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Pakistan should benefit from booming Asia: Mushahid Page 8 TAPI gas pipeline: Sifting skepticism from optimism Page 2 Ufone, ‘Teri mehrbani’! Page 3 Pages: 7

profit.com.pk

Saturday, 10 December, 2011

Receding commodity pRices

A view of northern site of Lowari Tunnel where construction work is underway in extremely cold conditions.

Faltering hopes

online

for economic growth: SBP Banks’ profits shifting away from interest income to investment in government papers g Banking system assets up by 8pc to Rs7.7t in Jan-June 2011 g Fresh bad debts of banks soar to Rs31b, upping infection ratio to 15.3pc g Islamic banking grows by 17.5 per cent g

TaTe Bank of Pakistan (SBP) has cautioned that banks’ source of profits were shifting away from interest income through advances to investment in the risk-free government securities, a trend central bank dubbed as neither ‘desirable’ nor ‘sustainable’. and this risk-averse behaviour of commercial banks took their assets to rs7.7 trillion, registering a growth of eight per cent or rs577 billion, during the first half of calendar year 2011 (January-June 2011).

accounted for almost 30 per cent of the banks’ interest income, up from 24 per cent in June-2010. “This suggests that growth in government borrowings has shored up banks’ earnings. This trend is neither desirable nor sustainable; first because it compromises intermediation function and second as any sharp cut in discount rate can discernibly affect banks’ profits.”

SBP stressed that there had been growing evidence of banks’ flight towards quality as net investments, mainly in government securities, now constituted around 34 per cent of the banks’ assets, compared with 28 per cent in June 2010.

Bad deBts on the RIse

CRowdIng out pRIvate seCtoR

On the other hand, banks’ advancesto-deposits ratio was moving downwards, having further dropped to 56.7 per cent by June 2011, against 63.0 per cent of last year.

Banks, however, can hardly be blamed for their current anti-growth attitude given their ever-increasing bad debts which, SBP said, had mounted to rs31 billion, pushing the infection ratio from 14.7 per cent to 15.3 per cent. SBP noted that public sector commercial banks and mid-sized local private banks appeared more vulnerable to higher credit risk. The regulator, however, is upbeat that in months ahead its current monetary policy stance of keeping interest rate at 12 per cent would make asset selection challenging for the banks. “Banks will either have to live with lower returns on their investments (a key contribution to profits in recent times) or to aim for greater private sector credit, which in a difficult economic environment, would truly test their ability to adroitly manage an already high credit risk,” SBP said in its Financial Stability review (FSr) on Friday.

“The share of net advances has witnessed a concomitant drop, from 47.6 to 43.9 per cent during the same period,” it said. according to State Bank, while the cash-strapped government’s reliance on banking sector heightened concerns about private sector crowding out, poor credit off-take by private sector had other causes as well that include severe energy crises and challenging economic environment.

However, going forward, results of stress tests showed that banking system was resilient to shocks emanating from a challenging macroeconomic and business environment, the regulator observed. about surge in banks’ assets SBP said it was in both absolute and growth terms and was the most significant since 2007.

The banks’ deposits increased by 9.4 per cent, registering the highest half yearly growth during last four years, it said; adding that net investments, with an increase of 22.4 per cent during July-Dec 2011, markedly outpaced the anemic growth of 1.04 per cent in net advances.

KARACHI

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ISMAIL DILAWAR

saFeR shoRes oF InvestMent In its future outlook for the country’s troubled economy, State Bank said a “mild” pick-up in the sofar-muted private sector credit was likely as the borrowing cycle of some key industries was resuming. The bank, however, is concerned over receding commodity prices that it said would keep economic growth in check during current fiscal year.

“The challenging business environment in general and banks’ risk aversion amid high credit risk would limit the possibility of a perceptible reversal in asset mix away from the government papers,” it said. about banks’ tilt towards government papers, the regulator said the returns from investments in government securities now

pRoFIts BeFoRe tax up 31pC The first-half yearly review shows that the banks’ profits before tax were up by 31 per cent during the first half to reach rs77 billion, with return On assets (rOa) of 2.1 per cent (1.8 per cent in June-10) and return On equity (rOe) of 21.9 per cent (17.7 per cent in June-10).

During Jan-June 2011, the banks remained fairly liquid on the back of growing share of investments in government papers, it said, adding that banks’ capital adequacy ratio also observed improvement, reaching 14.1 per cent by June-2011.

SBP said concentration in profits had dropped (share of top five banks down from 95 per cent in Dec-10 to 78 per cent in June-11), ensuring that even smaller banks had a share, albeit marginal, in

industry profits. “Further, growing profits have also helped reduce the number of loss-making banks, from 17 in June-10 to 8 in June-11,” the regulator observed.

Minister assures resumption of work over Lowari tunnel ISLAMABAD

IsLaMIC Banks gRow By 17.5pC about Islamic Banking Institutions (IBIs) it said Sharia-compliant banking had grown 17.5 per cent during H1-CY11, with bulk of incremental assets channeled into government securities. Islamic banks appeared more liquid, solvent and profitable when compared with rest of the banking sector but were facing unique risks of “reputational” and “displaced commercial” nature, it said. referring to other components of financial system, SBP reviewed that domestic financial markets remained stable during the period under review, despite some bouts of mild strain. external inflows kept value of domestic currency almost stable, as Pak rupee depreciated by a marginal (0.35 per cent) against US dollar. Capital market managed to post a growth of four per cent during the half year under review. Bank said during the review period, asset base of Development Finance Institutions (DFIs) managed to grow marginally by four per cent, primarily on account of stronger growth in investments. “Share of advances in total assets remained intact (around 35 per cent), though at significantly lower level than what DFIs’ nature of business would warrant.” However, SBP said trading volumes and activities in corporate debt market largely remained low. Derivatives market, on the other hand, shrank further as insipid credit to private sector coupled with stable exchange rate and interest rate environment dampened demand for new derivative contracts.

Money MaRket InvestMents In contrast, State Bank said, mutual funds industry witnessed its revival as money market investments improved net assets of industry by 24 per cent in H1-CY11. “The insurance industry witnessed a growth of 16.6 per cent in its asset base with the life business experiencing a much strong growth (24 per cent),” it added. Payment systems had functioned smoothly, with amount transacted through retail payment system growing by 14 per cent (YoY) against 11.6 per cent in the corresponding period last year. In terms of volume, the share of ebanking transactions had gained momentum, reaching 42 per cent by June-11, the bank said. It said branchless banking was experiencing a rapid expansion in the country and more banks were planning to enter this growing segment.

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JALALUDDIN RUMI

everal successive governments have failed to complete the lowari road tunnel and access roads project despite 126 per cent escalation in the cost, from rs7.984 billion to rs18.132 billion, after passage of three decades. Minister for communication once again assured GigitBaltistan that government would soon start work on the project. Federal Minister for Communications Dr arbab alamgir who was heading the meeting on lowari Tunnel Project on Friday said this. Work on lowari tunnel project has remained suspended from last five months due to shortage of funds while the PC1 was also revised due to change of design from rail Tunnel to road tunnel.

Minister was told by GM lowari road Tunnel Project Col (r) Salman rasheed that rs6.4 billion have been spent so far on lowari Tunnel project costing over rs18 billion. It was told that work on the project will be soon resumed by the contractors. The participants of the meeting were told that the lowari road Tunnel comprises of two tunnels which are of 8.5 kilometers and 2 kilometers respectively. GeO consultants in collaboration with SaMBU of Korea were working on the project and would resume the work on the much delayed project. The project envisages construction of 8.6 km minielectric rail tunnel to provide facilities of a piggyback shuttle service for transportation

of a mix of loaded cargo and passenger vehicles to and from one portal to the other between districts of Dir and Chitral.

Subsequently, it was decided to modify the already excavated tunnel cavity by enlarging the existing cross section up to three metres to provide space for two-lane road, including two-metre emergency land on both sides along with allied facilities. The modified road tunnel would thus accommodate three to five times the traffic volume capacity of the rail tunnel. The project, after completion, would contribute to overall socio-economic uplift of the region and will provide access from the Central asian States to Gwadar deep sea port.

Federal Minister apprised the participants that this project is not only vital for Khyber Pakhtunkhwa but, with its completion, a longstanding demand of the people of Chitral will also be fulfilled and the project itself will open new vistas of development and will established durable road links with afghanistan and Central asian States and hence will strengthen the country’s economy by facilitating trade, tourism, industry and agriculture.

The meeting was attended by Chairman NHa Syed Muhammad ali Gardezi, Member Infrastructures Planning Commission General (r) Shahid Niaz, additional Secretary Ministry of Communications amjad Nazeer, Joint Secretary Mathar Niaz rana, Member Construction NHa Yousaf ali Khan and GM lowari road Tunnel Project Col (r) Salman rasheed and other high officials.

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Saturday, 10 December, 2011

02 debate Sifting skepticism from optimism tapI pIpeLIne pRoJeCt

KunwAR KHuLDune SHAHID

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N 14th November 2011, Turkmenistan’s President Gurbanguly Berdimuhamedow along with Prime Minister Yusaf raza Gillani signed five agreements and memoranda of understandings (MoUs) at the Prime Minister’s House. The most momentous signature however was on the Gas Sales and Purchase agreement (GSPa) which is being touted as materialising the Turkmenistan-afghanistan-Pakistan-India (TaPI) gas pipeline project by 2016. TaPI has been paraded as being worth $7.6 billion, and has been staunchly backed by the US – that would rather see Pakistan adopt this pipeline in lieu of the Iran-Pakistan gas pipeline. according to GSPa, the gas price would be nearly two-thirds of the price of crude oil in the international market.

However, the total cost of the project could only be calculated after reaching an agreement over the transit fee with afghanistan and after negotiations with India. after December 2010’s ‘inter-government agreement’ (IGa) – that was signed by President asif Zardari, afghan President Hamid Karzai, President Berdimuhamedov and Indian Petroleum Minister Murli Deora in ashgabat, the capital of Turkmenistan on 11th December 2010 – the aforementioned GSPa is along the same line. an agreement on ‘gas sales purchase relating to the TaPI pipeline project’ was signed by Mubeen Saulat, Managing Director of Inter-State Gas System and amanali Hanalyev, Chairman of Turkmenistan Gas Trade Concern. TaPI gas pipeline project is being developed under the auspices of the asian Development Bank, and will transport natural gas from the Caspian Sea from Turkmenistan, through afghanistan, then Pakistan and eventually into India. The flag bearers of the project believe it to be the ‘modern continuation’ of the Silk road. However, there are a myriad of reasons that generate causes for both optimism and skepticism.

oRIgIn The TaPI project’s origin can be traced all the way back into early 1990s and the quest of oil magnates in Kazakhstan and Turkmenistan to trace a networking route without touching the sensitive areas of Iran and russia. While russia ruled the roost and had the hegemony over the export pipelines of both Kazakhstan and Turkmenistan, these international oil companies were in a dire need to expand their export route; especially after the east european (or north asian, whichever way you prefer) leviathan constantly rebuffed the idea of allowing the use of its pipeline network.

Nonetheless on 15th March 1995 the project kicked off, after an inaugural MoU was signed between Turkmenistan and Pakistan for a pipeline project.

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project was backed by leading global companies like the argentinean ‘Bridas Corporation’, the US company ‘Unocal’ and the Saudi oil company ‘Delta’.

Route The length of the TaPI pipeline is said to be 1,680 km (1,040 miles) and will originate from Dauletabad gas field located in the amy-Darya Basin in the ahal province in Turkmenistan. The gas field is within proximity of the Turkmenistan-Iran border. From the Dauletabad gas field, the pipeline will progress towards afghanistan. after entering the afghani border, the pipeline will run parallel to the highway between Herat and Kandahar; and along that route the pipeline would eventually progress towards Pakistan. The pipeline would enter Pakistan from the western vicinity in Quetta, Baluchistan and would gradually progress towards Punjab, culminating most notably in Multan. Fazilka – an Indian town near the Indo-Pak border – is being peddled as the final destination of the project, after which all four of Turkmenistan, afghanistan, Pakistan and India would be linked together by this lucrative natural gas project.

dynaMICs Turkmenistan has the world’s fourth largest gas reserves and the proposed gas pipeline has a 735km section across afghanistan followed by an 800-km portion which passes through Pakistan before reaching India. The pipeline will have a radius of 710 millimeters (28 inches); a 1420 millimeter (58 inch) diameter, 4461.62 millimeter circumference and 6,335,529 millimeter square opening. The working pressure will be 100 standard atmospheres (10,000 kPa).

The initial capacity is said to be 27 billion cubic meters (bcm) of gas per annum; 2 bcm of which will be provided to afghanistan before the residual 25 bcm is equally divided between Pakistan and India, 12.5 bcm each. The capacity is touted to augment up to 33 bcm eventually.

The pipeline would have six compressor stations built along the pipeline. The estimated cost on the project is $7.6 billion and it is being financed by the asian Development Bank.

1995-2000 Unocal and Delta signed a separate agreement with Saparmurat Niyazov, then president of Turkmenistan on 21st October 1995 to further enhance the prospects of the pipeline project. In august, the following year, the Central asian Gas Pipeline, ltd (CentGas) consortium for pipeline construction, under the guidance of Unocal was formed, which further boosted the development. Then, CentGas was made one of the signatories in the formal signing ceremonies in ashgabat on 27th October 1997, by the government of Turkmenistan and numerous international oil companies. Owing to the fact that the pipeline had to traverse the

turbulent region of afghanistan, an understanding with the Taliban – ruling over the region undisputedly in the late 90s was necessary. robert Oakley’s – then US ambassador to Pakistan – move to CentGas in 1997 was another milestone move, which paved the way for further developments. The Taliban were eventually taken on board in January 1998, when they opted for CentGas over the argentinean Bridas Corporation and eventually gave the green signal to the project. as the russian grip over the region and its pipe networks weakened, in June 1998 russian company Gazprom also relinquished its 10 per cent stake in the company. However, a major blow to the project came on 7th august 1998, when US embassies in Nairobi and Dar es Salaam were reportedly bombed under Osama Bin laden’s command, and Mullah Omar announced that the former had the full support of the Taliban. and hence on 8th December 1998, Unocal withdrew from the project and abandoned its offices in afghanistan and Pakistan.

2000s after it seemed as if the pipeline deal was being shelved for good in the tail end of the previous century, the noise generated in the early 2000s begged sanguinity. a new deal pertaining to the agreement over the pipeline was on the horizon in 2002, and on 27th December 2002 a deal was signed by the leaders of Turkmenistan, afghanistan, and Pakistan. By 2005 a final draft was sketched out, and asian Development Bank submitted the final version of a feasibility study designed by a British company named Penspen.

The word is that, after the US commenced its well documented ‘war on terror’ and eventually supplanted the Taliban from the authority in afghanistan, the project has become a veritable possibility and has had the full backing of the US. However, due to the afghan region being a tumultuous zone throughout the previous decade, work on the project has failed to materialise and has stalled. Nonetheless, on 24th april 2008, Pakistan, India and afghanistan signed a framework agreement pertaining to purchase of natural gas from Turkmenistan and eventually the agreement between the governments of the four countries was signed on 11th December 2010.

gas shoRtage The recent past has witnessed unprecedented gas shortage in Pakistan. The hours of load shedding are on a precipitous ascent and there is a dire need for an amelioration act to drag the country out of this quagmire. according to statistics, the demand for natural gas in Pakistan has risen by almost 10 per cent between 2000 and 2008, and clocking around 3,774 mmcfd, compared to the total production of 3,200 at the time. However, the gas demand has escalated over the past three years, with numbers as high as 4,731 mmfcd cubic being posted, whereas the production was 4,528 mmfcd – a gap of 203 mmfcd. even so, the cleavage between demand and supply has been on the rise and seriously intimidating numbers have been posted over the past couple of years. a source of natural gas was vital to improve the current scenario of power shortage and load shedding.

us InteRest US has made it unambiguous that it would rather see Pakistan pursue the TaPI project than the Iran-Pakistan gas pipeline project, owing to the multitude of issues it has on the Iranian front. US sees it as an interesting strategic venture in South asia, with all major players and stakeholders being linked via this pipeline. The word is that once the project takes definitive shape, the US companies would eventually jump in the project making it more economically feasible for the Pakistani hierarchy and hence dispelling the vociferous clamour in favour of the IP project. It has been unanimously understood

that Pakistan would opt for TaPI in lieu of IP owing to its appeasement plan for the everescalating domination of US in the region.

CentRaL asIan CoRRIdoR With the opulence of Central asia in terms of natural resources being an open secret, TaPI is a major step towards linking that particular zone with the rest of the world through the sub-continent. The opening up of this route via afghanistan and Pakistan would allow the Central asian states to export energy, to the west without traversing the russian realm or depending on russian routed. and with american influence over the afghanistanPakistan region indubitable, this maneuver would eventually give access to US designs of usurping the Central asian reservoirs and markets in what is now formally called as ‘The New Great Game’.

ChIna’s deaL China has also struck a one-on-one gas import deal with Turkmenistan, and hence the price settled by the two countries would be a telling factor in determining the cost that Pakistan would have to pay in the running of this project. reports tell that China has agreed upon $7.7/mmbtu, which is quite expensive by any standards. also, considering Pakistan’s endeavours to negotiate the price with Iran over the price settled in the IP project, which was considerably less than the numbers being flaunted here , and TaPI borders on a costly affair.

Owing to the security premium and the linkage cost in TaPI deal pundits believe that Pakistan might have to eventually pay up to $11-12/mmbtu – 50 per cent more than our Chinese counterparts.

the aFghan questIon Considering the perpetual battlefield that afghanistan has become, any project that traverses that war-hit turbulent zone cannot be labeled as ‘lucrative’ without some serious contemplation.

The chaos surrounding any move from, within or relating to afghanistan would also be a massive cause of skepticism. and hence if one is linked to such a project that has its heart in afghanistan and the major chunk of the route passes through that chaotic zone, it does nourish the Doubting Thomas and his cynical voice. Couple this with the fact that we are paying hefty bucks for a venture that might eventually be seriously dented.

CynICIsM The noise engulfing the project in our neck of the woods is not one of buoyancy. It is the general consensus that by pursuing TaPI instead of IP, the Pakistani hierarchy is merely acquiescing to the US demands and going for something that would eventually cost quadruple the amount of IP project. add the aforementioned afghan question into the mix and one ponders over the raison d’être behind such a move. The move might end up being imprudent profligacy on the government’s part and might end up being criminal wastage of public money.

epILogue With the current plethora of issues related to power shortage marring the entire nation, any glimmer of hope is welcome. But, with the IP project running parallel to the TaPI project, the juxtaposition is inevitable. Considering the fact that IP is considerably less costly than TaPI, the question marks over the feasibility of the pipeline project originating from Turkmenistan become all the more conspicuous. add the fact that it’s actually Uncle Sam who wants to dictate our matters and wants us to opt for the TaPI instead of the more economically feasible and evidently the more lucrative IP; the cause for scepticism might outweigh the cause for optimism.

The writer is Sub-Editor, Profit.

He can be reached at khulduneshahid@gmail.com

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Saturday, 10 December, 2011

EDITORIAL

Timely aid from Beijing HINa has often proved an allweather friend, especially when business with the traditional patron has turned cold-ish. So never mind the expected stiffness in US aid flows. Part of the disappointment will be offset by increased friendlier inflows, and hopefully, another sizeable part by proactive posturing on part of Islamabad.

Two an extent, hints of both trends are found in the Bhasha-Diamer dam example.

With the world bank still non-committal, adding to our disappointment with donors, Beijing’s $4 billion assistance has come at a crucial time for Pakistan. and that the discontent has pushed Islamabad to diversify its funding base, approaching the Saudi Fund for Development and Japan Bank of International Cooperation, can rightly be seen as a long-term positive for Pakistan. anything that forces the government machinery out of its inertia is welcome, even if it causes a hiccup or two in the process.

Funding and other bottlenecks only underscore the importance of the project. In

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addition to relieving the power sector’s unbearable burden, it will bring compound benefits. These include helping save foreign exchange, supplementing irrigation supplies, mitigating downstream flood damage and above all, it enhancing Tarbela’s potential life by 35 years. at a higher government level, the project also demonstrates the virtues of prudent planning and intelligent application of foreign aid. For years our political and financial machineries have diverted aid funds to non-development heads, eroding the people’s trust to no small extent. Projects like the dam will not only aid the real economy in the long run, they will also provide crucial fiscal expansion in the immediate term. Projects that provide employment, stimulate consumerism and engineer the second round multiplier will go a long way in countering persistent stagflation. We will follow these developments closely, and press for wider application when the narrative starts taking definitive shape.

Khalid Mir T the petrol station I’m always asked by someone who works there: “check the meter is at zero.” This is mildly irritating, but of no consequence. But it is interesting that he assumes I wouldn’t trust him to do his job properly. However, if you’re going to get your car repaired, matters become a bit more serious. Unless you know something about cars, you generally have to trust the mechanics are doing a professional job and not trying to cheat you. When you think about it, trust-or the lack of trust-is crucial for all sorts of transactions and interactions between people. at the most fundamental level, children trust that parents will make decisions that take into consideration their well-being. Couples trust each other and citizens trust that politicians will not embezzle funds or think only in terms of their own interests. When you send your child to school you trust the teachers will be fair, open-minded, and true to the internal norms of their profession. When you go a hospital or a court of law you trust those making choices and decisions on your behalf will do so in the best possible way, and that they’re not motivated by their own selfish interests. Similarly, you trust bankers will invest your money wisely (something we’re not so sure about now, after the financial crisis) and that soldiers will do their job and not be bought off by the highest bidder.

So, we trust lots of people with things that are valuable to us, like our savings, the quality of our healthcare and the education of our children.

There’s an implicit vulnerability in doing so and we all know that things can go horribly wrong if we place too much trust in other people when it’s not justified. But there’s no denying that the quality of our social fabric is enhanced by trust, or what economists call ‘social capital’. a smooth-running society needs a certain level of trust amongst its people and in its institutions.

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There’s an implicit vulnerability in trusting others

Tobacco Control Cell registers case against Philip Morris Philip Morris should not only be blamed. If there are strict laws regarding cigarette advertisements in Pakistan, then obviously, the publishing media must be aware of them as well. Why didn’t the media take notice of them before publishing these adverts? Where are the media ethics and responsibilities? It is the responsibility of newspapers to ensure that such advertisements that are in blatant violation of the sovereign law of Pakistan are discouraged. The advertisements are scanned before publishing and reviewed minutely, they do not happen to appear suddenly. Why is the tobacco company being sued

The dividend of tru

when the printing media should have been taken to task for they are the ones who printed these advertisements in their magazines?

Were the managers drugged or bribed that they forgot to check the ifs and donts list? The newspaper companies should have out rightly refused to print advertisements by Philip Morris. These printing advertisement people otherwise are big nit pickers that they hang you by the noose if required details are not appropriate. How is it possible that they made such a big error?

Trust can be an important factor in the working of the economy as well. Think about the petrol station example again. What’s to stop the person fixing the meter for his own benefit? What’s to stop me from driving the car off without paying him? Would a society without trust lead to anarchy? also, think about a lot of transactions that occur over time, like borrowing and repaying a loan. If you can’t trust someone to pay back the loan you might be less inclined to lend to that person or anyone else, and that might lead to less overall productive investments and lower growth in the economy. Or you might think: why should I pay my taxes if the government cannot be trusted to use the resources wisely? Trust matters to the economy. at this point you might wonder if we can get along without trust. after all, there are other ways in which societies can ensure exchanges between people take place. If the police and the courts of law are functioning then people who betray the trust put in them can be caught and punished (of course, assuming we can trust those officials to act honestly). Or you might think things like reputation or competition prevent people from cheating since if they go back on their word eventually no-one will trust them and they’ll lose out as people take their ‘business’ elsewhere. also, if the government provides information and establishes standards of quality then it’s less likely that people will erroneously (blindly) trust someone else.

However, that can never be the whole of the solution to the problem because there are lots of decisions that we make very infrequently and about which we can only have imperfect knowledge: which school to send your child to, which doctor to see, which politician to vote for and so on. reputation and better information might help, but we’d still end up having to trust strangers. Societies without these good formal institutions and without a developed sense of ‘generalised trust’ either, end up trusting only people they know-which is why personal networks are so important in our country.

In short, it would be too costly for any society to monitor and enforce each and every transaction, or to design complete contracts. even if it wasn’t that costly, would we want to live in a police state where every action of ours was monitored and could we trust those officials anyway to be good enforcers? Since we can’t do everything ourselves, we have to sometimes take the short-cut and trust people. Societies with high levels of general trust, it turns out, do much better economically and socially than those with low levels.

The writer is a professor of economics at LUMS

SAADIA YAquB geRMANy

Ufone, Teri mehrbani !

Maheen Syed F Ufone were to put up a comedy show and charged a ticket of rs500, I would definitely have paid more. But If, I were to buy a Ufone sim for more than the actual price, I would probably think twice.

Ufone advertisements have been the talk of the town for more than two years now. Truly, Ufone has set a perfect example of how simple and tasteful humour can catapult an advertisement into the realm of entertainment. Who can forget the popular ‘Teri mehrbani’ advertisement that made

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headlines and even took over ‘Zubaida apa’s’ jokes. However, the point to ponder is that even though, we all have a brand recall for Ufone, does that really matter? Has it stimulated the majority of us to change our networks or brand loyalties?

The statistics are indeed startling; with Mobilink still leading the market and Ufone ranked as third among the telecom service providers. When you come to think of it, no connection has a comparative advantage over the other. Trust me, there is no special difference between charging rs3 per minute or rs1.5 per 30 seconds. even if a connection is charging less for a call, it will somehow manage to suck the blood of its customers through the value added Services or an asterisk at the top of every call rate, which would require reading glasses to notice. are Ufone advertisements merely comic enactments or are they actually increasing the brand’s sales and market share? Ufone advertisements have a lot of viewership without a doubt. They are also

one of the very few Pakistani advertisements whose print advert does not need an explanation; just a screenshot of the electronic advertisement actually speaks a thousand words for the print ad. Their popularity is such that everyone has already seen the electronic advertisement for the same ad. In fact, one of the paint companies has also started to follow their lead by stealing Ufone’s main men. according to results of a recent customers’ perception survey result (September/October 2011) based on the performance of their respective cellular mobile operators by Pakistan Telecom authority (PTa), Ufone finished in at the last position among its competitors. So yes, we do need ‘quality’ advertisements (like everybody says), but are they actually needed to alter perceptions of the audience? likewise, a typical answer to the impact of advertisement on sales is that advertising enables an organisation to enhance sales.

Similarly, advertising is used to persuade

shahaB JaFRy Business Editor

kunwaR khuLdune shahId Sub-Editor

BaBuR saghIR Creative Head

aLI RIZvI News Editor

Maheen syed Sub-Editor

haMMad RaZa Layout Designer

My grandmother does not remember her date of birth, but she proudly recalls a famous Ufone commercial

and drive consumer behaviour with respect to a commercial offering i.e. products, ideas, or services. advertising is certainly not a social service and I am sure, Ufone did not promise to keep the nation happy by feeding them with an entertainment package every now and then. Therefore, the million dollar question is, are Ufone advertisements really effective? If we take feedback as a measure of the advertisements’ effectiveness, then not only the target audience i.e. youth, but majority of the nation is responding positively towards Ufone advertisements. My grandmother does not remember her date of birth, but she proudly recalls a famous Ufone commercial.

But that is just one side of the story; the measures of advertisements’ effectiveness not only include recall, but also attitude change, and brand choice at the same time.

Persuasion is there, but it does not move, affect, or determine a purchasing decision in Ufone’s case. Feedback is also there, but that is in terms of viewers’ demand for more and more advertisements from Ufone.

What we need to know is that humour in advertising does not work alone, because advertising is only a part of the total marketing effort. a product that is poorly positioned or inadequately distributed in comparison to its competitors, may not make it to the top even though, the advertising itself is well-conceived and professionally executed e.g. Mobilink does not spend much on advertisements, but has a large customer base because it reaches out to almost every town of Pakistan.

The writer is Sub-Editor, Profit. She can be reached at syedmaheen@hotmail.com

For comments, queries and contributions, write to: MuneeB eJaZ Layout Designer

email: profit@pakistantoday.com.pk ph: 042-36298305-10 Fax: 042-36298302 website: www.pakistantoday.com.pk

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Saturday, 10 December, 2011

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news

The government and people of Pakistan join fellow SAARC member states in commemorating the 26th anniversary of signing of the SAARC Charter

prime Minister, syed yusuf Raza gilani

Commercial banks disturbed over interest rate regime KARACH

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ISMAIL DILAWAR

OMMerCIal banks are adversely impacting smooth functioning of interest rate corridor by holding billions of rupees excess reserves in cash. according to central bank data, the banks, which are currently pocketing handsome amounts through investing massively in the risk-free government securities, held excess Cash reserves (eCrs) worth over rs41.17 billion during the week ranging from 25th November to 1st December 2011. eCrs are an amount that banks posses over and above minimum required Cash reserve requirement (Crr). a breakup shows that during the week under review con-

ventional banks’ cumulative excess cash accounted for rs24.591 billion while that of the Islamic banks amounted to rs16.579 billion. SBP figures reveal that while conventional banks were, collectively, raising in excess cash of rs3.513 billion on daily average basis their competitors in Islamic banks were reserving the same to the tune of rs2.368 billion. a weekly review of banks total eCrs show that they held rs797 million on November 25, rs797 million on November 26, rs797 million on November 27, rs2.766 billion on November 28, rs9.063 billion on November 29, rs13.789 billion on November 30 and rs13.160 billion on December 1 of the current year. These amounts also include pre-mature encashment that banks reported to the central bank in line with

BSD circular No 09 issued by SBP in July 2006. alarmed by banks’ increasing eCrs, State Bank reported that banks’ practice to reserve excess liquidity was putting adverse affect on smooth functioning of interest rate corridor, currently standing at 12 per cent. “excess cash reserve not only adversely impacts smooth functioning of the interest rate corridor,” SBP said. State Bank said additional eCrs had also “implications” for the banks’ own liquidity management. Sensing urgency of the situation, the regulator has decided to make public on weekly basis the banks’ possession of liquidity that is in excess of Crr. “In order to bring more efficiency in the money market operations of banks, State Bank of Pakistan has decided to publish

weekly data of excess Cash reserves maintained by commercial banks over and above the minimum required Cash reserve requirement,” State Bank said in a press communiqué issued on Friday. State bank is concerned over the country’s growth prospects as the risk-averse banks are extending extensive loans to the fundsstarved central and provincial governments instead of lending to the growth-oriented private sector.

Government’s excessive budgetary borrowing from banks, which stood above rs700 billion during July-Oct FY12, have increased assets of the latter to rs7.7 trillion during Jan-June 2011. On the other hand, banks’ advances to the private sector, considered worldwide as the engine of growth, are negligible and according to central bank are “muted” so far.

PPAF unveils Rs 238m uplift plan for FATA

Cellular operators fail to meet standard of quality

ISLAMABAD: Pakistan Poverty alleviation Fund (PPaF) has unveiled a comprehensive integrated development programme at a cost of more than rs238 million for benefit of over 40,000 poor and marginalised communities in impoverished districts of rajanpur, layyiah, Dera Isamel Khan and Khyber agency (FaTa). This financing would be used for small-scale infrastructure, water, energy, livelihood enhancement, protection and human and institutional development. as many as 109 small scale community physical infrastructure projects including 26 irrigation projects, 12 drinking water supply projects, 25 sanitation projects, 21 link road projects and 25 culvert schemes would be completed under this financing. 54 integrated infrastructure (water & energy) projects, 16 integrated water efficient infrastructure projects and 38 renewable energy projects are also included. assets would be transferred to the poor and ultra poor community organisations to sustain their livelihood under livelihood enhancement and protection component. Besides linkages development and formation of common interest groups (CIGs), livelihood improvement trainings would also be imparted to the marginalised communities.

PPaF partner organisation namely South asia Partnership-Pakistan (SaP-PK) will execute these projects to provide basic infrastructure and social sector services in the abovementioned districts. PPaF is the leading apex institution for community-driven development in the country and the largest source of pro-poor spending outside Public Sector Development Programme and federal budget. Set up as a fully autonomous private sector institution, PPaF enjoys facilitation and support from government of Pakistan, World Bank, IFaD, USaid, USDa, KfW and US Corporate Sector. Outreach of PPaF now extends throughout Pakistan and its micro credit, water and infrastructure, drought mitigation, education, health and emergency response interventions have been widely recognised. as the largest institution of its kind in the world, PPaF has received high performance ratings from donors. STAFF RePORT

KARACHI: according to Quality of Service (QoS) test results released by the regulator Pakistan Telecommunication authority (PTa) on Friday, none of the operators met all QoS criteria. However, Mobilink showed better results compared to other four operators, while the performance of Telenor, Ufone and Zong were similar to each other.

The regulator stated that results of the survey pushed the regulator to move ahead by development of KPIs for inclusion in Service level agreement (Sla) between lDIs and CMTOs. essential parameters for Ir billing format were also finalised, and a survey was carried out in the middle of 2011 to check the billing discrepancies Mobilink and Telenor met all billing requirements successfully.

Despite difficulties faced by operators due to power cuts (blackout/brownout), rising cost of fossil energy, cellular operators have been trying to maintain services at affordable cost. The regulator is of the opinion that due to lowering of access Promotion Contribution (aPC) and a little more effort in retaining the customer, cellular operators will succeed in meeting the criteria and appropriate billing format.

It is to be noted that regulators actively monitor QoS of operators to safeguard consumers’ interests. PTa also regularly conducts QoS survey of different services offered by its licensees but it is pertinent to mention here that PTa is the first known regulator in the world that has conducted a survey in order to check the QoS of International roaming (Ir) facility. The first survey was conducted in 2006 followed by the second phase in 2009 to figure Ir QoS parameters and their benchmarking. On the basis of actual test results, recommendations of standardising bodies (GSMa, ITU, etc) and best international practices, following standards were developed to measure Ir QoS. WAQAR HAMZA

OGDC leads buying frenzy Karachi Staff report

LAHORE: November proved to be the worst month for cement manufacturers this fiscal year as cement dispatches declined by 6.47 per cent as compared to corresponding period of last year. Cement dispatches decline was due to eid ul azha and less demand in local as well as export markets. Data released by all Pakistan Cement Manufacturers association reveals that local cement demand has continuously declined since July 2011 when sales of commodity increased by 16.31 per cent compared to production in July 2010. However, increase in local demand was reduced to 10.61 per cent in august, 8.81 per cent in September, and 5.77 per cent in October over dispatches made in the corresponding periods of these months last year. “November is the first month this fiscal when demand in local market declined by negative 5.12 per cent” said a spokesman of aPCMa. STAFF RePORT

pkR record depreciation forces oeMs to marginally increase prices KARACHI: Increasing utility expenses and record depreciation in Pakistani rupee, which in last month has only depreciated by almost 5 per cent against Japanese Yen (from 1.0980 to 1.152) and 4 per cent US$ (from 86 to 89), has forced Indus Motor Company (IMC) to marginally increase the retail prices of Corolla, Cuore and Hilux variants with immediate effect. according to the statement issued from IMC today, prices have been increased by around 1.5 per cent only on account of very steep decline in Pak rupee against US$ and Japanese Yen, which is making the imported CKD kits and local vendor parts more costly, as the raw materials of vendors are also imported.

Company spokesperson, commenting on price increase said, “We have been absorbing most of the costs on account of depreciating rupee so far, however, recent decline has forced us to marginally increase our prices.” STAFF RePORT

Chinese businessmen exempted from visa fee ISLAMABAD: as the two countries are celebrating year 2010 as year of friendship, Pakistan has decided to exempt all Chinese businessmen visiting Pakistan, from visa fee and have also made efforts facilitate the Chinese workers in visa processing. Chinese ambassador to Pakistan liu Jian Friday called on Interior Minister rehman Malik at Ministry of Interior and discussed issues of bilateral interest. He conveyed best wishes for President asif ali Zardari from the leadership of China and himself for his health. Chinese ambassador appreciated the government for protecting the Chinese workers, employees and business community based in Pakistan on various projects all over the country. Interior Minister rehman Malik issued instructions to facilitate Chinese workers for visa processing. He also exempted Chinese businessmen visiting Pakistan from visa fees and added that China has always shown its solidarity with Pakistan and stood by it in difficult times. STAFF RePORT

paCRa maintains a- rating of dFtL KARACHI: Pakistan Credit rating agency (PaCra) has maintained the Insurer Financial Strength rating of Dawood Family Takaful limited (DFTl) at "a-" (Single a minus). rating denotes DFTl's strong capacity to meet policyholder and contract obligations. at the same time, risk factors are moderate, and impact of any adverse business and economic factors is expected to be limited. rating reflects DFTl's growing takaful volumes, a result of an effective business strategy employed by its management, though overall market share is likely to improve only gradually, given intense competition. The company has employed a sound technology infrastructure that lends support to its operational efficiency. STAFF RePORT

agriculture input usage shrinks

W

ITH OGDC carrying the index weight on its shoulders, the KSe-100 index was able to muster another strong performance today as it added 72 points to yesterday’s total to close at 11,464 points. OGDC ended up 2.6 per cent higher than its previous close and contributed 71 points towards the index point gain.

The KSe 100 index closed at 11464.61 levels with the gain of 72.04 points, while total volume stood at 38,122,380 along with the total value of 2,449,153,914. KSe 30 index gained 36.26 points to close at 10654.48 levels, and all Share index closed at 7936.79 levels after

Cement demand weakens in local, foreign markets

gaining 46.60 points. Total 101 scrips advanced 102 declined and 96 remain unchanged out of total 299 scrips traded.

The eCC meeting to decide the December gas load management schedule yesterday was a game changer for the fertiliser sector as

the eCC decided to cut off the gas supply to engro’s enven plant with immediate effect. Hence, key beneficiaries FFC, FFBl and FaTIMa witnessed a strong rally including the top positions on the volume leaders board as investors sense a price hike emanating from the

SNGPl side based on the eCC’s decision. Overall, the week ended on a positive note but with political uncertainty in the air, market stability is a far cry at this point and we advise investors to remain wary of negative triggers, said Sr. Investment analyst at HMFS, ali Hussain.

LAHORE: Kissan Board Pakistan (KBP) has estimated that the usage of DaP and urea fertilisers have witnessed a drop of 90 and 33 per cent respectively. Similarly, certified seeds usage has halved mainly because of government’s antifarmer policies. KBP President Sardar Zafar Hussain and General Secretary Malik Muhammad ramzan Whari said in a news statement on Friday that imposition of General Sales Tax on agriculture inputs had badly affected their usage. In addition, artificial shortage of urea fertiliser and exorbitant increase in its prices had further reduced its usage. Under influence of international donors and IMF, farmers leaders said, government had imposed unjustified taxes on agriculture. This in turn has resulted in farmers’ cost of production surpassing their sale price. They said increase in electricity and diesel price was further aggravating the situation. STAFF RePORT

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Saturday, 10 December, 2011

China may set up new ventures to manage its foreign exchange reserves

news

Chinese Central Bank governor, Zhou xiaochuan

Ten years on, US business rethinks China dreams

05

CORPORATE CORNER Bank of khyber Chiniot branch starts operations

CHNIOT: Bank of Khyber (BoK) Chiniot branch has started its operations at ehsan Plaza in old furniture market area of Chiniot. Mr Bilal Mustafa Managing Director BOK formally inaugurated the branch in a graceful ceremony this morning. This formal inaugural ceremony of was also attended by Mir Javed Hashmat executive Director BoK, Mr Khurshuid alam Head Banking Operation, Mr lal Nawaz Khattak Head Business Development, Syed ali Nawaz Gilani Head Marketing and other local business and trading community members. PReSS ReLeASe

wASHInGTOn

F

ReUTeRS

eW in the United States would recognize Charlene Barshefsky or remember what she did.

Not so in China where the former Trade representative says she is stopped in the streets by ordinary people and thanked.

Her gift to the Chinese people was leading the US delegation that negotiated China's entry to the World Trade Organization in December 2001. The removal of trade barriers heralded unprecedented economic growth for China, vaulting it in a decade to the second largest economy in the world and helping slash its rural poverty rate from 10.2 per cent in 2000 to 2.8 per cent in 2010. "The Chinese consider WTO entry the most historic achievement in US-China relations since (US President richard) Nixon's visit to China," in 1972, Barshefsky said.

It is a different story in the United States where, 10 years on, China's entry into the club of world trading nations is having equally huge ramifications. The flood of cheap manufactured goods gives an extra $600 a year for the average american family to spend on clothing, shoes, household goods and electronics. But Made in China has hastened the decline of US manufacturing. Factory jobs have shrunk in number by 25 per cent the past decade to 11.5 million today, and average factory wages adjusted for inflation have virtually stagnated.

Chinese imports meanwhile have ballooned the US-Sino trade deficit to $273 billion, four times that with any other country. It has stirred anti-China sentiment, a labor union backlash and legislation in Congress to try and force China to let its currency strengthen more rapidly to lower its export advantage.

Now american business, lured a decade ago by the promise of a fastgrowing Chinese middle class, is starting to shift gears and rethink what the China dream can deliver. Some chief executives are questioning whether the United States is pressing China hard enough to hold up its side of the bargain in joining the elite trade club. "I think by any definition -- if you look at the raw numbers -- we've made a lot of

progress.

But by the same definition, we'd be fooling ourselves if there isn't a lot of frustration," said the man who now holds Barshefky's old job, US Trade representative ron Kirk.

The reconsideration of China is taking place while the United States struggles with an economic slump that has brought high unemployment and doubts about the country's long-term fiscal health. It is also taking place in an election year, and while China is a regular target in presidential campaigns, even Mitt romney, with the strongest corporate credentials of all the republican candidates, has made a point of criticizing China.

TENSIONS MOUNT The US complaints about China are well known -- widespread theft of intellectual property, a lack of transparency about its regulations, missed WTO deadlines for opening markets, foot-dragging in allowing its currency to rise in value and subsidies such as low-interest state loans that favor domestic industries.

China argues that as a developing economy, it needs to protect its nascent industries and help them grow. It also retorts that the United States blocks its companies in key sectors.

Huawei Technologies, for instance, withdrew its $2 million bid this year for 3 leaf Technologies when the US government raised national security concerns, and oil giant CNOOC canceled an $18.5 billion bid for american oil company Unocal Corp in 2005 after a political backlash in the United States. as trade frictions grow, corporate america for the first time is publicly voicing concern that the trade deal with China is lopsided, and pressure is building on President Barack Obama to toughen his stance.

Jim McNerney, Boeing Co's chief executive, touched upon the issue in November, speaking of a "dilemma" in China relations when he asked Obama at the aPeC business summit how he would assess the US-China relationship when both the left and the right are calling for a harder line.

Obama gave his administration's standard response of pursuing constructive engagement and a strong policy with a key partner, but the subtle criticism appeared to have hit home. later, after a private meeting with Chinese President Hu Jintao, he called for China to stop "gaming" the world trade system. Business can be a far more powerful lobby than trade unions, the

traditional voices that have complained of China's trade practices.

Its influence, particularly in a presidential election year, could lead to increasingly adversarial relations. "The level of business support for stable USChina relations is beginning to fracture," said Nick Consonery, China expert at the eurasia Group, a political risk institute that works closely with corporations.

BUSINESS COMPLAINS The policy that perhaps most frustrates american business stems from a 2008 announcement by China's StateOwned assets Supervision and administration Commission. It identified "economic lifeline" sectors that China says it must dominate.

The list is long -- aviation, air freight, coal, oil and petrochemicals, power generation, telecommunications and weapons. Industries such as chemicals, equipment and auto manufacturing, electronic communications, steel and nonferrous metals are set as state controlled to varying degrees. These state-owned enterprises enjoy a monopoly or oligopoly in the Chinese market; subsidies for land, water and power; and belowmarket cost of capital. Until recently, american business leaders had been loath to speak of China's practices for fear it would lose them lucrative contracts or result in regulatory scrutiny that harms their China operations. Several have gone public in the past few months.

"The Chinese government is not going to allow a non-Chinese Internet company to succeed... It is a weapon in the 21st century national security games," eBay Inc chief executive John Donahue said in October at a Web 2.0 summit. eBay has abandoned its efforts to build a Chinese marketplace where people bid for goods online after it ran into stiff competition from a free Chinese site.

Its new strategy is to sell goods from Chinese companies to international buyers. "It was about finding a business model that works in China," said Daniel Feiler, spokesman for its China operations.

Google Inc. last year pulled back to Hong Kong on concerns Chinese were hacking the Internet search giant and a row with China over censorship.

Jeffrey Immelt, chief executive of General electric Co which has multibillion dollar contracts in turbines, railroad engines and aircraft parts with China, also faced choices in how to compete. "The notion was, if we're part

of the Chinese economy, we should be allowed to win." But finding ways to win means that companies have to avoid confrontations with Chinese authorities, he said.

ptCL president and Ceo Mr walid gets honoured at Magnificent 7 uae expo

FIGHTING BACK In the past three years, the United States has brought five cases against China at the WTO, more aggressive than the seven cases during the eight years of former President George W. Bush's administration. By March 2010, the United States had won three WTO cases against China, four were resolved before WTO action, and four were pending. apart from negotiations at WTO complaints, the United States also is working to draw other big asian trading nations into regional or bilateral trade pacts, which are designed to open markets and serve as a hedge or counterweight against Chinese trade policies. It ratified a free trade agreement with South Korea recently and has breathed new life into the TransPacific Partnership (TPP), a 9-nation free-trade group that gained new heft in November when Japan, Canada and Mexico announced plans to join negotiations. US officials want TPP to set new standards on free trade and become a template for future international trade deals.

What remains unclear in Washington is whether China's new leadership in 2012 will resume market opening or turn further inward.

The country took a huge leap in the 1990s as it prepared for WTO entry, slashing red tape, removing layers of protection for domestic factories and farms and opening its markets. That work is widely credited inside and outside China with turning the country into the industrial dynamo of today.

The US ambassador to the WTO Michael Punke said China made "impressive steps" to bring its laws and regulations into line with global rules in the five years after WTO entry.

Some trade experts say reform fatigue then set in and they expect opening measures to resume. Other US experts say China turned away from market liberalization as early as 2003, when the reform-minded team of President Jiang Zemin and Premier Zhu rongji retired and handed power to the more cautious current leadership of Hu Jintao and Wen Jiabao, respectively.

"Nobody who was watching China enter the WTO back then saw this change coming," said China trade analyst Derek Scissors of the Heritage Foundation.

KARACHI: CeO and President, Pakistan Telecommunication Company limited (PTCl), Walid Irshaid received an honorary shield from Mr ahmed Nasir alzaabi, representative from Ministry of Foreign Trade in the presence of Uae ambassador to Pakistan, H. e. eisa abdullah al Basha al Noaimi, Council General H.e Suhail Bin Matar al Katbi at the Uae Trade and Investment Conference 2011. Held as part of the first ever "Magnificent 7 Uae expo 2011" in Pakistan, organised by the Uae Ministry of Foreign Trade and Uae Consulate Karachi. PReSS ReLeASe

adamjee Life growth Fund experiences a positive trend KARACHI: adamjee life Growth Fund performance during November saw a positive trend, the per unit Navs (as of Dec 1st, 2011) were as follows: Investment Secure Fund (S&a) Bid 103.6663; Offer 109.1224, Investment Multiplier Fund Bid 102.6732; Offer 108.0771, Investment Secure Fund (IFl) Bid 100.000; Offer 103.0928 and Investment Diversifier Fund Bid 100.000; Offer 103.0928. For the first time in Pakistan, adamjee life has launched a commodity based fund called Investment Diversifier Fund providing people the option to invest in commodities like in gold, silver and oil, which is the need of the time considering the decline and volatility of the equity market. PReSS ReLeASe

BIsp starts using technology based systems for expanding operations ISlaMaBaD: The experts working in social sector have attributed the phenomenal success of Benazir Income Support Programme (BISP) to the use of state of art modern technology at various stages and components of the programme, mainly to achieve the purpose of efficiency and transparency as well as to provide smart solutions to beneficiary families. By introducing modern technology, BISP aims to ensure minimum human involvement to maintain transparency besides making the disbursements faster and more reliable. PReSS ReLeASe

KARACHI: Collectibles, pioneer and among the top luxury watches retailer in Pakistan, celebrates its 15th anniversary with a glittering reception hosted at the Swiss Consulate, Karachi. PRESS RELEASE

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Saturday, 10 December, 2011

06 maRkets top 10 sectors

49% 09% 10% 04% 04%

Chemicals

01% 03% 01% 02% 17%

Real Estate Investment

Construction & Materials Electricity Banks

Fixed Line Telecommunication

Oil & Gas

Financial Services

Personal Goods

Equity Investment Instruments

STOCK MARKET HIGHLIGHTS Index 11464.61 2918.84 2628.55

KSE-100 LSE-25 ISE-10

Change +72.04 +20.24 +33.85

Volume 38,122,380 650,980 12,662

Market Value 2,449,153,914 24,615,140 707,313

top 5 peRFoRmeRs sectoR wise

Major Gainers Company Nestle PakistanXD Colgate Palmolive Sanofi-Aventis Packages Limited Oil & GasSPOT

Open 2452.55 580.00 139.13 81.77 154.54

High 2520.00 608.99 145.00 85.85 160.60

Low 2459.79 600.00 140.00 81.77 153.26

Close 2505.65 605.74 145.00 85.83 158.53

Change 53.10 25.74 5.87 4.06 3.99

Turnover 29 47 210 657,934 1,612,850

680.00 5445.00 118.19 254.15 196.99

660.00 5600.00 114.00 255.95 195.00

646.02 5380.00 112.29 246.01 193.00

653.12 5434.80 112.29 248.63 193.33

-26.88 -10.20 -5.90 -5.52 -3.66

174 7 1,830,379 156,821 2,867

Volume Leaders Fatima Fert.Co. Fauji FertilizerXD Fauji Fert Jah.Sidd. Co. Engro Corp

23.14 155.46 52.44 5.12 118.19

23.75 160.40 53.25 5.15 114.00

22.82 148.10 51.25 5.03 112.29

23.57 158.83 52.78 5.07 112.29

0.43 3.37 0.34 -0.05 -5.90

11,290,509 3,853,851 3,305,089 1,984,474 1,830,379

Bullion Market Gold 24K Gold 22K Silver (Tezabi) Silver (Thobi)

Per Tola (PKR) 57,206.00 51,608.00 1,067.00 1025.00

Per 10 Gm (PKR) 49,097.00 44,245.00 915.00 880.00

Per Ounce US$ 2,848.00 – 35.05 –

hIgh

Low CuRRent

Change

voLuMe

409.80 119.90 22.06 7.00 92.00

402.00 115.40 21.15 6.87 90.05

407.34 119.18 22.06 6.95 90.91

5.13 3.19 0.00 0.06 0.55

94,034 1,798,600 289 278,943 26,862

29.00 69.39 153.64 37.50 1.50

28.15 66.50 152.50 35.85 1.50

28.87 69.39 153.00 36.45 1.50

0.82 0.00 -0.64 0.56 0.01

1,689,569 10 1,804 101,880 2,982

Oil and Gas Attock Petroleum Attock Refinery Burshane LPG Byco Petroleum Mari Gas Co.

402.21 115.99 22.06 6.89 90.36

Arif Habib Co SD Biafo Ind. Clariant Pakistan Dawood Hercules Descon Chemical

28.05 69.39 153.64 35.89 1.49

20.00 1.40 8.61 30.05 10.24

20.79 1.46 8.79 31.00 10.10

20.00 1.35 8.63 29.60 10.00

20.00 1.35 8.66 30.05 10.00

0.00 -0.05 0.05 0.00 -0.24

1.80 52.69 14.27 7.61 19.94

25.82 3.60 40.34 7.70 20.50

Ados Pakistan AL-Ghazi Tractors Ghandhara Ind. Hinopak Motor K.S.B.Pumps

89.0701 139.1454 1.1457 118.8106

5.25 161.88 7.49 78.54 26.95

1.97 53.00 14.30 7.98 20.53

1.83 51.02 13.27 7.70 19.90

1.83 53.00 14.13 7.87 20.44

0.03 0.31 -0.14 0.26 0.50

3,101 64,581 2,536 903 1,419,943

US Dollar Euro Great Britain Pound Japanese Yen Canadian Dollar Hong Kong Dollar UAE Dirham Saudi Riyal Australian Dollar

International Oil Price WTI Crude Oil

$98.26

Sell 89.30 119.90 140.42 1.1451 88.69 11.51 24.33 23.81 92.14

Brent Crude Oil

$108.11

Atlas Battery Ltd. Bal.Wheels Dewan Motors Exide (PAK) General Tyre

170.00 23.60 2.20 177.10 16.00

27.10 4.10 40.50 8.59 20.50

25.15 3.26 40.01 7.70 19.48

25.90 3.90 40.50 8.43 20.50

0.08 0.30 0.16 0.73 0.00

8,219 151,477 2,251 3,414 125

voLuMe

Dewan Sugar Engro Foods Ltd. Habib Sugar Mills Habib-ADM Ltd. Ismail Industr

2.25 23.95 27.23 13.30 65.00

2.49 24.25 27.48 13.69 64.99

5.99 161.99 7.95 79.95 26.95

4.60 158.50 6.66 74.62 25.61

172.89 23.70 2.20 178.50 16.83

169.00 23.70 2.05 173.00 15.71

110.49 111.43 150.02 150.00

AL-Abid Silk Mills Diamond Ind. Hussain Industries Pak Elektron Ltd. Tariq GlassXD

23.34 8.20 3.90 4.20 8.65

23.60 9.03 3.90 4.40 8.89

(Colony) Thal Ali Asghar Textile Amtex Limited Artistic Denim Mills Azam Textile

1.40 0.56 1.29 20.10 1.35

1.40 0.55 1.33 21.07 1.39

28.90 3.50 121.61 20.25 126.68

AHCL-DEC ANL-DEC ATRL-DEC DGKC-DEC ENGRO-DEC

28.60 3.47 119.49 20.25 123.99

5.25 158.63 6.66 74.65 26.95

171.50 23.70 2.20 177.10 16.80

109.00 111.18 145.05 145.58

Abbott Laboratories Ferozsons (Lab) Ltd. GlaxoSmithKline Pak. Highnoon (Lab) IBL HealthCare XD

100.37 76.20 67.51 28.20 12.74

101.60 76.90 68.00 29.25 12.50

0.00 -3.25 -0.83 -3.89 0.00

30 730 2,005 809 45

1.50 0.10 0.00 0.00 0.80

2,700 500 213 38 1,313

0.69 -4.44

1,170 203

P.T.C.L.A Pak Datacom LtdXD Telecard Limited Wateen Telecom Ltd WorldCall Telecom

10.80 34.50 0.96 1.85 1.11

2.25 23.98 27.40 13.19 64.97

0.00 0.03 0.17 -0.11 -0.03

3,000 19,195 179,447 1,775 1,504

23.34 8.20 3.80 4.20 8.65

23.34 8.20 3.90 4.25 8.65

0.00 0.00 0.00 0.05 0.00

2 2 6 8,650 10

1.40 0.55 1.26 20.15 1.16

1.40 0.55 1.30 20.98 1.35

0.00 -0.01 0.01 0.88 0.00

511 500 1,802 13,064 52

28.00 3.36 116.55 19.76 121.00

28.21 3.46 117.30 20.09 122.70

-0.69 -0.04 -4.31 -0.16 -3.98

220,500 629,500 165,000 55,000 454,500

100.00 76.31 68.00 29.25 12.30

-0.37 0.11 0.49 1.05 -0.44

2,094 1,113 10,200 7,001 14,060

100.00 75.99 67.99 28.00 12.00

10.95 34.50 1.00 2.00 1.17

10.70 34.00 0.89 1.82 1.05

10.74 34.50 0.90 1.88 1.06

-0.06 0.00 -0.06 0.03 -0.05

873,286 50 179,056 2,098,153 74,429

0.28 36.50 0.61 1.63 41.70

0.37 36.55 0.67 1.68 41.90

0.37 36.02 0.60 1.62 41.26

0.37 36.08 0.64 1.65 41.30

0.09 -0.42 0.03 0.02 -0.40

9,500 851,435 98,815 25,551 54,238

60.24 10.31 5.57 11.87 29.53

59.20 10.45 5.75 11.98 29.90

59.00 10.20 5.46 11.66 29.46

59.00 10.28 5.55 11.80 29.50

-1.24 -0.03 -0.02 -0.07 -0.03

6,927 25,619 422,339 805,934 182,086

Electricity Genertech Hub Power Co. Japan Power K.E.S.C. Kot Addu Power

Banks Allied Bank Ltd Askari Bank B.O.Punjab Bank Al-Falah Bank AL-Habib

syMBoL

open

hIgh

Low CuRRent

Change

voLuMe

Non Life Insurance 2.20 23.63 27.25 13.15 62.01

Fixed Line Telecommunication

Beverages Murree Brewery Co. Shezan Int’l

Change

Pharma and Bio Tech

Automobile and Parts Buy 88.50 117.20 137.35 1.1235 85.41 11.14 23.87 23.39 88.52

Low CuRRent

Future Contracts

General Industrials Cherat Packaging ECOPACK Ltd Ghani Glass Ltd MACPAC Films Merit Pack

hIgh

Personal Goods 1 6,507 1,100 414 9,012

Construction and Materials Al-Abbas Cement Attock Cement Berger Paints Cherat Cement D.G.K.Cement

open

Household Goods

Industrial metals and Mining Crescent Steel Dost Steels Ltd. Huffaz Seamless Pipe Int. Ind.Ltd. Inter.Steel Ltd.

syMBoL

Food Producers

Industrial Engineering

Interbank Rates US Dollar UK Pound Japanese Yen Euro

open

Chemicals

Major Losers Wyeth Pak Limited UniLever Pak Ltd. Engro Corp National Refinery Shell Pakistan

syMBoL

Adamjee Ins Ask.Gen.Insurance Atlas Insurance Cres.Star Insurance EFU General Ins

43.20 8.00 36.50 2.00 35.80

43.78 8.50 36.75 2.20 36.00

42.12 8.00 35.99 2.00 34.46

42.76 8.42 36.51 2.00 35.96

-0.44 0.42 0.01 0.00 0.16

13,373 1,218 1,993 1,065 747

13.50 1.40 65.53

14.50 1.40 65.53

0.00 0.00 0.00

2 1 157

0.32 16.30 15.17 1.00 0.80

0.02 0.00 -0.02 -0.25 -0.01

12,419 101 36,007 5,008 90,802

Life Insurance American Life East West Life Assur EFU Life Assur

14.50 1.40 65.53

14.50 2.34 68.80

Financial Services AMZ Ventures A Arif Habib Investmen Arif Habib Ltd. Dawood Cap.Man XB Dawood Equities

0.30 16.30 15.19 1.25 0.81

0.33 16.79 15.59 1.00 0.96

0.27 16.30 15.00 0.80 0.70

Equity Investment Instruments 1st.Fid.Leasing Mod Allied Rental Mod Atlas Fund of Fund B.R.R.Guardian Cres. Stand.Mod

1.63 21.64 5.78 2.24 0.42

1.60 21.64 5.90 2.32 0.44

1.60 20.90 5.78 1.92 0.37

1.60 21.64 5.85 2.24 0.44

-0.03 0.00 0.07 0.00 0.02

6,000 125 250,001 101 503

13.30 31.50 36.00 12.51 64.00 1.39 62.10 21.50 57.50 29.40 15.75 7.00 1.93 10.14 0.72 1.70 0.98 16.65 18.00 69.50 25.01 1.46 9.70

13.33 32.05 36.00 13.19 66.73 1.43 62.21 23.50 57.92 29.40 16.00 7.96 1.93 10.15 0.81 1.80 1.03 16.75 18.54 69.74 26.16 1.54 9.89

0.34 0.00 0.91 0.00 0.14 0.00 -0.99 1.11 -0.08 0.01 -0.45 0.00 -0.01 -0.19 0.01 0.05 0.03 -0.19 -0.31 -0.25 0.00 0.07 -0.08

2,700 2 3 3 410 203,002 521 1,835 1,000 1 4,805 3 4,921 251,289 37,236 108,012 156,907 16,516 5,610 512 39 151,675 71,999

Miscellaneous Century Paper Pak Paper Prod.

Security Paper P.N.S.C. Pak.Int.Con. SD TRG Pakistan Ltd. Murree Brewery Grays of Cambridge Pak Tobacco Co. Shifa Int.Hospitals Hum Network Ltd. Media Times Ltd P.I.A.C.(A) P.T.C.L.A Telecard Limited Wateen Telecom Ltd WorldCall Telecom Sui North Gas Sui South Gas EFU Life Assur AKD Capital Ltd. Pace (Pak) Ltd. Netsol Technologies

12.99 32.05 35.09 13.19 66.59 1.43 63.20 22.39 58.00 29.39 16.45 7.96 1.94 10.34 0.80 1.75 1.00 16.94 18.85 69.99 26.16 1.47 9.97

13.33 32.05 36.00 13.25 69.90 1.47 65.28 23.50 60.00 29.40 16.00 8.90 2.03 10.38 0.90 1.94 1.05 17.00 18.89 72.67 25.01 1.64 10.12

mutual Funds Fund

offer

Repurchase

Alfalah GHP Cash Fund Askari Islamic Asset Allocation Fund Askari Islamic Income Fund Askari Sovereign Cash Fund Atlas Income Fund Atlas Islamic Income Fund Atlas Money Market Fund Atlas Stock Market Fund Crosby Dragon Fund

501.2900 114.7196 103.6501 100.6900 519.3500 519.0900 516.9700 453.1500 82.9800

501.2900 111.8516 102.6136 100.6900 514.2100 513.9500 516.9700 444.2600 81.3500

nav 501.2900 111.8516 102.6136 100.6900 514.2100 513.9500 516.9700 444.2600 81.3500

Fund

offer

Repurchase

HBL Money Market Fund HBL Multi Asset Fund HBL Stock Fund IGI Income Fund IGI Stock Fund JS Principal Secure Fund I JS Principal Secure Fund II KASB Cash Fund

100.2768 87.0103 97.6745 101.8987 112.3545 121.5000 104.1200 0.0000

100.2768 85.3042 95.2922 100.8898 109.6141 111.5200 96.5000 0.0000

nav 100.2768 85.3042 95.2922 100.8898 109.6141 117.3900 101.5800 100.1087

Profit for e-paper_Layout 1 12/9/2011 11:10 PM Page 7

Saturday, 10 December, 2011

If foreign policy is not preserving the national interest, pakistan has its sovereign right to reevaluate its terms with any country

news

07

Foreign Minister, hina Rabbani khar

pakistan should benefit from booming asia: Mushahid ISLAMABAD

P

STAFF RePORT

OlITICal consideration has remained one of the biggest hurdles in development of South asian association for regional Cooperation (SaarC) region houses 22 per cent of the world population. Secretary General, PMlQ and Chairman Pak-China Institute Mushahid Hussain Syed said growth of the region has been projected to surpass 50 per

cent of the world’s GDP by 2030 that calls for immediate steps by Pakistan to boost intra-regional trade lest we miss the boat. Speaking at a seminar organised by SaarC Chamber of Commerce to celebrate 26th SaarC Charter Day, he said SaarC is the biggest trading block in the world with lowest level of trade.

Contribution of South asia in the global GDP is less than two per cent and its share in exports in only 1.5 per cent, which does not reflect our true potential, he said.

Pace of growth in SaarC region has been slower at five per cent as compared with other blocs like NaFTa, eU, aSeaN and COMeSa, wherein intra-regional trade is estimated at 62 per cent, 58 per cent, 28 per cent and 22 per cent respectively, Mushahid

Hussain informed. He said that for greater asia we should enhance cooperation with China, Iran, afghanistan and Myanmar.

Tariq Sayeed, vP, CaCCI and former President SaarC CCI and FPCCI while calling upon framing new trade rules as existing set of rules are not encouraging businesses said that cost of cross border trading in SaarC remained highest in the world while visa difficulties have become a Non-Tariff Barrier.

Free movement of businessmen can transform region into a block like eU where the people of eight nations will remain in peace like as a family, said Tariq Sayeed adding that we have a shared history, shared culture and we deserve to have a shared future. Tariq said that opening up of trade will not hurt Pakistan.

Pakistan’s exports to face drastic decline this year textile exports likely to be reduced by over $3 billion g pakistan unlikely to maintain $25 billion exports during 2011-12 g exports declining during last few months

Civil aviation, ground handlers fleece businessmen at aFu Importers get only one free day for customs clearance g Customs department constitutes special Immediate g

LAHORe

g

KARACHI

P

gHULAM ABBAS

aKISTaN is unlikely to maintain the export record of $25 billion this year as the textile sector, which shares over 60 per cent in the country’s over all exports, is likely to face a decline of over $3 billion.

The drastic reduction in the price cotton in international markets and the severe energy crisis in the country have affected the production and demand of textile items causing a continues decline in the country’s exports, Chairman landhi association of Trade and Industry (laTI) Ziad Bashir, told Profit.

He claimed that under the present circumstances textile exports are expected to face a decline of over $3 billion, which could reduce Pakistan’s over all exports to around $22 billion as compared to the $25 billion recorded this year.

GLOBAL RECESSION AND ENERGy CRISIS: Ziad Bashir, who is also Director of Gul ahmed Textile Mills, Karachi, Pakistan, said that besides the huge decline in cotton price, which had skyrocketed last year, the major reasons of reduction in exports were the global recession, internal security concerns, energy crisis and high costs of production as a result of the energy dilemma.

Besides depreciation of Pakistani rupee which significantly increases the

cost of imported inputs, rise in inflation rate and high cost of financing was also adversely affecting the textile industry. He also linked the decline in domestic and foreign investments to growing energy shortages in the country as well as the high cost of borrowings. “an increase in the trend of using iPhones, Blackberry and other costlier modern technology globally has forced people to reduce spending on other items which also include textile made ups,” claimed Ziad Bashir.

ExpLORING REGIONAL MARKETS: In reply to a query, he said, the only way to reduce the aftermath of global recession and other crisis on the country’s exports was to search the unexplored regional markets which have comparatively huge demands for Pakistani textile.

He said that current fall in exports of textile was an alarming situation for the policy makers as the slow down in growth of textile exports would ultimately affect the total exports of the country. On the other hand Bangladesh - enjoying the least Developed Country facilities in global markets especially europe - was now eyeing textile export worth $30 billion during fiscal year 2011-2012, he said. Ziad lamented that the concerned authorities here were yet to take steps in order to maintain the current export growth despite the tall claims of exploring new markets and

trade centers in various regions.

SOuTH ASIAN COMpETITORS: The South asian competitors including India, China and Bangladesh, on the other hand were supporting their textile industry in view of the economic slowdown in the international market. The high interest rate in the country, he said, was not favouring the industry and future investments. according to recent data Pakistan’s exports during November 2011 were valued at $1.552 billion which were 13 per cent lower than the level of $1.776 billion during November 2010. exports recorded last month also declined by 18.14 per cent as compared to the exports registered in October 2011.

The imports during last month were recorded $3.729 billion registering a growth of 19 per cent against the imports of $3.131 billion registered in November 2010. However the imports had shown only 3.38 percent growth if compared with the imports of $3.607 billion recorded in October 2011.

The cumulative figures show that Pakistan’s exports during July-November 2011-12 were $9.434 billion, while in the corresponding period of the last year 2010-11 exports were $8.959 billion, which shows 5 per cent growth. Imports during July-November 2011-12 were $18.424 billion as compared to $15.404 billion during the same period of the year 2010-11, registering 20 percent growth.

sngpL cuts gas supply to urea plants LAHORe

S

STAFF RePORT

UI Northern Gas Pipelines limited (SNGPl) has once again suspended gas supply to the country’s largest urea manufacturing plant, engro Fertiliser’s new plant, for an indefinite period, Profit learnt. Industry leaders are expecting that suspension of gas supply to fertiliser plants will drastically increase urea prices in the country, which are already hovering at a 32-year high. Sources indicated that another fertiliser manufacturer, Pak arab, Multan, was also expecting gas supply suspension in couple of days. In order to fulfill urea demand for rabi season, government ensured uninterrupted gas supply to fertiliser plants during December, on 17th November and asked industry to reduce fertiliser prices by rs100 per bag.

Meanwhile, the federal cabinet deci-

sion was based on increased demand for gas in winter and pressure exerted by powerful lobbies that had been rallying for gas even though they have gas agreements for nine months only. engro’s enven has been completely shut down for the eleventh time this year by SNGPl. Increased gas supply had brought market prices down from rs1,800 to rs1,550 which saved farmers rs250 per bag. However recent curtailment of gas to fertiliser plants will burden farmers with a loss of approximately rs11-15 billion in rabi due to expected price hike by hoarders and dealers. In terms of available urea stocks, opening inventory was 200,000 tonnes on 30th November. However, total demand for urea in December is 900,000 tonnes and as imports are expected to be delayed coupled with a halt in local manufacturing, we shall be faced with a shortage of 300,000 – 450, 000 tonnes in December.

On the basis of a sovereign commit-

ment of 100mmcfd, engro set up the world’s largest single train ammonia-urea plant in Daharki, which has a production capacity of 3850 tonnes per day (1.3 million tonnes per annum), the largest amongst all manufacturing plants. engro Fertiliser’s new urea plant, which has sat idle for 158 days following its construction due to gas curtailment, would have helped to end the country’s urea deficit. This would also have helped minimise the country’s foreign exchange outflow/loss considerably and helped national exchequer save funds as imported urea is costly and hurts the domestic industry. SNGPl’s action is contrary to government’s directive to ensure gas supply to the fertiliser sector in rabi. Sindh High Court has also passed a judgment to supply continuous gas to enven as per contract based on sovereign guarantee and article 158. Shutdown of engro’s plant is contrary to this judgment as well

We should encourage business interests of India. Indian goods can be re-exported from Pakistan which will benefit all stakeholders, he said. Our region has lost momentum but it has ability to bounce back as we have 45 per cent of young population, 12 per cent of known global natural resources, and all prerequisites to become developed nations, national business leader said. Participants were of the view that purpose of SaarC is to ensure welfare of almost two billion people. recent series of dialogue between Pakistan and India is very encouraging for the whole region. Trade expansion is the simplest way to ensure regional economic corporation which require collective and collaborative strategies and joint-ventures, the speakers stressed.

O

IMRAN ADNAN

N the one hand, Civil aviation authority (Caa) is wasting precious cargo storage space on petty issues with Customs Department at air Freight Unit, lahore. On the other hand, in connivance with ground handlers, it is fleecing domestic trade and industry by charging higher throughput charges on pretext of speedy release of good, Profit learnt on Friday.

Customs agents disclosed that historically, airlines’ cargo handling arms (ground handlers) were offering free of cost cargo storage at aFUs for five days, but these free days were reduced to two when Federal Board of revenue (FBr) Customs Department introduced round the clock customs clearance facility at aFU two threeyears ago. Business community was happy with this initiative as their consignments were being cleared swiftly, they added. However, due to various reasons Customs Department could not continue 24-hour operations even for a couple of months and started observing the normal eight working hours. But ground handlers did not increase free working days. Mismanagement on the part of ground handlers and Caa, being aviation regulator and custodian of aFU, was causing heavy losses to domestic trade and industry, but nobody was willing to address their grievance, customs agents stressed. Speaking to Profit, an unnamed customs clearing agent pointed out that in practical terms, importers were getting only one free day for customs clearance. “On various occasions, shipments land at aFU after working hours, which means that customs agent, or importer, has to wait for the next day for customs clearance.” It is akin to a ‘between the devil and the deep blue sea’ situation for the business community as if somehow customs agent manages to complete the cumbersome customs clearance process on the same day, Caa asked him to deposit an addition three per cent throughput charges on the pretext of expedite clearance. On the other hand, if consignment gets delay importer had to pay additional storage charges, he lamented.

Both importers and customs agents further indicated that Caa and ground handlers always tried to conceal agreements between them.

They did not display tariffs, just to mint money from business community. Customs agents termed these agreements as dubious, which

were providing local and foreign operators and ground handlers an opportunity to fleece domestic trade and industry. Cost of doing business was already high in the country, such malpractices were further aggravating the situation, they maintained.

Customs additional Collector Dr asif Mahmood Jah accepted that trade and industry had genuine grievance, but it was beyond the scope of FBr or Customs department. He underlined that customs officials were making all out efforts to expedite and facilitate the domestic trade and industry. Customs department had constituted a special Immediate Clearance Group (ICG), which was providing 24-hour customs clearance facility for perishable commodities, live animals or any other priority clearance items. On various occasions, customs formalities were completed even after clearance of goods to maximum facilitate trade and industry, he added. another customs official at aFU lahore disclosed that millions of rupees worth of confiscated goods had been wasted in cargo sheds at aFU because of petty disputes between customs and Caa. He further pointed out that in some cases storage charges were even higher from the price of merchandise. Citing the example of some wastepaper shipment, he indicated that Caa was demanding rs47 per kilogram as storage charges whereas market value of scrap paper would be around rs2025 per kilogram. Giving another example he disclosed that Customs Department confiscated some religious books as the importer was not willing to pay duty and taxes leviable under the law. later, some senior customs officials decided to donate these books to some religious organisation, but Caa asked the department to pay throughput charges despite knowing the circumstance. The case had been forwarded to Caa headquarters for weaver, which might take a couple of days to get approval, he maintained.

To confirm the allegations of customs agent, Caa Senior Manager Cargo at aFU, Khurram adnan Usmani, was asked by the scribe to provide a copy of tariff or agreement. But he put down the request by stating that it was a confidential document, which could not be made available to public. He said all such agreements belonged to headquarters in Karachi. a member of lahore Customs agents Group (lCaG) suggested that Caa should renegotiate its agreements with ground handlers and asked them to display tariff at prominent place. He said issue of free storage should also be reviewed in consultation with stakeholders, to make domestic manufacturing more competitive.