
Delivery Systems Act, 2004. The law will better enable Pakistan to
regulate and control export, re-export, transshipment, and transit of
goods and technologies related to nuclear and biological weapons and
missiles capable of delivering such weapons.
(ii) The Injured Persons (Medical Aid) Act, 2004. The law makes it
mandatory that the injured person brought to the hospital must be
given proper medical aid prior to any medico-legal procedures and
investigations by the Police thus contributing to saving of hundreds
and thousands of precious lives.
(iii) The Criminal Law (Amendment) Act, 2005. The amendment will
enable better enforcement of laws prohibiting abominable customs of
karo kari etc. by making these offences cognizable by the state.
(iv) The Illegal Dispossession Act, 2005. This law will help curb activities
of land mafia by providing strict punishment against such activities.
(v) The Fiscal Responsibility and Debt Limitation Act, 2005. The law
will help in achieving macroeconomic stability and long term
Government of Pakistan
ONE YEAR PERFORMANCE OF THE GOVERNMENT
AUGUST 2004 TO AUGUST, 2005
sustainability of government finances. It will place limits on
governments borrowing which were previously missing.
1.5 Women and democracy
An important focus of government policies is to bridge the gender gap in the society.
This is more pronounced in the matters of governance. Steps have been taken to
politically empower women so that they can play an effective role in promoting and
protecting democratic values in the country.
1.5.1 Political empowerment of women at grass roots level
An important project entitled Women Political School (WPS) under the Ministry of
Women Development has been initiated with the aim of promoting gender balance
in the political sphere. The program helps the women in public offices so that they
can contribute in raising and addressing their issues and concerns in public forums.
The following achievements were made:-
(i) 5 project offices were established at federal & provincial capitals.
(ii) 500 women councilors were trained as Master Trainers for training
other women councilors in the areas of local governance.
(iii) 300 officers of the local governments have also been trained in the
project management.
(iv) Basic IT Training has been imparted to 1000 women councilors.
In addition, 10 District Resource Centers (DRCs) have been established. These are
located at Rawalpindi, Lahore, Multan, Sargodha, Peshawar, Hangu, Karachi,
Sukkur, Jaffarabad & Quetta. These Resource Centers aim at providing effective
participation of women councilors in political power and decision making.
1.5.2 Protection of women from discriminatory laws & practices
The practice of honor killing in the name of Karo-Kari, Siyah Kari and other such
customs is reprehensible and needs to be rooted out. No civilized society can ever
tolerate such abominable crimes against women. To combat the scourge of honor
killing of women, the Parliament has passed Criminal Law (Amendment) Act 2004,
whereby these offenses are now cognizable by the state.
1.6 Strengthening devolution
The system of local government which was introduced by General Pervez Musharraf
in 2001 has successfully completed its first term. In the light of the experience
gained through its working, it was felt that certain changes in the framework were in
order. Accordingly, in consultation with the Provincial Governments a
comprehensive review of the Local Government Ordinance 2001 was undertaken
and necessary changes were made to consolidate the local government in the
overall context of the Devolution Plan 2000. Ultimately sanction was accorded to the
consensus amendments in Provincial Local Government Ordinances, 2001. In June
Government of Pakistan
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2005, the Provincial Governments, inter alia, promulgated the amendments relating
to the creation of district service, restructuring of provincial departments, disciplinary
powers of nazims and naib nazims, improvement of enforcement mechanism, and
functions of provincial local government commission. These amendments in the
Local Government Ordinance, 2001 will further strengthen the accountability
process over the local governments. In this regard, the roles and powers of the
Chief Executive of the Province and the Provincial Local Government Commission
have also been clarified in the law.
Government of Pakistan
ONE YEAR PERFORMANCE OF THE GOVERNMENT
AUGUST 2004 TO AUGUST, 2005
1.7 Promoting a culture of political tolerance
Political intolerance and the feudal attitude of dominating those with lesser authority
have in the past been the main causes of political instability in the country creating a
threat to the continuation of democratic dispensation. The government has
consciously and consistently worked to promote a culture of political tolerance in
which due space is allowed to the opposition to play its role in democratic
dispensation. The government believes narrowing differences rather than creating
unbridgeable distances. As part of this accommodating policy the government has
given funds to opposition members of parliament so that they are able to carry out
development activities in constituencies. The leadership at the highest level has
maintained an open door policy and has always shown willingness to keep
opposition party leaders. Opposition is free to raise issues within the Parliament and
in public meetings. This approach has brought a measure of maturity and stability to
the political process.
1.8 Freedom of press
The press enjoys unprecedented freedom in the country. It goes to the credit of
General Pervez Musharraf that he has laid the foundation of a society where dissent
is not only faced by the leaders but allowed wide dissemination. The most notable
development in this regard is the opening of electronic media for the private sector.
Government considers it a healthy development that today the opposition enjoys an
equal access to electronic media. It is committed to continue and further strengthen
this policy.
1.9 Local bodies elections
Regular elections create legitimacy for the government and strengthen the
democratic institutions. The government has fulfilled its promise of holding free, fair
and transparent local bodies elections as per the announced schedule. The Election
Commission of Pakistan, an independent and autonomous constitutional body, has
conducted the said lections. These elections were held in two phases on 18th August
and 25th August 2005 covering 54 and 56 administrative districts in all the provinces
of the country. The process of finalization of the election process is underway. The
third phase elections to elect Tehsil, Town and Zila Nazims and councillors against
the reserved seats of Tehsil/Town and Zila Councils are scheduled to be held on the
6th October, 2005. People of Pakistan have, through their enthusiastic participation
in the Union Councils elections, have endorsed the process of strengthening
democracy at the grass roots level and empowerment of citizens initiated through
the Devolution Plan, 2000. Over 222,000 candidates (including 47,422 women)
contested the Union Council elections. Soon the new nazims and naib nazims will
take charge of their offices and start discharging their functions as elected
representatives of the people.
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CHAPTER-II
IMPROVING LAW AND ORDER
T he government is ceaselessly striving to make the country a place where rule of
law reigns supreme, where every Pakistani feels secure to lead a life in
conformity with his belief, culture, heritage and customs; where a Pakistani from
any group, sect or province respects similar freedoms for others; where every
foreign visitor feels safe; and where neighborhoods, communities, roads, parks and
bazaars are secure and peaceful. A number of new initiatives were undertaken to
strengthen the capacity of law enforcing agencies to provide security to life and
property, maintain law and order, improve access to justice, and further tighten the
entry of illegal entrants.
2.1 Strengthening law enforcement
2.1.1 Providing adequate resources
Government is providing significant resources to meet the growing needs of law
enforcement. During the year, a sum of Rs. 47 billion was allocated for law and
order. In the previous year a sum of Rs. 39 billion had been allocated. This reflects
an increase of 18% from the last year. A sizeable amount of this money was
allocated for development works, which included provision for better equipment and
arms, vehicles for efficient mobility, housing for security personnel and up-gradation
of training facilities. Resources were also provided to strengthen the newly
constituted public safety commissions in all the provinces. To promote better
cooperation between law enforcement agencies and civil society, the successful
experiment of Citizen Police Liaison Committee (CLPC) in Karachi is being
replicated across all the provincial headquarters and the federal capital.
2.2.2. Legislative support for law enforcement
In order to achieve the objectives of making the police an efficient and service
oriented institution accountable to the people through their elected representatives,
several steps were taken to expedite the implementation of the Police Order, 2002.
Through an intensive process of consultation with the Provincial Governments
necessary changes were incorporated in the Police Order, 2002 through Police
Order (Amendment) Ordinance, 2004. The Ordinance will be passed by the
Parliament soon. The amendments have appropriately empowered the Zila Nazim,
Provincial Public Safety and Police Complaints Commission and District Public
Safety & Police Complaints Commissions to perform their roles effectively. The
functions of the Provincial Complaints Authority have been assigned to the
Provincial and District Public Safety Commissions. The composition of the District
Public Safety & Police Complaints Commissions (DPS&PCCs) has been changed to
include the MNAs and MPAs.
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A number of amendments have been made in the Anti-Terrorist Act to provide for
expeditious disposal of cases. These include addition of new crimes, provision for
speedy trials, simplified trial procedure, establishment of special benches in high
courts and flexibility of inter provincial transfer of cases. These amendments will
assist in better law enforcement.
2.1.2. Promoting use of modern technology
For speedy flow of information and effective coordination a computer hub has been
established between Main Control Room of National Crisis Management Cell
(NCMC) in the Ministry of Interior and provincial liaison office. Data received from
various agencies with regard to terrorism, law and order, and issues of internal
security has been stored in the central database. Necessary software has been
developed to improve reaction time and remove the difficulties associated with
handling of a large database. This will enable better coordination among the law
enforcement agencies. National Forensic Science Agency is being upgraded. By the
end of September 2005 Automated Finger Prints Identification System (AFIS)
available at headquarters of the Federal Investigation Agency will be linked to
provincial headquarters and with 52 districts. An affordable solution to monitor and
intercept vehicle movement has been developed. This system envisages the
issuance of Electronic Vehicle Identification Tags (VINTAG) to all vehicles including
motorcycles. When vehicles with VINTAGs drive through the control points their
movement will be electronically recorded without slowing them down. In case a
vehicle without VINTAG passes such points, security agencies will be alerted in real
time and a photograph of that vehicle is recorded. This will help reduce vehicle
thefts and related crimes by monitoring and intercepting suspect vehicles. In the first
phase this project is being implemented in Karachi. Once a complete system is in
place nationwide the location of all vehicles will be ascertainable within defined
areas.
2.2.3 New initiatives to fight economic crimes
New challenges are emerging for law enforcing agencies, especially in the field of
economic crimes. Copyrights violations, spurious drugs and unauthorized use of
telecommunication facilities are some of the new crimes that have engaged the
attention of law enforcing agencies. Government is building necessary expertise and
providing requisite facilities to its agencies to combat these new crimes.
(i) Copy Rights Violations: The government is aware of the fact that
some elements are actively violating copyright laws by engaging in
unauthorized production of copyrighted material. This harms the
reputation of the country and discourages foreign investment. The
government through the Federal Investigation Agency launched special
campaign against the manufacturers of pirated CDs and other such
material. Over 500,000 pirated CDs, DVDs, Audio-cassettes were seized.
This has sent a signal to the offenders that the laws against intellectual
piracy will be strictly enforced and implemented in the country.
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(ii) Seizure of Illegal Telephone Exchanges: Unauthorized use of
telecommunication facilities was posing not only a security threat but
causing significant losses to public revenues. The government initiated
necessary steps to close such facilities. The violators are being
prosecuted in accordance with law.
(iii) Spurious Drugs: Spurious drugs pose a grave risk to public health.
Realizing its duty to prevent this activity, the government has initiated
action against illegal manufacturers of such drugs and achieved
remarkable success. Strict enforcement action has brought this activity
under considerable control.
2.3 Improving access to justice
2.3.1 Building infrastructure for courts
Judiciary is an important pillar of the State. The government fully respects courts
independence and is committed to ensure dispensation of inexpensive justice to
citizens. Under the Access to Justice Program, the Government is providing
development funds for augmentation of judicial system to enable judicial officials to
perform their functions in an efficient manner. Better office facilities, provision of
necessary equipment, use of technology in management of court cases and
capacity building of court officers are the key elements of this program. The project
cost is nearly Rs. 20 billion. Nearly half the amount will be utilized by the end of
current year. As result of these efforts, evidence is emerging that the overall
disposal by subordinate judiciary has considerably improved.
2.3.2 Independent prosecution service
Weak prosecution impedes the delivery of efficient and socially beneficial justice
services and contributes to erosion of civil liberties and basic rights It is necessary
that prosecution service must be financially and operationally autonomous and
unified under a separate institutional setup to be able to exercise independence of
judgment while remaining fully accountable. An important institutional reform for
improving the administration of criminal justice is the creation of independent
prosecution service within each province. A phased program has been announced
by each provincial government for setting up this service including provision of
infrastructure, recruitment and training as well as creation of the enabling legal
framework. The program is progressing apace in all provinces.
2.4. Tightening immigration and registration
Government is devoting considerable efforts in protecting its borders from illegal
entrants. Such persons pose serious threat to country’s security and law and order.
In many cases, they also impose significant economic burden on a country that is
already facing resource constraints.
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2.4.1 National database & registration authority
NADRA has been rated amongst the top twelve companies of the world for system
integration and security of documents and amongst the top fifty IT companies. In the
former category NADRA rubs shoulders with icons such as IBM of USA and Sagem
of France. Government has given all the financial support to NADRA to pursue its
vital responsibilities and act as a model for other bodies. In addition, the government
is actively leveraging the excellent platform built by NADRA. Two cases in which this
has been done are utility bills collection and computerization of land records.
2.4.2 National database and card production
The national database holds the records of 70 million citizens including 22 million
children. This is the largest and most efficient population database in the world on
the basis of which 48 million Computerized Identity Cards have been issued. The
capability of this database now includes Facial Recognition and Finger Print
Identification. This will help not only in preventing misuse of national identification
documents but also enable law enforcing agencies to apprehend criminals.
2.4.3 Machine readable passports
With a view to aligning Pakistan’s passport system with international standards,
Government has launched the project of machine readable passports, which are
widely used throughout the world and provide better protection against forgery and
misuse of this important travel document. The MRP system has been deployed at
the 29 Regional Passport Offices in Pakistan. Similarly, MRP System has been
deployed at Dubai, Jeddah, London, Frankfurt, Rome, Oslo and Toronto.
2.4.5 Curbing human trafficking
The government through the Federal Investigation Agency has adopted stringent
measures to curb human trafficking. Particular attention has been paid to end the
criminal trafficking of young boys as camel jockeys to Middle East. 37 cases of
camel jockeys have been registered and 39 traffickers involved in human trafficking
of young boys and women have been arrested. For sustained action against human
trafficking, Anti-trafficking Units (ATUs) have been set up at FIA HQ and in zonal
directorates. These outfits are dedicated units for the enforcement of laws relating to
prevention of human trafficking to and from Pakistan. To solicit support from the
Civil Society, leading NGOs have also been co-opted for information and
assistance.
2.4.6 Establishment of foreign security cell
Pakistan is playing a leading role in the war on terror. This has added to the security
challenges facing the nation. Under the circumstances there is a special need to
provide protection to foreign residents and visitors. To meet this need, a special cell
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has been established in the Ministry of Interior, mandated to provide necessary
coordination for protection of foreigners working in or visiting Pakistan.
2.4.7 Revised visa policy
The visa policy of the government remains under constant review. On the one hand,
it is necessary to prevent entry of those who can pose security threats while, on the
other, it is required to facilitate the entry of investors and traders to encourage
economic activities. On the preventive side, given the serious possibility of misuse,
foreign students attending religious schools have been barred from entering
Pakistan. To facilitate trade and investment, a revised investor and business friendly
visa policy has been formulated. Maximum powers have been delegated to Pakistan
Missions abroad and field offices in Pakistan to facilitate foreign travellers including
those of Pakistan origin. Business Visa Facilitation Desks at all international Airports
in Pakistan have been established w.e.f. 1st February, 2005 to extend Visa facility on
Arrival (VOA) non-reporting for 30 days to the genuine foreign investors/
businessmen from developed countries like UK, USA, Italy, Germany, Australia,
Brazil, France, Switzerland, Sweden, China, Singapore, Hong Kong, Japan Korea,
Malaysia, Canada, Belgium, Netherlands, Luxembourg, Denmark, Ireland, Portugal,
Spain, Austria, Finland and Turkey.
2.4.8 Agreements to counter terrorism
Agreements on counter terrorism were signed with the Governments of China,
Singapore, Australia, Uzbekistan and Philippines. In addition, the following
agreements have also been signed:
(i) Agreement on Transfer of Offenders with Sri Lanka.
(ii) Agreement on Mutual Legal Assistance with Sri Lanka.
(iii) Agreement on Managed Immigration with UK.
2.5. Integration of frontier regions
A long existing peculiarity of administrative structure in the country was the
exclusion of certain frontier regions from the operation of normal laws applicable in
the rest of the country. This afforded a loophole to various elements to misuse the
said special dispensation and pose threat to the law and order conditions in the rest
of the country. This disparity also contributed to the backwardness of the frontier
regions, as these areas remained largely inaccessible for development efforts.
Government is determined to bring these regions at par with the rest of the country
so that the people living in those regions enjoy the benefits of development and also
to ensure that there is no safe haven for unwanted elements in the country.
2.5.1 Extending laws to frontier regions
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The President has extended 5 laws to the frontier regions. This is a major step as it
will bring these areas at par with the rest of the country. It will also enable freer
access to these regions and promote development activities.
2.5.2 Census of Afghan refugees
Pakistan has been hosting nearly 3 million refugees for more than 2 decades.
However, a proper census of these refugees was never undertaken, which posed
challenges for welfare efforts and rehabilitation and eventual repatriation of those
refugees. The first ever Census of all Afghans was carried out in 2005. It revealed
the numbers of Afghans in Pakistan is 3.049 million. This necessary, and long
overdue, step will enable Pakistan to better manage the problems of and posed by
those refugees.
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CHAPTER-III
DIPLOMACY AND DEFENCE
T wo critical components of effective statecraft are diplomacy and defence. Over
the past year, the Government made substantial progress towards achieving
foreign and defence policy goals, including enhancing the security of the
country, seeking resolution of outstanding issues, promoting political, economic and
trade relations and projecting the true positive image of the country in the
international community.
3.1. The diplomatic front
Over the past year, Government’s policies contributed towards greater regional
security and stability, reduction of tensions, progress towards resolution of
outstanding issues and promotion of regional cooperation. At the international level,
Pakistan continued with its efforts to promote peace and progress. It remained a key
player in the war against terrorism, promoted the concept of “Enlightened
Moderation” aimed at ensuring inter-civilizational harmony, and resolution of the
issues that are the root causes of terrorism. Recognizing the global trend of a shift
from geo-politics to geo-economics, the government pursued policies to enhance
economic and trade linkages worldwide. Towards this end, it effectively leveraged
Pakistan’s pivotal position at the cross-roads of South, Central and West Asia. A
measure of the Government’s active diplomacy was the several high level meetings
in Pakistan and abroad with countries in Asia, Africa and Europe as well as North
and South America. During these exchanges over a hundred agreements/MOUs
were signed covering a wide range of cooperation in the political, military, economic,
trade, cultural, technical, scientific and educational spheres.
3.1.1 Relations with neighboring countries
The strong bonds of friendship and cooperation between Pakistan and China were
further strengthened during Premier Win Jiabao’s visit to Pakistan in April 2005
when the two countries signed a landmark Treaty of Friendship, Cooperation and
Good Neighbourly Relations as well as an Early Harvest agreement on free trade.
During this year, a total of 21 Agreements/MOUs were signed with China,
underscoring the abiding friendship between the two countries. This friendship
remains a factor for peace and stability in the world.
Pursuing the composite dialogue process with India, President Musharraf visited
New Delhi in April 2005 which accelerated conclusion of several confidence building
measures between the two sides. These included commencement of the Srinagar-
Muzaffarabad bus service; agreement in principle to commence Lahore-Amritsar
bus service; as well as Amritsar-Nankana Sahib bus service. Agreement was also
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reached on the draft text for pre-notification of ballistic missile tests apart from
setting up of a hot-line between the Foreign Secretaries of the two countries and
upgradation of the existing hotline between Directors General Military Operations.
With Pakistan’s efforts, the APHC and other prominent Kashmiri leaders from IOK
visited Pakistan which was an unprecedented development underscoring Pakistan’s
advocacy of involving the Kashmiri people in the dialogue process. In meetings with
Indian leaders, the President and Prime Minister repeatedly emphasized that a
lasting peace between the two countries could only be achieved by resolving the
Kashmir dispute. A solution to the dispute must be acceptable to all three parties –
Pakistan, India and the Kashmiri people, for which all sides had to demonstrate
courage, determination and flexibility.
With Afghanistan, the Government took measures to further strengthen cooperation
including extending a credit of 100 million dollars for reconstruction and
rehabilitation in addition to 100 million dollars committed earlier. During the visit of
the Afghan President to Pakistan in March and our Prime Minister’s visit to Kabul in
July, the two sides concluded 7 agreements/MOUs covering political, military,
cultural, media, transport, trade and investment areas. We also donated 200 trucks,
100 buses and 45 ambulances to the Afghans. Moreover, during this period
Pakistan-Afghan trade reached the unprecedented level of 1.2 billion dollars, an
increase from 26 million dollars in 2001.
The highlight of relations with Iran during this period was signing of the MOU on
negotiations regarding the proposed gas pipeline mega project from Iran to Pakistan
and onwards to India which was concluded in July 2005. Other agreements with Iran
covered trade, export of agricultural products and establishment of a Joint
Investment Company.
3.1.2. Regional cooperation
In order to maximize the benefits of Pakistan’s strategic location at the cross-roads
of South, Central and West Asia, the Government promoted the creation of multiple
linkages or corridors of cooperation within these three regions, covering the energy,
trade and transportation sectors. Apart from concluding the MOU on the Iran-
Pakistan-India Gas Pipeline, the Government pursued other options involving supply
of gas from Turkmenistan via Afghanistan to Pakistan and from Qatar to Pakistan
and onwards to India. Pakistan also undertook to upgrade the transportation
linkages with western China as well as with the Central Asian States which would
terminate at the upcoming Gwadar Port.
In this context, visits by the President and the Prime Minister to the ECO member
states of central Asia, Kyrgyzstan, Uzbekistan, Tajikistan, Kazakhstan and to
Turkey, Iran and Afghanistan, served to strengthen bilateral as well as multilateral
cooperation. Apart from the total of 19 bilateral agreements/MOUs signed with these
countries, Pakistan, Iran and Turkey agreed to pursue a fast track on trade between
them which would supplement the larger Economic Cooperation Organization Trade
Agreement (ECOTA) within the region. Given Pakistan’s growing prominent role in
the region, the Shanghai Cooperation Organization (SCO) extended observer status
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in July 2005 in connection with which the Prime Minister attended the SCO summit
in Kazakhstan.
In his capacity as the Chairman of SAARC, the Prime Minister visited the capitals of
member states late last year for discussions with their leaders on ways to promote
regional cooperation and strengthen the Organization. He pushed for early
implementation of the agreement on Free Trade (SAFTA) and the SAARC Social
Charter. Pakistan hosted the fourth SAARC Commerce Ministers’ meeting
(November 2004) and the SAARC Health Ministers’ Conference (July 2005).
Pursuing Pakistan’s Vision East-Asia Policy, the President and the Prime Minister
visited the major countries of this region, including Indonesia, Malaysia, Thailand,
Singapore, Brunei, Australia, New Zealand and Japan. The leaders of Malaysia,
Thailand and Japan also visited Pakistan during this period. During these
exchanges 17 agreements/MOUs were signed with these countries covering
political, security, economic, trade and cultural fields. A major achievement was the
agreement with Malaysia for the employment of Pakistani manpower. These
contacts, including Pakistan’s hosting of the Asia Cooperation Dialogue meeting,
advanced the objective of attaining full dialogue partnership with ASEAN which
would make a significant contribution to the growth of Pakistan’s economic and
trade linkages with this entire region.
3.1.3 Cooperation with muslim ummah
Apart from exchange of high-level visits with brotherly Muslim countries including the
UAE, Afghanistan, Saudi Arabia, Qatar, Iran, Oman, Lebanon, Turkey, Bahrain and
the Palestinian National Authority, the government implemented measures to help
strengthen the effectiveness of the OIC to meet growing challenges for the Muslim
world. In particular, Pakistan hosted the meeting of the Commission of Eminent
Persons (CEP) entrusted with the task of recommending measures for
strengthening the OIC and responding to the attempts to denigrate Islam and
Muslims. These recommendations were adopted by the 32nd ICFM in June 2005.
Pakistan also ensured that during the 32nd ICFM the OIC continued to maintain its
traditional support for the struggle of the Kashmiri people for self-determination.
3.1.4 Relations with the major powers
Significant progress was made in relations with the major world powers during the
previous year. With the United States high-level exchanges included visits by the
President to the United States in December 2004 and later by the Foreign Minister
in 2005 while the US Secretary of State, Secretary of Defence and the Deputy
Secretary of the Treasury as well as the Commander of CENTCOM visited Pakistan
during 2005. Since the designation of Pakistan by the US as a major non-NATO ally
in 2004, military and economic assistance to Pakistan has steadily increased with
the US Congress clearing the sale of military equipment worth 1.3 billion dollars in
November 2004 which was followed by the announcement on the sale of F-16
aircraft in March 2005. In the economic and social sector, the US offered assistance
worth 147 million dollars in May 2005. The American Overseas Private Investment
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Corporation (OPIC) organization enhanced its coverage for investment in Pakistan
up to 300 million dollars. Given this upward trend in relations, Pakistan’s exports to
the US increased by 11% during 2004-05.
High-level visits/exchanges with the major countries of the European Union,
including France, Germany, Italy, United Kingdom, Netherlands and Belgium,
strengthened Pakistan’s relations with the EU as well as bilateral contacts with these
countries especially in the economic, commercial, technical and scientific fields.
These exchanges also facilitated private sector cooperation with these countries
apart from opening up opportunities for greater European investment in Pakistan. Of
particular significance were exchanges to promote cooperation in the fields of small
and medium enterprises, renewable energy, vocational and technical training as well
as cooperation in promoting higher education.
During the visit of the Japanese Prime Minister to Pakistan in April 2005, Japan
announced revival of its Yen loan assistance to Pakistan after a hiatus of seven
years amounting to 16,400 million yen ($146 million). The two sides also signed a
Technical Cooperation Agreement, as well as agreements on Japanese assistance
for the Taunsa Barrage Rehabilitation Project and the Faisalabad Water Purifying
Plant Project. During Prime Minister Shaukat Aziz’s visit to Japan in July 2005, he
inaugurated the Pakistan Pavilion at the Expo Aichi and attended a Pakistani
cultural program consisting of prominent artistes. His visit also opened up avenues
for greater cooperation between the private sectors of the two countries, especially
in the fields of electronics, automobiles and tourism.
Over the past year relations with Russia also marked a significant improvement with
growing cooperation in the field of counter-terrorism and security cooperation as well
as increase in levels of economic and trade relations. This relationship received a
major boost by the meeting between the Prime Minister and the Russian President
in Astana, the capital of Kazakhstan during the SCO summit in July 2005.
3.1.5 New openings
For the first time in Pakistan’s diplomatic history, a major initiative was taken by the
President to explore new openings for relations with the leading countries of South
and Central America. The President visited Brazil, Argentina and Mexico in
November/December 2004 where he concluded several agreements/MOUs
covering consular relations, combating drug trafficking, cooperation for food security
and establishment of Joint Economic Commissions.
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3.1.6 Multilateral issues
Pakistan also played a prominent part in addressing humanitarian and socio-
economic issues within the United Nations system. Its efforts ensured adoption of
resolutions by the UN relating to the promotion of religious and cultural
understanding, universal realization of the rights of people to self-determination and
elimination of all forms of violence against women. In recognition of Pakistan’s pre-
eminent role in the international community, Pakistan was elected to the UN’s
Economic and Social Council, the Universal Postal Union (UPU) and the
International Civil Aviation Organization (ICAO). Pakistan played a prominent role in
the negotiations on reform of the UN, and was the prime mover of the Uniting for
Consensus group. Through the efforts of this group, we have ensured that a large
majority of member states endorse the need for a more equitable and democratic
UN system which does not create greater privileges for certain states, for instance
by creating new permanent members of the Security Council.
3.2.1. Maintaining credible defence
Guided by the conviction that peace can only be achieved through strength, the
Government pursued a defence policy based on maintaining a minimum credible
deterrence through strategic and conventional capabilities.
During the past year, the Government attained a number of significant milestones to
further augment and strengthen the defence capability of the country. These
included successful flight test of the indigenously developed state of the art cruise
missile; approved co-production with China of the JS-17 fighter jet, the first batch
production of which is expected in December 2006; produced 16 Al-Khalid Tanks in
co-production with China and upgraded 100 Al-Zarar tanks acquired from China.
The Government also reactivated the Submarine Rebuild Complex while the
Pakistan Ordnance Factory produced arms/ammunitions worth Rs. 6.5 billion for the
armed forces which is higher by 16.1% as compared to last year.
The Government also engaged in efforts to acquire defence equipment from abroad
in order to strengthen the country’s defence profile. These efforts included
successful conclusion of an agreement for the purchase of new F-16 aircraft from
the US, ensuring that the US Congress clears the sale of military equipment worth
1.03 billion dollars in November 2004, signed a contract with China for the
construction of 4 F-22P frigates, finalized procurement of 6 anti-submarine
helicopters as well as missile and ammunition for naval vessels/guns and started
negotiations with Sweden for the acquisition of 6 Airborne Early Warning System.
The indigenous production of defence equipment also helped the country earn
foreign exchange and the most significant deal in this regard was the sale of 20
Super Mushshak Aircraft to Saudi Arabia which earned $36 million for the country.
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CHAPTER-IV
MAKING GOVERNMENT MORE EFFICIENT
R eforms in governance have been initiated in the first year of the government to
ensure that the government departments and organizations become more
efficient and responsive to the people. Reforms in judiciary and police, public
sector capacity building, tax administration reforms, reforms in financial reporting
and auditing, effective monitoring and evaluation of development projects etc. have
been implemented. It is expected that successful implementation of these activities
would result in improving governance and growth related indicators in the country.
4.1 Performance based management
At the outset, the government is committed to promote a culture of governance
where all organs of the government work on well defined goals and targets and
precommit to achieve well specified and measurable bench-marks.
4.1.1 Goals and target
Soon after assuming his office, the Prime Minister initiated series of individual
meetings with every Minister, Minister of State, and Secretary of the
Ministry/Division to set precise goals and targets for their work. As a result of these
meetings rolling plans have been worked out with quarterly targets which are
regularly monitored by the Prime Minister.
The impact of this assignment has been manifold. The Ministries have been
activated and energized for establishing a culture of good governance, transparency
and accountability. These efforts are bearing fruits, as each ministry is producing
quantifiable and tangible results in the areas of its responsibilities.
4.1.2 Efficient and participative decision-making
The Government is promoting a culture of efficient and participative decision
making. No decision and issue is difficult enough to escape the attention and
scrutiny of the collective wisdom of the government. Accordingly, a large of number
of sticking and complex issues have been handled and decided by the government
with full participation of concerned stakeholders. Decisions such as law reforms, law
against honor killing, controlling export of nuclear and biological substances,
measures to ensure smooth supplies of essential commodities at reasonable prices,
establishment of intellectual property organization, madrassa reforms, curricula
reforms, privatization of PTCL, rationalization of tariffs on imported cars, trade with
India etc. were taken promptly.
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These decisions were made possible by regular holding of meetings of the Cabinet
and its various Committees. These forums enable wider consultation among all the
key policy-makers. The collective wisdom of cabinet members and senior
government officials promotes efficient and coordinated decision-making.
4.1.3 Restructuring of the federal secretariat
With a view to broadening the focus of government and allowing for better
democratic governance oversight on some key areas, the federal secretariat was
restructured in September, 2004. Number of ministries was increased from 32 to 39
and their divisions from 37 to 43. A rational redistribution of business among the
divisions was carried out to ensure greater efficiency in the functioning of
government.
4.2 Improving regulatory environment
The key function of the government is to create a well defined regulatory framework
that would enable private individuals and groups to engage in productive activities
with known rights and obligations. In the past, this role of the government had been
seriously neglected. With increasing passage of public sector economic activities to
the private sector, government is fully cognizant of the need that regulatory regimes
are strengthened to ensure equity and fairness in the market and to provide
adequate protection to the weaker segments of the society.
During the year, the Prime Minister has constituted a new Cabinet Committee on
Regulatory Bodies. This committee will coordinate the work of independent
regulatory bodies and ensure that they work in tandem with the policy framework
laid down for their respective sectors. Many steps were taken to strengthen the
regulatory environment. It provided expanded space to the private sector and
opened up new avenues of business for them.
4.2.1 State Bank of Pakistan
One of the fundamental responsibilities of the State Bank is regulation and
supervision of the financial system to ensure its soundness and stability as well as
to protect the interests of depositors. The Bank has taken many initiatives to fulfill its
regulatory role of protecting the financial sector, banks, companies, investors and
depositors from various risks.
(i) Initiatives to strengthen the Banking Sector: SBP has, in principle,
decided to adopt Basel II in Pakistan. This decision was taken after a
long and comprehensive consultative process. According to the Plan,
Banks will be required to adopt Basel II from 1st January 2008 and
Internal Ratings Based Approach from 1st January 2010.
(ii) Core principles for effective banking supervision: The Core
Principles for Effective Banking Supervision have become the most
important global standard for prudential regulation and supervision.
Pakistan is largely compliant with these principles. This sends a
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positive market signal because it is considered an important
benchmark for the financial sector assessment and technical
assistance provided by multilateral agencies.
(iii) Stress Testing: Financial system is normally exposed to different
types of risks like credit, market, interest rate risks. Stress testing is
one of the most widely used techniques to determine the likely
situations of financial distress. SBP has addressed this issue and has
done stress testing, taking various scenarios in its study. The analysis
suggests that banking system could withstand shocks resulting from
the losses accumulated without deteriorating the capital of the banks.
(iv) Reduction in inspection time: During the year under review, SBP
successfully minimize the time taken between completion of inspection
and the submission of final inspection report for enforcement actions
compared to earlier years. This resulted in swift remedial actions
reducing the systemic risks faced by the banking sector.
4.2.2 Securities and Exchange Commission
The function of Securities and Exchange Commission of Pakistan is to develop a
fair, efficient and transparent regulatory framework, based on international legal
standards and best practices, for the protection of investors and mitigation of
systemic risk aimed at fostering growth of a robust corporate sector and broad
based capital market in Pakistan. The SECP took many steps to create a better
regulatory regime for firms, entities and investors in Pakistan.
(i) Revision of laws and policy: The Securities and Exchange
Commission of Pakistan revised the disclosure requirements in
respect of balance sheet and profit and loss account of listed
companies and their subsidiaries with the objective of harmonizing
them with International Accounting Standards. The Commission
notified Margin Trading Rules, 2004 for introducing margin financing.
The Clearing Houses (Registration and Regulation) Rules, 2005 were
also notified. In order to minimize market abuse arising from conflict of
interest of brokers in case of proprietary trades, the Commission has
accorded approval to the Regulations for Proprietary Trading, 2004.
The Commission framed the Regulations for Securities Lending and
Borrowing, 2004, primarily to put in place a mechanism for securities
lending and borrowing for facilitating short selling transactions. In order
to address the regulatory concerns arising from the growth in internet
trading, the Commission issued the Internet Trading Guidelines, 2005.
(ii) Effective enforcement: Effective monitoring and enforcement actions
were taken against corporate entities that were found to be engaged in
unauthorized activities or non-compliant with laws. The Commission
took strict action against illegal and unauthorized forex
companies/international brokerage houses, which were operating their
businesses in violation of the law; thirty-eight such companies were
identified and action was initiated against them. Apart from these,
twenty-two unincorporated entities conducting such illegal business
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were also identified whose cases were referred to the National
Accountability Bureau (NAB). Eleven companies involved in multi-level
marketing/Pyramid schemes were identified and action was initiated
against them. The Commission penalized several brokers and
suspended their licenses for violations of the Securities and Exchange
Ordinance, 1969 and the Rules and Regulations framed thereunder. A
number of enforcement actions were initiated against NBFCs and their
managements. Besides, the Commission initiated winding up
proceedings against various NBFCs. The liquidation of a NBFC has
recently been completed and the case has been referred to NAB for
investigation of directors due to involvement in financial crimes.
Similarly, ten NBFCs are facing winding up orders initiated by the
Commission.
(iii) International coordination: As a step towards bilateral cooperation,
the Commission has signed memoranda of understanding with its
counterpart regulatory authorities in Australia and Bhutan. Moreover, a
memorandum of understanding has been set up between the
concerned regulatory authorities to set up the South Asian Securities
Regulators Forum.
As a result of the better regulatory framework in place, the following took place:
(i) Accelerated growth in registration of companies under the Companies
Ordinance, 1984 (Companies Ordinance) was recorded. New
incorporations during the period were 3,078, reflecting a 40 percent
increase over 2,207 companies registered during the preceding year.
(ii) A 41 percent increase in the KSE-100 Index was witnessed. Moreover,
market capitalization increased from Rs. 1,421.58 billion on 30 June
2004 to 2,068.19 billion on 30 June 2005. The KSE has outperformed
the regional markets and despite the extreme bearish trend during
March 2005, there was no settlement or margin issue.
(iii) One company, namely, Pakistan International Sukuk Company Ltd.,
has been granted approval to issue securities (Sukuk) outside
Pakistan. The Sukuks were listed on Luxemburg Stock Exchange and
the issue size was $600 million.
4.2.3 Pakistan Telecommunication Authority (PTA)
The gains in the telecom sector have been further consolidated. Two new cellular
licenses were awarded to Telenor and Warid Telecom generating revenue of $581
million. The service charges, fee and other related tariffs have been substantially
reduced and new services introduced to provide efficient and economical service to
the customers. These measures have led to an increase of 156% in totals
subscribers since last year. One of the key functions of PTA is to ensure that service
providers are maintaining the desired quality of services, keeping their operations
efficient and trouble free. For this purpose, PTA remained busy in conducting
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surveys and carrying out inspections/ raids etc. Some of the achievements in this
regard are as follows:
TABLE 4.1
Task Total
Commencement Inspections 160
Survey 214
Inspections 952
Complaints 2645
Complaints Resolved 2161
Show Cause Notices 17
Court Cases 14
Hearing 08
Fine Imposed 496
Raids (Illegal Call Termination) 11
4.2.4 Frequency Allocation Board (FAB)
Frequency Allocation Board (FAB) manages and allocates frequency spectrum, to
telecommunication and broadcasting operators, so that they can operate without
jeopardizing national security and interfering with one another’s operations. During
the year, FAB allocated frequency management to two mobile operators, 12 LDI
Licenses, 79 LL, 92 WLL Operators and 25 FM radio stations.
4.2.5 Pakistan Electronic Media Regulatory Authority (PEMRA)
PEMRA regulates electronic media in Pakistan. To further broaden the access to
electronic media, PEMRA granted 6 new licenses for satellite T.V Stations. In
addition, 7 new licenses to Foreign Satellite T.V Channels, 354 Cable T.V Networks
and 25 FM broadcasting licenses have been issued. As part of its responsibilities,
PEMRA closely monitors the quality and contents of media transmissions.
Prevention of unauthorized transmissions is the main focus of its enforcement role.
4.2.6 Oil and Gas Regulatory Authority (OGRA)
Oil & Gas Sector is one of the drivers of growth in the economy. Government has
given a liberal policy framework to promote oil and gas exploration and production in
the country. Oil and Gas Regulatory Authority (OGRA) is the independent regulatory
body charged with the regulation of the sector in accordance with the policies
framed by the government. In line with the liberal policy framework, OGRA has
issued 8 licenses for transmission and sale of gas, 183 in the marketing of CNG and
11 in marketing in the LPG Sector. To facilitate its dealings with the companies
operating in the sector and to redress public grievances against them, OGRA has
laid down detailed regulations in the areas of Gas Transmission and Distribution,
Financial Regulations, Storage and Transmission of CNG and Complaints
Resolution. A dedicated cell has been created to deal with the complaints. The
Authority received more than 400 complaints and disposed for more than 350 of
them. It imposed penalties on 18 CNG stations for contravention of rules and
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standards, apart of imposition of penalties on LPG licensees in 2 cases. The
Authority also carried out 8 determinations of revenue requirements during the year.
Fixation of the incentive oriented efficiency benchmarks in respect of line losses and
operating costs is a significant contribution of the Authority in terms of economic
regulation. This has motivated the gas companies to take practical steps to control
these costs. Consequently the revenue requirements of gas companies were
reduced by Rs: 2,558 million thereby reducing the impact on consumer’s gas prices
by Rs: 3.05 per MMBTU during the year.
4.2.7 National Electric and Power Regulatory Authority (NEPRA)
National Electric and Power Regulatory Authority (NEPRA) is charged with the
regulation of electric power sector. Given the critical nature of electricity in country’s
economic development, government has laid down an attractive investment policy
and flexible pricing policy to enable private sector to invest in the sector to meet the
fast growing energy demand. During the year, NEPRA granted 9 new generation
licenses to private sector producers. In addition, NEPRA completed the process of
granting generation licenses to all the independent power produces (IPPs) set up in
response to the 1994 power policy with the grant of license to M/s Altern Energy
Limited on 22.11.2004. In the public sector, generation licenses were granted to
WAPDA for hydro power projects, Lakhra Power Generation Company Limited and
Pakistan Atomic Energy Commission for its Karachi Nuclear Power Plant
(KANUPP). NEPRA approved Interim Power Procurement (Procedures and
Standards) Regulations-2005. The Performance Standards (Distribution) Rules,
2005 prepared by NEPRA were also approved by the government and notified in
January, 2005. NEPRA disposed off nearly 1000 consumer complaints against
power distribution companies. The year was a landmark in terms of the completion
of the first phase of power sector restructuring and detailed determinations of Tariff
review Motions filed by the 8 ex-WAPDA Distribution Companies.
4.2.8 Public Procurement Regulatory Authority
One of the key governance reforms recently introduced in the country is the
establishment of Public Procurement Regulatory Authority. Procurement regulations
involving public funds were outdated, lacking transparency, leading to corruption
and public criticism. PPRA reviewed a number of existing procurement procedures,
designed new procurement laws, exercised general supervision over public sector
agencies with a view to increasing efficiency, transparency and accountability in
public procurement without being operationally involved in actual procurement of
goods and services. The authority is maintaining a database of public sector
procurement opportunities wherein all requirements of goods, services and works
are advertised.
4.2.9 Intellectual property organization of Pakistan
Being signatory to WTO Agreement on Trade Related Intellectual Property Rights
(TRIPS), Pakistan was under obligation to update its intellectual property laws and
to provide for a comprehensive mechanism for their protection and enforcement.
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Accordingly, the relevant existing laws in the fields of Patents & Designs,
Trademarks and Copyrights were updated and new laws were promulgated. A
sticking point in this area was the establishment of an independent body which was
to operationalise the laws. The government has filled this important gap by setting
the Pakistan Intellectual Property Rights Organization. The Chairman of the
organization has been appointed from the private sector to inculcate an efficient and
independent outlook for the new body.
4.3 Civil services reforms
The key to service delivery in a society is the existence of an efficient and
accountable cadre of civil servants, who have the right capability and inspiration for
public service. Government is paying extraordinary attention in strengthening civil
services by building their capacity, enhancing prospects for career development,
improved compensation and effective monitoring of their performance and
accountability.
4.3.1 Capacity building for civil servants
Over the years in-service training opportunities for civil servants, which previously
were abundantly available, were virtually eliminated, seriously eroding their capacity
to remain effective service delivery. Government is according high priority to rebuild
the capacity of mid-level civil servants. In this respect, Government has initiated a
major project called Public Sector Capacity Building Project (PSCBP) which will train
the almost entire mid-level civil servants by utilizing both foreign and domestic
training opportunities. Following progress has been made towards this goal:-
(i) A group of 110 officers was sent abroad to elite institutions under the
Professional Development Program (PDP) to receive higher education
(One year degree) in the needed disciplines in the government. These
officers would be returning around September 2005 and would be placed
at various important positions at the federal and provincial governments.
Second batch of 73 officers has since been selected under PDP and
expected to proceed abroad for training in the Fall of 2005.
(ii) In order to expose the senior officers to the latest theory and practice in
the public administration, 47 officers (BS 20-21) were sent to the Kennedy
School of Government, Harvard, USA to participate in a customized 5
weeks training program. Selection of second batch of officers under
Executive Development Program is currently underway.
(iii) The National School of Public Policy (NSPP) has been set up by
notifying Pakistan Administrative Staff College (PASC), NIPA, Lahore,
Karachi, Peshawar Quetta and Civil Services Academy (DMG Campus),
Lahore as its constituent units. A Steering Committee of NSPP under the
Chairmanship of Advisor to the Prime Minister on Finance and Economic
Affairs has been set up to work out an Action Plan for the NSPP. This
initiative will go a long way in building indigenous training capacity for
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public administration in the country.
4.3.2 Improved compensation
The government has notified a 15 percent increase in salaries and a 10 percent
raise in pensions with effect from July 1, 2005. A substantial raise in various
allowances was also announced. The 15 percent increase has been made on the
basis of the revised basic pay scales 2005. The 10 percent pension increase will
also be allowed to government servants who would draw pensions under the revised
pay scales.
4.3.3 Promotion policy and boards
To ease off blockades in promotion for various occupational groups, the government
has decided to hold promotion boards twice during the year. Previously, the CSB
used to sit once in a year or sometimes once in 2-3 years for various grades, but
now the process has been streamlined. The CSB is convened twice in a year during
June/July and December to promote officers to BS-20 and above.
(i) Promotion proforma has been redesigned and made more authentic,
comprehensive and transparent.
(ii) In the past certain exemptions had been granted to officers from
undergoing mandatory training for promotion to BS-20 and 21. All the
exemptions have been withdrawn in order to stress the importance of
higher training.
4.3.4 Merit-based foreign postings
In order to improve the quality of Pakistan’s Trade Officers in 37 missions abroad,
the Ministry of Commerce this year reached out to a large number of potential
candidates who participated in a selection process/examination conducted by
LUMS. Private Sector, as well as banks and multinationals, were invited to nominate
candidates for the above examination. Final selection will be made from this pool of
talent, which would enable the Ministry to send well educated/trained men/women to
represent Pakistan as Trade Officers abroad.
4.3.5 Accountability and transparency
A comprehensive reform package in respect of declaration of assets of Federal Civil
Servants has been prepared in collaboration with National Anti Corruption Strategy
(NACS) Implementation Committee. The reform package includes the following: -
(i) Annual Declaration of Assets (DA) to be submitted by the civil servants
for the financial year ending on 30th June, instead of the erstwhile
practice of submitting on the calendar year basis.
(ii) With a view to saving the civil servants from undue hassle, the
provision of declaring property acquired/disposed off during the year and
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as such the requirement of prior permission to acquire and dispose off
assets, has been done away with.
Due to these reforms the date of declaration of assets will coincide with the date for
filing tax returns thus easing comparison. It also means that monitoring of assets i.e.
sale and purchase will be streamlined and computerized.
4.4 National Accountability Bureau (NAB)
NAB operates within the purview of National Accountability Ordinance (NAO) to deal
with cases of corruption and white-collar crime. To strengthen NAB, FIA’s Anti-
corruption and Economic Crime Wings were merged with the NAB with a view to
eliminating duplication and inconsistencies in the laws of respective agencies.
During 2004-05, NAB recovered Rs 706.25 million from 244 persons on the basis of
plea bargain and voluntary return. NAB also launched an awareness campaign
among masses regarding negative impact of corruption upon society through
seminars, TV talk shows, TV drama serials, anti-corruption articles in the print media
and essay writing, painting and poster competition among college and university
students.
4.5 Reforming public financial management
The process of reinvigorating the public sector through extensive reforms includes
reforms in the taxation regime, revamping the institutions of audit and accounts and
strengthening the governance in public sector organizations. Extensive measures
have been taken in each of these areas to further the goals of reform the state of
public financial management.
4.5.1 Tax administration
In order to make it more effective, efficient and friendly towards the tax payers, tax
administration system is undergoing many changes. These reforms include lowering
the tax and tariff rates of capital goods to promote investment and boost economic
activities, reducing the cost of doing business, discourage smuggling by reducing tax
rates of smuggling-prone items and promoting hassle-free environment for the
taxpayers through dedicated tax units and efficient work force. These policies of the
government have yielded positive results as smuggling prone goods have been
brought into the fold of regular imports.
4.5.1.1 Tax administration reform
The project has been initiated with World Bank’s assistance and aims at automation
of the functional areas of tax collection, capacity building of CBR’s officers/officials
through extensive training, technical assistance and up-gradation of physical
infrastructure of CBR’s field formations. The thrust of reforms is to remove discretion
of tax collectors, reduce contact with the taxpayers and facilitate taxpayers through
extensive use of information technology.
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4.5.1.2 Universal self-assessment scheme
A bold initiative was taken by introducing a true Self-Assessment Scheme whereby
taxpayers were allowed the right to declare their income which were accepted by the
Department. Achievement of budgetary targets by the Income Tax Department
despite acceptance of taxpayers declarations is indicative of trust reposed by the
taxpayers in the scheme.
4.5.1.3 Elimination of discretion and contact with taxpayers
Returns of Income Tax can now be filed electronically on the web or any magnetic
media or any other computer readable media. This is in keeping with the
international trends towards e-Government.
Through new Federal Excise Act, physical control has been replaced with Self-
assessment and self-compliance. There is no departmental intervention in duty
assessment and clearance/sales. The lengthy and complex documentary
procedures based on departmental approvals have been done away with. Zero-rate
of duty has been introduced for exports including deemed exports.
4.5.1.4 Setting-up taxpayers facilitation centers
CBR has established two Large Taxpayers Units (LTUs) one at Karachi and one at
Lahore, a Model Sales Tax Collectorate at Karachi and six Medium Taxpayers Units
(MTUs) at Karachi, Lahore, Rawalpindi, Peshawar, Quetta and Faisalabad. These
new offices provide facilities to taxpayers regarding Income Tax, Sales Tax and
Federal Excise under one roof. The business processes in these reformed and
restructured units are being re-engineered to facilitate taxpayers and achieve
functional efficiency.
4.5.1.5 Customs administration reform (CARE)
Another important initiative was the launching of Customs Administration Reform
Project (CARE) at Karachi Port, which was inaugurated by the Prime Minister in
April 2005. This project has introduced automated processing of customs
documents under which the “Goods Declarations” can be filed by an importer “on
line” without physical interaction with customs officials. The processing done in
Pakistan Customs Computerized System (PACCS) has reduced the clearance time
of goods to a few hours which previously used to take upto ten days. This is a major
step towards customer facilitation that has reduced the cost of doing business
considerably. It is planned to replicate this Pilot Project in rest of the country. This
new system has revolutionized the working of Pakistan customs and is an
unmatched initiative in this region.
4.5.1.6 Alternate disputes resolution
Alternate Dispute Resolution (ADR) mechanism has been provided for resolution of
dispute or hardship of the taxpayer through ADR Committees to minimize litigation.
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Another marked achievement has been the disposal of pending appeals related to
both direct and indirect taxes. CBR was assigned the target of 10% reduction in
appeals and adjudication cases in each quarter. At the beginning of the year there
was an opening balance of 46,537 of appeals both Direct & Indirect Taxes. By the
end of the June, 2005, virtually, the entire pendency has been liquidated and now
the department would be able to decide appeals within 90 days of their filing. This
extra-ordinary effort has provided great relief to the taxpayers.
4.5.1.7 Capacity building initiatives
Departing from the standard practice for other federal services, the pre-service
training of CBR’s officers has been modified significantly by introducing a one-year
segment of specialized training leading to an MBA in Tax Management. After
graduation, these officers will form an invaluable internal resource equipped with
modern management skills. The serving officers have been provided with extensive
opportunities for capacity building both at home and abroad for up-gradation of their
skills.
4.5.2 Audit and accounts
Reforms are also underway in the field of audit and accounts. A New Accounting
Model (NAM) based on the concept of modified cash based accounting has been
introduced for the public sector. The NAM has been implemented through a
computerized Financial Accounting and Budgeting System (FABS). The FABS has
been introduced by the Federal and Provincial Governments on an integrated IT
platform using the state of the art SAP R III software. A new auditing paradigm has
also been developed which has resulted in the development of a New Auditing
Model that is based on internationally accepted auditing standards. The new
auditing arrangement has been designed to meet the demands of auditing the
accounts to be developed under the FABS, and for this purpose Audit Management
Software and Computer Assisted Auditing Techniques will be extensively used. The
said reform are now been extended and followed up by further reforms. In the next
phase computerized FABS will be extended to all the districts of the country under
an integrated financial network. The financial management functionality of the local
governments will be integrated with the countrywide accounting and reporting
systems. The New Auditing Model will be implemented for the audit of Federal,
Provincial, and District governments.
4.6 Bringing professionalism in board rooms
Boards of Directors of public sector oil & gas companies (SSGCL, SNGPL, OGDCL
and PPL) have been reconstituted with a view to boost professionalism and
corporate culture.
4.7 Introducing e-governance
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A total of 19 e-government projects have been executed during the year. A sum of
Rs. 190 million is being spent in this regard by the Ministry of Information
Technology. Recommendations for changes in Secretariat Instructions for Internal
Communications and File Movement are currently being developed. The project for
E-Office will lay the foundation for the modern government office in the Federal
Government. Government officials will be better able to concentrate on activities that
add value to the working of the government. The pilot system including Human
Resources Management, Project Management, Internal Communications and others
is being implemented by the Ministry of Information Technology which is to be
replicated at other Ministries on successful deployment.
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CHAPTER-V
FOSTERING ECONOMIC GROWTH
E conomic growth and distribution of economic benefits to the people is the prime
goal of the government. The economic reforms agenda initiated under the
leadership of the President General Pervez Musharraf has laid the foundation of
a stable and growing economy. These trends were further punctuated during the
first year of the present government.
5.1 Key Indicators of economic performance
5.1.1 GDP growth
Pakistan’s economy extended its phenomenal economic performance for the third
consecutive year in a row at 8.4% real GDP growth. Large Scale Manufacturing
grew by 15.4% against the target of 12.2%, agriculture grew by 7.5% against the
target of 4.0% and services sector registered a growth of 7.9%, against the target of
6.2%. This shows that growth was broad based. Per capita income in dollar term,
stood at $736.
5.1.2 Agriculture
Accelerated growth of agriculture, especially high value agriculture is key element of
the present government’s overall strategy for poverty reduction. It is well established
that agriculture growth contributes most to poverty reduction and employment
generation, particularly in rural areas, where poverty is high. Through forward and
backward linkages, agriculture also contributes to rural economy and creates
livelihood for poor in the non-farm sector. During the first year of the government,
there was a record harvest of 14.6 million bales of cotton and 21.1 million tons of
wheat. Major crops grew by 17.3%. While increased water availability and favorable
weather played key roles in this improved performance of the crop sub-sector, the
impact of these was clearly supplemented by the easy access to farm credit. Credit
disbursement during the first nine months of the year was 54% higher than the
preceding year – record Rs 73.8 billion level against the full year target of Rs 85
billion. There was more than 60% increase in import of agriculture machinery in the
first half of the year, pointing to better prospects of the agriculture sector.
5.1.3 Large scale manufacturing
Sustained high demand continued to boost production in the LSM sector. Although
LSM growth was somewhat less than last year, it is still substantially stronger than
the average growth of 7.2% during the preceding three years. As a result of
continued strong growth in various industries, capacity utilization also witnessed a
significant increase. The highest increase of 38.5 percentage points in the capacity
utilization occurred in electronic industry during the year on the back of strong credit
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led demand for home appliances. Automobile industry witnessed a sharp increase in
capacity utilization (by 21 percentage points) mainly on account of higher capacity
utilization by tractors and motorcycle/ rickshaws. Moreover, capacity utilization in
fertilizers, paper & board, industrial chemicals and steel industries is either
exceeding or approaching 100%. These industries therefore required expansion in
their existing production capacity to meet the growing demand.
5.1.4 Services
Services sector surpassed the growth target by a wide margin on account of robust
growth in telecom sector, stellar performance in banking, insurance and wholesale
and retail trade. A 76.0% increase in cellular telephone connections to 8.8 million in
February 2005 and 160,000 WLL connections given in the first eight months of the
year show telecommunication services continued to expand at a rapid pace. The
banking sector is also expected to register robust growth, as it has been
strengthened through reforms and privatization and is expanding its lending
operations in new areas. Most banks reported robust increase in their profits in the
first half of the year. The large increase in imports boosted growth in wholesale and
retail trade.
5.1.5 Prices and monetary situation
Consumer Price Index (CPI) inflation averaged 9.3% during the year against the
original target of 5%. Rising demand in the economy in the face of most industries
operating at or near full capacity, shortage of essential food items like wheat,
pulses, meat and sugar, rising house rents and high oil prices put pressure on
general price level. An important contributor to the jump to the aggregate demand
during the year was the record growth in net credit to the private sector, which
surged to Rs362 billion by the third week of April 2005, even significantly higher than
the Rs 325.2 billion for the whole of the preceding year. To fight inflation the State
Bank increased its discount rate by one-and-a-half percentage points to 9% in April
2005. The decision has been taken to import critical food commodities.
5.1.6 Fiscal situation
After six years of extensive efforts through the reform of the tax system and tax
administration, Pakistan has succeeded in attaining fiscal stability. On account of
substantial loss in revenue under Petroleum Development Levy (PDL), the fiscal
deficit increased to 3.2% of GDP during the year, compared to 2.3% of GDP during
the previous year. The primary balance (total revenue minus total non-interest
expenditure) has remained in surplus for the last many years. Public debt burden
has also registered a sharp decline in recent years and is fast moving towards a
sustainable level.
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5.1.7 Current account balance and reserves
The current account deficit, excluding official transfers stood at $1358 million
(or 1.2% of GDP) during the year. Deterioration in current account emerged from a
sharp rise in the trade and services account deficits mainly owing to a rise in imports
(both oil and machinery) and other import related payments (e.g. shipment charges).
In the long term however, the rising investment in machinery and inputs should be
reflected in higher export earnings as well as import substitution. Pakistan’s total
liquid foreign exchange reserves, maintained an upward trend during the year under
review. Reserves touched all time high at $12.6 billion – up from $12.3 billion last
year. The continued build up in foreign exchange reserves has provided strength to
the Pakistani rupee vis-à-vis US dollar. The inter bank exchange rate per US dollar
averaged rupees 59.4 per US dollar during the year as against Rs. 57.6 averaging
last year, reflecting a depreciation of 3.0 percent. In general, Pakistan’s exchange
rate vis-à-vis US dollar has remained stable.
5.1.8 Public debt management
Public debt burden continues to decline rather sharply over the last five years with
significant improvement in fiscal situation. During the year, public debt as
percentage of GDP declined to 61.7 percent from the previous year’s level of 67.7
percent. Until a few years ago, Pakistan was facing serious difficulties in meeting its
external debt obligations. Not only was the stock of external debt and foreign
exchange liabilities growing at a breakneck pace, but the debt carrying capacity
remained stagnant. Following a credible strategy of debt reduction, Pakistan has
succeeded in reducing the rising trend in external debt and foreign exchange
liabilities. Pakistan’s external debt and liabilities stood at $35.8 billion during the year
— down from 36.6 percent in previous year. Furthermore, the external debt and
liabilities as percentage of foreign exchange earnings declined sharply to 137.2
percent from 164.9 percent a year ago. Prudent debt management, the continued
build-up in foreign exchange reserves and the higher foreign exchange earnings,
pre-payment of expensive debt and debt write-off are the major factors responsible
for the reduction in the country’s debt burden. An agreement under PC-III was
signed with Russia amounting to $127 million. Rescheduling Agreement dated
December 13, 2001 had a provision for voluntary debt relief on bilateral basis by
means of debt swaps. Canada, Germany, Italy and Norway offered Debt Swap
arrangements on voluntary basis with regard to amounts of more than $700 million.
5.1.9 Economic assistance
Economic assistance to the total tune of $2.9 billion from various multilateral and
bilateral development partners was generated. Out of the total aid committed, $2
billion has been committed as project aid and $950 million as non-project aid and $3
million as relief assistance for Afghan refugees. During the year, total disbursement
amounted to $2.2 billion. Out of the total disbursement, $705 million have been
disbursed as project aid; $1.5 billion as non-project aid (food aid non food aid) and
$3 million as Relief Assistance for Afghan Refugees. There has been substantial a
increase in annual bilateral assistance from our development partners as U.K. has
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increased the annual package with increased focus on Maternal and Neo Natal
Health Care; Loan Agreement with Germany would finance 1400 mega watt of Gazi
Brotha Dam; European Union has also increased the annual package this year,
grant assistance from USAID, Japan and Norway for economic and infrastructure
development of the FATA regions has been provided; expanding road linkages
under the Asian Development Bank assistance program and major intervention in
the education sector with assistance of the World Bank are major contributions
during the year.
5.1.10 Foreign direct investment
Pakistan has succeeded in attracting $1.5 million in FDI during the year as against
$950 million a year ago, showing an increase of 60.5 percent. Over 70 percent of
FDI has come into power sector; telecom sector; chemicals, pharmaceutical and
fertilizer; oil and gas; and banking and finance. Almost 70 percent of FDI has come
from USA, UK, Switzerland, Japan, UAE and Netherlands. The following tables give
further details of FDI.
TABLE 5.1
Leading Sectors
Sector Million $ % age
Communication 517.6 34.0
Financial Business 269.4 17.7
Oil & Gas and Petro Ref 217.5 14.3
Power 73.3 4.8
Trade 52.1 3.4
Chemical 51.0 3.3
Others 343.1 22.5
Total 1524.0 100.0
TABLE 5.2
Top investing countries
Country Million $ % age
U.A.E. 367.5 24.1
U.S.A. 326.0 21.4
U.K. 181.5 11.9
Switzerland 137.5 9.0
Japan 45.2 3.0
Netherlands 36.7 2.4
Others 429.7 28.2
Total 1524.0 100.0
5.1.12 Privatization
Privatization is of state enterprises is one of the key programs of the country, aimed
at furthering the role of private sector in the economy and sparing key government
Government of Pakistan
ONE YEAR PERFORMANCE OF THE GOVERNMENT
AUGUST 2004 TO AUGUST, 2005
resources to focus on regulatory responsibilities. During the year, the program
showed remarkable progress as some of the key state owned assets were
successfully privatized, including the giant telecommunications corporations. The
following key transactions were undertaken which will fetch: 192 billion ($3.2 billion):
(i) Divestment of 10% additional shares of Dandot Cement, Ittehad
Chemicals, Kohat Cement, Ghribwal Cement, etc. for Rs.75 million in
October, 2004.
(ii) Divestment of 20% shares of KAPCO for Rs.5,282 million through IPO
in February,2005.
(iii) Sale of the International Advertising Rs. 5 million in April 2005.
(iv) Sale of the Pak-Arab Fertilizers Limited for Rs. 14,125.6 million in May,
2005.
(v) Sale of the National Refinery Limited (51% GOP shares) for Rs.
155,000 million in June, 2005.
(vi) Divestment of 4.22% shares of UBL for Rs.1090 million through IPO in
June, 2005.
(vii) Bidding for KESC was held on 4th February, 2005 and highest bid of
Rs.20.240 billion of Kanooz al Watan was approved. Bid price was not
received. The same has been cancelled on June, 2005. Second bidder
(Hasan Associates Ltd.) is being engaged.
(viii) The most notable transaction was for the sale of 26% shares of PTCL
for which an attractive offer of $2.59 was received.
The confidence shown by the investors in the investment climate in Pakistan is a
matter of great satisfaction specially the acquisition of major enterprises / assets by
foreign consortia / investors which sends a strong signal to other overseas investors.
Many transactions such as privatization of PSO and PPL have been brought to a
very advanced stage and biddings are targeted for September, 2005. Process for
privatization of Pakistan Steel Mills, KS&EW and Pak American Fertilizer has been
accelerated and targeted for completion by December 2005.
5.1.13 Stock exchange
The buoyant mood in Pakistan's stock markets continued. The Karachi Stock
Exchange (KSE) share index and aggregate market capitalization recorded an
increase of 41.1% and 45.2% respectively. The Karachi Stock Market remained as
one of the five best performing markets around the world with rate of returns in
dollar terms of 100 percent.
Government of Pakistan
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5.2 Continuity and consistency of economic policies
The key to the success of economic policies is continuity and consistency. After a
long time in country’s economic history a policy framework developed six years ago
has remained on track in terms of its direction and thrust. The present government
has carried forward this process forward. It remains committed to pursue this stance
in the future also. It will further liberalize, deregulate and privatize the economic
regime in the country. An increasingly greater space is being provided to the private
sector to shoulder the burden of economic development. Government will focus its
attention on strengthening its regulatory functions.
5.3. New initiatives to boost growth
5.3.1 Industrial parks
National Industrial Parks Development and Management Company has been set up
by the Ministry of Industries to establish modern / world class industrial parks
throughout the country. All infrastructure facilities such as water, power natural gas,
telephone, warehouses and other common facilities would be provided at the
industrial parks. NIPs is aimed at kick starting the much need industrialization
process. The company is based on the concept of public-private partnership where
the private sector manages the affairs in a wholly owned company funded by the
Government. NIP has a happy mix of private and public sector representatives in the
Board of Governors (BOG), while Chairman and Chief Executive Officer belong to
private sector. This company has taken up a project of developing National
Industrial Park in Korangi industrial area, which is owned by PIDC. The next project
is to develop an industrial park after purchasing a piece of land measuring 1500
acres from Pak Steel which was meant to develop the Downstream Industries and is
lying vacant. The company plans to develop such parks in Peshawar, Quetta and
major industrial centers along with rural areas.
5.3.2 Technological upgradation
Technology Upgradation & Skills Development Company (TADS) has been set up by
the Ministry of Industries to create a dynamic organization that aims at focused
technology and skills up-gradation of key industrial clusters in Pakistan. TUSDEC is
based on the principle similar to NIPs, and aims to create a conducive and enabling
environment for the upgradation and promotion of skills and technology. This
objective will be achieved through establishing/funding common facility centers,
design, support and maintenance, testing, certification, incubation, applied research,
dissemination centers etc. It has been established under the public private
partnership wholly funded by the government but managed by the private sector.
TUSDEC is taking many steps to achieve its objectives:
(i) The Cement Research Institute, Lahore has been handed over to
TUSDEC along with its building.
Government of Pakistan
ONE YEAR PERFORMANCE OF THE GOVERNMENT
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(ii) Tools & Dies Centre will be established in Karachi. Another Tools & Dies
Centre is proposed for Gujranwala.
5.3.3 Ministry of textile industry
Textile Sector occupies position of prime importance in the national economy. It
contributes 8.50% of the national income, constitutes 67% of merchandize exports
earning, employs 38% of the Industrial labor force, generates half of the production
of manufacturing sector and shares 9% in GDP. This sector has the potential to
meet the challenges of the highly competitive global market especially after the
quota phase out. With an aim of giving boost to the textile sector, the Government
established Ministry of Textile Industry on 2nd September, 2004.
5.3.4 Textile city
In order to boost exports of textile, Textile City at Karachi is under construction.
Total cost of the project is approximated at Rs. 3.6 billion, excluding estimated costs
related to the establishment of the proposed self generated power project and the
water treatment plant. The Textile City has already been incorporated as a public
limited company with an independent and professional eleven member Board of
Directors.
5.3.5 Garments cities
In order to build capacity for the garment sector, which would be most vulnerable to
adverse competition in the post-quota environment, it was decided to set up three
Garment Cities at Karachi, Lahore and Faisalabad. In order to establish the
Garment Cities, a sum of Rs. 1.425 billion will be spent out of the Export
Development Fund.
5.3.6 Aik hunar aik nagar
As a consequence of Prime Minister’s visit to Thailand and his subsequent
directions regarding replication of Thailand’s One Tambon One Product model, work
on “One village One Product” in Pakistan has been initiated through SMEDA under
the Ministry of Industries, Production and Special Initiatives. It is hoped that this
model will have a major impact on the rural economy and will act as catalyst for rural
modernization in the country though mobilization of community and local resources.
Under “One village One Product” Project, a detailed analysis of all selected products
covering aspects like design, marketing, technology up-gradation etc. will be studied
and support shall be provided to craftsmen in this respect. Initial work on the pilot
phase of the project has been initiated. The following products, covering all four
provinces of the country have been identified: -
(i) Tiles (Multan Halla and Naspur), Hashikari, Patri, Embroidery, Suzankari
Khas.
(ii) Silverware and Silver Jewellery.
Government of Pakistan
ONE YEAR PERFORMANCE OF THE GOVERNMENT
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(iii) Namda, gillum.
5.3.7 Agri-business development project
Government has emphasized the importance of private sector led agri-business
development for achieving the objectives of higher economic growth and poverty
reduction. Agriculture sector has the potential to increase employment opportunities,
enhance rural income, and contribute to the diversification of the rural economy. The
purpose is to diversify and commercialize crop production, increase value addition in
agriculture, create rural employment opportunities and raise agricultural export. This
project is being undertaken with the assistance of Asian Development Bank. It has
five different components which are: policy formulation and enabling environment;
capacity building for agribusiness support; agribusiness support fund; support for
agribusiness finance; and project implementation support and technical assistance.
5.3.8 Livestock
The Project, that spans five years, aims to enhance livestock productivity through
provision of livestock production, extension and veterinary services at farmer’s
doorsteps targeting 13 million rural poor in 1,963 Union Councils in 80 Districts.
There will be additional milk and meat production to the tune of 12 Million liters and
0.2 M tons annually respectively. 290 DVMs will be trained and deployed in the
same number of clinics. Every DVM will establish a clinic/lab, with the help of a
revolving fund placed at their disposal. These DVMs will provide services at cost. A
cadre of 7250 Community - based Livestock Extension Workers (CLEWs) will be
created with the help and coordination of these DVMs and government training
institutes. These new DVMs and CLEWs will provide services in the domain of
curative and preventive medicines, vaccinations, best farm practices, advice for
fattening of animals, increasing milk production etc. A sum of Rs. 1.7 billion will be
spent on this project. The project is based on the concept of public private
partnership. The Government and eight Rural Support Program (RSPs) have joined
hands to launch this project. Funding and monitoring of the project activities will be
done by the government, whereas RSPs will implement the project.
5.3.9 Enhancing competitiveness
A sum a $10 million is being provided by USAID under limited Support Grant
Agreement to support initiatives aimed at upgrading the competitiveness of
Pakistani SMEs. The Competitiveness Support Fund shall fund new start-ups and
existing small and medium enterprises to enhance their competitiveness. This will
reinforce economic growth and create new job opportunities. Based on the above
concept, a mega-project “Pakistan Enterprise Competitive Support Fund” amounting
to Rs. 2.975 billion is being prepared. It is projected that through Competitive
Support Fund’s operations overall competitiveness index of the country shall rise
Government of Pakistan
ONE YEAR PERFORMANCE OF THE GOVERNMENT
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from 91 in 2004 to 65 in 2009. In addition to that, Textile Garments Skill
Development Board under the Ministry of Commerce has been constituted which
would, inter-alia, supervise skill development in the garment sectors of Pakistan.
The major manufacturing units would be declared Skill Development Centre where
on the job training, certification, accreditation and other linkages will be done.
5.3.10 Improving quality and standards
The government has approved the National Quality and Plan, prepared by the
Ministry of Science and Technology in consultation with all stakeholders including
the Provincial Governments/Federal Ministries/private sector etc. The policy
provides a framework to initiate and promote quality culture. To respond to the WTO
inspection and certification requirements for exports, the Quality Testing
Laboratories/infrastructure is being upgraded in a phased program. The ISO 17025
NPSL laboratories at Islamabad have been granted the ‘Newton Tree’, through the
EU, a unique distinction that testifies to the R&D quality system being established by
the re-aligned PCSIR. Pakistan signed EU – Pakistan Technical Assistance
Program. Under this program, the EU is providing technical assistance to Pakistan
in quality control, export of goods and services, etc.
5.3.11 Increasing market access
Serious efforts to increase market access of our goods have been made with USA,
EU and China. Sri Lanka, Bangladesh, Argentina, Brazil, Mexico, Malaysia,
Singapore, Russia and Japan have been chosen for priority efforts for enhancing
bilateral trade through government-to-government efforts for market access. Free
Trade Agreement between Pakistan and Sri Lanka has become operational.
Preferential Trade Agreement between Pakistan and Iran was finalized in February
2005. The Agreement will become operational after its ratification by Iran. Pakistan
has already ratified the Agreement. During the visit of the Prime Minister of China to
Pakistan on 4-5 April 2005, an agreement on Early Harvest Program (EHP) was
signed which would become effective from 01.01.2006. The EHP would lead to an
FTA between the two countries. During the visit of Prime Minister of Malaysia to
Pakistan on 15-16 February 2005, both sides agreed to negotiate a Free Trade
Agreement. The European Union is largest trading partner and largest export
destination of Pakistan. Pakistan has been benefiting from zero duty access to the
EU market under the EU GSP arrangement for countries combating drugs
production and trafficking. That scheme has been replaced by the EU with a new
GSP scheme with effect from 01.07.2005. As a result of Pakistan’s hectic diplomatic
efforts, Pakistani textile and clothing will also qualify for GSP thus boosting our
export potential.
5.3.12 Human resource development
Government has placed greater stress on upgrading the skills of the vast resources
of human capital in the country. The strategy, implemented through the Higher
Education Commission, is to improve the higher education system and its
Government of Pakistan
ONE YEAR PERFORMANCE OF THE GOVERNMENT
AUGUST 2004 TO AUGUST, 2005
contribution to economic prosperity, gear it towards facilitating development in key
areas relating to faculty development, improving access and increased participation
in higher education, promoting excellence in learning and research, and ensuring
relevance to the economy through increased stakeholder participation. Over 440
scholarships were awarded to enhance the knowledge base of Pakistani scholars in
fields most relevant to the immediate economic needs of the country, i.e.
engineering, natural and basic sciences. In addition more than one hundred Post
Doctoral Fellowships in top Institutions of the world in the premier industrialized
countries of the world were placed. In PhD programs there has been a 56%
increase in enrolment over the first year of the government. A major development
initiative during the year was the computerization and networking of public sector
universities under which 30 Public Sector Universities were provided more than Rs.
300 million for establishing high-speed internal computer networks to be linked to
the Pakistan Education and Research Network (PERN) linking all the major public
and private sector universities of Pakistan.
Government of Pakistan
ONE YEAR PERFORMANCE OF THE GOVERNMENT
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CHAPTER-VI
INVESTMENTS IN INFRASTRUCTURE
T he pace of current economic development cannot be sustained without a
significant expansion in country’s existing stock of key infrastructure such as
water storage, power generation, roads, railways, ports, airports and
telecommunications. The government is committed to expend requisite efforts to
meet these critical needs of the economy. The development expenditure is the main
policy instrument for achieving this goal. Apart from revamping the entire
development planning framework and accelerating the pace of budget utilization, the
government has significantly raised the overall size of the development expenditure.
Increased development effort will also entail large opportunities for employment and
spur growth in industries that provide inputs for capital works.
6.1 Providing increased resources for development
The development plan for 2005-06 has been formulated to achieve the objective of
rapid development of key infrastructure deficiencies. The total size of the annual
plan 2005-06 is Rs.272 billion against Rs.202 billion in 2004-05 showing an increase
of 34.7%. In addition, Rs.43 billion is also invested by the public sector corporations
from their own resources. The allocations for infrastructure sectors are given below:
TABLE 6.1
(Rs. in million)
Expenditure on Infrastructure development
Sector 2004-05 2005-2006
Water sector 21405 35629
Power sector 14214 16080
Petroleum and Natural resources 1078 459
Communications 17729 20634
Ports and Shipping 4704 3744
Railways 9420 9848
Others 4143 5852
Total 72693 92246
6.2 Improving water sector
The focus of investment in the water sector is on increasing availability of water and
at the same time conserving scarce water to put it to productive use. 61
drainage/irrigation projects to reclaim and improve crops cultivation condition in 18
millions acres of waterlogged land have been executed. In this major effort, more
than 15,000 tube wells were drilled and 12,000 Kms of surface and 13,000 Kms of
pie drains were constructed to enhance drainage of water in the high groundwater
table areas. Additionally, the National Program for water-course improvement is
being implemented to achieve the target of 3035 watercourses in all the four
provinces. These projects have benefited about 16 millions acres of land and have
Government of Pakistan
ONE YEAR PERFORMANCE OF THE GOVERNMENT
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enhanced cropping intensity from 70 percent to more than 110 percent. Major
projects include: Raising of Mangla Dam, Gomal Zam Dam, Kurram Tangi Dam,
Mirani Dam, Sabakzai Dam, Satpara Dam, Kachhi Canal, Grater Thal Canal, Rainee
Canal, National Drainage Program, RBOD-I, RBOD-II, RBOD-III, Rehabilitation of
Irrigation and Drainage Systems in Punjab and Sindh, Lining of Irrigation Channels
in Punjab, Sindh and NWFP, etc.
6.2.1 Technical committee on water
Water security is extremely critical for future growth and development of Pakistan. In
order to reach an informed decision about the construction of storages and
distribution infrastructure, the government appointed a technical committee to
examine the issue of water resources. The said technical committee has presented
its report. According to the said report sufficient surplus water is currently available.
The committee has supported construction of new dams subject to the condition
that irrigation requirements of the provinces are met on priority and then filling of
dams should be carried out. The report has also recommended ensuring equitable
distribution of water resources among the provinces strictly in accordance with the
1991 water apportionment accord.
6.3 Fulfilling energy requirements
6.3.1 Import of power from Tajikistan and Iran
Pakistan is actively seeking cross border economic cooperation with its neighbors.
In this regard, Pakistan is already importing 30 MW of electricity from Iran, which is
being supplied to coastal areas of Balochistan. Iran has offered additional 20 MW of
electricity. This electricity will be beneficial to meet the requirement of Gwadar area.
Negotiations are currently held and will soon be concluded. Additionally, an MOU
has been signed with Tajikistan to explore the feasibility of importing electricity from
Tajikistan, which has sizeable surplus that is supplied to other countries also
including Russia. Minister for Energy of Tajikistan will be visiting Pakistan in
November/December 2005 in order to discuss and finalize the modalities for
implementation of the project.
6.3.2 Encouraging private sector investment in power generation
An aggressive marketing strategy to attract serious and creditable foreign and local
investors for investment in power generation has been adopted. Special emphasis
has been placed on developing and attracting private investments in hydel and coal
based projects. Private Power and Infrastructure Marketing Board (PPIB) held road
shows in London and Dubai to offer a variety of opportunities in this sector. For
investors interested in gas power projects the Board decided to hold an International
Competitive Bidding (ICB) for the setting three thermal power projects worth $1.3
billion. These projects are to be situated in Lahore, Faisalabad and Uch and would
have a combined power generation capacity of about 1,200-1,400 MW. For
investment in hydel projects PPIB has already advertised 7 raw sites with a
cumulative capacity of about 1800 MW. The government has invited expressions of
Government of Pakistan
ONE YEAR PERFORMANCE OF THE GOVERNMENT
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Interest for developing a 450 MW at Lakhra coal fired project. An MOU with the
Shenhua Group from China has already been signed to develop Thar coal and to
set-up a 600 MW power project at the site.
6.3.3 Developing indigenous oil and gas resources
The government is taking steps to ensure that the available petroleum resources are
optimally utilized to decrease country’s dependence on imports. The average oil
production increased to 66800 barrels per day from the previous year 2003-04
(62000 barrels).Gas production increased to 3728 Million Cubic Feet per day
against the previous year's production of 3343. 26 exploration licenses have been
granted as compared to 10 during the previous year. The financial commitment for
investment in the schemes for development of natural resources increased from US
$28 million to $140 million during the first year of the government. OGDCL has
initiated oil and gas fields development mega projects comprising 7 oil / gas fields
( i.e. Qadirpur, Chanda, Dhakni, Dhodak, Uch, Tando Allahyar and Sinjhoro), at an
estimated cost of $627 million to be completed in next 2-3 years.
6.3.4 Investment in mine development
Work has started on developing 40 new coal mines in addition to present 43 which
will increase the production by another 300,000 tones per year at Lakhra. An
agreement has been signed between PMDC and M/s MCC China for development
and mining of Duddar Lead-Zinc. MCC would invest about $72 million for mine
development and commercial exploitation. After Saindak, a new copper mining
project is being developed at Reko Dik, District Chaghi Balochistan, with an
investment of $200 million aiming to produce 40,000 tones of copper annually. If
successful, the project would be converted into a mega project requiring investment
of about $1.50 billion within next 5-10 years to produce 250,000 to 300,000 tones of
copper annually.
6.3.5 Alternative energy development
Alternative Energy Development Board (AEDB) Ordinance was promulgated on 30th
April 2005 to undertake development of alternative energy resources. AEDB has
electrified 100 Solar Homes at village Narian Khorian Islamabad. The project was
inaugurated by the Prime Minister on 19th June 2005. Similarly 100 solar homes in
one village in each province have also been electrified, where each household has
been provided with 88 Watt Solar Panels, 4 LED lights, a 12 Volt DC fan and a Solar
Cooker. A Solar Water Desalination Plant has also been installed and
commissioned at village Narian Khorian, ensuring the availability of clean drinking
water, a Children’s Playground with Solar Powered Lights, Two Solar Powered
Computers have been provided to the village Mosque / Community Centre which
has been air-conditioned using Solar Energy. An electric vehicle has also been
manufactured which will act as the first ever Electric Rickshaw in Pakistan. A 100
mega watt wind power generation project at Gharo -Keti Bandar, Sindh is under
process which has a potential of 50,000 MW. The Board has issued LOIs to 22
national and international companies for generation of 1100 MW power. Three
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ONE YEAR PERFORMANCE OF THE GOVERNMENT
AUGUST 2004 TO AUGUST, 2005
companies have submitted applications to NEPRA for generation licenses. A 40 KW
micro hydel turbine has been indigenously manufactured and installed at the
Khanpur Dam Canal near the village of Mohra Morado, Taxila. AEDB has signed
MOU with Turbo Institute of Slovenia for the transfer of know-how for making micro
hydro turbines in Pakistan.
6.4 Ports development
6.4.1 Setting up of a new ministry
A separate Ministry of Ports & Shipping has been set up, thereby bringing a very
critical sector into a close focus for its development and overall expansion.
6.4.2 Reduction in port tariff
With a view to attract a large volume of business port tariffs have been reduced. At
Port Qasim, these tariffs have been reduced by 25% for Pakistani flag vessels.
6.4.3 Port development projects
At Karachi Port another container terminal equipped with modern gantry cranes has
been established to enhance container handling. Furthermore, existing container
terminal expansion project is underway.
6.4.4 More effective monitoring of operations
To monitor the activities at the port and at the harbour a new state-of-the-art Video
Management System (VMS) has been installed.
6.4.5 Gwadar deep sea port
Gwadar Deep Sea Port Phase-I of the project stands completed and only some
installation/inter facing of various services/equipment in the buildings are now
underway. Agreement with the Chinese Firm for an additional dredging upto 14.5 m
has been concluded.
6.5 Building efficient highways
6.5.1 Dualization of N-5
The entire N-5 has been dualized except Tarinda Muhammad Panah (TMP) –
Bahawalpur Section (90 KM) construction of which is in full swing in two packages.
6.5.2 Rehabilitation of N-5
Rehabilitation of a 50 KM segment of Multan-Sahiwal Section and 40 KM segment
of Sahiwal-Lahore Section has been completed. Rehabilitation of Sahiwal urban
Government of Pakistan
ONE YEAR PERFORMANCE OF THE GOVERNMENT
AUGUST 2004 TO AUGUST, 2005
area and construction of ACW, rehabilitation of Wazirabad Bypass (11 KM) and
Taxila Monument-Turnol section (10 KM) are all in final stages.
6.5.3 Makran coastal highway project (MCHP, 653 KM)
The first three sections of MCHP namely Lyari-Ormara Section (248 KM), Ormara-
Pasni Section (152 KM) and Pasni-Gwadar Section (133 KM) were completed in
December 2004. NHA is starting construction of Gwadar-Jiwani Section (67 KM).
6.5.4 National Highway (N-25)
Plan for improvement of Kalat-Quetta-Chaman (247 KM) at an estimated cost of Rs.
6671 Million with the assistance of Asian Development Bank (ADB) has been
approved. Construction work is expected to commence soon.
6.5.5 Peshawar-Islamabad Motorway (M-1)
Islamabad-Burhan (37 KM) was opened for traffic in September 2004 and the
Rashakai–Charsadda (23 KM) Section in January 2005.
6.5.6 Islamabad-Lahore Motorway (M-2)
In addition to the Faizpur (KM 17) interchange opened for traffic in October 2004,
new interchanges are being added at two locations viz Makhdoom (KM 137) and
Khanqah Dogran (KM 80).
6.5.7 Better highways management & policing
Besides expanding the network of highways, government is devoting equal efforts in
improving the quality of traffic, safety of usage, effective policing and prevention of
highway crimes. The following measures in this regard are significant:-
i. Helpline: The National Highways & Motorway Police (NH&MP) has
introduced a round the clock “Helpline” (No. 130) to provide prompt help in
the easiest way to the road users. This number can be dialed from any
Mobile Phone or PTCL phone number round the clock.
ii. Road safety campaigns: Road accidents can only be minimized if the
people are properly educated on road discipline, traffic education and on
road safety. NH&MP published millions of road safety Booklets, pamphlets
and stickers etc. to educate the road users besides education through
electronic media, print media, road safety seminar & road safety stalls in
exhibition.
iii. Decrease in highway crime: Due to round the clock patrolling, effective
enforcement strategies, by creating the Special Emergency Squads, and by
video filming on all entry points of national highways and motorways, the
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ONE YEAR PERFORMANCE OF THE GOVERNMENT
AUGUST 2004 TO AUGUST, 2005
NH&MP has gained a remarkable decrease of 85% in the highway crimes
this year.
iv. Decrease in accidents: Effective enforcement and better accident analysis
strategies, in which every accident is analyzed on scientific point of view
and then remedies are suggested, such as “black spots” and other
measures, etc, the NH&MP has been able to reduce the accident rate by
70% during the last year.
6.6 Upgrading railways network
6.6.1 Institutional reforms
Government has decided that railway is to be converted into state owned
corporation. Draft legislation is being prepared in this regard. The non-core activities
viz manufacturing units and services are to be converted into limited companies.
Documentation and evaluation of assets of manufacturing units has been
completed.
6.6.2 Investing in improvement of existing assets
Rehabilitation and upgradation of Karachi-Khanpur main line (639 Kms) for 140
Km/hr. speed is in progress. It will be completed by June 2007. During the year 100
Kms track was renewed between Landhi-Kotri in addition to 27 Kms on Hyderabad-
Tandoadam and 53 Kms on Khanpur-Lodhran section. Dualization of Lodhran-
Khanewal (121 Kms) for speed of 140 Km/hr is in progress. The section from
Lodhran-Shershah (72 Kms) has been completed. The balance will be completed by
June 2006. Dualization of Khanewal-Raiwind (246 Kms) has also been started.
Conversion of 135 Kms Mirpur Khas- Khokhropar from Meter Gauge to Broad
Gauge is in progress. The scheme will be completed by December, 2005. Technical
and Financial Feasibility Studies to link Balochistan (Quetta) with NWFP-Peshawar
reducing the route length by 650 Kms has been started. The study for rail link to
Gwadar port with existing rail network is nearing completion.
6.6.3 Investing in improvement of rolling stock
Out of 16 locomotives received in SKD condition from China, 10 locomotives rolled
out from Locomotive Factory Risalpur for operation. 68 Coaches received in CKD-I
condition and 30 Coaches in CKD-II condition received from China, rolled out from
Pakistan Railways Carriage Factory Islamabad for operation. In addition to it, 125
old passenger coaches were rehabilitated in Pakistan Railways Carriage Factory
Islamabad. 205 Freight Wagons received from China in CBU condition were put into
service. In addition to it, 740 freight wagons were fitted with roller bearings replacing
plain bearings during the year. This completed the project of fitting Roller Bearings
to 9390 freight wagons.
6.7 Telecom Sector
Government of Pakistan
ONE YEAR PERFORMANCE OF THE GOVERNMENT
AUGUST 2004 TO AUGUST, 2005
Telecommunication is an indispensable need of modern business and social
organization. An extensive and diffused system of telecommunication network is
therefore a necessity to meet the demands of a growing economy. Government is
according high priority to the development of telecommunication infrastructure in the
country.
6.7.1 Liberal policy framework
Government has developed a liberal policy framework to encourage investment in
the telecom sector. The key objectives of this framework are to promote
infrastructure development, harness local entrepreneurship, increase quality and
choice of affordable services for businesses and consumers, protect security
interests of the country, extend telecommunications service to un-served areas and
induce fair competition amongst licensees. The results achieved so far are highly
encouraging as operators are rolling out new projects at an unprecedented rate.
Pakistan’s telecom sector is now rated as one of the most dynamic and vibrant in
the world. The success of the policies can be gauged from enthusiastic interest
shown by the new entrants, increased activities in the sector and improved level of
penetration which is around 10.37% (combined fixed and mobile tele-density). The
following statistics depict the success of the policy framework:
TABLE 6.2
S. Initiatives 2003 2005
No.
1. Fixed Telephone Lines 4 Million 5.1 Million
2. Mobile phone connections 2.4 Million 12 Million
3. Combined Teledensity 4.63% 10.37%
4. Two new cellular mobile licenses -- $582 Million
5. Number of Mobile Operators 4 6
6. LDI Operators 1 12
7. LL Operators 1 76
8. License fee from LDI/LL and spectrum of WLL ----------------- Rs.16.2
Billion
9. Mobile Phone activation charges Rs. 2000 Rs. 500
10. Telephone installation charges Rs. 1350 Rs. 500/750
11. Bandwidth charges for Internet. $3,950/2MB $2000/2MB
6.7.2 Privatization of PTCL
The first year of the government witnessed numerous activities concerning PTCL.
The privatization process was successfully completed. Expressions of interests
invited by the government for privatization of PTCL as integrated entity attracted
major interest. Sale deed of 26% shares of PTCL with Etisalat amounts to $2.59
billion. Etisalat has paid 10% down payment and bid bond worth $40 million.
Balance payment is due in late August 2005.
6.7.3 Revenue generated
Government of Pakistan
ONE YEAR PERFORMANCE OF THE GOVERNMENT
AUGUST 2004 TO AUGUST, 2005
Frequency option for WLL earned around Rs.14.5 Billion and $873 Million revenue
was generated by issuance of three Mobile Cellular licenses including one renewal
(Paktel) and two new licenses granted to M/s Al-Warid and Telenor. Net increase in
the mobile cellular subscribers during the year has been around 7.96 million which
amply speaks about the success of the cellular mobile policy. The details regarding
the rest of the sector are:
Installation of new telephone lines by PTCL 783,615
Telephone access to villages 5570
Broadband service provided to various customers 9252
6.7.4 Broadband policy
In order to support the proliferation of IT and IT-enabled services in the country, the
government, after a consultative process involving all stakeholders, formulated and
approved Broadband Policy for Pakistan. Rates of international bandwidth have
been reduced tremendously and currently international bandwidth is available at a
price of around $2000 per E-1 to facilitate the broadband service users. The
government is working along with other stakeholders to come up with a
comprehensive licensing framework of broadband services providers.
6.7.5 Software industry development
The total exports of IT and IT enabled services from Pakistan were $48 million
compared to the previous year’s figures of $32 million. Specific areas of software
development have been identified as being embedded software, telecom related
software and animation. Various activities have been carried out by Pakistan
Software Export Board (PSEB) under this head, including trainings, workshops,
business development, delegations, and exhibition. An IT City/Software Technology
Park is being set up.
6.8 Postal services improvement
Postal service has one of the most extensive networks of communication in the
country. Modern techniques and use of technology has been lacking to bring
reliability and speed which have been the main reasons for widespread substitution
to other forms of communication. Government is revitalizing the postal services by
investing in technology and expanding the scope of services that the vast network of
postal system in the country can provide.
6.8.1 Counter Automation
Counter Automation System provides sate-of-the-art point of sale terminals
equipped with digital weighing scales, 2-D barcode scanners and thermal slip
printers. Specially designed software, with complex business logic embedded in it,
ensures integrated service provision at each counter. During the one year period of
Government of Pakistan
ONE YEAR PERFORMANCE OF THE GOVERNMENT
AUGUST 2004 TO AUGUST, 2005
time, the service has been extended at five locations at Islamabad, Lahore, and
Peshawar GPOs including Post Malls.
6.8.2 Express mail track & trace system
The Express Mail Track and Trace System enables Pakistan Post to track the
express and registered insured mail items from end-to-end within the country,
providing both customers and management with valuable information relating to the
location of items. The customers can track the status of their article using internet
through the website of Pakistan Post. 11 major cities of Pakistan generating 80% of
express mail traffic are being covered through the system. The facility has been fully
upgraded during the last one year at Karachi, Quetta, Hyderabad, Multan, Lahore,
Faisalabad, Sialkot, Gujranwala, Rawalpindi, Islamabad and Peshawar.
6.8.3 Electronic money transfer
A fully computerized system that transfers money from 192 countries to Pakistan
within minutes has been implemented in collaboration with the Western Union. This
system has received tremendous response from the public. Total foreign exchange
worth $125 million has been received through Pakistan Post out of which $61 million
has been received during last one year. To further facilitate the customers, 300
additional computers have been provided to various post offices in the last one year.
6.9 Expanding aviation infrastructure
6.9.1 New airports
Two green field airport projects, one for the capital city and the other for the
upcoming mega city of Gwadar, have been planned. Feasibility and design have
been completed and construction works will soon begin.
6.9.2 Sialkot international airport:
Construction of new airport at Sialkot is in progress and is expected to be
commissioned by the end of year 2005.
6.9.3 International standard airlines services
New destinations of Kuala Lumpur and Singapore were added to PIA network.
Dubai Special twice a day flight was introduced with effect from 1st June 2005 with
the added feature of same day return fares for the convenience of businessmen and
executives. As part of fleet modernization and product improvement all the old A-
300B4 were withdrawn from service and replaced by relatively newer A-310 aircraft
for safer and more reliable services. A used A-310 Simulator is being installed for in
house training of our pilots for more efficient use of resources and saving of
precious foreign exchange. In order to upgrade travel on the feeder route network,
PIA has obtained approval for purchase of new F-27 replacement aircrafts. This
Government of Pakistan
ONE YEAR PERFORMANCE OF THE GOVERNMENT
AUGUST 2004 TO AUGUST, 2005
project will cost approximately Rs. 5 billion. Once inducted these aircrafts will
provide reliable and more comfortable flights for the people of the lesser developed
regions of the country. PIA successfully obtained the renewal of EASA (European
Aviation Safety Agency) certification after a detailed audit conducted by their
experts. This speaks of the high standards achieved in manpower and systems
development. Currently PIA is undergoing process for IOSA (IATA) Operational
Safety Audit certification which will enable the national carrier to joint into alliances
with the best airlines of the world.
Government of Pakistan
ONE YEAR PERFORMANCE OF THE GOVERNMENT
AUGUST 2004 TO AUGUST, 2005
CHAPTER-VII
DISTRIBUTING BENEFITS OF GROWTH
O ne of the main concerns of government’s development efforts is to ensure
distribution of growth amongst the broadest set of people. Such efforts will only
succeed when this objective is approached by attacking the causes that restrict
some people from fully participating in the growth process. Sustainable transfer of
growth benefits will require significant expenditures on investments in education,
health, population welfare, gender balance, protection of environment and access to
credit. Government is working to address the distribution issue through a
comprehensive strategy that addresses all these areas.
7.1 Poverty reducing expenditures
A number of budgetary expenditures help the low income groups as the underlying
services are largely used by the members of such groups. Accordingly, government
attaches great importance to preserving and increasing expenditures of on these
services. During the year, poverty reducing expenditures were increased from
Rs.256.3 billion to Rs.297.4 billion, reflecting an increase of 14%. The comparative
details of such expenditures in the last two years are given below:
TABLE 7.1
Poverty Reducing Expenditures
(Rs. in million)
Sector 2003-04 2004-05
Roads, Highways and bridges 22746 33460
Water supply and sanitation 5799 5853
Education 97697 106699
Health 27009 30565
Population Planning 4689 4553
Social Welfare 4144 1963
Irrigation 22506 36759
Rural Development 18607 14746
Law and order 39370 46911
Low cost housing 0 318
Justice admin 2437 3069
Food subsidies 8513 5359
Food Support Program 2804 2703
Tawana Pakistan 0 78
Village Electrification 0 4354
256321 297390
7.2 Education
Human development is the basic right of every citizen. Promoting quality education
is the key feature of government’s policy. There has been positive growth in all
sectors of education, except technical education,
Government of Pakistan
ONE YEAR PERFORMANCE OF THE GOVERNMENT
AUGUST 2004 TO AUGUST, 2005
7.2.1 Review the current education policy
The current Education Policy was formulated in 1998. It has not been able to meet
the challenges of fast changing circumstances. A three member high level
Committee of experts has been set up by the government to review the current
Education Policy and bring it in consonance with international standards.
7.2.2 Education Financing
Public Sector expenditure on Education during the year was Rs. 133 billion (Rs. 99
billion current and Rs. 34 billion development). This represents 2.73% public
expenditure on education as percentage of GDP. Eighteen new development
projects have been approved with total outlay of Rs. 3.4 billion.
7.2.3 Curriculum review
Curriculum review has been started. A Committee has been set up for this purpose.
The aim is to have an updated, modern, progressive curriculum while retaining its
Islamic character. History and Geography as a compulsory subject (Classes VI-VIII)
have been introduced in place of Social Studies. Curriculum of Geography and
History Classes (VI-VIII) was also finalized and notified for implementation. Scheme
of Studies for Medical Technologies Groups (Medical Laboratory technology,
Ophthalmic Technology, Physiotherapy technology and Dental Hygiene) at Higher
Secondary School Certificate level has been approved in consultation with Pakistan
Institute of Medical Sciences, Islamabad. 71 textbooks of Science subjects and 78
textbooks of Social Sciences at various levels were reviewed by relevant National
Review Committees and approval issued to Textbooks Boards/National Book
Foundation.
7.2.4 Improving the quality of education
Education was made free upto secondary level in Islamabad Capital territory. Free
textbooks have been distributed to all children at primary level in Islamabad. From
next year, this facility will be extended upto the middle level. Introduction of English
as compulsory subject has been introduced from Class-I in the entire country and
teachers have been recruited at enhanced pay of Rs.10,000/- per month for
Islamabad capital territory. Teaching of Science subjects in English has been
introduced in Urdu Medium schools starting with 10 Schools in each Province.
7.2.5 Madrassas Reforms
Government is expending concerted efforts to mainstream the Madrassa education
by introducing the subjects of English, Mathematics and Computers in their
curricula. To this end all Madrassas have been mandated to get themselves
registered. A provision for registration of deeni madaris has been added to the
Societies Registration Act, 1860 making registration of deeni madaris mandatory by
Government of Pakistan
ONE YEAR PERFORMANCE OF THE GOVERNMENT
AUGUST 2004 TO AUGUST, 2005
31-12-2005. Special allocations are made to assist those Madrassas who will be
registered and include the proposed subjects in their curricula. Non registered
Madrassas will not be allowed to function.
7.3. Health services
The second most important cause of human deprivation is lack of health facilities.
Accordingly, government is not only spending significant resources to provide
curative facilities to people by undertaking a number of initiatives to prevent
incidence of diseases, especially among the weak and vulnerable groups. Following
are the key initiatives in this regard:
7.3.1 Investment in better medical facilities
Public Sector expenditure on health during the year was Rs. 31 billion (Rs. 25 billion
current and Rs. 6 billion development). new development projects that have been
approved include.
(i) Project for Burn Care Unit of Pakistan Institute of Medical Sciences, Islamabad
at a cost of Rs.190 million.
(ii) Project for the establishment of Cardiac Surgery Facility at cost of Rs.551.7
million.
(iii) Rs.71.00 million have been allocated for each hospital i.e. Pakistan Institute of
Medical of Medical Sciences, Islamabad. Jinnah Post Graduate Medical Centre,
Karachi and National Institute of Child Health, Karachi for provision of MRIs.
(iv) A project of the establishment of 400 bedded Women and Children Hospital at
Rawalpindi at a cost of Rs.1325.044 million has been approved.
7.3.2 Provision of better medical services
(i) Program for prevention and Control of Hepatitis has been approved and
launched at a cost of Rs.2.59 billion.
(ii) Project for the prevention and control of Blindness has been approved and
launched at a cost of Rs.2.5 billion.
7.3.3 Improved health delivery
(i) Allocation for National Program for Family Planning and Primary Health Care
Increased from Rs. 2.6 billion to 3.7 billion.
(ii) Number of Lady Health Workers increased to 86,700.
(iii) Coverage of EPI increased to 71%.
(iv) National Strategic Action Plans for Nutrition and Malaria developed.
(v) 30,000 impregnated bednets distributed in high-risk malaria areas.
7.4 Population welfare
Government of Pakistan
ONE YEAR PERFORMANCE OF THE GOVERNMENT
AUGUST 2004 TO AUGUST, 2005
7.4.1 Better population planning
Ministry of Population Welfare has launched a Population Welfare Program,
operating within the framework of Population Policy (2002) and National Perspective
Plan (2001-11) with specific goal of promoting small family norms and providing the
means to achieve this objective by reducing the population growth rate from existing
1.9 to 1.3 per cent with a Total Fertility Rate (TFR) of 2.1 from existing 4.0 per
woman. The program has achieved its demographic target of 1.9 PGR and 4.0 TFR
against 1.99 and 4.07 respectively. Public Sector expenditure on population welfare
during the year was Rs. 3 billion.
7.4.2 National population commission
To accelerate Government’s efforts to control population growth, a National
Population Commission headed by the Prime Minister has been established. To
broaden the ownership of provincial governments, similar Provincial Population
Councils in the Provinces are being established which will be headed by the
Provincial Chief Ministers. The Commission and council would highlight the
important role of population planning in the overall economic development.
7.4.3 Improved reproductive and family health services
To increase access and coverage of the family planning services, Ministry of
Population Welfare through Provincial Population Welfare Departments established
following service delivery outlets & carried out recruitment of community based male
workers (Male Mobilizers):
(i) Family Welfare Centers 96
(ii) Reproductive Health Services ‘A’ Centers: 04
(iii) Mobile Service Units 46
(iv) Male Mobilizers 951
Around 200 Family Welfare Centers have already been established in BHUs and
other health outlets.
7.4.4 Seeking broad-based cooperation
In order to make Population Welfare Program a success involvement of
Parliamentarians, Local Councilors, opinion leaders, prayers leaders have been
ensured. In order to seek advice and guidance of religious scholars on Population
and Development an International Ulema Conference was organized in which 21
Muslim Countries participated. At the end of the Conference a declaration was also
signed by all the participating countries, in which Pakistan has been declared as a
host country for the Secretariat of the conference.
7.4 Khushhal Pakistan program
Government of Pakistan
ONE YEAR PERFORMANCE OF THE GOVERNMENT
AUGUST 2004 TO AUGUST, 2005
One of the most important programs launched by the government is the Khushal
Pakistan Program. Under this program small development schemes are undertaken
on the recommendations of the public representatives. The main sectors covering
the program are electrification of villages, provision of natural gas, construction of
farm to market roads and supply of drinking water. During the year, nearly Rs.15
billion were spent on these schemes by the federal, provincial and district
governments.
7.6 Environment
7.6.1 National environment policy
Pakistan during the last 58 years could not prepare a comprehensive and coherent
National Environment Policy and National Conservation Strategy was mainly used
as the policy document. Over the years, the need was felt that a wide-ranging policy
be prepared which could across the board provide guidance to all the policy makers.
The government in consultation with the stake-holders including members from the
civil society finalized National Environment Policy in 2005.
7.6.2 Investing for the future: protecting the environment
A sum of Rs 3 billion were provided to the Ministry of Environment for 14 on-going
and 21 new projects. Two important projects, i.e., 'Clean Drinking Water for All' and
'Environment Monitoring Systems', have been approved and are being launched.
The work relating to establishment of 25 MGD Sea Water Desalination Plant at
Gwadar is in full swing and contracts awarded to the contractors. 70% work on K-III
project for 100 MGD Water Supply Scheme to Karachi has been completed. Twenty
seven (27) Vehicles Tune-Up stations have been established to date and twenty-
three more are being established during 2005 in various part of the country. 371
mechanics all over the country have been trained for use of electronic and
computerized equipment for tune-ups.
7.6.3 Balancing energy and environment needs
At present 750 CNG stations are operational while 200 are under construction.
About 800,000 CNG vehicles are using CNG. With these developments, Pakistan
has become the leading country in Asia and the third largest user of CNG in the
world after Argentina and Brazil. Government is encouraging local manufacturing of
CNG buses and other equipment in the country for sustainability of the CNG
industry. A program will start initially in federal and provincial capitals where
dedicated CNG city-buses will be put on road. The program will then be extended to
cover other urban centers. It will also include infrastructure development and
manufacturing of dedicated CNG buses. The first LNG import project in Pakistan is
being initiated for import of 300-500 mmcfd by the year 2009, at an estimated cost
of $300-400 million.
7.7 Social safety nets
Government of Pakistan
ONE YEAR PERFORMANCE OF THE GOVERNMENT
AUGUST 2004 TO AUGUST, 2005
7.7.1 Assistance to the needy
Pakistan Bait-ul-Mal disbursed Rs. 3 billion to nearly 120000 beneficiaries under the
Food Support Program (FSP).Under Individual Financial Assistance (IFA) Scheme,
an amount of Rs.348 million was disbursed to 200000 beneficiaries. National
Centers for Rehabilitation of Child Labor (NCRCL) are functioning under PBM and a
100 schools have been established and 1100 students were enrolled in these
centers. Nearly 10000 female trainees got vocational training in 74 Dastkri Schools.
75 projects of NGOs were financially assisted by Pakistan Bait ul Mal and an
amount of Rs. 80 million was provided for these projects as institutional support to
orphans, disabled, aged children and juvenile.
7.7.2 Promotion of special education
Directorate General of Special Education (DGSE) provided special education to
nearly 5000 students enrolled in 58 centers. National Institute of Special Education
conducted 21 training courses for Training of Trainers and 443 participants attended
these courses. Vocational Training and Employment was provided to 900 and 600
disabled persons respectively. 57 workshops/seminars were also arranged to create
awareness and motivate local communities, persons with disabilities and their
families to participate in rehabilitation process under Vocational Rehabilitation &
Employment of Disabled Persons (VREDP). 13 Special Education Center buildings
were constructed including a Park for the Disabled.
7.7.3 Social welfare projects
25 Social Welfare Projects have been set up in the Islamabad Capital Territory,
three Provinces (Punjab, Sindh and NWFP) FATA and Northern Areas to provide
welfare services to the neglected and underprivileged strata of population in six
different spheres of activities. The areas of activities include:-
TABLE 7.2
S. No Projects No. of Projects Total No of
Beneficiaries
1 Community Development Projects 13 47786
2 Social Services(Medical) Projects 08 259265
3 Women Welfare and Development Centre 01 1419
4 Model Child Welfare Centre 01 7079
5 Pilot School Social Work Project 01 743
6 Social Welfare Training Institute 01 301
Total:- 25 316593
7.7.4 Child welfare and development
Ministry of Social Welfare and Special Education has signed an agreement with ILO
– IPEC at a total cost of $18986 on the implementation of action program titled
Government of Pakistan
ONE YEAR PERFORMANCE OF THE GOVERNMENT
AUGUST 2004 TO AUGUST, 2005
“Capacity Building, Advocacy and Awareness Raising for prevention of Child Labor”.
Ministry of Social Welfare and Special Education in collaboration with UNICEF
Regional Office for South Asia (ROSA) Kathmandu, Nepal Hosted a Forum
“Regional Consultation on Violence Against Children” on 19-21 May, 2005 at
Islamabad. Representatives from Civil Society, NGOs UN Agencies, South Asia
Coordinating group and Expert Resources Persons participated in the consultation.
The First Lady of Pakistan graced the inaugural session of Regional Consultation as
Chief Guest on 19th May, 2005 whereas, the Prime Minister of Pakistan Mr. Shaukat
Aziz graced the concluding session.
7.7.5 Housing sector
Housing needs of an increasing population needs urgent Attention so that more
people can have affordable housing.
(i) Creating incentives for affordable housing: Housing Advisory Board
has been reconstituted on 20-05-2005 with the approval of the Prime
Minister to formulate recommendations to provide “Land” and “Affordable
Housing” to general public. In its first meeting on 30-06-2005, Housing
Advisory Board constituted two Sub-Committees, which will look into
above issues and submit its recommendations to the Board.
(ii) Construction of 1000 apartments for low paid employees under
housing for all schemes: Ministry of Housing and Works launched a
housing scheme for low paid Government employees. The scheme is
envisaged on self-financing basis and the first pilot project comprising
about 1000 apartments has been launched by the Prime Minister on 11th
April, 2005 at Islamabad. This project will be first step towards solving the
problem of housing shortage for Government employees at Islamabad.
7.9 Extending information network
In order to ensure that the entire country is properly connected and all the people
benefit from increased availability of information, the government has taken a
number of initiatives. PTV launched a new channel “PTV Bolan” for the people of
Balochistan. In addition to that extension of PTV coverage in 5 remote frontier areas
through commissioning of re-broadcast stations has been done. This will help in
further integrating the regions with the rest of the country. Government has also
made sure that investment is made in the extension of radio network in the country.
For this purpose Pakistan Broadcasting Corporation installed 11 new radio stations
and transmitters during the year.
7.9.1 Improving information network
A sum of Rs. 31.921 million is being spent on providing proper IT infrastructure to
the press offices and press clubs in Pakistan. This project shall benefit 124 District
Press Clubs and 11 Regional Information Offices/Press Information Departments.
Government of Pakistan
ONE YEAR PERFORMANCE OF THE GOVERNMENT
AUGUST 2004 TO AUGUST, 2005
The project aims at improving internal and external communication, facilitating
journalists to be part of the global village and to use information and communication
technology infrastructure to obtain and disseminate information to the people of
Pakistan through print and electronic media. In first phase computers, relevant
software, printers, internet connectivity and other necessary accessories shall be
provided to journalists and staff of the Press Information Department and in the next
phase training will be imparted to the users on the proper use of hardware/software
and transmission of news and data. The project is scheduled for completion by
March 2006.
Government of Pakistan
ONE YEAR PERFORMANCE OF THE GOVERNMENT
AUGUST 2004 TO AUGUST, 2005
CHAPTER-VIII
PROMOTING INTER-PROVINCIAL HARMONY
P akistan is a federation of federating units and a number of federally and
provincially administered areas. Our Constitution enshrines clear division of
responsibilities between federal and provincial governments. Government is
striving to forge stronger ties between the two tiers of federation and to ensure that
the provinces are not only given adequately resources but that their capacity to
effectively discharge their responsibilities is enhanced and expanded. During the
year policies and measures were adopted to further these objectives.
8.1 Transferring more resources
The bulk of resources needed by provinces are transferred from the divisible pool
that comprises the revenues from key federal taxes such as income tax and sales
tax. The increasingly improved revenue collection performance by federal
government has enabled it to transfer a much larger amount of resources to the
provinces. Against a revised estimate of Rs.244 billion to be transferred during
2004-05, the budget for 2005-06 provides for a transfer of Rs.284 billion,
representing an increase of 16%.
TABLE-8.1
TRANSFERS FROM DIVISIBLE POOL
(Rs. in billions)
Year Punjab Sindh NWFP Balochistan Total
2004-2005 123 75 29 17 244
2005-2006 144 86 34 20 284
In addition to the above transfers, and with a view to enhancing the overall
resources for the provinces, the federal government provided additional subventions
in the forms of grants to the provinces. Against the revised estimates of Rs.35 billion
for 2004-05, in the budget for 2005-06 grants of Rs.41 billion are provided to the
provinces, representing an increase of 17%.
8.2 Award by the NFC
The present formula for transfer of resources is based on the NFC Award of 1997.
Efforts are underway to reach a consensus on a new award. The federal
government is keen to enhance the share of provinces in the divisible poor.
However, for horizontal distribution, provinces are continuing to debate alternative
basis. It is hoped that the award will be finalized in the near future.
Government of Pakistan
ONE YEAR PERFORMANCE OF THE GOVERNMENT
AUGUST 2004 TO AUGUST, 2005
8.3 Increased development resources
The government has taken many steps to ensure that the federal development
efforts are equitably distributed across all provinces, and extra resources are
provided to less development provinces. The following distribution of development
outlays across provinces reflects these priorities.
TABLE-8.2
Provincial Distribution of Development Expenditure
(Rs. in billion)
Punjab Sindh NWFP Balochistan Total
Province specific 8.972 11.590 3.033 14.039 37.634
By location 5.653 0.817 5.449 6.304 18.223
Total 14.625 12.407 8.482 20.343 55.857
8.4 Assistance in seeking donor assistance
Government provided full assistance to the provinces in seeking donor assistance. It
facilitated provinces in negotiations with the donor agencies and has helped the
provinces in getting loans for structural reforms and resources management
programs. The federal government also picked up the foreign exchange risk on
these loans. Overall the provinces were provided following assistance both in the
shape of loans and grants during this one year:
TABLE-8.3
(Rs. in billion)
Punjab Sindh NWFP Balochistan Total
Loan 6.316 2.542 2.852 2.818 14.488
Grant 0.002 0.010 0.767 0.228 1.007
Total 6.318 2.552 3.579 3.046 15.495
8.5 Encouraging fiscal discipline
Federal Government has applied huge efforts in bringing discipline in its fiscal
affairs. It is important that this disciplined is practiced by the provinces as well. With
a view to achieving this objective, fiscal position of the provinces is carefully
examined and corrective measures are recommended. The most important
instrument for bringing discipline is to allow access to highly concessional
(adjustment) loans from development partners in return from achieving prior
objectives, such as increased social expenditures, reforms in civil services,
privatization of provincial enterprises and restructuring of some of the inefficient
departments. All the provinces have obtained such adjustment loans (totaling about
$500 million) and have consequently affected significant reforms in their fiscal
affairs. These loans have enabled provinces to retire large amounts of their highly
expensive loans from the federal government, thereby getting significant savings in
debt servicing. This in turn has allowed them to increase their expenditures on
poverty reducing social sectors.
8.6 Restructuring of provincial departments
Government of Pakistan
ONE YEAR PERFORMANCE OF THE GOVERNMENT
AUGUST 2004 TO AUGUST, 2005
Government is keenly assisting provincial governments to support the devolution
process. The success of the new system of local governments will depend on how
quickly the local governments build their capacity to perform their intended
functions. In this regard, the provincial government departments will be restructured
by the 31st December, 2005 for compatibility with offices decentralized to the local
governments. This will enable the departments to perform policy analysis, oversight,
checks and balances, capacity building and coordination functions through
Provincial Local Government Commission. It will also be ensured that the
departments do not indulge in direct control of the decentralized offices, posting and
transfer for officers of such offices, and technical sanctions and administrative
approvals of district level projects. The federal government, through a series of
devolution support programs is helping expedite this process.
8.7 Supporting community empowerment
The non-elected proactive citizens are participating very actively in the development
activities at the local level by establishing Citizen Community Boards (CCBs). Under
the Local Government Ordinance, 2001 each local government is bound to set aside
25% of the development budget for the CCB projects. The CCBs contribute 20% of
the approved cost of the project and up to 80% is contributed by the concerned local
government. At present, there are 19,413 registered CCBs in the country (Punjab:
10,168, Sindh: 2,351, NWFP: 6,187, and Balochistan: 707). The CCBs have
completed 1,307 projects. The Federal Government through the Devolution Trust for
Community Empowerment (DTCE) has been providing support to build capacity of
the CCBs, thus supporting the process of community empowerment in a big way.
The DTCE had, by 31st May 2005, in 13 districts of Pakistan, funded 901 projects.
Rs.258 million have been provided under the program out of which Rs 59 million
stand utilized by the CCBs at the Union level.
Government of Pakistan
ONE YEAR PERFORMANCE OF GOVERNMENT
AUGUST 2004 TO AUGUST, 2005
CHAPTER-IX
PRESERVING CULTURE AND HERITAGE
T he government recognizes that our cultural framework must be receptive to new
ideas and changes emerging on the world stage. If the global village finds us in
cultural confusion and chaos, we are bound to suffer from imposed cultural
patterns. Our cultural heritage is one of the oldest in the world. What is needed is to
facilitate the rehabilitation of our cultural pride as well as to anticipate its future
manifestations so that we emerge as a nation living in modern world with a unique,
distant and proud heritage. In order to fulfill the said mission, the government has
taken many steps.
9.1 Preserving historical sites
The preservation and restoration work has been carried out at 50 sites and
monuments at a total cost of Rs. 46 million. It has given them new lease of life.
Resumed conservation work at World Heritage Site of Moenjodaro has been started
in collaboration with UNESCO. Taxila Museum has been upgraded on the most
modern lines. Ministry of Culture has entered into agreements with three NGOs
namely Himalayan Wild Life Foundation, Cosmos Productions and Global Heritage
Fund, USA for conservation of Rohtas Fort, Katas Temples and Asif Khan’s Tomb,
Lahore.
9.2 Establishment of national monument
A national monument of Pakistan is being established in Islamabad. This project of
paramount national significance, approved at a total cost of Rs. 428 million was
initiated through an earth breaking ceremony by the President of Islamic Republic of
Pakistan on 25th May 2004. The construction work on the project is moving on fast
track. The monument is dedicated to all those who sacrificed their lives in the
creation of Pakistan for a better future for the Muslims. The project includes a
Museum which will portray significant events of Pakistan Movement and the whole
project complex will provide suitable recreational facilities for the public as well. The
expected completion date of the project is 30.06.2006. After completion the National
Monument will be opened to all visitors.
9.3 Prompting arts
9.3.1 National Arts Gallery
A National Arts Gallery is being set up in Islamabad. The project cost is Rs. 456
million. The expected date of completion is 30.06.2006. It envisages 4 stories Art
Gallery with modern facilities, most modern auditorium of 400 seating capacity with
theater and stage facilities, administrative and teaching area, open air-theater and
Government of Pakistan
ONE YEAR PERFORMANCE OF GOVERNMENT
AUGUST 2004 TO AUGUST, 2005
cafeteria. The main objectives of the Establishment of National Arts Gallery are to
further promote long standing friendship between the people of Pakistan and world
at large, create a vehicle for exchange of creative endeavors between the artists
and intellectuals of the country, to provide national forum to the artists of Pakistan,
provide galleries of international standards to house collection of art from Islamic
and SAARC countries, which would promote understanding of cultures between
these countries, to promote linkage between artist of Pakistan and Islamic Ummah
in particular and rest of the world in general.
9.3.2 National College of Arts
Liaquat Memorial Hall of the Ministry of Education has been earmarked for
establishment of National College of Arts at Islamabad. The President of Pakistan,
who opened the campus in July, 2005, underlined the significance of arts in the
development of the society and the critical role they can play in tempering emotions
and discouraging extremism. The work on full fledged construction of the new
campus is currently in hand.
9.4 Boosting tourism
Pakistan is home to a wide variety of tourists attractions. 6 of the 8 peaks of the
world, beautiful and scenic places across the mountainous and plane landscape,
historical and religious sites and a long coast-line are some of the assets that hold
excellent promise for tourism in Pakistan. However, concerted efforts to develop
tourism industry have been lacking, with the result that Pakistan was not able to get
its due share from the pool of world travelers. Conscious of its potential to become
as one of the key exports of the country, government is devoting serious efforts to
promote the tourism in the country.
9.4.1 Ministry of Tourism
To focus on development of tourism industry in Pakistan and to create a better
image of Pakistan on the world level, a separate ministry of Tourism has been set
up. During the year 2004-05 Rs. 51.0 million were allocated for development of
tourism projects. The year recorded new height for tourist arrivals in Pakistan by
hosting 648,000 tourists, compared to 500,900 tourists in the previous year,
registering a remarkable increase of 29.4%. Efforts of the Government to promote
the image of Pakistan as a tourist friendly country have helped surpass tourist
arrivals target of 615,000 for the year 2005 set by the WTO/UNDP in Tourism
Development Master Plan. If, this performance continues, the tourist arrivals target
of 720,000 set for the year 2010 by the international development agencies is likely
to be achieved much before the close of the year.
Government of Pakistan 3
ONE YEAR PERFORMANCE OF GOVERNMENT
AUGUST 2004 TO AUGUST, 2005
9.4.2 International cooperation
For the development of bilateral cooperation in the field of tourism Pakistan signed
Agreements with Italy and Afghanistan. Pakistan participated in 17 international
tourism promotional events / exhibitions / expos / meetings held in USA, UK,
Germany, Japan, China, Holland, Italy, Thailand, Malaysia, Singapore, Brunei, Sri
Lanka, Macau, Fiji and Uzbekistan.
9.5 Facilitation to zaireen
In order to promote fraternity, peace, and fostering friendly relations between
Pakistan and India, visits of Zaireen play a key role. Government, with concerted
efforts and composite dialogue with India, has succeeded in enhancing the number
of shrines from 5 to 13 and number of Zaireen from 1350 to 3000.
9.6 Safeguarding minority rights
The Constitution of Pakistan has provided adequate guarantees for the rights of the
minorities. Their places of worship are fully protected and they have equal access to
all the privileges and rights to the state resources like other citizens. The
Government is committed to improve the well-being of the minorities and to ensure
their presence in the mainstream of the social life.
9.6.1 Ministry of minority affairs
In September 2004, Minorities Affairs Wing of the former Ministry of Minorities,
Culture, Sports, Tourism and Youth Affairs was upgraded as a full fledged separate
Ministry to meet the long outstanding demand of minority communities in Pakistan.
The Ministry will be working to safeguard the rights of minorities and to promote their
welfare.
9.6.2 Development of minority communities
55 development schemes were approved by the government with a total allocation
of Rs. 25 million for development of minority communities. 5812 poor individuals
from the minority population were given financial assistance to the extent of Rs. 20
million. Educational scholarships amounting to of Rs. 7 million were disbursed to
6243 deserving minority students. Seven eminent persons from various minority
communities were granted National Cultural Award with a cash prize of Rs.50,000
each.
9.6.3 Preserving religious sites
Evacuee Trust Property Board, an autonomous organization, conducted the visit of
record number of 24,000 Sikh and Hindu Yatrees from within and outside of
Pakistan to their holy places on 6 festivals. It arranged their reception, traveling,
boarding, lodging and health facilities. This helped improve the image of Pakistan as
Government of Pakistan
ONE YEAR PERFORMANCE OF GOVERNMENT
AUGUST 2004 TO AUGUST, 2005
a peaceful, democratic and moderate country. ETPB undertook the repair,
maintenance, rehabilitation and conservation of Sikh shrines throughout the country
with an amount of Rs. 120 million.
Government of Pakistan 5
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