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Intel – the IT industry juggernaut Page 2 The jingle bells of creativity Page 3 The new form of corruption in Pakistan Page 7 Pages: 7
profit.com.pk
Monday, 02 January, 2012
Govt fails in enhancing tax revenue ISLAMABAD AMER SIAL
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he year started with desperate attempts by the government to save $11.3 billion standby arrangement facility of the International Monetary Fund (IMF) which was finally abandoned in September with the announcement that macroeconomic stability was on the right track and the country could withstand shocks for the current fiscal year. IMF was stressing upon taxing the rich, curtailing losses of the public sector enterprises and reducing the power differential subsidy to zero to stop the national economy’s hemorrhaging. A weak coalition government tried to apprise IMF of many contentious political issues that were hindering the implementation of its advice. It even arranged meeting of the Fund with the political parties but IMF maintained its “do more” stance on the revenue and power sector reforms. Losses in the power sector alone impacted a loss of two per cent in the annual fiscal deficit that had remained over six per cent of the GDP for the last three fiscal years. Due to the suspension of IMF programmes in May 2010, foreign inflows were reduced to a minimum, as international financial institutions and other bilateral donors kept stressing additional revenue generation to meet up the shortfall. Pakistan wanted continuation of IMF programme as it would have made possible budgetary support from IFIs and other donors. Currently, financial support from donors is only possible if the IMF issues a letter of support to the intending donors on the macroeconomic stability of the country. Pakistan managed to face obstacles due to the rise in international commodity prices, mainly cotton, which enhanced the annual exports to over $25 billion and remittances of over $11 billion during the last fiscal year. even though Pakistan has not opted for a new bailout package from IMF for current fiscal year but has maintained a steady relationship with IMF to seek another programme if the need arises, as experts estimates exports and remittances would remain under pressure due to the global financial crisis.
During the last fiscal year, various tax reform measures were approved but not fully implemented. RGST was not approved by parliament, but additional tax measures were introduced in the current fiscal year’s budget. In mid-March 2011 government approved a flood surcharge levy, increased special excise duty on imports and imposed a 17 per cent sales tax on sales of tractors. It also increased the ex-factory rate on sugar, removed sales-tax exemptions on fertilisers, pesticides and plant machinery, and eliminated zero-rate sales taxes on garments, carpets, leather, surgical and sports goods. however, soon afterwards, a few measures were diluted: the tax rate on the textile sector and some other items was reduced from 17 to 5 per cent. The combined fiscal impact of these tax measures were aimed at preserving the tax ratio at a similar level as last year, but
this target was not met. A recently released World Bank progress report on Country Partnership Strategy on Pakistan for the next three years points out that Pakistan’s mediumterm outlook critically hinges on a significant revenue mobilisation effort that should produce two to three per cent of GDP in the next four to five years. It notes that the toughest question government faces is how to create fiscal space. This occurs in a context of fiscal retrenchment and gets aggravated by its low and declining total and tax revenue ratios that reached single digit by end of last fiscal year. Revenue mobilisation in Pakistan has been historically weak. In the last fiscal year, various tax policy reform measures were approved, but not fully implemented. A comprehensive revenue mobilisation strategy centered on structural reform
of the taxation system is needed to confront these challenges. The overall tax policy strategy points to six major measures including adoption of broad based Reformed General Sales Tax on goods and services, provincial tax reforms, a two-tier structure for individual income tax and adopting a withholding tax, reform of the federal excise tax, adopting a business friendly corporate income tax, and a simplified structure of customs duties. Federal and provincial governments for the last one year have failed to evolve a consensus on the imposition of RGST on services and agriculture income tax. The bank report recommends that the tax administration strategy should centre on broadening the tax base, establishing an effective audit and enforcement mechanism, establishing an effective internal and external mechanism, and limiting Federal
Board of Revenue’s administrative powers to legislate by administrative orders. however, a look at the last decade shows the tax revenues were declining since the global crisis, budgeted revenue targets were persistently missed, income and sales taxes were rising. But trade and excise taxes were declining and low tax collection is also apparent for the provincial governments and privatisation proceeds have been marginal in the last four years. Government’s slow pace on implementing the tax administration reforms have resulted in unfulfilling of the expected results. Giving momentum to the number of new tax filers, centralised audit, including audit of large taxpayers, and fully computerised tax system and continuous monitoring of FBR staff could yield desired results in next few fiscal years.
Pakistan’s exports rise by 10pc in last five months KARACHI
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STAFF REPORT
eSPITe energy crisis and security issues, Pakistan’s export figures in the last five months were 10 per cent higher than the corresponding period last year. Pakistan has attended more than 12 exhibitions and four business forums in China during the outgoing year 2011. This participation will be increased to 20 exhibitions in 2012, said Tariq Iqbal Puri, Chief executive of Trade Development Authority of Pakistan (TDAP) during a meeting with Mian Abrar Ahmad, President, Karachi Chamber of Commerce & Industry (KCCI) here at KCCI head office. he also agreed to allocate Pakistan Pavilions to KCCI for several international exhibitions including TDAP’s WeXNeT for women entrepreneurs scheduled to be organised in Dubai soon. he also expressed his gratitude towards Karachi Chamber’s support and active participation. he was also upbeat about the president’s meetings with
foreign delegation on the juncture of expo Pakistan 2011 and also sought same support in expo Pakistan 2012. head of TDAP also recognised the Karachi chamber as the most productive forum of Pakistan and commended its efforts for playing an imperative role to uplift the economy.
he expressed his desire that TDAP and KCCI should work closely as partners in progress to enhance exports. he said KCCI is a proactive and leading chamber and its role in trade and industry is pivotal. he termed business community as the “locomotive” for trade.
he appreciated the fact that so far exports were satisfactory despite export targets being marred by security issues and energy crises. Financial crises of eU had also affected the export, he added. While expressing contentment he said that current export figures were 10 per cent ahead if we compare the last five months’ exports with the volume of exports last year. he stated that the authority had changed its approach while diversifying destination like Russia, China, Japan, Iran, Afghanistan, Central Asian States, GCC countries. he highlighted the participation of Pakistan in more than 12 exhibitions and four business forums in China. This participation will be increased to 20 exhibitions in 2012, he added. In 2012 trade through Karakoram highway will resume with Western China. he requested President KCCI to organise workshops and seminars with collaboration of KCCI to create awareness in the business community about unexplored markets. “Pakistan needs trade not aid; the only solution to uplift and strengthen the economy is industrialisation and enhancing
exports,” Mian Abrar said. While exchanging his views Mian Abrar asserted upon the dire need of exploring regional markets and enhancing regional trade with SAARC, ASeAN, Central Asian Republics, China, Iran, India, Middle east and African countries. he was of the view that by design Pakistani exports remain stagnant. he focused on strengthening the economy while increasing exports rather than remittances. he suggested a policyshift from Western markets to regional trade blocs like SAARC, ASeAN, Shanghai Cooperative Council. he urged to bring diversity in export while encouraging unexploited engineering sector, value-added agro based and halal food sector etc. he also demanded to allocate KCCI to organise Pakistan Pavilions in the international exhibitions around the globe. Former President KCCI Majyd Aziz, Senior Vice President Younus Muhammad Bashir, Vice President Zia Ahmed Khan and the managing committee members also participated in the meeting and exchanged their views and proposal to enhance trade.
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Monday, 02 January, 2012
02 debate Intel – the IT industry juggernaut In an exclusive interview with Profit’s Ali Rizvi, Country Manager Intel Pakistan talks about the IT sector, Intel’s contributions and the emerging trends that can be expected in the year 2012
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cent of these teachers hail from Punjab he said. As far as competition is concerned, he said that he did not view it as a threat but rather as an opportunity. “Increased competition is good because the consumers benefit from it,” Siraj said. As far as Intel was concerned they were focusing on promoting the benefits of their own technologies. “We are building hardware specific solutions, with the ability to penetrate a large customer base.”
ALI RIzvI
heN I was born, the world of technologies was evolving. I would see my rich uncle carrying a briefcase and he’d open it to reveal a mobile phone that seemed something out of outer space. I always wondered if eT carried one too to communicate with kids on earth and as technologies were evolving, my generation was thrust into a world where left, right and centre technologies were evolving at a speed faster than light. Metaphorically speaking, of course. And then, there were cartoons too and almost all of us remember the name Mickey Mouse. It’s a household name. everybody’s heard about it, invariably. In technology, what is the first name that comes to my mind? Well, it has to be Intel. I knew that if there was anything evolving on the computer technology front, it had to be Intel.
APPeAlIng TeChnologIes
WoRld WIThouT MICRoPRoCessoR Intel, the world leader in silicon innovation, develops technologies, products and initiatives that continually advance how people work and live. Intel was the company that introduced the world’s first microprocessor in 1971. Intel is the world’s largest semiconductor chip maker, based on revenue. It is the company that made a series of microprocessors, processors that are found in most personal computers worldwide. Since the invention of the wheel, for this generation the single most important invention has to be the microprocessor that enables us to use computer technologies to facilitate us in a vast variety of fields. A world without the microprocessor would be akin to a world without a light bulb. In order to gain greater understanding of Intel’s role in Pakistan, we met Naveed Siraj, Intel Country Manager Pakistan. Unfortunately, due to bad traffic I reached 20 minutes late but he was pleasant enough to wait patiently. So we got straight to the point. What is Intel’s role in Pakistan I asked him? Intel is the tech leader in the industry catering to three distinct segments. It has demonstrated leadership through focusing on enterprise development. Intel during the course of its operations has facilitated businesses through the implementation of computer technology that has benefited them largely, Naveed Siraj said. While explaining the problems faced in the implementation process, he
said SMes by design focus on revenue generation. Small businesses will therefore not want to invest in IT. Instead, they would like to rely on customised software programmes. Therefore, their aim is to operate software and hardware both, with minimum resources. Intel has targeted the SMe sector and after taking on projects of mutual interest, has come far in facilitating these small and medium enterprises.
InTel’s PlACe In The MARkeT Dwelling on how the advent of new companies in the IT industry has affected Intel’s stake in the market, he said that in the last three years smart phone sales have almost doubled. Therefore, there has been phenomenal market growth. Both the formal and informal channels have contributed towards this growth. Therefore the growth has been more organic in nature. IT products, Siraj said have also experienced high growth, mainly due to the affordability of IT products. We have witnessed an increase in the use of PC’s as well. Therefore, growth in the sector presents us with an opportunity. Intel continues to be the mar-
ket leader and while there have been challenges, these challenges have not been insurmountable. To facilitate progressive growth, the government will have limit the informal sector and instead focus on evolving policies that are conducive to bringing down the costs of IT products in the local market. We recognise governments need to generate revenue, however steps must be taken to reduce the general sales tax from the present 17 per cent. Mr Naveed Siraj was very straightforward about the company’s vision for 2012. “We will continue the execution of our programmes, while simultaneously focusing on joint programmes with different entities as well.” he said that Intel’s collaboration with Meezan bank is also an initiative that promises to yield great results. “Through Meezan bank we have offered to provide laptops to students on installments. They now also have the opportunity of owning a notebook for $100. Public private partnership is also another dimension that holds great promise.” With regards to the Punjab 100,000 laptops distribution programme, he said it is a good venture that will offer students increased mobility and access to information.
They will be able to augment their studies and increase their learning through the use of laptops.
ReCessIon hAngoveR When asked about how badly the global economic recession has affected the IT industry and how he views the prospects in the Asian markets, he said that firstly with regards to Pakistan schemes like those recently launched in Punjab and others initiated by Intel such as Intel teach are helping project a different image of the country that needs to allocate more resources towards image building. As far as Asia is concerned he said that there has been a shift in percentage of revenue being generated in different regions and with the increase of the middle class, Asia is attracting businesses despite the recession. The IT sector he said stagnated in Pakistan mainly because there was no dedicated IT minister. While speaking about Intel teach he said that till last month, the figure of teachers who have been trained under the programme has reached 300,000. It was initiated in 2001 and under this programme intel has trained 10 million teachers. 70 per
“People want products that appeal to them, therefore we have also worked towards creating such technologies. Ultra book is another category of notebooks where the focus has been towards creating a rapid response technology. Ultra book has the ability to update emails on standby. Increased battery life is another area that we are working on. The Ultra Book was launched last year and is also available in Lahore, with four brands releasing the product worldwide,” Naveed Siraj said. When asked about whether the year 2012 will see an increase in the demand for data centers, he said that for every 600 smartphones, one server is required. With the growth of smartphones being witnessed world wide, it will be accompanied by an increase in the demand for data centers. Talking specifically about Pakistan he said that in order to promote information technology, device usage and pervasiveness needs to increase that can only be brought about by evolving strategies to provide consumers with affordable products. The ownership of computers needs to be emphasised upon and there should be a greater focus on promoting women entrepreneurship that will encourage faster growth in the IT sector. Seminars also need to be conducted to increase awareness about IT Siraj said. And on this note, we wrapped up our meeting with Intel Country Manager Pakistan Naveed Siraj. It is an accepted fact that in order for Pakistan to progress it will have to develop the IT sector on an urgent basis that will create new avenues of opportunity for the people of this country. Intel has done commendable work on their part and other companies need to follow suit to ensure that the development of the country is a collaborative effort that involves all stakeholders in the process. The writer is News Editor, Profit. Comments and queries: ali.rizvi7957@gmail.com
America’s threat to Trans-Pacific trade A JAgDISH BHAgwAtI
S if undermining the World Trade Organization’s Doha Round of global free-trade talks was not bad enough (the last ministerial meeting in Geneva produced barely a squeak), the United States has compounded its folly by actively promoting the Trans-Pacific Partnership (TPP). President Barack Obama announced this with nine Asian countries during his recent trip to the region. The TPP is being sold in the US to a compliant media and unsuspecting public as evidence of American leadership on trade. But the opposite is true, and it is important that those who care about the global trading system know what is happening. One hopes that this knowledge will trigger what I call the “Dracula effect”: expose that which would prefer to remain hidden to sunlight and it will shrivel up and die.
The TPP is a testament to the ability of US industrial lobbies, Congress, and presidents to obfuscate public policy. It is widely understood today that free-trade agreements (FTAs), whether bilateral or plurilateral (among more than two countries but fewer than all) are built on discrimination. That is why economists typically call them preferential-trade agreements (PTAs). And that is why the US government’s public-relations machine calls what is in fact a discriminatory plurilateral FTA, a “partnership” invoking a false aura of cooperation and cosmopolitanism. Countries are, in principle, free to join the TPP. Japan and Canada have said they plan to do so. But a closer look reveals that China is not a part of this agenda. The TPP is also a political response to China’s new aggressiveness, built therefore in a spirit of confrontation and containment, not of cooperation. The US has been establishing a template for its PTAs that includes several items
unrelated to trade. So it is no surprise that the TPP template includes numerous agendas unrelated to trade, such as labor standards and restraints on the use of capital-account controls, many of which preclude China’s accession. From the outset, the TPP’s supposed openness has been wholly misleading. Towards this end, the TPP was negotiated with the weaker countries like Vietnam, Singapore, and New Zealand, which were easily bamboozled into accepting such conditions. Only then were bigger countries like Japan offered membership on a “take it or leave it” basis. The PR machine then went into overdrive by calling the inclusion of these extraneous conditions as making the TPP a “high-quality” trade agreement for the twenty-first century, when in fact it was a rip-off by several domestic lobbies. American regionalism closer to home shows the US now trying to promote the Free Trade Agreement of the Americas (FTAA). But its preferred template was to
expand the North America Free Trade Agreement (Canada, Mexico, and the US) to the Andean countries and include huge doses of non-trade-related issues, which they swallowed. This was not acceptable to Brazil, the leading force behind the FTAA, which focuses exclusively on trade issues. Brazil’s former President Luiz Lula Inácio da Silva, one of the world’s great trade-union leaders, rejected the inclusion of labor standards in trade treaties and institutions. The result of US efforts in South America, therefore, has been to fragment the region into two blocs, and the same is likely to happen in Asia. ever since the US realized that it had chosen the wrong region to be regional with, it has been trying to win a seat at the Asian table. The US finally got it with the TPP, simply because China had become aggressive in asserting its territorial claims in the South China Sea, the South China Sea, and vis-à-vis India and Japan.
Many Asian countries joined the TPP to “keep the US in the region” in the face of Chinese heavy-handedness. They embraced the US in the same way that east europeans rushed to join NATO and the european Union in the face of the threat, real or imagined, posed by postSoviet Russia. America’s design for Asian trade is inspired by the goal of containing China, and the TPP template effectively excludes it, owing to the non-trade-related conditions imposed by US lobbies. The only way that a Chinese merger with the TPP could gain credibility would be to make all non-trade-related provisions optional. Of course, the US lobbies would have none of it. Jagdish Bhagwati, University Professor at Columbia University and Senior Fellow in International economics at the Council on Foreign Relations, is the author of Termites in the Trading System: how Preferential Agreements undermine Free Trade.
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Monday, 02 Januar y, 2012
EDITORIAL
Why won’t you privatise?
The year that was
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O denying the bearing of outside influences on economic policymaking, but when an entire year’s growth trajectory follows exogenous flows, there is something inherently flawed in power centres. All was well in the finance ministry till the international commodity market jacked up cotton prices and Arab spring and recession worries engineered increasing remittances. Of course, smiles dropped when the cotton boom was priced out of the commodity market and oil remained elevated despite pronounced growth slowdown in the financial north. Yet all that is bad has not been unfairly thrust upon the government, and Islamabad cannot claim being taken by surprise by international developments. The cotton windfall was circumstantial at best, and those thinking otherwise have been exposed as inappropriate, to say the least, to occupy seats that affect financial decision-making. In fact, the domestic situation has been cause for much more alarm. Despite Dr Sheikh’s tough talk, the government has not been
able to free itself from its largely self-imposed financial straight jacket. The PSe burden has not been shed, indicating continued preference for traditional political maneuvering despite the obvious negative economic spill-over. Tax collection remains compromised, with no hint of the posturing needed to brush up the FBR and build provincial tax collection capacity to benefit from the 18th amendment. Then there is blatant, inexcusable, unprecedented government borrowing, crippling private sector expansion and ridiculing monetary policy calculus. The tight fiscal space has also minimised public spending when most needed to upgrade social overhead capital and ease labour market pressure. The rupee’s losing streak, too, has not been offset by export base expansion. Still, in debris lies opportunity. So long as it is in the dark as to what to do, the government can at least figure out what not to do. And a good starting point would be not repeating ’11 mistakes. There was little encouraging in the year that has been. But at least what must be avoided is a lot clearer.
Sakina Husain
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INCe it has been well established that the mode de gouvernance relevant for the Pakistani political landscape is to avoid a horizontal alignment at all costs, the government today and in future would duck a million times if it has to, but not establish its writ in front of mob of any size. Things that one has to do to stay in power! The government would rather incur losses of more than Rs600 billion annually than stand tall to protests, which could spill over and cause subversion. This is the price the state has to pay for not being entrusted with national trust while being, very proudly so, democratically elected. In the state’s defense, it is like walking on a very thin rope to extract water out of a deep well. Once the privatisation process is initiated, the discourse surrounds burnt cars, corruption, lost jobs, the much higher than ten per cent cut, and concerns regarding the possibility of being able to mend the black sheep. On the critical end, successive governments have been unable to prove their worth on this front (among all others) and privatised entities are still surrounded by deep controversies. Now only if we had only one favourite; the non-transparent privatisation of PTCL has resulted in losses of more than a billion dollars (Rs89 billion)with ambiguity on whether the entire payment has been received, and, KeSC’s liabilities (contingent upon GoP) have grown to Rs160 billion from reportedly zero at the time of
Politico-economic compulsions of choking many to benefit a few All-weather friends
Afghan question
This is with regards to the news report, “China Three Gorges plans $15b investment in Pakistan” published on Saturday. It is indeed a promising undertaking that China looks to be on the verge of sponsoring. Our Chinese friends’ investment plan of $15 billion in the Pakistan energy sector is really commendable. It might border on being a herculean task and even if this much investment plan could be materialised it would make Pakistan self sufficient in power sector. This would also cater many other hydro, thermal projects that are either in the pipeline or are under implementation. Regretfully, Pakistan government did not take such preposition seriously four years back.
This is with regards to the article, “The Chinese flavour in US brewed Afghan soup” published on Thursday. I’m completely lost for words at the sheer irony that the China’s oil deal with Afghanistan is engulfed by. I mean it was America’s war, they paid hefty bucks for it and welcomed scorns from all over the globe; and at the end of the day someone else gets the cake. This serves the US right, because they have caused destruction all over the world in their lust for control over resources. And now China is looking like emerging as the true global power, without any violence whatsoever.
M ASLAM CHAuDHRy
SALeeM AJMAL
LAHORE
MuLTAn
privatisation. Moreover, processes that were initiated, such as the case of PIA, met with severe criticism although the organisation has negative net worth of about Rs63 billion and accumulated losses of more than Rs90 billion. Similarly, Pakistan Railways incurs an annul loss amounting to Rs15 billion, has been injected with Rs10 billion in the last two months. Commentators lament loss of about 400 engines, which were, by the way, as old as the country itself, while about a hundred or so original and very antique masterpieces are by the grace of god still functioning. Recently, sighs of relief were heard when some engines convalesced, as there is much talk of privatising the white elephant. So clearly, things are out of control and the government cannot afford more dissent and disapproval than what it already faces. But if one were to compare the Rs600 billion loss with the Rs300 billion that the government intends to spend on the country’s education, hospitals, roads, in sum all of us, the writer cannot help but feel wistful at the prospects of having about a trillion rupees being available to spend purely on development. And if one were to compare, the Rs743 billion paid in direct taxes with the said amount, it would be unnatural for the salaried/middle class to not feel infuriated and push demands for expedient privatisation. As of Oct-11, the credit extended to Public Sector enterprises amounted to Rs407 billion, about Rs19 billion higher than the beginning of the year. If one were to keep the losses in perspective with this amount, one would only wish a lot of luck to banks that have lent out this money. On the same end, credit to the private sector has gone down by Rs37 billion during the Jul-Oct’11, thus it is not just the prospect of recovery but the opportunity costs that have to be brought in perspective. In the heart of hearts, nobody wants anyone to die. But in the current scenario, a larger group of people is being choked to support a few. And sadly, it’s not just for now and today. There is no solace. The writer is an economic analyst and freelance financial journalist. She can be contacted at sakina.husain@gmail.com
The jingle bells of creativity
L
Maheen Syed
IVING in a corporate world, one happens to hold up to the cliché that money can buy everything. As part of the deal, the rich get everything and the poor become losers of the game. Looking at the quality of advertisements today, it often strikes me, if creativity is also synonymous to the amount of money spent. A general rule of thumb suggests that all the big companies usually come up with more creative
ideas than the smaller companies just because they choose to affiliate themselves with renowned advertising agencies that mostly have good stuff in store to advertise the product in a unique way. It is thus, very strange and a matter of concern for many of us. But realistically speaking, just like money can’t buy happiness; money can’t buy creativity either. We as a nation are instilled with some serious creativity in the real sense. No one can doubt the level of creativity that we are bestowed with; some smart Asians we are. Creativity is not a science, it is an art. An advertising campaign that sends the message across its audience can be deemed creative even though it can get on your nerves. If we look at a very poorly designed commercial and forget about quality issues for some time; I recall some mind boggling jingles that literally made one beg for mercy, but were actually very effective even
though we detested them to the extreme. Admit it, we still remember those catchy slogans and I pay tribute to all of them with hats off and a thousand bows. Telefun has to win the creativity gift hamper for drilling ‘0900-78601’ into our heads. ‘Gaye soap sabunon mein toap’ was also creatively designed to remain etched in our memory, even after so many years. ‘Kis nay kaha tha kay Pepsi pay paanch rupay kum kerdo?’ and ‘Kis nay kaha tha kay Pepsi 65 ki ker do?’ I swear, none that I know, made this grave mistake. But Pepsi managed to worm its way into our minds by a genuinely lame yet creative concept. Similarly, we also acknowledge that ‘Maza awami kha badami…’ and The Jazz Jazba’s famous songs made sure, we cry more on the consistency of the over exposure of these jingles, so that we can forget the trauma of watching Pakistan lose in the Cricket World Cup.
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
Realistically speaking, just like money can’t buy happiness; money can’t buy creativity either
On the flip side, the theory of ‘Naqal and Aqal’ also comes rightly into play when we cheat creatively. Just recently, I was reminded of this when a popular magazine took up one of my articles as their ‘letter to the editor’ and the paradox of the creativity was that it was published right under the letter whose title read, ‘plagiarism’; eliminating the slightest of possibility to even think of the above content as being fabricated. *Round of applause*. Coca-Cola, along the same lines, started targeting the cricket lovers and their spirits of hope, after Pepsi had already targeted the cricketers and the cricket team. Pantene wanted us to try and test their product to make sure that it is the number one shampoo and Sunsilk, the very next day, tells us that it is
already tried and tested that Sunsilk is the number one shampoo. The debate of creativity is strongly tied with intellectual property under which, a set of exclusive rights are recognised for a number of distinct types of creations of the mind. however, creativity may not always mean originality, which is why, often marketers argue that creativity breeds creativity and if the ideas are copyrighted, it would leave no room for their improvement. had Graham Bell copyrighted the telephone, mobile phone would not have existed today. I’d have to agree to this too, to some extent, as long as the originator gets his due credit. 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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Monday, 02 January, 2012
04
news
The future relations with the US would be clear, not confusing. The war against terrorism cannot be won alone
hina Rabbani khar, foreign Minister
ASSESSINg LIvINg STANDARDS ANALYSIS SHAHID KHuRSHEED
Evaluating happiness via New Economics Foundation’s ‘Happy Planet Index’ and other coefficients g
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he piece does not divulge anything about a happy planet but expresses efforts needed to make the planet, i.e. earth, happy. ‘happiness’ is the most perplexed word in the dictionary of mankind. It is often confused with ‘comfort’.
HAPPY PLANET INDEX UNDP has made significant criteria to evaluate how happy the masses are in different corners of the world. The happy Planet Index is another significant yardstick of assessing the living standard of human beings in the world. It was introduced by New economics Foundation (NeF) in July 2006. It looks to be designed to evaluate the style of living, thinking and reacting towards the corporeal forces applying over human mental capacity and other capabilities. It studies the well recognised indices of countries’ development such as GDP (Gross Domestic Product), the hDI (human Development Index) and works while taking sustainability into account and considering uncertainty as the dominant factor against happiness and fulfillment of life. It is evaluated on the basic thesis that ultimate aim of most of the people is not to become rich but generally to live long and lead a happy and healthy life. Similar work is being done under different names as ‘living planet index’, ‘gross national happiness’, ‘physical quality of life index ’, ‘global peace index ‘, and ‘freedom house’ etc.
GINI COEFFICIENT Gini-coefficient is another gauge of national income distribution around the globe and is used as stimulant towards genuine happiness. The Gini-coefficient is an evaluation of the disparity in distribution of wealth and resources. A value of 0 expressing perfect equality where everyone has equal share of income and a value of 1 expresses maximum inequality where only one person grasps all the income. It has found application in the study of inequalities and indiscipline as diverse as sociology, politics, economics, health science, ecology, chemistry, engineering, industry and agriculture.
FREEDOM HOUSE ‘Freedom house’ or ‘Freedom in the World’ was launched in 1973 represents the level of political rights in various states, territory, on a scale from 1 (most free) to 7 (least free). Depending on the ratings, the nations are then classified as "Free", "Partly Free", or "Not Free". It is again a thought provoking point that
even a nation is a member of the United Nations according to UN criterion; it can be declared ‘ not free ’ according to some other civilized standard acknowledged by the same organisation i.e. the UN. Freedom house rankings are widely reported in the media and used as sources by political researchers. Their construction and use has been evaluated by critics and supporters.
GENUINE PROGRESS INDICATOR The genuine progress indicator (GPI) is an alternative metric system which is an addition to the national system of accounts that has been suggested to replace, or supplement, gross domestic product (GDP) as a metric of economic growth. The GPI is used in green economics, sustainability and more inclusive types of economics commonly known as "True Cost" economics.
LEGATUM PROSPERITY INDEX The Legatum Prosperity Index is an annual ranking developed by the Legatum Institute of 118 countries. The ranking is based according to a variety of factors including wealth, economic growth, personal well-being, and quality of life. Norway topped the lists of the last two reports i.e. 2010 and 2011. The 2010 Legatum Prosperity Index is based on 89 different variables analyzed across 118 nations around the world. Source data includes World Development Indicators, Gallup World Poll, World Intellectual Property Organisation, WTO, GDP, UN human Development Report, World Bank, OeCD, World Values Survey. The 89 variables are grouped into 8 sub groups which are averaged using equal weights. These 8 sub-indexes are: n health n Safety & Security n Personal Freedom n economy n entrepreneurship & Opportunity n Governance n Social Capital n education For example, Personal Freedom includes freedom of speech and religion, national tolerance for immigrants and ethnic and racial minorities. In many developing countries like Pakistan people are not allowed to talk openly against generally accepted norms and religious beliefs. This type of attitude makes the minds of people clogged and increase a mob of followers and not of thinkers. An obsessed mind cannot be an independent researcher. All kind social and religious researches demand an attitude of a judge and not a pleader. In all Muslim countries we are producing pleaders and not unbiased scholars.
SOCIAL CAPITAL SUB-INDEX The Social Capital sub-index includes the percentage of citizens who volunteer, give to charity, help strangers, and who feel they can rely on family and friends. It is strange enough that a distorted form of religion plays an important role in philanthropic contributions and the reason behind it to reduce the severity of crime in the people on self help basis. Go for a big offense and get clemency of mighty Lord by distributing Zardah (Sweet rice) at Data Darbar. It is the elasticity of conscience which can give some soothing effect to an ignorant soul.
LIVING PLANET INDEX The Living Planet Index (LPI) is an indicator of the state of global biological diversity, based on trends in vertebrate
populations of species from around the world. The Living Planet Index was originally developed by WWF in collaboration with UNeP-WCMC, the biodiversity assessment and policy implementation arm of the United Nations environment Programme. UNeP-WCMC collected much of the data for the index in the first few years of the project.
GROSS NATIONAL HAPINESS Many think tanks suggest that beneficial development of human society can take place only when material and spiritual development take place side by side to complement and strengthen each other. The four pillars of GNh (Gross National happiness ) are the promotion of sustainable development, preservation and promotion of cultural values, conservation of the natural environment, and establishment of good governance The Physical Quality of Life Index (PQLI) is an attempt to measure the quality of life or well-being of a country. The value is the average of three statistics: basic literacy rate, infant mortality, and life expectancy at age one, all equally weighted on a 0 to 100 scale. human development (humanity) in the scope of humanity, specifically international development, is an international and economic development model that is about much more than the rise or fall of national incomes.
CHILD DEVELOPMENT INDEX People are the real wealth of nations. Development is thus about expanding the choices people have, to lead lives that they value and improving the human condition so that people will get the chance to lead prosperous lives. And it is thus about much more than economic growth, which is only a means - albeit a very important one – of enhancing people’s choices. The Child Development Index (CDI) is an index combining performance measures specific to children education, health and nutrition - to produce a score on a scale of 0 to 100. A zero score would be the best. The higher the score, the worse children are faring.
GENUINE PROGESS INDICATOR The genuine progress indicator (GPI) is an alternative metric system which is an addition to the national system of accounts that has been suggested to replace, or supplement, gross domestic product (GDP) as a metric of eco-
nomic growth. The GPI is used in green economics, sustainability and more inclusive types of economics commonly known as "True Cost" economics.
GLOBAL PEACE INDEX The Global Peace Index (GPI) is an attempt to measure the relative position of nations' and regions' peacefulness. It is the product of Institute for economics and Peace (IeP) and developed in consultation with an international panel of peace experts from peace institutes and think tanks with data collected and collated by the economist Intelligence Unit ( eIU ). The list was launched first in May 2007 then continued on May 2008, 2 June 2009, 10 June 2010 and most recently on 25 May 2011. It is claimed to be the first study to rank countries around the world according to their peacefulness. It ranks 153 countries (up from 121 in 2007).
SUSTAINABLE DEVELOPMENT Moreover, it is believed that the concept of sustainable development requires determination of the environmental cost of pursuing those targets. The happy Planet Index ( hPI ) pioneers derived their base line from the philosophy of Jeremy Benthem (1748 – 1832) english, and Stuart Mill ( 1806 – 1873 ) eldest son of James Mill, i.e. utilitarianism, that a common man’s course of action is not more than overall happiness which he extracts from comforts of life. his moto of living is ‘eat drink and be joyous, for tomorrow you die’. It is just a kind of consequentialism that morality of an action can be determined by its cosequences. If you get pleasure than all is correct. With a changed and more charged version you can say, “God is in his heaven and all is right with the world”. It is the principle of ultimate happiness and the countries which are doing their best in this direction, allowing their citizens to lead such lives and avoiding infringing on the opportunity shall stand at better place on the scale. This will help making this planet a happier one for coming generations. hPI cannot measure happiest countries in the world but can assess life satisfaction on physical grounds. We must not forget the fact that the more you have the capacity to enjoy physically; the less your mental capabilities are. hPI is best conceived as a measure of the environmental efficiency of supporting well-being in a mediocre well-being. each country’s hPI value is a function of its average subjective life satisfaction, life expectancy at birth, and eco-
logical footprint per capita.
THE RANKINGS According to the latest updated statistics of happy Planet Index (hPI), first 11 satisfied countries in the world are from Central and South America except Vietnam at No 5, Coata Rica at No 1, followed by Dominican Republic, Jamica, Guatemala – all are tiny Central American countries. Colombia at 6, and Brazil at 9 are South American countries which are not small but their people are leading relatively tranquil lives. Most of these countries remain detached from hazardous political upheavals of the world. Pakistan, despite its abnormal milieu, is at No 24. It means that we are prima facie a satisfied nation which is enhancing the level of world peace and making this planet a happy one. And of course one of the reasons behind this position is our fight against terrorism. Another reason is our extraordinarily suspicious and contented approach towards corruption. Many of us are not fed up with corruption, suprisingly. They only talk of this colossal quandary but, indeed, they are waiting for their own turn to make hay in the expected sunshine. 25 out of the first 50 are Asian countries with Saudi Arabia, Philippines, Indonesia, Bhutan are at 13, 14, 16, and 17. China at No.20, Sri Lanka at 22, Pakistan at 24, Bangladesh at 31,Malaysia at 33, India at 35, Nepal at 37. First european country, in this list of 143, is Netherlands, which is at No 43 followed by Germany at 51, Italy at 69, France at 71, UK at 74, the winner of hDI (human Development Index) Norway is ranked 88th. The busiest nations are in the middle from 51 to 100 except Israel at 67, South Korea at 68, Japan at 75, Turkey at 83 Australia at 102, New Zealand at 103, Denmark 105, Russia at 108, Lebanon at 110, US at No 114, South Africa at 118. The empty headed nations of the world are generally closer to the bottom which is a proof that empty headed person or countries are doing nothing in the cause of making this planet happy. In the last 43 countries, from 101 to 143, 29 states are African including Zimbabwe, Tanzania, Botswana, Namibia, Brundi, Barkina Faso, Central African Republic, Sierra Leone, Togo, Benin, Mozambique and Mali are woven into a long tail of happy Planet Index in reverse order from Zimbabwe 143 to Mali at 132. The writer is a Grade-20 officer and a freelance contributor. He can be contacted at shahidkhursheed2009@gmail.com
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Not a drop of oil will pass through the Strait of Hormuz, if more Western sanctions are imposed over Tehran's nuclear programme
news
Iranian vice President, Reza Rahimi
Economics review of the
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CORPORATE CORNER Mr khurram sayeed hails issuance of sRo 1119(1)/2011
yEAR 2011
KARAChI: Mr Khurram Sayeed, executive Committee Member, India-Pakistan Chamber of Commerce and Chief executive Planet Petrochemical, has hailed the inclusion of polymers in the road list of items importable from India. he said that polymers of PP and Pe are used in the manufacturing of bags for fertiliser, sugar and cement and this measure will give some relief to the consumers as they can now be easily imported from India at competitive prices. he further said that through the SRO 1119(1)/2011, other items included in the road list are cement, clinker, vegetables, cotton, yarn, cane and beet sugar, among others. PRESS RELEASE
The eurozone's future hung in the balance, the US saw its credit rating downgraded, Japan's earthquake rocked markets and fiscal failings forced out two prime ministers
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Inauguration of CT scan machine at Begum Akhtar Welfare Trust
JANUARY The year begins with a prediction. "We have to save the euro over the next six months," says hungary's prime minister, Viktor Orbán, as the country starts its six-month turn heading the european Union. In the UK, the economic data shows inflation shooting up to 3.7% in December, prompting growing speculation that the Bank of england will raise interest rates by the spring. It is revealed that the UK economy shrank by a shock 0.5% in the last quarter of 2010 as Britain's recovery faltered in the pre-Christmas snow. At the annual get-together for world leaders in Davos, George Soros – the speculator who famously "broke the Bank of england" – warns that the UK faces recession unless its austerity package is relaxed. Cynics muse that Soros might be talking up his own strategy, rather than expressing concern.
FEBRUARY News that inflation rose to 4% in January, the highest annual rate in more than two years, prompts a predictable response. Deputy governor of the Bank of england, Charles Bean, warns that interest rates may have to rise, and is joined by Andrew Sentance - a soon-to-depart member of the Bank's monetary policy committee (MPC). City wags, concerned that his medicine might finish off the UK, dub him "Death" Sentance. No such concerns in China, which becomes the world's second-largest economy after taking the title Japan had held for more than 40 years.
MARCH The last thing the world's economy needed in March was a shock, but that's what it got. An earthquake and tsunami in Japan rock financial markets. Meanwhile, having spent the runup to the financial crisis insisting there was nothing risky about stuffing sub-prime mortgages into collateralised debt obligations, the credit ratings agencies awake. Moody's slashes Greece's rating by three notches to B1, while also downgrading Spain's to Aa2. Borrowing costs for weaker members of the eurozone continue to rise, raising fears that further rescue packages will be needed. The agency also has words for
George Osborne following the chancellor's "budget for growth". It says Britain could lose its prized AAA credit rating if growth forecasts prove too optimistic.
APRIL The ratings agencies are developing a taste for this downgrading lark.Standard & Poor's snips US debt outlook from stable to negative for the first time since the Pearl harbor attack in 1941. Meanwhile, China raises its interest rates for the second time in 2011, adding to concerns that its economy is overheating. A shutdown of the US federal government is averted with a late deal on spending cuts, but the gold price hits a new record of $1,500 an ounceas investors seek safe havens.
MAY With the world looking for firm financial leadership, Dominique Strauss-Kahn is arrested in New York on sexual assault allegations, forcing his resignation as the head of the International Monetary Fund (the charges are subsequently dropped). Portugal negotiates a €78bn (£70bn) bailout deal, while the economic thinktank, the Paris-based OeCD, says the UK will have to start raising interest rates to prevent inflation.
JUNE The Orbán timescale still looks valid. Five months after hungary's prime minister warned europe had six months to save the euro, a Berlin meeting between Germany's chancellor, Angela Merkel, and the French president, Nicolas Sarkozy, prompts headlines: "45 minutes to save the euro". Meanwhile, the rudderless IMF supports the UK's austerity measures, butstock markets fall sharply on the imminent prospect of a Greek default. Greek bonds hit record levels after riots add to the pres-
sure on the government.
JULY What a relief. "At the 11th hour, a new solution to save the euro has emerged," reports the Wall Street Journal, after european leaders hammer out a new deal including a "Marshall plan" to stimulate the Greek economy. In the UK, a second royal wedding, an earthquake, hot weather, heavy snowfall and the Olympics are all lined up to excuse poor second-quarter GDP figures. French finance minister Christine Lagarde is appointed the new head of the IMF. With the post again going to a european, emerging nations argue it should be filled on the basis of competence, not nationality. Whatever next?
AUGUST Congress passes a new US debt ceiling deal, but it's still not a great month for Barack Obama. The president is rocked as ratings agencyStandard & Poor's carries out its threat to downgrade the US's gold-plated triple A rating to AA+, as it judges that a deficit reduction plan is too tame. Switzerland moves to counteract the "massive overvaluation" of the Swiss franc. In the UK, the MPC members suddenly agree. Dissenters Martin Weale and Spencer Dale fall back into line in a unanimous vote for interest rates to remain at their record low of 0.5%.
SEPTEMBER having solved the problem in July, the world's leaders start doubting whether they really have saved the euro. Leading central banks are to flood the financial system with US dollars, in a co-ordinated action designed to boost market confidence. In the UK, public sector job cuts send unemployment back through the 2.5m barrier, and having backed the coalition government's austerity drive in June, the IMF hedges its bets. It cuts UK economic growth forecasts and warns that David
Cameron may have to slow his deficit reduction programme.
OCTOBER Merkel and Sarkozy hold emergency talks in Frankfurt to cement a deal to save the eurozone (again). Sarkozy flies to Germany rather than stay with his wife, Carla, for the birth of their first child – underlining either the scale of the panic or his fear of maternity wards. Inevitably, europe's leaders claim another victory after increasing the firepower of the main bailout fund - the european financial stability facility (eFSF) – to around €1tn. The Bank of england takes action to kick-start Britain's flatlining economy by pumping £75bn more into the banking system – more, and earlier, than economists had expected.
NOVEMBER The much-heralded October eurozone victory suffers a setback. The Merkozy eyebrow arches as Greek prime minister George Papandreou proposes a referendum on the deal. The plebiscite is subsequently crushed, as is Papandreou, who quits. he's not alone. Italy's prime minister, Silvio Berlusconi, also says he's off as interest rates on Italian bonds rise above 7%. In the UK there is some good news, as figures show GDP was stronger than expected in the third quarter, growing by 0.5%, while inflation is also starting to fall. But there's bad news too: in his autumn statement, Osborne concedes the UK will barely grow next year.
ISLAMABAD: Inauguration ceremony of CT scan machine was held at Begum Akhtar Rukhsana Memorial Welfare Trust hospital in Bahria Town, Phase 8. Chief guest Mrs Malik Riaz hussain did the ribbon cutting. Bahria Town’s Chairman Malik Riaz hussain, executive Director General (Rtd) ehtesham Zameer, executive Director General (Rtd) Shoukat Sultan, hospital Administrator Brigadier (Rtd) Khurram Raza, VCe Commodore (Rtd) M Ilyas and a large number of other notable guests were also present on this occasion. PRESS RELEASE
farzana Raja distributes life insurance cheques
LAHORE: Federal Minister and Chairperson Benazir Income Support Programme (BISP), Madam Farzana Raja, distributed life insurance cheques at a distribution ceremony under Waseela-e-haq scheme of BISP held at governor house. During the ceremony, 152 cheques, each comprising of Rs1.5 million, were distributed among the beneficiary families, while 20 cheques, under life insurance scheme of BISP were also distributed. Besides other leaders, Governor Punjab Sardar Latif Khosa, President PPP Punjab Imtiaz Safdar Warraich, PPP Parliamentary Leader in Punjab Assembly Raja Riaz and General Secretary PPP Punjab Samiullah Khan were also present on the occasion. PRESS RELEASE
Inauguration of double Phattak flyover MULTAN: The inauguration of Double Phattak Flyover was performed by Prime Minister Syed Yusuf Raza Gillani in Multan. Federal Minister for Communications Dr Arbab Alamgir Khan said that the construction of Double Phattak flyover was a long standing demand of people which was included in package III of Multan Inner City Ring Road Project. This package has a total cost of Rs1596 million. In order to ensure safe, smooth and fast traffic flow in the city of Multan, 6x interchanges have been completed at cost of Rs3.58 billion. PRESS RELEASE
DECEMBER UK unemployment hits a fresh 17year high of 2.64m. The tension between the US and China over international trade escalates when Beijing imposes additional duties on cars imported from the United States. eU leaders agree a "fiscal compact" after David Cameron vetoed a revision of the Lisbon treaty. And the year ends with a happy new year message from the IMF: the world, warns Lagarde, is at serious risk of sliding into a 1930s-style slump. GuARDIAn
KARACHI: Mr Arif Suleman, Honorary Advisor of Royal Thai Government in Pakistan, met with Shaikh Abdul Qadir Al - Shaibi, (key holder of the Khana-e-Kaba), during his recent visit to attend Ghosle Kaba Ceremony in Makkah Al Mukarmah Saudi Arabia. PRESS RELEASE
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Today, we have reached a great milestone. The reactors are stable, which should resolve one big cause of concern for us all
Markets
Japanese Prime Minister, yoshihiko noda
weekly review
KSE gains 47 points WoW, gas crisis takes toll on industry
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kse ends flat as volumes sink to new low 92 advance, 102 decline, 110 remain unchanged of total 304 scrips traded kse-30 index closes at 10292.58
KARACHI
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STAFF REPORT
he week started off with extremely low volumes amid the issues pertaining to Capital Gains Tax (CGT), memo-gate controversy and gas supply to the manufacturing sector particularly the fertilizer industry. Adding to the misery of the fertilizer
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kse gains 41 points despite lackluster trading 104 advance, 106 decline and 105 remain unchanged of total 315 scrips traded kse-30 closes at 10288.20
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sector, poor off-take numbers in November further dampened investor sentiments. As a result, average volumes were down by 15%WoW to 38m shares. however, the KSe 100 Index witnessed a gain of 47 points, up 0.4%WoW. Foreign fund managers remained mostly inactive due to Christmas and New Year holidays, thereby remaining net seller of meager US$0.4m.
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Margin Trade system spurs bulls at kse 133 advance, 87 decline, 98 remain unchanged of total 318 scrips traded. kse-30 index closes at 10318.16
AAHYAn MuMTAZ
he year-end witnessed low trading volumes and all round dull activity as the KSe-100 index gained a meager 47 points (+0.4% WoW). Activity remained slow, with average daily volumes coming in at 38mln shares (-15% WoW). Political tensions, infrastructural issues, regulatory concerns, and dampened industrial activity compounded negative investor sentiments. Foreigners again were net sellers, disposing USD 0.4mln worth of equities during the week. The week started off where the last ended; in the midst of political turmoil engulfing the country in the wake of the memogate scandal. The political atmosphere has taken its toll as investors treated the uncertainty with a cautious approach. Further, the issues pertaining to Capital Gains Tax (CGT) which has resulted in a deadlock between capital market participants and regulator hammered activity. however, some respite from the regulatory front was seen with the SeCP’s recently announced relaxation in Margin Financing rules. It is expected that the amendments will have a positive effect on the market as the rules come into play once implemented. This bodes well for activity and should see the market in the positive in the coming weeks, assuming the political situation settles down a bit and macroeconomic fundamentals see a marked improvement from the declining trend they have assumed.
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negatively impact the margins of the manufacturing sectors. FERTILIzER OFFTAkE DOwN 11%MOM: All fertilizer sales in November were down 11%MoM, whereas both urea and DAP offtake dropped MoM by 12% and 22% respectively. Consequently, the fertilizer stocks like FFC, eNGRO, FFBL & FATIMA underperformed the market by 3%, 6%, 10% and 1%
kse-100 ends on sour note, with 88 pts drop 98 scrips advance, 113 decline, 88 remain unchanged of total 299 scrips traded kse-30 loses 139.13 points to close at 10179.03
respectively. LSM cONTRAcTS IN OcT, FDI FALL DURINg 5MFY12: Large scale manufacturing (LSM) has grown by 2.1%YoY in 4MFY12 mainly due to the low base effect as floods last year had affected the industrial production. In October alone, however, the LSM contracted by 1.5%. Furthermore, Foreign Direct Investment (FDI) fell by 27%YoY in 5MFY12 to US$419.8m.
sToCk sPeCIfIC ACTIvITy
foRWARd lookIng exPeCTATIons
Fertilizer stocks were in the limelight unsurprisingly given the issues revolving around gas supply for the industry. The gas crisis in the country is worsening with the winter setting in. In order to rationalize the gas usage, the GoP is considering proposals regarding month-long closure of CNG stations and raising CNG prices. Moreover, the GoP has finalized the increase in gas tariff for different consumers from 14% to 207% from Jan 2012 which is likely to negatively impact the margins of the manufacturing sectors. Furthermore, NIB was in the limelight with newsflows regarding a possible sale of the bank to IBIC. According to sources, talks are underway for a suitable price which would entice the Chinese bank to view a possible acquisition favourably given the heavy losses that have been sustained by NIB over the course of its operations in Pakistan.
Fertilizer stocks are expected to be in the limelight for the coming week as a hardline stance on gas supply is expected to finalize shortly. In the event that the proposed 207% hike in feed stock prices to the fertilizer sector is implemented, a urea price hike in the range of Rs 300/ bag would be highly likey. In such a case, FATIMA is the preferred stock which benefits from windfall gains as prices are hiked. Further, banking stocks, with yearly results to be announced would be popular plays on attractive dividend yields.
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The lifeline of the country continues to be the industries as well, and as a result of an increase in demand of gas; the curtailments to the industry, have adversely affected it. Our focus remains, to find a solution that benefits all the stakeholders
analysis
sngPl Managing director, Arif hameed
The publication prank of business schools
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NAwAzISH MIRzA
he recent trend in Pakistan’s academic scene is a transition from core teaching institutions to so called research concentrated universities. This has been pushed at the top level as the higher education Commission (heC) has linked various appointments, promotions and tenures of academia with their research output. The countless business schools of the country are following suite with their rankings heavily relying on the research published by the faculty. The research and its dissemination is beneficial if the purpose is improving on knowledge and possibly that was the prime factor for heC’s focus on promoting research. however, the recent growth of open access journals has provided Pakistan’s academia in management sciences with the possibility to beat the system and sadly some of them did not miss the train. Consequently, we are facing a catastrophe of research in management sciences. The numerous open access journals that form the basis of this publication hoax, offer some interesting services that are worth discussing. Primarily, some of these two managed to end up in indexing services provided by Thomson Reuters and Ulrich’s Journal Database that are considered Kosher by heC making them favourite for business schools professors. Secondly, these journals mostly have at least twelve issues a year (some might have up to 24) and you can end up publishing same number of articles if you can afford to pay some hundred dollars for each “acceptance”. Interestingly, fee is charged on acceptance and not on submission making it a risk free venture for the researchers. Thirdly, if you do not have a foreign currency account or a visa card, you can still pay for publication through a local bank account in Pakistan – yes in PKR. even if these reasons are not good enough, you further have the possibility to act as “reviewer” of your own paper by creating fake emails as a professor and proposing the nonexistent expert as a possible referee. Surprisingly, the journal will not investigate the pseudo referee and voila you have a publication – assuming that being rational, the author is not likely to reject his own paper. Further, even you let the editors do the tough task of finding a referee; still the rejection rate of these journals is zero, making them attractive for a publication seeking public. This reminds me of Nobel laureate Myron Scholes, who in one of his guest lectures at Paris Dauphine stated that every academic manuscript has an ex ante 99% probability of rejection. Thanks to these journals, we are excellent at beating the odds. Lastly, the editorial board of these journals have significant participation from the sub continent. Further, readers should not be surprised if they end up on the website of an international open access journal whose entire editorial board comprises of academics from some university in Kyber Pakhtunkhwa. Oh yes! Still it is an international journal. In a recent article published by Dr Q Isa Daud-
pota – who has been tracking the issue of fake publications for sometime – some interesting facts are presented about the heC recognised PhD supervisors in management sciences. his findings reveal that half of these holy supervisors have publications in such dubious journals with an average of 4.6 articles per person. The same article further reveals that one of the professors in management sciences produced 18 international publications – all in such journals - in eighteen months. I had a similar experience sometime back when a seasoned academician tried to show his superiority on me by claiming that he has been publishing four articles a month taking his publication count to 40. Impressed by his quote, I investigated the publication bouquet and imagine what I got. From 1980 to 2007, his total publications including his doctoral dissertation were 4 that increased by ten times from 2007 to 2011. All thanks to these open access journals. This information is shocking for anyone who is familiar with the research and publication process in business studies. In technologically advanced countries (a terminology used by heC for developed countries) a business related academic article would require, on average, six months of extensive work. Interestingly, this average time is spent on research despite the convenient on and off campus access to systematic databases, literature, surveys etc. Further, the review, comments, revision and publication process can take up to a year for a second tier journal whose editorial process ensures that the research is genuine and findings are not cooked.
CRony CAPITAlIsM
The new form of corruption in Pakistan how bad investment drives good investment out
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SHAN SAeeD
still remember during Asian Financial crisis, President Suharto’s government faced an ignominious exit from the parliament in May1998. People were fed up with corrupt rulers in Indonesia. his famous son Toni was caught for corruption, crony capitalism and wrongdoing in the government. In Pakistan, we are in the same boat with even higher level of corruption at all spheres of the government department. Prime Minister, his son, cronies like Ayyaz Niazi-Corrupt Chairman of NICL ex-Russian Night Club Manager and exStandard Chartered corrupt banker in Dubai, Khawaja in Oil and gas company.
President and his entourage of corrupt people like Raja Pervaz Ashraf in Rental Power deals, ex-MD Capt Ajjaz haroon of PIA, Babar Awan and Dr. Asim hussain—doctor becoming an energy expert. he has no idea what’s going on in the energy market globally. Does he know about shale gas or natural gas that would entirely change the global energy market in the next 5-years? For his information, till 2006, the United States was the ninth largest global producer of natural gas. Now, it’s No 1 in the world. It’s really remarkable the recovery USA has made in the natural gas market due to its consistent effort in breakthrough technology. energy experts are sharing their strategic thoughts about solar energy, natural gas and shale gas that
Given the progression of our business professors who have demonstrated the ability to publish at such an unbelievable rate, there could be two possible actions. If we believe in the story, heC should propose their names to Nobel committee to be considered as next laureates for an achievement that surely is unmatched worldwide. else, heC should crack down on all such publications and all such authors for the insult these imbeciles are bringing to business academics. The dire consequences of these practices do not emanate from incapable individuals publishing filth in name of research but actual loss will surface if genuine faculty members are tempted to ride this bandwagon to match the publication rate of open access clientele. For those who are curious about title of some of these journals should refer to Dr Daudpota’s article that exposes king of the ring of open access. The sad part of the story is yet to come. While browsing the website of god fathers of these journals, I came across some academic conferences in Pakistan where these sham journals are acting as collaborator. In one of those conferences that took place in the last week of December, heC is appearing as a co sponsor. having heC on board, whom should we recourse as lender of the last resort? The other conference that is likely to take place in spring 2012 in Lahore has all collaborating journals from the same category. Again, with heC’s generosity towards research, this conference might claim some research grant or at least some recognition for the university, while, simultaneously, these Jour-
would be the new game changer in the global energy market. Few regions are not even considering analysing the energy market or having skin in the game. In the coming decade, countries that would be thriving with their economies would be those who are investing heavily in the energy and natural resources. ENTREpRENEUR’S pERSpEcTIvE: how crony capitalism kicked good investment out of Pakistan? Local entrepreneurs and businessmen know that they have to bribe or kickback or commission the government officials to get work done. Moreover, these government officials want stakes in the new ventures and profit sharing. This makes them uncomfortable as they don’t want to share profits with government officials because they fear black mailing in future. Fear is a depreciating asset with no upside or recoverable value. They want to make investment in Pakistan but are apprehensive about corrupt government invest amounting to $10 to $15 billion if present government gets it act straight by allowing level playing field to the all investors in Pakistan instead of favouring their own men to get kick backs. Since government wants to favour its own people to have smooth cash flow of corrupt funds in bank accounts, makes good investment
nals benefit as these questionable conferences provide marketing opportunities to exploit more academicians. This discussion brings another challenging issue for heC. The quality assurance procedure demands that at least one article from dissertation should be published in a recognised journal before the formal award of PhD degree by a local degree granting institution. If these journals continue to remain as recognised, only because they appear in some indexing service, the quality of locally produced PhDs will be of serious concern. In context of academic articles in general and PhD in specific I would like to share a unique source of plagiarism that heC should counter and which is unlikely to be captured by these dubious journals. This incident recently happened in a foreign country when a Pakistani doctoral student translated a thesis to english that was originally written in some european language, and submitted in his own name. The fraud was detected by the reviewer by chance as there is no way a software, regardless of its artificial intelligence, can disclose this kind of intellectual deception. If this can happen abroad, I will not be surprised if this is already happening in Pakistan. The result of these malign practices, leading from plagiarism, false research, publishing in fake journals, is fairly obvious albeit seriously daunting for business education. The unethical publishing yields institutional applaud, research rewards, promotions and tenures. The websites of business universities are flashing the news of their faculty’s publications in this bogus category. This raises a very serious question. What should we expect about the future business managers who are being trained by people violating basic research etiquettes? This is high time that heC should take serious note of research practices being followed at business schools in Pakistan. The authority must enforce its vision of promoting a research culture in the country. The indexing lists are not sacred cows and heC must strictly scrutinise the journals to remove such plagued publication avenues that promote cheating among business academia. They must abstain from recognising so called business conferences that act as nothing more than marketing campaigns for such journals. They must retrospectively evaluate the promotions, appointments and other benefits of faculty in management sciences on basis of prank research and corrective measures must be taken to convey a clear signal. For once, grandfather clause should be trashed in the wider interest of business education. Similarly management schools should discourage these kinds of publications by their faculty members otherwise such high rate of publications can be a source of humour but is not a reflection of class in serious academics. The author holds PhD in quantitative finance from Paris Dauphine. The views expressed are of author and does not represent any institution. Author can be contacted at nawazish@nmirza.com
difficult to get in the financial system in the country. The image of the country is badly tarnished in the local and international media as our corrupt rulers are only thinking short term to fill their own pockets. International or foreign investors take a cue from local investors before making investment in Pakistan. Just a small example Yamaha wanted to invest $15 million in Pakistan in 2010, but withdrew their investment as corrupt government officials wanted kickbacks in the deal. Chinese company pull out of Thar Power Coal project as NePRA officials wanted kick back on $17 billion investment. GDP size remained stagnant for the last two years as GOP did not support in increasing income of the people. INSIDE INFORMATION: Do government officials know that where the illegal funds are heading for? They are landing with FBR very soon. You bet. By the way, All Suiss banks have announced that they are closing account of Pakistani clients and are revealing data of all Pakistani account holders with FBR who are maintaining huge funds with them. So government officials have to think hard where to place those illegal funds in the coming three months. The sleepless nights would be pressing for some people. REMEDY FOR cRONY cApITALISM:
Government should provide confidence to local investors in order to restore its credibility and financial standing in the international community. Once local investors will get their skin in the game and invest in Pakistan, foreigners would automatically come in the market to place funds. The rule is very simple, be open, be transparent and don’t favour your own people. Let the market function without government interference. Government of Pakistan should follow successful economies like Singapore, Malaysia, Indonesia and South Korea to welcome local and international investors to make good investment, sharing technology and best management practices for the economy to grow and to provide jobs to the local people. The suffering of people in Pakistan is too much now and they want to have financial emancipation and want to improve their living standards going forward. happy investment the good way! Shan Saeed is a financial market economist with 12 years of solid global experience based in Singapore/Malaysia. He has graduated from Uni of Chicago, Booth School of Business, USA and IBA Karachi. He can be reached at saeedshan@gmail.com. Blogs at www.economistshan.blogspot.com