Profit 29th December, 2011

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Taking toll of the trade deficit Page 2 IKnomics – walking the PTI talk Page 3 E-banking transactions mount to Rs12 trillion Page 7 Pages: 7

profit.com.pk

Thursday, 29 December, 2011

Prime Minister approves USF projects in Balochistan and Sindh ISLAMABAD

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STAFF REPORT

HE meeting of the board of Universal Service fund (USf) presided over by the Prime Minister Syed Yusuf Raza Gilani on Wednesday approved two projects to provide basic telephony and data services in Balochistan and broadband services in interior Sindh. The meeting also decided to initiate more telecom related projects in Balochistan to improve the telecom services in the province. Prime Minister also laid emphasis on initiation of more developmental projects, especially in

Balochistan using technologies like optic fiber, microwave, satellite and telecom excellence centers.

Prime Minister also directed to conduct training for people living in un-served areas so that direct and indirect employment opportunities can be created for them and digital divide can be bridged. He urged the fund to enhance equitable services to all segments of the society and also ensure that funds are used economically as well as prudently.

The meeting was informed that the rural telecom project in Mastung Lot, basic telephony and data services will be provided to a population of 74,831 people which reside in 102 muzas.

Mastung Lot consists of Mastung, Nushki and Ziarat districts. In the broadband project of Southern Telecom Region-V, the broadband services would be provided in 73 towns and cities in 10 districts namely Ghotki, Jacobabad, Kambar Shahdadkot, Kashmore, Khairpur, Larkana, Naushahro feroze, Shaheed Benazir Abad (Nawabshah), Shikarpur and Sukkur. The project aims at provision of 78,000 broadband connections in these districts. It was informed that in addition to this, 206 Educational Broadband Centers (EBCs) would be established in higher-secondary schools and colleges and 93

Govt to drop gas bomb: tariff to rise by 14pc Consumers using 300 units to be charged per mmBTU

Tariff for Industry increased by 17 per cent to

Rs 507.86

CNG Zone I tariff increased by 38.6pc to

Rs 792.80 mmBTU;

CNG Zone II tariff raised by 27.7pc to

Rs 730.80 mmBTU

AMER SIAL

T

o retain the profitability of the two inefficient stateowned gas utility companies and to enable them to undertake politically motivated gas supply schemes, the government is all set to notify a massive hike of 14 per cent in gas tariff and imposition of gas infrastructure development cess effective from January 01, 2011.

According to the proposed revision in gas sale prices, the tariff for domestic and commercial consumers will be increased by 14 per cent while for other consumer categories increase will accompany cess, which the government plans to utilise for infrastructure development for gas import projects like LNG, Iran Pakistan (IP) gas pipeline and Turkmenistan-AfghanistanPakistan and India (TAPI) pipeline. The oil and Gas Regulatory Authority (oGRA) has allowed uniformed tariff hike for both the gas utility companies, even though the demand for increase in tariff was lower for Sui Southern Gas Company. The uniform tariff will generate Rs1 billion additional revenue during the second half of the current fiscal year which will be given to provinces under the gas development surcharge.

While Cess is estimated to generate Rs22 billion during the remaining six months of the current fiscal year. The tariff for domestic consumers using up to 100 cubic meters or 3.5 mmBTU will be increased from Rs107.87 per mmBTU to 122.95 mmBTU. This will increase

Rs245.89

mmBTU

ISLAMABAD

Rs448 monthly bill by Rs63 to Rs511 per month. Tariff for consumers using up to 300 units or 10.6 mmBTU will jump from Rs215.74 to Rs245.89 mmBTU. It will cause an increase of Rs313 in the monthly bill of Rs2240 to Rs2553 per month. Tariff of commercial consumers will be increased 14 per cent from Rs526.59 to Rs600.19 per month.

Industrial sector tariff will be increased by 16.97 per cent from Rs434.17 to Rs507.86 mmBTU that will also include Rs13 mmBTU as cess. Power sector tariff of WAPDA and KESC will jump 13.58 per cent to Rs507.86 from Rs447.14 mmBTU, including cess of Rs27 per mmBTU. Tariff for IPPs will increase by 34.57 per cent to Rs507.86 from Rs377.39 mmBTU including cess of Rs70 mmBTU. Cement sector tariff has been increased by 14 per cent from Rs609.09 mmBTU to Rs694.22 mmBTU but no cess has been imposed as at present no gas supplies are given to the sector. Tariff for CNG sector, which is held solely responsible for the gas crisis, will increase by 38.63 per cent in Zone I consisting of KPK, Balochistan and Potohar region from Rs571.87 to Rs792.80 mmBTU, including a cess of Rs141 mmBTU. While in Zone II consisting of Sindh and Punjab tariff will increase by 27.79 per cent from Rs571.87 to Rs730.80 mmBTU including cess of Rs79. Tariff of feed-stock for old fertiliser plants will be jacked up by 207.10 per cent from Rs102.01 to Rs313.27 mmBTU including a cess of Rs197. While for new fertiliser tariff has been increased only 1.81 per cent from Rs59.59 to Rs60.67 mmBTU and no cess has been imposed.

Gas tariff for direct sales to WAPDA from Kandhkot to Guddu will increase 17.58 per cent from Rs431.94 to Rs507.86 mmBTU including a cess of Rs27. Tariff from Sara and Mari to Guddu will increase 20.89 per cent from Rs420.09 to Rs507.86 mmBTU including a cess of Rs27 mmBTU. Petroleum Minister Dr. Asim Hussain has been claiming that the increase in gas tariff will not impact the people but increase in gas tariff of CNG, industrial, power and fertiliser sector will be indirectly impacting the people and will massively increase inflation.

Community Broadband Centres (CBCs) for those who cannot afford to have their own personal computers.

The board noted that USf had made immense progress under the rural telecom programme as USf has provided basic telephony and data services in more than 3,500 muzas.

Broadband services have been provided in 256 2nd and 3td tier cities and towns along with providing almost 334,000 broadband connections and establishing 943 EBCs and 291 CBCs. In the optic fiber programme, around 3,960 kms of optic fiber cable has been laid to connect 58 un-served tehsils and towns. To take broadband internet to the villages, USf has

launched another Programme. The pilot project of that programme is also under implementation aiming to bring the most modern e-Services through broadband, down to the village level. With these achievements, USf has created a success story for the public-private partnership entities nationally and internationally, the meeting was told.

Secretary IT Saeed Ahmad Khan, Chairman-PTA Dr Muhammed Yaseen, Member-Telecom Dr. Ismail Shah, CEo-ISPAK Azfar Manzoor, Representative of Consumer Association of Pakistan Kaukab Iqbal and CEo-USf Riaz Asher Siddiqui attended the meeting.

OGDCL inefficiency results in

$2 billion loss Petroleum minister directs OGDCL to get two rigs every year g Professionals to be inducted in petroleum ministry g Minister to visit India on Jan 24 for discussing TAPI transit fee g

ISLAMABAD

A

AMER SIAL

fTER learning that the state owned oil and Gas Development Company Limited (oGDCL) has incurred $2 billion just on renting rigs and for data processing equipment during the last two decades, petroleum minister has directed the company to buy two rigs every year and purchase its own data processing equipment.

Talking to journalists on Wednesday, a perturbed Petroleum Minister Dr Asim Hussain said matters of oGDCL were in complete mess and not a day passes when some new disclosure about inefficiency and corruption in the entity is not revealed to him. The company had incurred $1 billion on renting rigs and $1 billion on data processing equipment during the last two decades. The minister said he was amazed to know that an exploration and production company of the size of oGDCL was not having a pool of rigs and was renting rigs on $32,000 per day from other firms. “I was shocked to know that they did not even have the vital data processing equipment to analyze data,” he added. oGDCL had purchased the last rig in 1985 and for the last 25 years they were renting rigs for drilling, he said, adding that the cost of the rig was not expensive as they cost between $7 million and $15 million. “I have directed them to purchase two rigs every year and ordered for purchasing data processing equipment,” he said.

According to a source, the flagship company had a pool of four decades old eight drilling rigs that was a major reason for oGDCL not being in a position to increase indigenous oil and gas exploration and production. The company earns around Rs50 billion in profit per year, but had not been able to purchase new rigs in decades. This was resulting in outsourcing of employment opportunities to foreigners at the cost of local people. oGDCL had to pay rent up to 800 days on drilling for a depth, which was estimated to complete within 330 days. foreign contractors delay drilling work sometimes on perceived threats because of the law and order situation, which add to the cost of the company.

About the appointment of the new Managing Director of oGDCL, the minister said the process was under way and would be completed in next two weeks. He said the tenure of new MD would be of three years.

Expressing his complete dissatisfaction over ministry’s technocrat staff, the minister said they have decided to hire a professional as Executive Director General Hydrocarbons on MP-I grade to steer the technical directorate of the ministry. Currently, the ministry has five posts of DGs including petroleum concessions, petroleum, gas, minerals and special projects. All the officials would be reporting to the new EDG. The post has been approved by the Establishment Division and federal Public Service Commission was working on the criteria for the post.

The minister said he had also

amended the rules and in future, 50 per cent appointments on the technical posts would be through promotion; 25 per cent on deputation and 25 per cent through direct induction. He hinted at least two incumbent DGs would be shown the door on their poor performance and new professionals would be hired. “We need professionals for new thinking to come out of the energy quagmire,” the minister said.

Experts have been stressing that the ministry of petroleum and ministry of water and power, lacked competent professionals which was one of the main reasons why the government completely failed to address the energy crisis. The government has also approved hiring of new professionals in the ministry of water and power to improve its planning and implementation.

Petroleum minister said for long term planning, he had decided to set up a think tank under the Hydrocarbon Development Institute of Pakistan, to advice the government on various issues and formulate polices for the future. He said the think tank could have up to 15 people.

About the finalisation of transit fee with India on TAPI pipeline, the minister said he would be visiting India on January 24, 2012, to discuss transit with his Indian counterpart. They would be discussing the transit fee on both models of volume as well as length of the transiting pipeline. The ministry has already sought permission from ECC to sign the gas sale purchase agreement with Turkmenistan.

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Thursday, 29 December, 2011

02 D

debate ISMAt SABIr

UE to favourable conditions in the international market Pakistan’s external account has shown an unexpected improvement during fY11. It provided some breathing space to the economy. It also indicated that domestic business environment has remained the same, i.e. no improvements recorded.

However, the increase in the demand and prices of Pakistani exports products along with healthy growth in remittances helped to bring about an improvement in country’s external position, said a recently published SBP report.

Despite good performance of the external sector no change in the production mix and the destination of exports has taken place. A continuous decline in capital and financial flows was also alarming. The financial account surplus declined for the fourth consecutive year in fY11 and the projections for fY12 show that this trend may continue in the future. Inflows of foreign direct investment (fDI), equity securities and loans have remained lower than last year.

The poor macroeconomic conditions and the deteriorating law and order situation, an improvement in either fDI or equity securities flows may not be possible in the near future, the report indicated. for instance, net foreign investment inflows in the country fell by 59.2 per cent to $305.4 million in first five months of fiscal year 2011-12 compared with $748.7 million in the same period last year. out of total foreign investment, fDI depicted a decline of 27.1 per cent to $419.80 million as compared to $576.2 million in 5MfY11. further, the suspension of the IMf program will also lower inflows from IfIs. Thus, if the current account deteriorates, support from the financial account will not be available, as was the case in 2006-08. In the absence of foreign inflows, financial account would be under pressure due to the repayment of the IMf loan.

due to an increase in the unit value of exports than imports. The share of finished goods in total exports was about 71 per cent compared to 88 per cent in Bangladesh. In India and Sri Lanka it is 67 per cent.

exPORTS TExTILE exports demonstrated an increase not only because of higher prices of cotton yarn and cotton fabrics that showed an increase of 20 per cent,

tory infrastructure to provide testing and certification facilities acceptable to destination markets; the provision of financial support to revamp fish jetties at Gaddani, Dam, Pasni and Jewani; ensuring the provision of facilities such as landing stations/jetties/ports along the Makran coast in partnership with the provincial government of Balochistan and supporting Korangi seafood processing companies in developing a traceability system for smoked, canned, fresh and frozen fish products.

The reason behind the lower import quantity of petroleum products was the increase in domestic production of high speed diesel (HSD), furnace oil (fo) and motor gasoline (MS).

Palm oil prices also increased. There were shortage of pulses, sugar and cotton, due to floods in August 2010, compelling the country to import these commodities. The prominent factor in inflating the import bill was the rise in the prices of petroleum products, palm oil and sugar. In the food group, the import of palm oil

Taking toll of the trade deficit

CURRenT ACCOUnT BALAnCe DURING the last two years, the improvement in the current account continued in fY11 showing a small surplus of $0.3 billion, after depicting deficits for six consecutive years. The latest figures show that the current account deficit rose three times in the last four months, as against the same period last year, indicating difficulties ahead on the external front.

The SBP reported that the current account deficit as percentage of the GDP reached 2 per cent was recorded at 0.8 per cent last year.

The bank said that deficits rose to $1.555 billion during July-october while these were $541 million during the same months of the previous year. The overall scenario of the external front is depressing, except remittances that were 24 per cent higher. Trade and services gap rose to minus $6.227 billion, 32 per cent higher than last year, during the four months.

The deficit may further affect value of Pakistani rupee, once the central bank stops supporting the local currency. Moreover, higher current account deficit will also compel SBP to carefully evaluate the interest rate decision. The central bank has already slashed the interest rate twice in the last two monetary policies, despite double digit inflation which again rose in october. Exports recorded a sharp rise of 28.4 per cent during fY11 against 9.1 per cent in fY10. Exports of $25.3 billion were the highest ever in the history of the country. This was achieved on the back of 35.2 per cent rise in cotton and textiles related exports.

TRADe DeFICIT PAKISTAN’S trade deficit continued narrowing down for the third consecutive year, in fY11. In 2010 a fall in imports caused a reduction in the trade deficit. There was a sharp increase in exports this year that contracted the trade deficit. Although imports have also increased by 14.7 per cent, the growth in exports outpaced the growth in imports.

Trade deficit was $294 million in 2001-02 that rose to $1,208 million in next two years, 2003-04, in 2004-05 it further rose to $4,352 million, $8,259 million in 2005-06, $9,495 million in 2006-07, $14,970 million in 2007-08 and reduced to $12,492 million in 2008-09. The trade deficit during 200910 was $11,536 million that further decreased to $10,500 million in 2010-11. The increase in exports was mainly the result of higher international cotton prices and better unit prices of textile products. Although the quantum of textile exports rose marginally, but the price impacted the earning.

The increase in exports was quite encouraging but energy shortages and law and order situation remained a big constraint in the country’s exports and competitiveness. In 2010-11 Global Competitiveness report, Pakistan’s ranking has dropped to 123 from 101 last year. In the region, its overall competitiveness ranking is lower than that of India’s 51, Bangladesh’s 107 and Sri Lanka’s 62. The export earnings were historic that increased to $793 million in fY11 as against to $422 million in fY10. The trade deficit is likely to increase due to the slowdown in exports particularly, textiles and cotton exports. The overall import bill may also be higher in fY12, due to increase in both quantum and average prices of petroleum products.

According to the SBP figures, commodity prices started rising in fY09, Pakistan’s terms of trade (ToT) have also shown a continuous improvement. This was

but also due to high value added products such as bed wear, towels and readymade garments. Moreover, Pakistani exporters are now increasingly targeting relatively smaller importers in export markets. This strategy is being applied by India, Bangladesh and Sri Lanka, while China is shifting to supply established brands. This strategy is quite successful as orders can be filled by the existing set up.

The food exports growth comprising of wheat, fish, meat, fruits, and vegetables with improved production and higher prices of these commodities helped earn substantial amounts of foreign exchange. In the food group, wheat exports accounted for more than 55 per cent growth followed by vegetables 9 per cent, fish 6.7 per cent and meat 5.1 per cent. The exceptional rise in wheat exports can be attributed to higher international prices due to production losses in Russia, USA and Canada and the availability of an exportable surplus from last year’s carryover stocks and strong expectations of a bumper crop in fY12 in Pakistan. It is expected that exports of meat would continue to grow for the fifth year that has already increased four fold since fY07. This growth was due to both an increase in quantity and in prices. The rise in meat and meat preparation exports is on account of higher demand from Saudi Arabia, after the Saudi government banned meat imports from some African countries. Realising the potential in the Halal meat industry, which has worldwide sales of over $1 trillion, the Sindh Board of Investment (SBI) took a number of initiatives for the promotion of the Halal meat industry in Pakistan at the start of fY11. Their efforts resulted in higher production and exports of meat. The report said, the production of meat and its exports are likely to rise further in fY12. After declining during fY10, fish and fish preparation exports increased to $297 million despite the loss of the European market. Pakistan managed to fetch higher prices for its shrimp exports from Egypt and other markets such as China, UAE, Thailand, Korea, Saudi Arabia and Indonesia which not only reversed the loss - about $30 to 40 million per annum, of Europe as an export market but also increased export earnings. overall, fish and related exports rose to 131,700 tonnes, worth $297.3 million, as against 106,000 tonnes, estimated at $227.0 million last year.

FISheRIeS exPORTS A number of initiatives are under way to further increase the exports of fish and fish preparation, including the expansion of the existing labora-

RICe exPORTS THE report also pointed out that despite higher prices in the global market, rice exports declined due to production losses, about 1.7 million tonnes of paddy, caused by the floods. Rice production was only 4.82 million tonnes as compared to 6.61 million tonnes in fY10. The decline in rice exports was mainly due to the lower export volume of non-basmati rice, whereas basmati rice export increased in quantity. Non-food and non-textile exports increased by 16 per cent as compared to 13.3 per cent last year. The factors responsible for growth were petroleum products, leather raw and manufactured, footwear, medical and surgical instruments, chemicals and pharmaceuticals, and engineering goods.

There was a fall in the exports of fertiliser, jewelry, cement and molasses. Chemicals and pharmaceutical exports grew 21.8 per cent during fY11. other sub-sectors, such as, plastic materials earnings were 50.4 per cent and from other chemicals increased by 20.5 per cent. This rise can be attributed to an increase in import demand from India for chemicals like polyethylene and pure terepthalic acid (PTA). Manufactured leather exports grew by 17.3 per cent. The main contributors were leather garments followed by leather gloves. During the year, export of footwear also increased by 16.5 per cent. Among footwear products, the exports of leather footwear increased 26.4 per cent and that of canvas footwear by 51.0 per cent. The higher export was mainly due to rise in demand in traditional markets and relatively better export prices.

IMPORTS AfTER declining for the last two years, imports grew by 16.4 per cent in 2011 as against a decline of 0.3 per cent last year. The growth was due to increase in food, petroleum, textile, agricultural and chemicals. The imports of machinery, transport goods and metals fell.

The factors responsible for the increase in imports include increase in international commodity prices, especially in petroleum products, that rose by 51 per cent after declining by 20.6 per cent last year. The quantity wise import of petroleum products grew 6.1 per cent.

and sugar was about 72 per cent of overall growth in food imports.

The increase in sugar imports was due to domestic shortages. However it is expected that sugar imports would decline in fY12 due to the expected rise in sugar cane production after the floods and favourable weather conditions in Punjab and Sindh. The rise in the import bill of raw cotton was due to higher prices in the international market, and a marginal increase in quantity. It is expected that the import of raw cotton will decline in fY12.

Although imports in the machinery group shows a decline but import of textile machinery rose by 53 per cent in fY11 as against 41.3 per cent rise last year. Higher import of textile machinery was due to replacement of old machinery mainly in the weaving sector and imports of new machinery in spinning and stitching sectors.

The imports of transport group declined by 3.9 per cent, however, the import of motor cars and motor cycles increased sharply. Especially, the import of CBU units of cars grew by 41.5 per cent compared to 29.5 per cent last year. This growth was expected after the government’s decision to increase the age limit of imported cars from 3 to 5 years in December 2010. The imports of CBUs are directly proportional to the age limit. A major fall was seen in the import of other transport equipment, wheat, agricultural machinery, fertilizer; construction and mining machinery and power generating machinery.

It was said in the report that Wheat imports continued to decline for the second consecutive year, dropping by 87.3 per cent during fY11. The fall in wheat imports was the result of better domestic crop and carryover stocks from fY10.

The imports of fertilizer significantly declined because less quantity was imported as its unit price increased by 20 per cent. Pakistan has increased fertilizer production capacity by 1.4 million tonnes in fY11.

The decline in the imports of construction and mining machinery and iron and steel may be the result of lower construction activities. In the case of power generating machinery, inventories carried forward from previous years that declined imports during the year.

It is to be noted that during the last eleven years trade deficit has increased 3571 per cent that depicted a worrisome phenomenon that should be remedied urgently by increasing exports.

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Thursday, 29 December, 2011

IKnomics – walking the PTI talk

EDITORIAL

‘Black year’ for agriculture

I

DENTIfYING rock-bottom stage is tricky enterprise, hence age-old wisdom that “no matter how bad things are, they can always get worse”. But when a chronically stagflated economy’s largest employing and bread winning segment registers a truly “black year”, collapse is not far. The 35 per cent input cost increase coupled with a price drop of approximately 25 per cent (excluding wheat) has a compound impact on the overall national economy, and merely re-adjusting subsidies and support prices will not correct the domino-effect of depressing tendencies set in motion.

Immediately, drop in yields and earnings will push more people from the periphery to already overflowing city-centres. Compromising agriculture does not just affect produce and earning. It also harms agri-industry, the life and blood of our miniscule export economy, pressuring both revenue and employment to the downside. That materialises the twin dilemma of reduced consumerism as well as reined in government fiscal expansion, both mission critical to Pakistan’s

chances of reverting to sustainable growth. Invariably, rising unemployment, especially when fueled by government inefficiency, impacts the social fabric in a very negative manner, increasing crime.

It does not help when agri-industry is deliberately deprived of precocious credit due to the government’s over-imposing presence in the borrowing market. That the practice continues despite widely debated and published negative effects, it is no longer difficult to ascertain whether the large borrowing constitutes simple disregard for the wider economy or actually borders on the criminal. The government no doubt realises by now that its formula for subsidy withdrawal and GSP imposition has not achieved the aim of making the agriculture sector more efficient. It has, in fact, achieved exactly the contrary. With growth slow, employment weak and industry in obvious decline, the fate of the agriculture sector ought to be a sobering reminder of Pakistan’s current state of affairs. Incidentally, it is also a good reflection of the government’s chances come election time.

Syed Sayem Ali

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MRAN Khan's 'tsunami' has hit the coast of Karachi and Pakistan's financial hub is buzzing with excitement. In a space of a couple of months, the Pakistan Teehrik-e-Insaf (PTI) has transformed from a party on the fringes to an All Star Galácticos – the Real Madrid Cf of Pakistani politics. The influential business community is watching with great interest and intrigue.

PTI has played its cards smartly and over the last few months has won over confidence of the business community in a series of organised and strongly worded gestures.

This includes putting forward a 100-day plan in July 2011 which focused primarily on corrective measures to pull the economy out of the downward spiral of record high inflation, rising unemployment, crippling energy crisis and unsustainable debt burden. The cornerstone of the 100 days strategy is to raise tax revenues, curtail expenditures and give confidence to expatriate community to invest more in the future of Pakistan.

In a nutshell, PTI aims to raise tax revenues to 20 per cent of GDP within five years from less than 10 per cent of GDP today and increase foreign investment to $10 billion annually within five years from $1.5 billion today. Even if partially successful these measures will boost growth to above six per cent of GDP and create over five million new job opportunities. Perhaps more importantly this growth will not come at the cost of record build up in price pressures.

A stable Pakistani rupee and reduction in money printing by the government will help to bring headline inflation below eight per cent, compared to 14 per cent in fY11.

This will reduce cost of doing business in Pakistan and encourage higher investments in the economy.

PTI’s think-tank believes that if these investments are channelled into three key projects then the growth trajectory of the economy will rise to above 10 per cent over the medium term, creating nearly eight million new employment opportunities. These projects in-

Pakistan Tehreek-eInsaf postures for a Herculean task

SNGPL question This is with regards to the interview, ‘Addressing the gas dilemma’, published yesterday. I had the opportunity of reading the interview with MD SNGPL, Arif Hameed. The writer has not asked important questions related to corruption and mismanagement in SNGPL, such as theft of gas in connivance with SNGPL lower staff and their contractors. Both SNGPL and Sui Sourthern Gas Company are white elephants having monopoly in the distribution of natural gas. Their staff is very rich and owns plazas and other properties. There should be more gas companies region wise, so that consumers can have the choice of buying gas at competitive rates. Why does SNGPL also have to cover the province of KP? Why does Balochistan not have a gas company to distribute natural gas in the province when it is the one of the main producer of natural gas? Why are SNGPL and Southern Gas Company allowed to participate in the installation of CNG stations when the federal government policy was to allow one CNG station between five kilometers from each other? Actually these companies’ staff has made a lot of illegal money by sanctioning CNG station without any future vision.

S t HuSSAIn CHIef exeCutIve COnSuMER AwAREnESS And wELFARE ASSOCIATIOn

clude developing the Reko Diq project, the 5th largest copper and gold deposits in the world. The second project targeted is to develop the Thar coal deposit to produce 5,000 MWs, or 1/5th of the total power generation, and curtail the dependence on oil imports.

Last and perhaps most importantly the construction of the Diamer Basha dam to produce 4,500 MWs and support higher agriculture production.

The PTI economic reforms agenda largely reflected aspirations of the business community and international financial institutions including the International Monetary fund. The proposals on economic reforms sent by the Pakistan Business Council to the government ahead of the fY12 budget shows strong convergence with the steps outlined in the PTI's 100-day plan. Similarly, IMf has linked all future funding to Pakistan based on progress on tax reforms and energy sector reforms.

However, carrying out these reforms is a Herculean task even at the best of times and most experts will testify that if somehow PTI does form the next government in the 2013 elections, they will take over at a time when the economy will once again be on the verge of a bigger and more painful balance of payment crisis than in 2008. The crisis in 2008 led to a 28 per cent drop in value of the rupee and fuelled record high inflation. In many ways Pakistan is even more vulnerable to a crisis today than in 2008 due to extremely flawed energy policies, with dependence on imported oil rising sharply due to the deterioration in the energy mix.

No government in the last sixty years has been successful in implementing these politically difficult decisions and the reasons are obvious. No one wins elections on the promise to put more taxes and undertake austerity measures. It didn't work out too well for the Italian Prime Minister Silvio Berlusconi, it appears to have hurt President obama chances for a second term and Pakistan is no different. Hence all mainstream political parties have shied away from making tax reforms a part of their political manifesto.

PTI has taken a huge political risk by putting tax and austerity reforms at the centre of its political manifesto but this bold initiative has paid off handsomely for PTI. It has given them a de facto leadership role in representing the demands of the business community by bringing these demands to the centre of the mainstream political debate. It has also removed the myth that putting economics ahead of populist slogans is bad politics. This is obvious watching the swelling ranks of PTI and growing appeal of the PTI reforms agenda amongst the rural and urban youth of Pakistan.

The author is a former World Bank employee and currently works with a leading commercial bank

AveRAGe JOe InveSTOR

Wait and watch

T

Agha Akbar

HE trend in volumes has been extremely sluggish day in, day out throughout the last week. And the KSE-100 benchmark has remained singularly one-dimensional – flat. If there was a rise it was in single digit, ditto for the fall, the only exception being Wednesday when the rise was 40 points plus.

The volumes have been so low that the first two sessions this week witnessed just 20 million shares traded, while on Wednesday it jumped to the vicinity of 35 million –

definitely far below the market’s heydays.

But this was not unanticipated.

This being the holiday season in Europe and the US, not to mention the far East, the activity channelled through the trading houses from there comes to a standstill. As for the local investors, there is too much uncertainty, and the inspiration provided by gains from dividend and bonus shares are somewhat far off to perk them up.

With absolutely nothing driving the market, mostly jobbers – for the uninitiated, speculators who buy at some point on any given day and offload their purchases for a little gain or loss in the same session – have only been active, and that too quite sporadically. This also is understandable. The jobbers become hyper when there is volatility. That is when they smell profit. No fluctuation means no real opportunity for a quick buck. So, they too wait and watch, listlessly looking at the computer screens now and then to keep

abreast of the goings-on, all this while monotonously munching on gram and little sugar pellets that is the staple with which brokers entertain them, before filing out around the time of closing. for the Average Joe Investor, there are nuggets to learn from in what the big daddy amongst the stockbrokers, Mr Arif Habib, chairman and CEo of the group named after him, said on Tuesday at a reception in Islamabad. In a nutshell, this is what he said, “Economy is improving but we are faced with a bigger problem of perception… our capital markets are one of the best in the world, giving 31 per cent return on average in the last 10 years but it is also facing the issue of image… Interference in the capital markets hasn’t helped bring improvement… There is no Capital Gains Tax in most countries and the system is not as frequently altered in developed countries.”

Mr Habib is anything but an Average Joe Broker. He knows his turf better than

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

Can the Chinese model of success be replicated by other developing nations across the globe?

a shark would know its patch in the sea. Indeed there are some who may know the market as well but there are few who could manipulate it better than him.

In all three points picked from his little speech, every word is drenched in depth and wisdom. Seldom are even the best speakers this precise and objective – hitting the nail on its head unerringly time after time.

The CGT is an issue that has acted as a bugbear for the market for quite some time now. And the recent spurt of lobbying has come to naught, for the federal finance minister Hafeez Sheikh has shot the proposal down with the kind of finality that is not likely to endear him with the brokers.

The perception part too is critical. In these troubled times there are other rea-

sons why foreign traders have pulled out large chunks of investment from our markets, but our much battered image too is one serious pickle.

The return of investment part of Arif Habib’s speech has been talked about too often in this space to bear repeating. But this is something that should reinforce the Average Joe Investor’s faith in the market.

Last week one had talked about ‘a few mouth-watering buys in cheap and middle range that one has discovered’. But again, the word count is up, and since nobody is in a rush to buy and there is nothing to lose in waiting for a week, so until next Thursday.

The writer is Sports and Magazines Editor, Pakistan Today

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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Thursday, 29 December, 2011

04

Business leaders must deal with the complexities arising in the ecosystem of any business, both internal and external

news

SBP governor, yaseen Anwar

Development of livestock sector essential: CM Punjab LAHOre

P

STAFF REPORT

UNJAB Chief Minister Muhammad Shahbaz Sharif has said that the development of livestock sector will not only strengthen the economy but poverty and unemployment can also be eliminated by promoting the sector. The Punjab government is pursuing a comprehensive programme for the uplift of livestock sector and setting up modern slaughter houses; an important step towards development of the sector and increasing exports, the chief minister said. He directed that red tapism should not be allowed to come in the way of development of the livestock sector and the schemes

for promotion of livestock must be pursued vigorously.

He was presiding over 13th meeting of Board of Directors of Punjab Agriculture and Meat Company (PAMCo) at Chief Minister’s Secretariat. Provincial Minister for Agriculture Ahmad Ali Aulakh, Members Provincial Assembly Rao Kashif Rahim, Arshad Jutt, Chairman Special Initiatives Haroon Khawaja, Chairman Planning & Development, Senior Member Board of Revenue, Secretaries of Agriculture, Livestock, finance, Law, Commissioner Lahore and officers concerned attended the meeting.

Chief Executive officer PAMCo Dr. Hamid Jalil gave a detailed briefing regarding the strategy evolved for the projects of development of the livestock sector, breeding of ani-

mals and horticulture in the province which included making Pothohar the area of olive, Thal the zone of Kinnow and Cholistan the valley of grapes.

Addressing the meeting, Muhammad Shahbaz Sharif said that livestock sector has been neglected during the last 64 years. Had concrete steps been taken for the improvement of this sector, our economy would have been strengthened and the people associated with this sector would have had the opportunity to prosper, he said. The Chief Minister was of the opinion that ample opportunities of development of this sector were available in Pakistan. He said that Punjab government is taking all out measures for improvement of this sector and PAMCo, Livestock and Dairy Devel-

Farmers criticise govt over fertiliser policy LAHOre STAFF REPORT

f

ARMERS associations from all across the province have strongly criticised government’s skewed fertiliser policy, which is helping profiteers in minting money from poor farmers.

Wheat Growers Association President Chaudhry Hamid Malhi, Livestock farmers and Breeders Association Director Mohammad Amin Chattha, Punjab Water Council Director farooq Bajwa, farmers Associates of Pakistan Director Rabia Sultan, Basmati Growers Association Director Aman Ullah Chattha, Kinnow Growers Association President Hamid Saleem Warraich, Multan Mango Growers Chairman Maj (retd) Tariq Khan pointed out that the government imported some 0.8 million tonnes of urea during Kharif 20011 and imported another 0.9 million tonnes for Rabi crop. Government had announced imported urea price at Rs1,300 per

bag and local urea plants were offering Rs1,600, but farmers were getting urea fertiliser at Rs1,750 or at even higher rate due to absence of price control.

It seemed, they said, government was conniving profiteers in minting money from poor farmers.

It did not seem mindful of the fact that despite heavily subsidising urea government could not benefit poor farmers. They suggested that government should not sell imported urea at subsidised rate if it could not control prices in domestic markets.

They believe that it would not only stablise fertilisers prices but also curb black-marketing, besides saving Rs5 billion which was being wasted in wrongly planned subsidy. Representatives of a numbers of farmers associations strongly rejected unnecessary subsidy, which had proved counterproductive.

They further demanded independent inquiry and release of the names of all beneficiaries who got benefited from this illplanned subsidy.

FERTILISERS PRICES An exorbitant increase in fertilisers’ prices has dramatically reduced fertiliser usage by 25-35 per cent during current Rabi season. Agri forum Pakistan President Muhammad Ibrahim Mughal has warned that reduced fertiliser usage could easily compromise Rs100 to Rs150 billion agriculture produce. In a press statement issued on Wednesday, Mughal pointed out that urea and diammonium phosphate (DAP) usage shrank by 25 and 35 per cent respectively, in comparison to the previous Rabi season.

He indicated that farmers used some 1.3 million tonnes of urea and 0.564 million tonnes of DAP fertiliser, which had been dropped to 0.975 million tonnes and 0.363 million tonnes during current Rabi season, respectively. In addition, potassium fertiliser witnessed a drop of over 48 per cent during the same period.

opment Board have also been set up for this purpose. He said that despite the availability of resources, the share of Pakistan in the trade of meat in international markets is negligible and a number of countries are now expressing interest in the import of meat from the country. He said that for the first time in history, halal meat has been exported to Malaysia and now after the establishment of state-of-the-art slaughter house, the meat will be exported to Iran and other Gulf countries. He directed that a practicable strategy be devised for export of meat and uplift of the livestock sector. He said that Cholistan has been declared disease free zone and such a system should be evolved for this purpose in which incentives be given to the local farmers for breeding animals.

SBP, nBP field offices to remain open ISLAMABAD STAFF REPORT

S

TATE Bank of Pakistan (SBP) has issued necessary instructions to SBP, Banking Services Corporations (BSC) field offices and NBP to remain open for extended hours till 10:00 pm on 30th and 31st December 2011, to facilitate trade and industry in getting their cargo cleared for imports and exports and for receiving of returns and payments of duty and taxes. fBR has made the request to SBP to issue necessary instructions to SBP field offices and NBP to remain open on 30th and 31st December 2011. In order to ensure that all receipts collected on 31st December 2011 are credited to the government account on the date, a second and special clearing at 1:00 pm, 31st December 2011 has been arranged so that all the clearing instruments received up to 10:00 pm are cleared and credited to the government account in value date of 31st December 2011. It was requested to the concerned institutions or taxpayers that it is compulsory to present State Bank cheques in order to ensure the crediting of amount to the government account on the same day.

Karachi Stock Exchange gains 41 points despite lackluster trading KArACHI STAFF REPORT

K

SE-100 index witnessed a day of lackluster trading in the absence of any interest from local as well as foreign investors. As calendar year approaches closure, today’s session being the last one for clearing in CY12 drew investor’s interest seeking to square position. However, investor participation was highly skewed towards HUBC which bagged one-third of the 46 million shares traded.

Despite an ADR of less than one, an overall advancement at local bourse was completely distorted by thinly traded ULEVER and NESTLE, a synonymous ploy

for local market. Volumes improved 135 per cent from previous session with major interest witnessed in HUBC, owing to its attractive dividend yield. oGDC managed to close 0.3 per cent higher on the news flow regarding the production flows from NASHPA II. further consolidation was witnessed in fertiliser stocks as uncertainty continues to prevail regarding Gas Infrastruc-

ture Development Cess (GIDC).

With today’s notification of an increase in consumer gas prices from 1st Jan 2012, fertiliser stocks followed by cement and industries are poised for reaction in upcoming session. Given heightened systematic risks we reiterate investors to remain caution as foreign flows could dictate the trend ahead, said Salman Vidhani, Senior Investment

Analyst at HMfS. KSE 100 index closed at 11352.59 levels with the gain of 41.21 points, while KSE 30 index bagged 12.60 points to close at 10288.20 levels. All Share index closed at 7856.03 levels, after gaining 29.37 points. Total 104 scrips advanced 106 declined and 105 remain unchanged out of total 315 scrips traded.

Senator Raisani strong contender in FPCCI election KARACHI: Senator Mir Haji Lashkari Raisani has obtained a strong position in the forthcoming annual elections of federation of Pakistan Chambers of Commerce and Industry (fPCCI), via support from all six chambers of Balochistan to become President of fPCCI. All six chambers commerce of Balochistan including Quetta, Lasbela, Gawadar, Makran, Chaman and Pasheen have consensus on a single candidate for the presidential slot of fPCCI. The last chamber of commerce and industry of Pasheen, on Wednesday has also joined in on a move to bring an unopposed contestant in the election from Balochistan. The strong candidate, who succeeded in getting the vote from all chambers of the province was Senator Mir Haji Lashkari Raisani, sources told Profit.

The position of the third contestant of the election which is allegedly backed by a strong group of fPCCI has become weaker after the alliance made by chambers and directive of Sindh High Court to withhold results of the body’s election. Balochistan High Court has also allowed Pasheen Chamber to participate in election of fPCCI after which the number of supporters to Raisani has increased to six. STAFF REPORT

KP chamber of commerce apprehensive about power theft PESHAWAR: President Khyber Pakhtunkhwa Chamber of Commerce and Industry (KPCCI) Afan Aziz said Tuesday power theft in rural and urban areas of Peshawar is bringing bad name to the entire province.

Aziz said Peshawar Electric Supply Company (PESCo) would have to take drastic steps to end ‘kunda culture’ in the province, causing shifting of investment to Punjab. KPCCI vice presidents Ziaul Haq Sarhadi and Abid Salam, former president Usman Bilour and executive committee’s members attended the meeting while Ghazanfar Bilour, Muhammad Ishaq, Zulfiqar Ali Khan and Amanullah Khan participated in the meeting as observers. The meeting was told about the progress made so far in releasing Bank of Khyber loans for small traders. Afan Aziz said under Article 158 of the constitution, Khyber Pakhtunkhwa had the sole right to gas produced in the province and after meeting demands of the province, surplus gas would be provided to other provinces. He underlined the need to solve gas crisis. STAFF REPORT

Standard Chartered appoints head of consumer banking in Pakistan KARACHI: Standard Chartered Bank Pakistan has announced the appointment of Naseer Hasan as head of consumer banking. He replaces Aalishaan Zaidi, who has moved to being the group head of branch management to Standard Chartered Group Distribution in Singapore.

Naseer was previously head of distribution in Pakistan. In the new role, Naseer will be responsible for strategy, development and management of Standard Chartered’s Consumer Banking operations in Pakistan, underlining Bank’s continued commitment to the country and focus on meeting specific needs of its customers in the country. Mohsin Nathani, Chief Executive officer of Standard Chartered Bank Pakistan said, “I am delighted to welcome Naseer as the head of consumer banking. I am confident that under his leadership, we will continue building on our success in the consumer banking business in Pakistan. STAFF REPORT

Inland Revenue team visits steel mill LAHORE: A six-member team of Directorate General Vigilance of Inland Revenue constituted on the instructions of Member Inland Revenue visited a steel mill near Pindi Bypass, GT Gujranwala and detected massive evasion of income Tax and general sales tax (GST). The team comprising Director Vigilance Inland Revenue Tanvir Ahmad Malik, Addl. Commissioner Safdar Abbasi, Addl.

Collector Zulfiqar Hasson, Auditor Sales Tax Asfandyar Khan, Senior Inspector Income Tax Gulfraz Ahmad and Inspector Income Abbas Khan spent the day to ascertain the facts, verify the declared position and the real volume of business turnover in the case and to ascertain the extent of tax evasion being made. According to the facts, as per the record available in RTo in Gujranwala two persons namely Arif Bhutta and Azam Bhutta were running the steel furnace and mainly declaring income from this source. However, in the scrutiny of the electricity bill, the main raw material being used in the furnace revealed the fact that on the average the bill came to around to Rs15 million to 20 million per month. on the basis of electricity bill, the production declared was far lower than the actual consumption and they had grossly misused the self assessment schemes announced by the government over the years as they had manipulated their accounts to fit in the scheme of assessment. STAFF REPORT

29-12-2011_Layout 1 12/28/2011 11:40 PM Page 5

Thursday, 29 December, 2011

We are committed to undertake new initiatives in order to provide our customers with the best products and financial solutions in a modern banking environment

news

Bank Alfalah CeO, Atif Bajwa

05

The Chinese flavour in US brewed Afghan soup While the US mulls over clearing out its mess in Afghanistan, China has conjured up the key to unlock rich Afghan resources

g

KunwAr KHuLDune SHAHID fTER bagging the rights to develop the lucrative Aynak copper mine in 2008, China has completed its money-spinning one-two punch on the Afghan front by signing a ‘$7 billion’ worth oil deal with Afghanistan. The deal will see state-owned China Natural Petroleum Corporation develop a trio of oil fields along the Amu Darya River located in the north of the country – this area has been considerably less jarred by upshots of the American war. The ‘$7 billion’ amount that has been touted is the potential gain for the volatile region – that has been shrouded by war and its aftereffects for a long time – over the course of 25 years. The contract caters the northeastern provinces of Sari Pul and faryab. Afghanistan will get 70 per cent of the total profits and the Chinese oil leviathan would be paying 15 per cent corporation tax. So basically, this is a deal that

A

is going to reap prodigious fiscal benefits for Afghanistan, while at the same time it enables China to haul out resources to stimulate its ever escalating energy needs. This is a nailed on win-win situation if there ever was one!

Afghanistan sits atop massive mineral wealth and throughout the course of history powers have hankered after an entrance into its rich zones – China might just have conjured up the key that other powers have long craved for. The poor infrastructure and security issues, that have been the corollary of the American war in Afghanistan, have warded of Western mining companies; but China seems to be closing in on striking the proverbial goldmine. of course, when juxtaposed with other mammoth oil deals around the globe, the deal signed yesterday might seem petite; but what it has spelled out is the fact that China is the frontrunner in any forthcoming scramble for Afghan riches. This indeed is a leaf out of Victorian irony; for,

US has consumed epochs, splurged out gazillions and has been at the receiving end of global antagonism just so it could be at the head of the queue in nosediving into opulent Afghani mines. And now when matters in Afghanistan are approaching something bordering on stability, especially in the concerned province – even if de facto stability might be half a light year away – it is China that is on the brink of forestalling US at the head of the pack in this ‘great game’.

Americans are already sceptical about those at the helm; now watching China pick up the benefits of their ‘war on terror’ could result in a massive backlash.

It is indeed intriguing to note that after having endured three global monsters vying to overpower the nation and usurp their natural resources over the past forty years, Afghanistan seems to have identified the country that it trusts with its development.

While the historical ‘superpowers’ expounded their intention of accessing the reservoirs via intimidation, the Asian giant that has triumphed has done so by showcasing its constructive intents around the globe, contrary to the relentless destruction of others.

China is – in its emblematically

reticent manner – intent on ensuring that US’s ‘silk road’ aspirations do not materialise. And owing to this deal in Afghanistan, the Asian powerhouse has also flaunted its unparalleled wherewithal when it comes to matters pertaining to energy and resources. Experts also opine that there is a distinct possibility that after the rise of Korea and China into the upper echelons of geopolitical matters, Russia might follow the Asian upsurge and be more assertive in global

matters. Russia has quite a few European strings tied to its belt courtesy its hegemony over natural gas in that particular neck of the woods; and now with US on a precipitous descent, Russian ascent might be on the horizon.

This deal is another massive wallop that the US has had to endure during its involvement in Afghanistan and it might find it difficult to further prolong its presence in Afghanistan. This might be the first of many such maneuvers

from the Chinese hierarchy to strengthen its grip in Afghanistan by flexing its economic muscle, as US clings on to its few remaining dynamites. The US war in Afghanistan might not have had the cliché of ‘winner takes all’ bulging out from every iota; but as things stand, it is China that is on the verge of winning most – if not all.

The writer is Sub-Editor, Profit. He can be reached at khulduneshahid@gmail.com

CORPORATE CORNER PeL holds prize distribution ceremony

pitching and the best sales activity prizes. The chief guest on the occasion, Kashif Mehr, Vice President of Lahore Chamber of Commerce and Industry (LCCI) appreciated the efforts of the students and also motivated them to come up with better entrepreneur strategies. The event was attended by a large number of industry representatives, investors and students from other universities. PRESS RELEASE

BOK opens its hyderabad branch LAHORE: In a popular family festival, Dawn Lifestyle, PEL set up a stall that featured fun activities and prizes for the general public. The prize distribution ceremony was held at PEL's factory. on this occasion, GM Sales and Marketing, Mr Amir Ahsan distributed PEL desire refrigerator among the lucky winners. The winners were delighted to receive their prizes and greatly appreciated and thanked PEL. PRESS RELEASE

University of Management holds entrepreneurship festival

LAHORE: University of Management and Technology (UMT) organised an entrepreneurship programme in which MBA and BBA students presented their innovative entrepreneurial projects. Led by UMT faculty members, Daud Ilyas Butt and Manqoosh ur Rehman, 25 groups of students participated in the festival. Students presented and defended their innovative ideas in front of a panel of judges in order to win best idea

HYDERABAD: The Bank of Khyber (BoK) Hyderabad branch was formally inaugurated at Hala Naka Area, Hyderabad by Mr Bilal Mustafa, Managing Director BoK in a graceful ceremony.

Speaking at the inaugural function, he said that BoK over the last few years increased its branches network across the country to facilitate the business community through proper branch interaction which will alternatively help in promoting the economic activities. The inaugural ceremony was also attended by BoK Executive Director Mir Javed Hashmat, Group Head Credits Mr Imran Samad, Head Business Development Mr Lal Nawaz Khattak, BoK Head Investment and Treasrery Mr Masood Wahidna and Head Marketing Syed Ali Nawaz Gilani. PRESS RELEASE

agencies across Asia Pacific were surveyed by Visa at the future Gov Asia Pacific Summit 2011. The Visa poll revealed that the top two challenges faced by public funds managers were funding cuts (58 per cent) and the need to drive efficiency improvements (57 per cent). other issues this group needed to address were tackling late payments (41 per cent), improving accountability for the management of public funds (39 per cent) and the shadow economy (25 per cent). More than half of those polled (58 per cent) also said they still rely on cash and checks to pay beneficiaries and businesses. When it comes to managing public funds, more than half of the Asia Pacific government agencies polled in a Visa survey said they are most challenged to get the job done by budget cuts, pressure to streamline operations, and late payments. PRESS RELEASE

KARACHI: Vice Chairman diplomatic Committee, north Karachi Association of Trade and Industry (nKATI), Qazi Yasir Ali, along with nKATI’s President Abdul Rashid Fodderwala and former education minister Qazi Khalid Ali, at a dinner hosted in honour of Martin Loetzer Vice Consul Trade and Economic Affairs Federal Republic of Germany. PRESS RELEASE

KARACHI: Meezan Bank and Linde Pakistan have entered in a diminishing Musharakh Agreement.

Picture shows Mr Yousuf Husain Mirza (Chief Executive- Linde Pakistan) and Mr Ariful Islam (COOMeezan Bank) signing the agreement. PRESS RELEASE

KARACHI: Chairman, FPCCI Aviation committee, Mr Yahya Polani, presenting a souvenir to the Country Manager Pakistan RAK Airways, Syed Moinuddin.

Also seen present on the occasion are district Manager, Pakistan International Airline (PIA), Aftab Sulangi, Kumail Polani, Asif usman, Alama Liaquat, Haroon Kazmi and others. PRESS RELEASE

KARACHI: CEO wi-tribe Pakistan, Mustafa Peracha and director Marketing, Ali Fahd present with wi-tribe Shahsawars at the Lahore Polo Club. PRESS RELEASE

RAwALPIndI: Pearl Continental Hotel Rawalpindi celebrated Christmas with zeal and fervour. Picture shows Mr Sheharyar Mirza, General Manager PC Pindi, along with guests. PRESS RELEASE

visa reveals results of survey across Asia Pacific LAHORE: one hundred top finance and procurement officials from central government, city administration and hospital management

29-12-2011_Layout 1 12/28/2011 11:42 PM Page 6

Thursday, 29 December, 2011

06 Markets top 10 sectors

24% 09% 35% 10% 08%

Chemicals

01% 07% 02% 03% 01%

General Industrials

Construction & Materials Electricity Banks

Fixed Line Telecommunication

Oil & Gas

Financial Services

Personal Goods

Equity Investment Instruments

STOCK MARKET HIGHLIGHTS Index 11352.59 2809.17 2544.89

KSE-100 LSE-25 ISE-10

Change +41.21 -6.28 -8.44

Volume 36,785,803 1,054,616 69,500

Market Value 1,469,803,525 16,186,684 2,061,070

top 5 perForMers sector wise

Major Gainers Company Nestle PakistanXD UniLever Pak Ltd. Siemens Pak Unilever Pak Foods Wyeth Pak Limited

Open 2969.91 5502.82 932.53 1670.00 760.39

High 3118.40 5700.00 979.15 1712.00 798.40

Low 3099.00 5555.00 945.00 1705.00 749.99

Close 3118.40 5649.62 979.15 1708.18 786.32

Change 148.49 146.80 46.62 38.18 25.93

Turnover 360 891 620 57 515

2540.00 167.65 232.01 45.80 151.00

2494.97 166.00 231.80 44.00 151.50

2450.00 162.10 229.10 44.00 149.00

2464.17 164.83 230.19 44.00 149.30

-75.83 -2.82 -1.82 -1.80 -1.70

22 2,710 74,913 500 1,265

Volume Leaders Fatima Fert.Co. Arif Habib Co SD Pak Reinsurance Engro Foods Ltd. Jah.Sidd. Co.

23.12 26.97 14.50 23.00 4.12

23.20 27.00 14.73 23.00 4.17

22.82 25.95 14.38 22.80 4.03

22.96 26.70 14.56 23.00 4.07

-0.16 -0.27 0.06 0.00 -0.05

3,304,155 1,559,547 1,029,249 1,005,190 937,415

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

Per Tola (PKR) 53,517.00 51,608.00 964.00 1025.00

Per 10 Gm (PKR) 45,931.00 44,245.00 828.00 880.00

Per Ounce US$ 1,587.00 – 35.05 –

hIGh

LOw CURRenT

ChAnGe

vOLUMe

420.50 109.55 22.80 6.78 84.74

416.00 108.00 22.52 6.65 82.62

419.75 108.56 22.52 6.75 82.74

-0.27 -0.61 0.00 0.03 -0.68

16,299 152,085 101 60,252 4,422

16.50 0.85 27.00 151.50 39.58

16.40 0.40 25.95 149.00 38.00

16.44 0.64 26.70 149.30 39.58

0.89 -0.37 -0.27 -1.70 1.88

1,800 16,880 1,559,547 1,265 411,564

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

420.02 109.17 22.52 6.72 83.42

Agritech Limited Agritech(PREF)(R) Arif Habib Co SD Clariant Pakistan Dawood Hercules

15.55 1.01 26.97 151.00 37.70

18.50 1.13 8.24 32.91 10.49

18.75 1.12 8.43 34.55 10.50

18.15 1.10 8.00 31.70 10.03

18.74 1.10 8.09 34.46 10.47

0.24 -0.03 -0.15 1.55 -0.02

2.54 50.99 6.75 18.82 1.41

27.23 3.75 42.06 6.99 79.81

Ados Pakistan AL-Ghazi TractorsXD Bolan Casting K.S.B.Pumps Millat Tractors Ltd.

89.9797 140.9622 1.1573 117.5944

5.28 176.55 28.50 24.51 365.22

2.60 51.00 6.80 18.95 1.59

2.12 50.99 6.45 18.70 1.41

2.32 50.99 6.75 18.83 1.41

-0.22 0.00 0.00 0.01 0.00

820,325 26 1,502 419,090 1

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

$100.78

Sell 90.30 118.26 141.68 1.1569 89.77 11.65 24.62 24.09 93.05

Brent Crude Oil

$109.27

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

162.00 125.98 23.70 1.69 159.60

27.85 3.70 43.00 6.99 81.00

27.10 3.60 41.30 6.90 80.00

27.23 3.70 42.85 6.99 80.74

0.00 -0.05 0.79 0.00 0.93

326 7,012 5,515 47 2,100

vOLUMe

Adam Sugar AL-Abbas Sugur AL-Noor Suger Mills Baba Farid Bawany Sugar

17.90 92.48 55.99 39.83 11.00

18.90 92.49 55.99 39.00 11.80

5.80 184.75 29.92 25.73 369.00

4.70 176.00 28.50 24.51 364.00

165.00 125.98 24.88 1.68 161.30

0.03 4.20 0.00 0.00 0.82

3,131 707 8,600 99 4,390

164.45 125.98 23.70 1.62 159.60

2.45 0.00 0.00 -0.07 0.00

1,460 5 300 27,809 1

109.00 111.18 145.05 145.58

0.69 -4.44

1,170 203

163.45 125.00 23.70 1.62 159.60

110.49 111.43 150.02 150.00

AL-Abid Silk Mills Hala Enterprise Hussain Industries Pak Elektron Ltd. Tariq Glass Ind.

23.34 7.00 3.00 3.55 8.30

24.50 7.00 3.00 3.65 8.49

Amtex Limited Azam Textile Azgard Nine Babri Cotton Bannu Woollen

1.20 1.11 3.21 8.41 14.85

1.25 1.60 3.26 8.50 14.37

AHCL-DEC AHCL-JAN ANL-DEC ATRL-DEC ATRL-JAN

27.00 27.47 3.25 109.50 110.62

26.92 27.10 3.20 109.25 110.50

5.31 180.75 28.50 24.51 366.04

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

99.95 75.44 66.08 30.23 13.76

100.00 78.00 67.00 30.23 14.00

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

10.00 34.50 0.80 1.75 0.85

18.90 92.49 55.99 39.00 11.00

1.00 0.01 0.00 -0.83 0.00

10,491 7 26 2,000 10

24.50 6.90 3.00 3.40 8.00

24.50 7.00 3.00 3.59 8.12

1.16 0.00 0.00 0.04 -0.18

500 111 100 38,312 4,396

1.19 1.11 3.08 8.41 14.26

1.24 1.11 3.11 8.41 14.26

0.04 0.00 -0.10 0.00 -0.59

103,150 1 314,901 1 1,510

26.05 26.40 3.11 108.30 109.31

26.73 26.93 3.17 108.91 109.94

-0.27 -0.54 -0.08 -0.59 -0.68

88,500 94,000 1,500 60,000 61,000

100.00 75.44 66.68 30.23 14.00

0.05 0.00 0.60 0.00 0.24

1,361 1 1,508 20 5,275

99.50 75.44 66.00 29.25 13.70

10.10 34.50 0.83 1.85 0.89

9.96 34.00 0.75 1.75 0.83

10.00 34.50 0.80 1.75 0.84

0.00 0.00 0.00 0.00 -0.01

140,195 101 42,806 26,613 214,669

0.31 34.17 0.64 1.59 15.51

0.34 34.33 0.68 1.59 15.51

0.22 34.06 0.61 1.53 14.62

0.27 34.11 0.63 1.59 15.51

-0.04 -0.06 -0.01 0.00 0.00

30,012 417,944 47,381 41,119 100

56.41 10.01 4.86 11.20 28.10

56.50 10.20 4.96 11.34 28.20

54.99 9.85 4.83 11.18 27.80

55.34 9.92 4.93 11.20 27.88

-1.07 -0.09 0.07 0.00 -0.22

16,622 80,549 331,096 102,692 60,345

Electricity Genertech Hub Power Co. Japan Power K.E.S.C. Kohinoor Energy

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 18.40 88.00 53.20 39.00 11.00

Fixed Line Telecommunication

Beverages Murree Brewery Co. Shezan Int’l

ChAnGe

Pharma and Bio Tech

Automobile and Parts Buy 89.30 116.11 139.45 1.1420 87.09 11.37 24.33 23.84 90.10

LOw CURRenT

Future Contracts

General Industrials Cherat Packaging ECOPACK Ltd Ghani Glass Ltd MACPAC Films Packages Limited

hIGh

Personal Goods 10,566 8,000 4,334 173,937 5,502

Construction and Materials Al-Abbas Cement Attock Cement Cherat Cement D.G.K.Cement Dadabhoy 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 Rafhan Product Tri-Pack Films P.S.O. Faisal Spinning Clariant Pakistan

SyMBOL

Adamjee Ins Central Ins Co. EFU General Ins Habib Insurance IGI Insurance Ltd.

44.42 50.02 36.21 9.85 43.38

45.70 52.50 36.05 10.29 43.50

43.30 50.02 36.00 9.85 42.74

45.29 50.02 36.00 9.85 43.46

0.87 0.00 -0.21 0.00 0.08

102,889 50 1,804 100 2,200

13.50 1.40 65.53

14.50 1.40 65.53

0.00 0.00 0.00

2 1 157

0.34 15.17 13.59 0.70 2.54

-0.01 0.27 -0.08 0.05 -0.01

1,523 6,608 12,450 500 4,006

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 Equities F. Nat.Equities

0.35 14.90 13.67 0.65 2.55

0.35 15.60 13.60 0.70 2.75

0.30 13.90 13.28 0.70 2.37

Equity Investment Instruments 1st.Fid.Leasing Mod AL-Noor Modar B.F.Modaraba B.R.R.Guardian Cres. Stand.Mod

1.58 4.50 4.25 2.06 0.49

1.60 4.30 4.00 2.15 0.50

1.58 4.10 4.00 2.06 0.42

1.58 4.30 4.00 2.06 0.50

0.00 -0.20 -0.25 0.00 0.01

7,490 10,239 1,398 100 4,815

12.77 31.00 36.33 12.97 61.00 1.12 64.08 4.75 24.50 3.42 14.94 8.29 23.00 27.17 10.89 1.83 9.95 0.75 1.75 0.83 15.68 19.00 14.00 1.70 70.13 23.76 1.25 8.90 2.18

12.77 31.00 36.33 13.00 64.27 1.13 64.08 4.75 24.50 3.50 15.94 8.30 23.75 27.17 11.41 1.90 10.00 0.81 1.75 0.86 15.75 19.46 14.00 1.70 74.33 23.78 1.30 8.90 2.18

-0.25 0.00 0.45 0.00 3.04 -0.02 0.00 0.25 0.00 -0.09 0.00 0.18 0.00 -1.41 1.00 0.06 0.00 0.01 0.00 0.02 0.00 0.01 0.00 0.00 0.51 -1.23 0.05 -0.06 0.00

3,892 1,600 570 274 3,484 485,705 25 500 15 12,505 1 532 19 1,198 6,042 17,682 236,375 54,991 68,275 370,630 26,015 2,026,362 80 50 17,220 1,096 64,670 65,371 1

Miscellaneous Century Paper Pak Paper Prod.

Security Paper P.N.S.C. Pak.Int.Con. SD TRG Pakistan Ltd. Murree Brewery Shakarganj Food AL-Abid Silk Mills Pak Elektron Ltd. Singer Pakistan Tariq Glass Ind. Grays of Cambridge Shifa Int.Hospitals 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 American Life East West Life Assur EFU Life Assur AKD Capital Ltd. Pace (Pak) Ltd. Netsol Technologies Pak Telephone

13.02 31.00 35.88 13.00 61.23 1.15 64.08 4.50 24.50 3.59 15.94 8.12 23.75 28.58 10.41 1.84 10.00 0.80 1.75 0.84 15.75 19.45 14.00 1.70 73.82 25.01 1.25 8.96 2.18

13.20 31.50 36.34 13.00 64.28 1.17 64.99 4.75 25.69 3.59 15.94 8.90 23.75 28.39 11.41 2.00 10.09 0.82 1.80 0.89 16.30 19.64 14.75 1.80 74.97 23.80 1.33 9.08 3.05

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

29-12-2011_Layout 1 12/28/2011 11:42 PM Page 7

With 50,000 tonnes of surplus Kinnow as a result of the sanctions, there is an urgent need to explore new markets and avoid such unwanted losses to the national exchequer

Thursday, 29 December, 2011

07

news

harvest Tradings CeO, Ahmad Jawad

E-banking transactions mount to Rs12 trillion g

Transactions depict increase of 19 per cent in second half of Fy11 KArACHI

T

STAFF REPORT

HE value of e-Banking transactions aggregated to Rs12 trillion during the second half of fY11 showing an increase of 19.0 per cent as compared to the first half of the year, says State Bank of Pakistan’s Payment Systems Half Yearly Review released on Wednesday.

The volume of such transactions during the period under review reached 125.9 million depicting an increase of 15.5 per cent as compared to the first half of fY11, the Review said, adding that the payment system infrastructure in Pakistan has maintained an overall growth trend for the second half of fY11. The Automated Teller Machines (ATMs), which are the largest channel of e-Banking transactions, showed a 16.5 per cent increase in number of transactions and 19.0 per cent increase in value, raising the share of ATM transactions in total e-Banking transactions to 58.8 per cent and 5.4 per cent respectively, the review said. It further noted that the number of Real-Time online Branches (RToB) transactions grew by 14.7 per cent and the value of transactions increased by 18.8 per cent as compared to first half of fY11. ‘These transactions contributed 31.6 per cent in total volume of e-Banking and 93.2 per cent in the value of such transactions re-

spectively,’ the Review observed.

According to the Review, as many as 466 more Automated Teller Machines were added in the system bringing the total number of ATMs in the country to 5,200 while 380 more bank branches were converted into Real Time online Branches (RToBs). ‘A total of 7,416 bank branches (78%) are now offering real time online banking out of a total of 9,541 branches in the country. The number of plastic cards at 14 million also registered an increase of 6.2 per cent during the period under review as compared to the numbers during the preceding half year,’ the review added. It said that the total number of PoS terminals at 37,232 depicted a decline of 16 per cent as compared to 44,383 terminals in the first half of fY11. ‘This decline in the number of PoS terminals is due to business considerations in terms of which investment in ATMs was considered a more viable strategic option. The volume of PoS transactions in the country during the second half of fY11, however, reached 7.2 million showing an increase of 2.8 per cent.

The value of PoS transactions at Rs33.9 billion registered a 4.4 per cent decrease as compared to the first half of fY11, the rev i e w added.

The overall increasing trend in payment system infrastructure was also witnessed in the large value payments settled through Pakistan Realtime Interbank Settlement Mechanism (PRISM), which increased by 14.8 per cent in volume and 21.9 per cent in terms of value as compared to the first half of fY11. The report further noted that the major portion of PRISM transactions, in terms of value was of settlements against securities which accounted for 46 per cent of the total transactions followed by Interbank funds Transfers at 37 per cent and settlement of retail cheques through multilateral clearing at 15 per cent. The review said that the volume and value of paper-based retail payments during the second half of fY11 were recorded at 177.3 million and Rs84.6 trillion respectively indicating an increase of 3.5 per cent in the volume of transactions. ‘The value of transactions has increased by 13.3 per cent as compared to the first half of fY11. The contribution of paper-based payments in total retail payment transactions was 58.5 per cent in terms of volume and 87.5 per cent in terms of value,’ it added.

500K TOnneS wheAT TO Be SOLD AT

RS950 PeR MAUnD LAHOre

P

STAFF REPORT

UNJAB government has given approval to the sale of halfmillion tonnes of wheat at Rs950 per maund, during January. It was disclosed that through the sale of wheat present in godowns, which was purchased in 2009-10, further expenditure of Rs3 billion to be incurred on its protection can be saved. This was stated by Senior Advisor to Chief Minister Punjab Sirdar Zulfiqar Ali Khan Khosa, while presiding over a meeting at 90-

Shahrah-e-Quaid-e-Azam. Provincial Minister for Law Rana Sanaullah, Provincial Minister for Agriculture Ahmad Ali Aulakh, Chief Secretary Punjab, Chairman Planning and Development Board and Secretaries of finance, food and Agriculture Departments, attended the meeting. The meeting was told that at present, 4.3 million tonnes wheat is available with the food department in godowns of various districts, whereas only 0.7 million tonnes wheat have been sold so far. The meeting was told that this wheat would be sold at the export rate of Rs1036 per maund.

Lucky Cement earns carbon credits KArACHI

T

STAFF REPORT

HRoUGH its Waste Heat Recovery (WHR) Project, - a power generation unit that does not require any external fed fuel to operate and uses the wasted heat from the system as its fuel, Lucky Cement has managed to substantially reduce carbon emissions. Due to this innovative and environment-friendly approach, the company qualified for the Clean Development Mechanism (CDM) under the Kyoto Protocol of United Nations and earned itself precious carbon credits. Estimated annual carbon dioxide reduction by virtue of WHR plant at its Pezu Plant is 29,918 metric tonnes and by WHR at Karachi Plant is 50,000 metric tonnes. Clean Development Mechanism (CDM) allows emission-reduction projects in developing countries to earn Certified Emission Reduction (CER) credits. These CERs or carbon credits can be traded and sold and are used by developing nations to finance

their industrial projects. one allowance or CER is equivalent to one metric tonne of carbon dioxide emissions. These allowances can be sold privately or in the international market at the prevailing market prices. These trade and settle internationally and hence allow those credits to be transferred between countries.

Each international transfer is validated by United Nations framework Convention on Climate Change (UNfCCC). Lucky Cement’s pioneering innovation is thus preserving environment, curtailing its energy needs and saving cost in a unique way. Lucky Cement is also an ISo 14001:2004 certified company, which is a certification awarded to companies that meet all the international environmental standards and have environment friendly practices and processes. Lucky Cement, Pakistan’s largest cement producer with production capacity of 7.75 million tonnes per annum is playing an active role in addressing issues of environmental degradation. The company has invested in many projects that are ecologically friendly and energy efficient.

Cement prices continue to soar Chairman APTMA concerned over textile export decline KArACHI

A

STAFF REPORT

growth of 3.54 per cent YoY in cement volumes during 5MfY12 may not get the investors too excited. However, 3839 per cent YoY jump in net retention prices in fY12 (YTD) and an approximate eight to nine per cent QoQ rise in 2QfY12 is a comforting factor for the sector. Interestingly, and contrary to general expectations, high cement prices have maintained their level in the winter season as well. Another silver lining for the sector has been recent correction in coal prices (down 10 per cent since September 30, 2011) which is likely to help loosen cost pressures, thus boosting margins.

CEmEnt PRICES REfuSE tO gIvE An InCH: Despite the winter chills setting in we have not seen cement prices nudge southwards.

In the past, owing to slowdown in construction activity in winters, stronger competition tends to emerge within the sector which had consequently led to a dip in cement prices.

However, during this year (2QfY12) and last year (2QfY11), the trend has reversed and prices have risen in order to counter the weak demand. Considering this weak demand outlook (JS estimates five to six per cent YoY growth in fY12), we believe prices are likely to stay

relatively strong to sustain profitability of the sector, said furqan Ayub at JS. SHORt tERm WEAKnESS In COAL PRICES: Since September 30, 2011, coal prices have plunged 10 per cent to foB $102.2 per tonne (Richards Bay Index). This is unusual, since historically coal prices have surged in the winters due to increased demand. This time though, the deteriorating economic conditions in Europe and US coupled with retrenching developing market growth has led to a slide in coal prices. Nonetheless, due to supply tightness, increased reliance on thermal power generation and strong industrial growth in China, the general consensus amongst the international analyst community is for coal to remain firm with an upward bias in the long run.

However, this short term weakness in coal bodes well for the domestic cement sector. In the table below, we have done a sensitivity analysis for both LUCK and DGKC’s earnings to coal prices, he added.

OutLOOK: He further said that we believe high cement prices and contained coal prices are triggers that have gone somewhat unnoticed amid the weak sentiment prevailing in the market. Even if coal prices take a U-turn from here, cement prices are firm enough to sustain healthy margins.

LAHOre

C

STAFF REPORT

HAIRMAN All Pakistan Textile Mills Association (APTMA) has expressed deep concerns over alarming decline in textile exports during November 2011 due to energy shortage and high interest rate. He said five major sectors of textile industry, including cotton yarn, cotton cloth, knitwear, bed wear and towel have registered a steep fall in quantity terms during November 2011.

Chairman APTMA said textile exports of cotton yarn have declined by 11 per cent in November 2011 against corresponding period, followed by 22 per cent drop in cotton cloth, 38 per cent in knitwear, 40 per cent bed wear and 20 per cent in towel in quantity terms.

He said decline is worsening with every passing month since the start of new fiscal year, which means there is less production for exports in the country due to obvious reasons.

According to him, APTMA has been crying over the situation since day one and latest report of SBP annual report has corroborated the APTMA concerns. The SBP annual report has

pointed out that the manufacturing sector has suffered a serious setback. The industrial growth was negative 0.1 per cent in financial year 2011 due to prolonged power outages and reduction in gas supplies.

However, he said, the SBP report must also mention that high interest rate has also played havoc with the industrial growth besides energy shortage. He said cost of credit has been unbearable for industry and it was only the government having benefited from the credit available in the country.

Mohsin said APTMA has been pointing out time and again that non-availability of credit was putting textile industry growth in limbo and all demands of bringing it to a single digit level were falling on deaf ears. According to him, constant closure of textile mills was enough to prove the fact that sustainability of textile industry was doubtful in present situation. NPLs are therefore piling up fast, he added.

Chairman APTMA has urged government to take stock of the situation and engage stakeholders to support the stumbling exports as Pakistan’s industrial growth was poor when juxtaposed with other South Asian states.