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Arab News
an hour ago
- Arab News
Economists blame lax regulation, call for reforms to resolve Pakistan's recurring sugar crisis
ISLAMABAD: Pakistani economists on Thursday blamed weak enforcement of regulations by the government and lack of transparency for the recurring sugar crisis in the country, stressing the urgent need for reforms in the sugar industry to resolve the problem. In Pakistan, high sugar prices have often triggered public outcry and become flashpoints for opposition criticism, with recurring allegations of hoarding and cartelization, especially during election years or periods of economic volatility. Sugar crisis has once again started to make headlines in Pakistan, with retailers and suppliers reporting that prices of the commodity have risen sharply to Rs200 [$0.71] per kilogram in many parts of the country. This development takes place despite the government's announcement earlier this month that it has capped sugar's retail price at Rs173 [$0.61] per kilogram. 'The sugar crisis is not new, it recurs every two to three years regardless of which party is in power, even under military regimes,' Dr. Kaiser Bengali, a leading economist, told Arab News. 'This pattern continues due to weak enforcement, lack of transparency in stock reporting and poor regulatory oversight at all levels.' The economist said the crisis was caused primarily by a powerful cartel of sugar mill owners who manipulated prices by influencing both the federal and provincial governments' policy decisions. Bengali explained that these sugar mill owners, many of whom were politically connected, created artificial shortages to drive up prices and maximize their profits. 'Each year, mill owners pressure the government to allow sugar exports, claiming they need to clear old stock to begin the crushing season,' Dr. Bengali said. He said mill owners also demanded subsidies under the pretext of covering price differentials, only to later cause domestic shortages and raise sugar prices. Pakistan's Food Security Minister Rana Tanveer Hussain refuted reports of a sugar shortage in the country, alleging that a perception was being created as if there were major issues regarding the availability, supply and pricing of sugar. 'The government launched a crackdown on hoarders and profiteers, including retailers and even mill owners, in an effort to curb market manipulation,' Hussain told Arab News after addressing a press briefing on the issue. 'We have also fined shopkeepers Rs180 million ($639,000) who were selling [sugar] at higher prices,' the minister said. In a press statement released by his ministry, Hussain said Pakistan currently has 5.8 million metric tons of sugar from this year's production in stock and with the buffer stock of 500,000 metric tons, the total availability stands at 6.3 million metric tons. He said this is sufficient to meet the annual domestic consumption requirement, which is also around 6.3 million metric tons. The statement said Pakistan exported 750,000 metric tons of surplus sugar last year, earning $402 million. The ministry said this export decision was not an 'abrupt' one but was taken after thorough verification of data from the Federal Board of Revenue (FBR) and other departments. Responding to criticism over the government's export and import decisions, Hussain told Arab News said such narratives ignored a ten-year trend in Pakistan where sugar exports typically followed the crushing season and were sometimes followed by imports of the commodity. He acknowledged that initial projections for the 2024–25 season estimated sugar production at 7 million metric tons, slightly above the previous year. However, the adverse effects of climate change affected agricultural output, including sugarcane yield. 'As a result, actual production dropped to 5.8 million metric tons,' he said. 'NO QUICK FIXES' Pakistani business reporter Shehbaz Rana, who has extensively reported on the matter, said the control of sugar mills by politically powerful families was the major reason for the crisis. 'The only viable solution is full deregulation of the sugar supply chain, removing government controls over production, pricing, imports and exports to dismantle cartel structures and foster true market competition,' Rana said. Economist Dr. Khaqan Najeeb, Pakistan's former finance adviser, said the sugar sector's crisis underscored the urgent need to move beyond 'reactive firefighting' and adopt structured, tech-driven, and market-aligned frameworks. 'Addressing this challenge requires deep policy expertise and a commitment to serious, evidence-based reform,,' he told Arab News. He pointed out the need for six key sugar sector reforms: improving per-acre yields, promoting ethanol and bagasse power, deregulating the market, enforcing anti-cartel laws, using technology to monitor the supply chain, and setting transparent, formula-based pricing with timely farmer payments. 'These are not quick fixes — they demand consistent, hard work, but after years of misaligned interventions through poorly timed exports and imports, one thing is clear, there is no easy solution, only the hard path of structural reform,' he added.
Arab News
3 hours ago
- Arab News
Pakistan ruling party chief discusses strengthening bilateral defense, economic ties with Saudi envoy
ISLAMABAD: The president of Pakistan's ruling Muslim League-Nawaz (PML-N) party Nawaz Sharif and his daughter, Punjab Chief Minister Maryam Nawaz, met Saudi Ambassador Nawaf bin Said Al-Malki on Thursday to discuss strengthening bilateral defense, political and economic ties between the two countries, an official of the Punjab government said. Pakistan and Saudi Arabia enjoy close defense, economic and diplomatic ties. In recent months, the two countries have sought closer economic cooperation, with Islamabad and Riyadh signing 34 business-to-business agreements last year worth $2.8 billion. During their meeting, Sharif and the Punjab chief minister conveyed their sincere wishes and respect for Saudi Arabia's King Salman Bin Abdulaziz Al Saud and Crown Prince Mohammed bin Salman, the public relations officer to the Punjab chief minister said in a message circulated to media. 'The meeting included discussions on matters of mutual interest, economic cooperation, defense partnership, and unity of the Muslim Ummah,' the statement said. It added that both sides reaffirmed to further strengthen the historic, political, economic and defense ties between Pakistan and Saudi Arabia. 'Both sides agreed to expand defense partnership, joint training, intelligence sharing and mutual cooperation,' it said. The Punjab chief minister said Pakistan and Saudi Arabia's relationship is based on mutual trust, shared values and long-standing brotherhood. 'Relations with Saudi Arabia are a central pillar of Pakistan's foreign policy, which continues to grow stronger in political, economic, and other sectors,' she was quoted as saying. Nawaz said Islamabad is grateful to Saudi Arabia for hosting 2.5 million Pakistani expatriates in the Kingdom. 'Maintaining close and continuous contact with Saudi Arabia at the consular level is a top priority of the Punjab government,' she added. Apart from being a key regional ally and close business partner, Saudi Arabia also happens to be the largest source of foreign remittances for Pakistan. These remittances are a lifeline for Pakistan's cash-strapped economy, playing a critical role in stabilizing foreign exchange reserves and its supporting balance of payments.
Arab News
5 hours ago
- Arab News
India PM Modi faces opposition fury after Trump's 25 percent tariff threat
NEW DELHI, INDIA: Indian opposition parties criticized the government on Thursday, describing US President Donald Trump's threat of a 25 percent tariff as a diplomatic failure for New Delhi, while the rupee currency tumbled and equity indexes slid in response to the news. The 25 percent rate would single out India more harshly than other major trading partners, and threatens to unravel months of talks, undermining one of Washington's strategic partners in the region, viewed as a counterbalance to China. Trump said the tariff on imports from India would start from Friday, in addition to an unspecified penalty for Russian dealings and involvement in the BRICS grouping of nations. In response, the government of Prime Minister Narendra Modi said it was studying the implications of Trump's remarks and was dedicated to securing a fair trade deal. 'This development reflects a broader collapse of foreign policy under the Modi government,' a lawmaker of the main opposition Congress party said in a notice to the lower house of parliament, asking for a discussion on the matter. The debate would focus on the 'government's economic and diplomatic failure in preventing the imposition of 25 percent US tariffs plus penalties on Indian exports,' the notice added. Commerce Minister Piyush Goyal was expected to brief the lower house later on Thursday, his office said. 'I don't care what India does with Russia,' Trump said in a Truth Social post on Thursday, adding, 'They can take their dead economies down together, for all I care.' Russia remained India's top oil supplier during the first six months of 2025, accounting for 35 percent of overall supplies. Economists warned the steep tariff could hurt India's manufacturing ambitions and trim up to 40 basis points off economic growth in the financial year to March 2026. India's benchmark equity indices, the Nifty 50 and BSE Sensex, fell as much as 0.9 percent each in early trade before paring losses and trading flat. The rupee was trading down 0.2 percent at 87.6175 after touching its lowest in more than five months earlier in the day. 'RAW DEAL' India has received a 'raw deal,' said Priyanka Kishore, an economist at Asia Decoded. 'While further trade talks may bring the tariff rate down, it appears unlikely that India will secure a significantly better outcome than its eastern neighbors,' she added. That would raise questions about India's relative appeal as a China plus one destination, she said, referring to a strategy of diversifying supply chains through manufacturing outside China to reduce geopolitical and operational risks. Trade talks continued, Trump said on social media, however, as nations face a Friday deadline to strike deals on reciprocal tariffs or have a US tariff slapped on their exports. The US levy on India exceeds those agreed by some other nations in deals with the Trump administration. For example, the tariff on Vietnam is set at 20 percent and on Indonesia at 19 percent, with levies of 15 percent on Japanese and European Union exports. On Wednesday, Trump said Washington had reached a trade deal with India's arch-rival Pakistan that Islamabad said would lead to lower tariffs on its exports, but neither side has yet revealed the agreed rate. Since India's short but deadly conflict with Pakistan in May, New Delhi has been unhappy about Trump's closeness with Islamabad and has protested, casting a shadow over trade talks. Despite former public displays of bonhomie between Trump and Modi, India has taken a slightly harder stance against the United States in recent weeks. Trump has repeatedly taken credit for the India-Pakistan ceasefire he announced on social media on May 10, but India disputes his claim that it resulted from his intervention and trade threats. 'The government has destroyed our economic policy, has destroyed our defense policy, has destroyed our foreign policy,' opposition leader Rahul Gandhi told reporters. The United States, the world's largest economy, now has a trade deficit of $45.7 billion with India, the fifth largest. Trump's announcement and the lack of clarity on the penalty have created 'considerable uncertainty,' said Krishan Arora, a partner at consultants Grant Thornton Bharat. 'India is also actively realigning its position in global supply chains through deeper trade and investment linkages with other countries — an effort that must now accelerate to reduce long-term vulnerabilities,' Arora said.
