Profit 6th January, 2012 by Profit Epaper

PRO 06-01-2012_Layout 1 1/6/2012 12:22 AM Page 1

Telecom sector–anchoring Pakistan’s economy Page 4-5 Agriculture collapse in ‘12 Page 3 SBP and finance ministry give conflicting estimates of fiscal deficit Page 7

Pages: 7

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Friday, 06 January, 2012

Corruption in LPG industry touches Rs350b in last 7 years

Company registration goes up by 15 per cent during 2011 ISLAMABAD STAFF REPORT

Profiteers charge consumers Rs30 per kg in last three months LPG mafia steals Rs42m from the poor consumers: LPGDAP alleges Government can generate Rs5b per year through implementing LPG policy 2011 KARACHI

GHULAM ABBAS

iquefied Petroleum Gas (LPG) industry in the country has made record corruption of over Rs350 billion in the last seven years as LPG mafia seems to be given a free hand to make money through charging consumers with exorbitant prices.

PRICE HIKE LPG marketing companies, under the current shortage of gas in the country, has also increased the price of the liquefied gas by Rs30 per kilogram in the last three months without any justification, irfan Khokhar Chairman, LPG distribution Association Pakistan (LPGdAP) said while addressing a press conference here at Karachi Press Club on Thursday.

HELPLESS GOVERNMENT The highly influential group and profiteers in the industry were making an increase without any fear as concerned authorities in government were helpless to control the price forcing the poverty hit consumers especially in the hilly areas of the country to buy the much costlier fuel in winter season.

RECORD BREAKING PRICES As per data provided by Khokhar, the companies were charging the people

with the record additional price of Rs366 and Rs1,416 per domestic slender and commercial slender respectively. The per kilogram price of LPG in hilly areas including Gilgit Baltistan, Sawat, fATA and others has also reached Rs175 without any notification of ministry of petroleum or Oil and Gas Regulatory Authority (OGRA). “The price of gas could be reduced to at least Rs90 per kg from the existing Rs175 per kg if the government exempts LPG import of General Sales Tax while making the import feasible to the importers,” he said adding that at least 13000 MT LPG was imported last month which was 38 per cent of local production. According to Chairman LPGdAP the unjustified increase in price by LPG companies making international prices an excuse has multiplied the woes of crisis hit people.

CORRUPTION & IRREGULARITIES Talking about corruption and irregularities in the LPG industry, Khokhar alleged that the price of fuel was increased by 541 per cent in the last seven years as the production cost jumped to Rs92 per kg from Rs17 per kg. from April 2006 to January 2012 production price reached to Rs92133 per MT thus making the additional cost of production by Rs75133 per MT and Rs75 per kg in last five years.

LPG MAFIA Collectively LPG mafia pocketed

Rs350 billion increased price in the past seven years. in the last seven years, the number of LPG producers was increased from five to 11 while there were 90 companies currently as compared to earlier number of 17. The huge irregularities made in the allocation, distribution and award of LPG quota by the government among retired army officers Khalid Maqbool, Muneer Hafeez and Moinuddin Haider, two former chairmen of the National Accountability Bureau and politicians, were also reasons for the current skyrocketing prices of LPG, he claimed.

LPG POLICY 2011 Talking about LPG Policy 2011, he said, the country could generate at least Rs5 billion per year if the policy

was implemented as it would eliminate the control and monopoly of the LPG mafia in the country. He also praised dr Asim, minister of petroleum and natural gas for his efforts to implement the new LPG policy. He also appealed prime minister, chief justice of Pakistan, and ministry of petroleum to take action against LPG companies which were busy in black marketing and charging the poor people with exorbitant prices against the international rates. He requested the chief justice to remove stay over LPG policy in order to provide a cheaper fuel to the consumer. in reply to a query, he said present and past governments had failed to curb the corruption and black marketing in LPG industry which ultimately have fallen heavily on consumers.

eCuRiTieS and exchange Commission of Pakistan (SeCP) registered a total of 3,596 companies during the last year 2011, showing an increase of 15 per cent as compared to 3,137 companies registered during 2010. A statement of SeCP said out of the registered companies 3,239 were private companies, 28 public unlisted companies, 255 single member companies, 51 not-for-profit association, 15 foreign companies, five trade organisations and three companies limited by guarantee. in december 271 companies were registered in which private companies have the highest share in new incorporation totaling 239 followed by 20 single member companies, five public unlisted companies, three not-for-profit associations and foreign companies, each, and a trade organisation. Of the three foreign companies, two are from Turkey and the uSA and have been registered in islamabad; while a foreign company from Netherlands is registered in Karachi. foreign investment by nationals from China is witnessed in three new local companies in the auto and allied, mineral, and services sectors and by nationals from Singapore and Afghanistan in two new local companies in tourism and communications sectors. The sector-wise position shows that the trading sector has highest new incorporations with 39 companies, followed by services with 35, hajj and umrah services with 20, education with 14, construction and information technology with 13 each, communications with 12, tourism with 11, and food and beverages with 10. Company Registration Office (CRO), Lahore registered the highest number of companies, i.e., 88 followed by CROs islamabad and Karachi registering 78 and 67 companies, respectively. Remaining CROs at Peshawar, quetta, Multan and faisalabad registered 17, 10, seven and four companies respectively. The authorised capital and paid up capital of 271 companies, is Rs4.53 billion and Rs475.06 million, respectively. during the month, 19 companies increased their authorised capital with the aggregate authorised capital increment of Rs1.57 billion and 42 companies raised their paid up capital with the total paid up capital increment amounting to Rs3.15 billion.

Suzuki mulls over Alto discontinuation KARACHI STAFF REPORT

OLLOwiNG the earlier announcement by indus Motor Company Limited of the discontinuation of daihatsu Coure, Pak Suzuki Motor Company (PSMC) recently announced similar plans with respect to its 1000cc Alto model. implementation of euro-ii compliant emission standards from July 2012 is to blame for this. Although applicable on all vehicles assembled locally, PSMC has announced that it only plans to cease production of Alto while its other non-euro-ii compliant models (Mehran, Bolan and Ravi) will be upgraded to meet the new regulatory specifications. we believe the reason behind Alto being singled out is the fact that at least three of PSMC’s models (Mehran, Bolan and Ravi), together

comprising more than 60 per cent of total units sold in CY10, use variants of the same engine thus making it economically feasible to import an upgraded version of the engine used in these models as compared to investing in one which makes up 15 per cent of total sales volume, said umar Hafiz at AHL.

DISASTER FOR PSMC? Not necessarily! even though this would impact ePS negatively by approximately PKR 1.05 when viewed in isolation, we believe that PSMC’s Mehran model would witness an increased demand owing to this cessation, he added. ‘Our argument is based on the relative pricing of different passenger cars in the 8001000cc segment. with Coure no longer being an option for customers, Cultus,

priced at Rs957,500 (average) as of January 2012, is the next best alternative,’ he added. However, with this price being almost 25 per cent higher than Alto’s January 2012 average price, coupled with the effect of higher fuel costs owing to CNG curtailment and halt of production of CNG variant models, we believe that Mehran sales would also be augmented

WILL MEHRAN SAVE THE DAY? Although it is impossible to calculate with a high degree of certainty at this stage, but even if CY12 Alto sales (by volume) are reduced by 60 per cent, and half of these lost sales are captured by Mehran, this would entail a topline net impact of Rs2.6 billion. Our base case hinges upon Rs1.8 billion

revenue increase brought about by an additional 3000 Mehran units being sold at a CY12 estimated price of Rs597,000. However, being a high margin product with higher degree of localisation, Mehran sales would entail

lower costs, especially when viewed in light of rupee depreciation against Japanese yen and uS dollar.

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Friday, 06 January, 2012

news CORPORATE CORNER NIT to inaugurate NIT/summit Bank ATM card KARACHI: National investment Trust (NiT) is coming up as pioneer of yet another value added innovative facility of NiT/Summit Bank Co-Branded ATM card for its unit holders with collaboration of Summit Bank. The inauguration ceremony of the NiT/Summit Bank Co-branded ATM Card will be held at a local hotel in Karachi on 7th January. Mr Hussain Lawai, President and CeO of Summit Bank and Mr wazir Ali Khoja Chairman/Md NiTL will distribute NiT ATM cards among the NiT unit holders. PRESS RELEASE

ADB Approves

NBp rehabilitates flood damaged schools in Nowshera

loan for Khanki Barrage LAHORE STAFF REPORT

After completion of headwork, more than three million acres of fertile land has been irrigated

eCReTARY irrigation Punjab irfan elahi said Asian development Bank (AdB) has approved an Adf (very soft) loan of $270 million for constructing new Khanki Barrage Project as a replacement for the 120 years old Khanki Headquarters and it plays a pivotal role in the irrigated agriculture of Punjab province which is the backbone of national economy. He further said that the irrigation

department of Punjab, being the custodian of the major hydraulic structures, has taken up rehabilitation and modernisation of barrages located in the province in phased programmes. On the basis of feasibility and detailed design studies, New Khanki barrage is proposed to be 900 ft downstream of existing headquarters for which a project costing Rs23,442 million was prepared and got approved from eCNeC in 2009. irfan elahi added that project is designed using state of the art techniques and is being implemented

Taskforce to implement CNG safety measures ISLAMABAD STAFF REPORT

OveRNMeNT has set up an inter-ministerial taskforce to evolve an inspection and enforcement regime to ensure safety of CNG kits and cylinders installed in public transport and private vehicles. The taskforce will be headed by Joint Secretary Ministry of Petroleum, while director General Hydrocarbon development institute of Pakistan (HdiP) will be its secretary, and representatives of OGRA, department of explosives, Motorway Police, RTAs and uN disaster Risk Consultant will be its members. it has already conducted detailed interactions

with the interior ministry, district administrations, provincial governments, traffic police and other stakeholders. Secretary petroleum has requested provincial chief secretaries to indicate locations in all districts for establishment of CNG testing stations by HdiP. Moreover, ministry of professional and vocational training has been requested to arrange for diploma courses through collaboration with NAvTeC and Provincial Technical education and vocational Training Authorities (TevTA) to provide technical trainings in order to produce skilled personnel who would be deployed at all CNG stations and testing centers. Taskforce has recommended that refueling procedure

and site safety at CNG pumps would be ensured by Chief inspector explosives (Cie) and OGRA. Rfid chips would be implanted on tested cylinders and scanned prior to refueling. it is proposed that private vehicles would be inspected annually and Public Service vehicles (PSvs) would be tested every four months. After the cut-off date Motor vehicle examination (Mve) will not certify vehicle having untested cylinders and RTA shall not grant route permits to vehicles having untested cylinders. damaged, expired and non-approved cylinders would be seized by police and correct location of cylinders in PSvs would be decided by OGRA and use of multiple cylinders shall be banned.

through international contract following AdB guidelines. Civil works are scheduled to start in September 2012 and the completion period is five years. implementation of the project will ensure sustainable irrigation supplies to the command area for the next 100 years and it will help in alleviating poverty and bringing prosperity to the abovementioned districts Gujranwala, Hafizabad Sheikhupura, Nankana Sahib, faisalabad, Toba Tek Singh and Jhang. He told that after completion of headwork, more than three million acres of fertile land has been irrigated.

pak growers can topple Indian agriculture rates: Agri Forum Chairman LAHORE STAFF REPORT

AKiSTANi growers can produce vegetables, fruits, meat and other agricultural commodities on 25 per cent lower rates than the indian farmers provided rates of fertiliser, diesel and electricity in Pakistan are brought at par with india for the agricultural sector. This was claimed by Agri forum Pakistan Chairman, Muhammad ibrahim Mughal, while talking to a group of media here on Thursday. Presently, input cost in agriculture, livestock, fisheries and poultry is three times higher than that of india due to which, Pakistani agricultural produce is expensive in the market, Mughal claimed.

KARACHI: National Bank of Pakistan (NBP), CSR division has rehabilitated 10 flood damaged public sector schools and provided them with furniture, equipment and installed tube-wells for drinking water in district Nowshera. The objective of rehabilitation was to make flood-hit schools functional for the education by providing furniture, ceiling-fans and drinking water facility. NBP is running vocational training centers, providing training and skills to rural women to earn livelihood in honourable manner are in progress. Atlas Khan, Regional Head Peshawar said NBP will rehabilitate 10 more schools next year and the bank will also set up health camps at Jakra and Chamkani villages of Khyber Pakthunkhwa where a team of qualified doctors will provide healthcare and medicines to the people. PRESS RELEASE

Warid brings back sIM Jagao oﬀer KARACHI: warid brings back its ‘SiM Jagao Offer’ with more invigorating and embracing feel than ever before. All those warid customers who have not used their warid SiM since 1st October, 2011, can start using it now to receive a bonus on every recharge for the next three months. The bonus amount ranges from 5 per cent for a reload of less than Rs100, up to 25 per cent for a reload of Rs1,000 or more. This bonus will not only be eligible for free calls to all local networks but also free SMS to all local networks. Customers can also enjoy amazing call rates as low as Rs2.99/hour for all calls to fnf for the duration of the campaign. PRESS RELEASE

LG and Intel sign strategic alliance LAHORE: LG electronics (LG) and intel entered into a strategic alliance to adopt and jointly promote intel wireless display (widi) technology. intel widi will be embedded into next year’s LG Cinema 3d Smart Tvs, making them the first in the Tv industry to feature intel widi technology. intel widi is a wireless connectivity inter-face which allows for instant, highdefinition viewing of content stored in notebooks and other external mobile devices on large screen Tvs, projectors or monitors. “Through this strategic alliance, Cinema 3d Smart Tv users will be able to access a wider variety of content in a more convenient manner,” said Seog-ho Ro, Senior vice President of LG Home entertainment Company’s Tv Business unit. “intel is planning to expand intel widi technology to various devices to provide con-sumers the seamless, smarter usage experience,” said Hee-Sung Lee, Country Manager of intel Korea. PRESS RELEASE

Dollar reserves stand at $16.917b

Bears grip KSE as foreign selling continues KARACHI STAFF REPORT

KARACHI: The country’s total liquid foreign reserves stood at $16.917 billion during the week that ended on the 30th of december. According to State Bank, during the week in review central bank held $12.877 billion, while the banks other than SBP possessed $4.039 billion. STAFF REPORT

eARS seared the local bourse’s floor with a precipitous drop in the benchmark KSe-100 index by 174points in the wee hours of trading. Albeit trading commenced on a weaker note, rumours of engro initiating yet another urea price hike kept investor’s interest alive in ffC and kept the overall market afloat. However, persistent disinvestment by foreign investors amidst economic concerns, news of National Power international intending to liquidate its 17 per cent stake in HuBC and lack of impetus including confirmation of urea price hike crippled the sentiments as the index faltered sharply. Profit taking was witnessed today at inflated levels as KSe-100

index closed down 174 points at 11,188 level with 30m shares traded today, down 36 per cent from yesterday. fii’s selling in index heavy weights continued to haunt local investors despite attractive earning growth of 15 per cent and dividend yield of 8.5 per cent for 2012. Tension between Judiciary and the government on non-implementation of former decisions is expected to en-

hance political noise in the country before the upcoming Senate elections due in March 2012. fii’s were rumored sellers in energy scripts while locals were seen accumulating banking and fertiliser scripts. Although red blanketed most of blue chip stocks, selling pressure in index heavy OGdC made matters worse. Though systematic risks loom large, further

pull back represents opportunity for re-entry into selected stocks, said Salman vidhani, Senior investment Analyst at HMfS. The KSe 30 index closed at 10206.75 levels with the loss of 152.39 points, while All Share index lost 113.08 points to close at 7755.65 levels. Total 85 scrips advanced 116 declined and 90 remain unchanged out of total 291 scrips traded.

KARACHI: Picture shows Mr Amer Pasha, Country Manager Visa Inc Pakistan and Afghanistan, handing over the donation cheque for flood victims of Jamshoro to Ms Shahbano Alliani, senior strategic manager and gender specialist, Thardeep Rural Development Programme (TRDP). PRESS RELEASE

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Friday, 06 Januar y, 2012

EDITORIAL

Agri collapse in ’12

Forward looking monetary policy?

N principle, the central bank governor embodies everything capital markets hold as intrinsic truth when he says consumer expectation surveys will facilitate forward-looking monetary policy. There can be no arguments with the other assertion at SBP’s centre for survey research either, that such exercises help gauge inflation expectations and economic confidence of households, in addition to popular reaction to policy formulation and subsequent economic implications. But coming to the factual, public feedback, though important, accounts for precious little when central bank autonomy is compromised. Perhaps the good dr ishrat Husain, himself a former SBP governor and director iBA, the support institution for the CSR initiative, should have made a point of this, considering how central bank printing presses continued to undermine its core price-stability function even as he praised the initiative. for, as things stand, monetary policy is haphazard at best, and

not because the public feedback loop hasn’t existed so far. we, along with numerous stakeholders, have endlessly debated the erosion of monetary policy due to the government’s borrowing excesses. first, when rates were jacked up, the government didn’t stop borrowing, diluting the anti-inflationary impact of the hawkish policy stance, leaving nothing to show for sidelining private sector investment in crunch time. Then, when rates dropped dramatically, the government still kept borrowing, crowding out crucial private sector investment critical to snapping out of chronic stagflation. expecting public opinion to influence interest rate and money market decisions in such circumstances amounts to ridiculing the very people consulted for the exercise. Mr Anwar’s initiative is appreciated, though it should have been preceded by a visible show of safeguarding the bank’s autonomy, so much of the work now being done is not just another waste of time and resources.

Tariq Bucha

iTH 2011 rightly dubbed a black year for agriculture, the outlook is not much rosier in the new year for the economy’s largest employer. A number of crucial factors combine to put unbearable downward pressure on agriculture growth and productivity. And failing urgent and immediate action, the spill-over will not only affect the sector’s growth, but also the national GdP, employment and export earning. One, due to obvious time lags between policy implementation and on ground results, much of the policies introduced in ’11 will take intrinsic shape in ’12, with the prospect of a more dismal outlook for the latter. Two, area of wheat cultivation has been reduced by 10-15 pre cent, which will compound losses in agri-GdP because of flash flood losses in Sindh. Three, cultivation mechanics have been altered, as indicated by tractor off-take in H2-2011 dropping by an alarming 33 per cent. Comparing with 33 thousand in the first half of the year just ended, the number for the last six months came at only 12 thousand. The trend implies that the ongoing year will record a tractors offtake shortfall of approximately 40-50 thousand, which in turn means that a similar number of farmers will not posture towards mechanisation. So, not only will no new land come under cultivation, but rather even the present amount will decrease. These developments have made wheat cultivation non-feasible for a bulk of the farmers. The wheat support price, set at Rs1050 per maund, is just not feasible in light of rising input costs alone.

The largest employer is likely to take a 10-15pc hit in the new year

Used imported cars better than local This is with regards to the article, “Market flooded with used cars”, published on 4th of January. Local car manufacturers have completely failed to provide good cars at affordable prices. They have created a monopoly and increased the prices by 250 per cent in the last four years, while rupee has also devalued by 40 per cent, only in the last four years. Local manufacturers make low quality cars and sell them on high prices. furthermore, they don’t have stocks and take months to deliver as well as their brokers take extra for delivery on time. imported cars are used, but are in excellent condition which makes you feel that you have paid for right thing. if we do not import used cars, then we will only be able to afford a Suzuki Mehran at 2 million rupees, as the monopoly holders will be in a position to increase the price to as much as they like to. Similarly, to bring in the imported cars, we are required to pay huge taxes above 10,000 dollars on each car to the government exchequer.

This sets a very dangerous precedent. wheat is the country’s staple crop for rich and poor alike. And considering price distortions and cost-benefit feasibility, farmers with bare-minimum initiative will shift out of wheat production. The cotton situation, too, is alarming. unlike the sugar industry, which enjoys popular political patronage, the cotton sector has not been blessed with government intervention this year. The industry is already suffering with international cotton prices at their lowest level in two years. And since the crash followed an abnormal hike last season, the export industry has been caught off guard as well, with compound losses for national growth. The worst sufferer, of course, is the helpless cotton farmer, whose livelihood erodes with little chance of help from concerned quarters. Overall, i see the agriculture sector taking a 1015 per cent battering in ’12. Support price distortions and lack of official patronage are not all. This season has so far been without the usual rainfall, a situation aggravated by the decision to close dams. Plus, with diesel price flirting with the Rs100 level, coupled with savage energy shortage, farmers are unable to continue using tubewells as their alternate water source. The prohibitive cost means water will remain scarce. Hence low growth, low productivity and poor sectoral results in the current year. Therefore, ’12 is likely to be a very dismal year for the agriculture sector, particular the farmer. The government no longer sits comfortably on its strategic reserves either. Reports indicate that a good 30 per cent of the stock has been lost to poor storage arrangements. The turbulence is concerning and can quickly cause numerous spill-over shocks. deteriorating agriculture will push yet more people from the periphery, burdening the already unsustainable cityurban structure. At a time of low growth, increasing unemployment will further tear the fragile social structure at the seams. And loss in agriculture output will seriously compromise export earning, something the country can ill afford when the other arm of revenue generation – tax machinery – is not much to write home about. unless timely action is taken, farmers too will join the tidal wave of public discontent, a worrying sign for all parties concerned, especially a government in election year. The writer is President, Farmers Association of Pakistan

SHOAIB KHAN AFRIDI LAHORE

shArI’A MATTers

Derivatives and shari'a

Humayon Dar

Re derivatives acceptable in islamic finance? Of course the answer is yes, but one must appreciate the difference between islamic derivatives and their conventional counterparts. furthermore, while the use of derivative contracts is acceptable in islamic finance, there are limits to trading in them. On a philosophical level, almost all islamic financial products are in fact examples of derivative contracts. for example, a Sukuk (an islamic equivalent of a bond) may link the returns of an asset (e.g., a

property) to an interest rate mechanism such as LiBOR. what are derivatives? Any financial product that may derive its returns from an asset other than what it immediately invests in may technically be a derivative product. The most common examples of derivative products include options, forward and futures contracts. while the commonly held view amongst shari’a scholars is that trading in such contracts is forbidden in islam, the financial engineering in islamic banking and finance has resulted in a number of islamic options, forward and futures contracts that may be used for risk management and hedging. Amongst the contemporary shari’a scholars, Professor Hashim Kamali is perhaps the only one who has taken an unambiguous view on derivatives. Most other scholars’ opinions are in line with the rather conditional view of the fiqh Academy of the Organisation of islamic Conference (commonly known as the OiC fiqh Academy), which states that the way derivatives are structured and traded in conventional financial markets is not permissible.

it must, however, be emphasised that trading in options (rights to buy and sell), forwards and futures contracts is not permissible under shari’a. The use of such contracts is permissible solely for hedging purposes and not for pure speculative reasons. Consider the following example: Party A is a Pakistan-based commodity broker who has bought soya beans from a uS-based commodity broker for a price of $3m to be paid in one month. Party A would like to hedge against this foreign exchange (dollar) exposure in a shari’a compliant manner. This can be done in various shari’a compliant ways including the following: This structure is based on two promissory arrangements: A bank gives a promise to Party A at a given time to buy Rs210 million for a price of 1.3c per one rupee on a future date – Promise 1. Simultaneously, Party A gives a promise to the bank to sell $3m for a price of Rs.70 per dollar (or a price of one rupee for $0.01428) on the future date – Promise 2. The following are important shari’a con-

shAhAB JAFry Business Editor

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Are derivatives acceptable in Islamic finance?

siderations for promises: 1. Promises in islamic law are not like contracts, i.e., while contracts are binding on both the transacting parties, promises are binding only on the promisor if the promisee decides to call upon it. 2. Only unilateral promises (or two or more unequal promises) are binding. 3. Two equal and oppoaite promises are considered as a contract, and if such an arrangement gives rise to a binding forward sale contract, this is deemed not in compliance with shari’a. 4. Two promises are considered as equal and opposite if they are given by the same two parties on the same object for the same price exercisable at the same time (or during the same period) but one of them is a promise to purchase and the other is a promise to sell. 5. Two promises are not considered as equal

and opposite if at least one of the following conditions is not met: (a) The two promises are given by the same two par-

ties; (b) Promises are given on the same object; (c) Promises are given for the same price; (d) The two promises are given for the same date (or period); and (e) One promise is to purchase and the other promise is to sell. in the above example, the condition 5(c) is not met, as the agreed exchange rates differ (one rupee = 1.428c versus one rupee = 1.3c). Hence, they are not equal and opposite, and are therefore not considered together as a binding forward sale contract. in conclusion, we assert that it is possible to structure derivatives in conformity with shari’a. The writer is a shari’a advisor to a number of banks and can be contacted at humayon@humayondar.com

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Friday, 06 January, 2012

Pakistan has lots of potential and energy and this energy can be transformed into socialisation, education, commerce, technology and health

news

Naeem Zamindar Ceo Wateen

Telecom sector – anchori KUNWAR KHULDUNE SHAHID

AKiSTAN Telecom Authority (PTA) covered a wide gamut of upgradation measures to enhance the quality of its services in the year 2011. These measures are shaped up to not only help the Authority in its individual quest for perfection; they would also cater the national interests and the development of national economy as a whole. ever since the inception of PTA in 1996, it has been active in vying to bolster the national economy by doing its best to contribute in every way possible. The actions taken in 2011 are touted by the experts as going a long way in making the previously unfathomable targets; achievable.

LuCrATIve NuMBers in synchrony with its vision, business feasibility has always been at the apex of any priority list that PTA conjures up. This coupled with the interests of the consumers, forms the foundation of the PTA structure, and its goals. And of course, with such an unambiguous approach towards, the impressive numbers posted in 2011 were a fitting outcome. Pakistan’s teledensity touched 68.39 per cent – a 6.7 per cent rise from 2010. Mobile subscribers at the tail-end of 2011 were estimated to be around 108.9 million – flaunting a growth rate of 10 per cent; which is twice as much as that of the previous year. There was a precipitous ascent in mobile penetration as well, as the num-

Pakistan’s teledensity touched

bers rose to 65.4 per cent – from 60.4 per cent last year. Number of Cell sites has also increased from 30,126 in June 2010 to 31,303 when the data was collected at the end of last year. Cellular industry’s ARPu also depicted a healthy increase from $2.41 in the previous fiscal year to $2.45 this time round. Mobilink continues its unrelenting presence at the top of the pile as far as mobile subscribers market is concerned, with a 30.7 per cent share, followed by Telenor (24.5 per cent), ufone (18.9 per cent), warid (16 per cent) and Zong (10 per cent).

BroADBAND MArKeT despite wireless technologies taking over the lion’s share of broadband market, the number of broadband users crossed the one million mark by rising up to 1,491,491 at the end of fY2011 from 900,648 previously – showcasing a 66 per cent jump. The broadband spread rose from 0.55 per cent to 0.89 per cent as well. PTCL was at the top of the broadband clientele with 848,379 holding 57 per cent market share. PTCL was followed by wateen in the aforementioned stat with 218,506 customers and 15 per cent of the market share.

LoCAL Loop The local loop (LL) segment of the industry also depicted a decent progression as it faced a daunting competition from the wireless solutions; including mobile cellular services. LL teledensity was calculated at 3.4 per cent, with a subscription

of 5.72 million in June 2011. PTCL maintained its domineering presence, and was the dominant operator in the fLL marker with 74 per cent of the market share. The Long distance and international (Ldi) carried 11.4 billion international minutes compared to 9.5 billion minutes in the previous year – showcasing a 20 p e r cent gain.

reveNue CoLLeCTIoN The telecom sector’s contribution to the national exchequer was a massive Rs116.9 billion. GST/fed rose by 20 per cent to Rs52.6 billion. The total telecom revenues were at their zenith this year, reaching an all-time high of Rs362 billion. Cellular income was also bolstered and took an 11 per cent spike to Rs262 billion from Rs236 billion previously. Over the past three years, the Authority has amassed around Rs40 billion against APC for uSf. in its endeavour to curtail grey traffic, the Authority saved revenue of $26 million.

Mobile subscribers at the The number of The telecom sector’s broadband users rose to tail-end of 2011 were contribution to the estimated to be around national exchequer was

68.39% 108.9m 1,491,491 Rs116.9b in 2011

at the end of FY2011

Telcos should opt for becoming complete solution providers ISLAMABAD

AMER SIAL

ith the Planning Commission estimating that one million youth would be entering the work force every year till 2040, the government has no planning of how to provide employment to the young population comprising almost 50 per cent of the total that according to official estimates is under 25 years of age. According to the Pakistan Telecommunications Authority (PTA) country’s teledensity has increased to 68.6 percent. The total mobile subscribers have reached a record level of 111.1 million at end October 2011, up from 109.6 million subscribers on June 30, 2011. The telecom revolution in Pakistan started with the deregulation of telecom sector in 2001. The number of subscribers jumped from mere 300,000 to over 1 million within one year. introduction of calling party pays regime acted as a catalyst to add up to 1 million subscribers every month in subsequent

months. Cut throat competition in the market resulted in Pakistan having the lowest average revenue per user (ARPu) in the world. However, despite a record increase in voice segment the data connectivity has failed to take off in the country that could promote impetus to other sectors. Mobilink remains the market leader with 33.5 million customers, fol-

lowed by Telenor with 27.6 million. ufone 20.8 million, warid 15.9 million, and Zong showed the most promising growth with 13.1 million customers. However the figures for broadband connectivity were least impressive as the country has only 1.6 million subscribers at end September. The wireless technologies have helped increase the base but still

overall the market remains at a nascent stage. wimax has over 478,000 customers while evdO has almost 404,000 customers, while the landline based dSL service has over 730,000 subscribers. These mobile companies have large customer base as compared to any other entity in the country. However, they have failed to tap the huge number of customers to other productive use. The experiment of mobile banking in Pakistan has proved very successful, as the penetration of conventional banking remains low in the country. But no company has attempted to opt for tailor made solutions for the agriculture, education or healthcare sector. Chairman PTA dr Mohammed Yasin is of the opinion that Pakistan has emerged as one of the leading markets in telecom sector especially in the voice segment but the mushrooming of data connectivity has not taken off due to the non availability of local content and applications. Since the local telecom operators have failed to develop local content and applications, PTA has entered the field by launching an online portal.

There is huge potential for local content and applications for education, health, governance and banking. The government has failed to come up with some innovative approach to push broadband penetration in the country; even though experts have proposed subsidising projects in main cities from the Rs80 billion universal Service fund. The government on the other hand thinks that the upcoming auction of technology neutral licenses for 3G or for other emerging technologies would be helpful. Success of telecom sector in Pakistan is seen as model for transformation and growth even by the entities of other sectors. Nearly all the Power distribution companies (diSCOs) want to implement enterprise resource planning (eRP) software to improve their planning and decision making. They think the adoption of technology could help them overcome many of their woes and look towards telcos to provide answers through iCT. The future for these telcos lies in converting to complete solution providers instead of being mere service providers.

PRO 06-01-2012_Layout 1 1/6/2012 12:23 AM Page 5

Friday, 06 January, 2012

news

oring Pakistan’s economy eNCourAGING INvesTMeNT Owing to an influx of around $493 million in telecom and fdi of $79 million, there was overwhelming buoyancy as far as the investment in the sector is concerned. The imports had a jump of $766 million from $725 million. Mobile handset imports soared to the $218 million mark, showing a leap of 29 per cent. PTA left no stone unturned in its pursuit of encouraging fore i g n investment in our neck of the woods.

BALANCeD reGuLATory poLICy Apropos balanced regulatory policy, PTA flagged, during the year industry issues, encompassing matters including; high GST, levy of provincial

taxes and introducing 36 licensing. when needed PTA issued Show Cause Notices, brought about penalties, suspended licenses and sensitized telecom operators on SOPs. To further ameliorate the service quality, PTA introduced Cellular Mobile Network qoS Regulations 2011 and GPRS/edGe quality of Service Regulations, 2010.

vised via field surveys and rendezvous with Customer Service Centres. in collaboration with law enforcement agencies, PTA has carried out 45 raids since 2009 against the grey traffickers. The Authority also blocked 1095 websites after consumer complaints.

Qos surveys sAFeGuArDING INTeresTs PTA has taken scores of initiatives to safeguard the consumer interest, including the likes of new online complaint management system, SOP to control spam, unsolicited telemarketing and a multitude of technical measures to purge out ‘obnoxious and fraudulent’ communication, Anti-Spam filters, common Short Code allocation, SMS blocking, Pre-NPR data and other such facilities. The new Rabta information Portal will also go a long way in providing the much needed information and content at a solitary place.

suBsCrIBer verIFICATIoN Law enforcement agencies were also aided by PTA owing to a comprehensive subscriber verification and authentication system to deal with illegal and unverified SiMs. A wide range of measures were taken, including the unveiling of Subscriber verification System, monitoring system, and another system to purge the database of mobile subscribers. There globally acclaimed projects were super-

Amidst quality of Services (qoS) surveys PTA took actions against the telecom operator if there was any plunge in the required parameters, directing the respective CMTOs to improve their services. As a corollary of PTCL qoS survey, a distortion of the parameters divulged in the company’s license terms and conditions was revealed and appositely dealt with after PTA issued a Show Cause Notice. PTCL also covered all the bases while orchestrating the second comprehensive qoS survey for wireless Local-Loop (wLL) sector, of Limited Mobility verification of all operational wLL licensees and their qoS were found to be up to the mark.

eDuCATIoNAL upsurGe PTA continued to spread its message of research in the telecom sector via associations with educational institutions. under PTA Academia Linkage programme, PTA signed Memorandums of understanding with leading universities of Pakistan to encourage research and become breeding grounds for future connoisseurs of the field. Gold medals and cash prizes to university students, who had excelled in their telecom and iT projects, were also given to

further shore up the Authority’s quest of expanding its repertoire.

SuStainable practice

GLoBAL ApproBATIoN PTA’s performance was praised both at the regional and international level, and the Authority was announced as the Most Progressive Telecom Regulator in South Asia for the year. Chairman PTA, dr Mohammed Yaseen had the revered distinction of receiving the Best Telecom Regulatory Leader of the Year from the South Asian, Middle eastern and North African (SAMeNA) Telecommunication Council.

Our corporate strategy reflects our commitment to sustainable business practices RASHID KHAn

vIsIoN 2020 even though PTA has reached unprecedented heights, the Authority is still vying to continue to enhance the sector in synchrony with the latest updates. PTA unveiled its ‘vision 2020’ document, which envisions future developments needed to ensure that PTA continues its upsurge during the next ten years as well. The document is designed to aid policy makers in synthesizing the best policies possible to ensure that the customer sanguinity and the technological advancement continue at the same pace. it is being prognosticated that numbers of mobile users, broadband subscribers and fixed line customers will surpass the marks of 160 million, 19 million and 5 million respectively, by 2020. The writer is Sub-Editor, Profit. He can be reached at khulduneshahid@gmail.com

President and CEO Mobilink

Startling proSpectS

The Pakistani market is still in its infancy and the prospect for the country and the telecoms industry is startling LARS CHRISTIAn IUEL CEO Telenor

inveSting in future

ics

Bab

s ag

hir

Foreign investment down 59pc to $305.3m during July-November

Inf

ogr

aph

KARACHI

ISMAIL DILAWAR

NALYSTS dub it a show of an absolute mismanagement by the country’s economic managers, as net flow of foreign investment in Pakistan nosedived by 59 per cent during first five months of current fiscal year, July-Nov fY12. State Bank of Pakistan Thursday reported that net flow of foreign investment witnessed an accumulative drop of $443.4 million and shrank to $305.3 million from $748.7 million of the corresponding period in fY11. during the review period, the foreign direct and portfolio investment in the country posted a respective decrease of 27 per cent or $156.3 million and 164 per cent or $290.7 million. FOREIgn InvEstmEnt FROm dEvELOpEd ECOnOmIEs dROppEd by 62 pER CEnt: A geographical account of foreign investment shows that investment from developed

$443 million drop in FDI during July-November

economies, including countries from european and North American regions, declined by 62 per cent or $265 million to $160.4 million as against $425.5 million invested during the same months last year. The investors from developing economic of Asia and African regions also remained in the red zone and reduced to $156.8 million during July-Nov fY12 from the previous $284.8 million. This depicts a slump of 45 per cent or $128 million in monetary terms. FOREIgn pubLIC InvEstmEnt InCREAsEd by 77.6 pER CEnt: foreign Public investment, however, set in the green zone and increased by 77.6 per cent from the negative $4.9 million to negative $1.1 million. Sector-wise data shows that economic groups including food, tobacco and cigarettes, chemicals, pharmaceuticals, cement, ceramics, basic metals, electrical machinery, transport equipment, power, trade, communications and financial business saw the offshore investors investing money as low as 51 per cent, 100 per cent, 87 per cent, 100 per cent, 99 per cent, 29 per cent, 40 per cent, 145 per cent, 108 per cent, 688 per cent, 176 per cent and 97 per cent, respectively.

OvERALL dECLInE In ECOnOmy: Analysts said this was the amount coming from those foreign companies which were already operating in Pakistan. “The portfolio investment is marginal,” said Asfar Bin Shahid, a senior economist. The analyst said the country’s corporate sector was not growing in tandem with the economy which was increasing demand and consumption in the country through creating employment and increasing exports. “This is because there is an overall decline in the

economy,” A.B Shahid said. The analyst appeared critical of government saying while the country was facing acute energy shortage economic managers had no solution in hand. “There is no focus on the part of government which, perceivably, is absolutely incapable of managing the economy,” the economist viewed.

Zong made a cumulative investment of $1.5 billion in 4 years and it has deposited 26b rupees as taxes during the same period FAn YUn JUn CEO Zong

cuStomer Service

I believe our centricity towards Customer Service mentality as an organisation is our greatest strength MUnEER FAROOqUI CEO, Warid Telecom

PRO 06-01-2012_Layout 1 1/6/2012 12:23 AM Page 6

Friday, 06 January, 2012

06 Markets top 10 sectors

38% 05% 22% 15% 04%

Chemicals

01% 05% 04% 04% 02%

support Services

Construction & Materials Electricity Banks

Fixed Line Telecommunication

Oil & Gas

Financial Services

Personal Goods

Non Life Insurance

top 5 perForMers sector wise syMBoL

opeN

hIGh

LoW CurreNT

ChANGe

voLuMe

418.00 113.48 23.00 6.92 87.00

415.00 111.01 22.76 6.61 85.50

415.09 111.59 22.99 6.82 85.99

-1.30 0.22 0.47 0.02 0.71

9,152 868,241 1,533 302,860 63,469

0.01 28.18 5.68 152.25 40.82

0.01 27.47 4.72 150.00 39.65

0.01 27.87 5.68 150.05 39.81

0.00 -0.01 0.00 -2.51 -0.76

5,000 568,749 5 5,607 79,999

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

STOCK MARKET HIGHLIGHTS Index 11187.88 2882.87 2438.94

KSE-100 LSE-25 ISE-10

Change -174.09 -19.57 -68.39

Volume 24,557,542 736,854 34,540

Agritech(PREF)(R) Arif Habib Co SD Bawany Air Products Clariant Pakistan Dawood Hercules

Open 3190.65 365.42 74.18 141.00 120.70

High 3234.99 371.84 77.88 145.00 125.00

Low 3152.00 363.00 73.56 141.01 120.00

Close 3201.36 370.29 77.87 144.39 124.06

Change 10.71 4.87 3.69 3.39 3.36

Turnover 12 18,806 9,114 710 42,871

Major Losers UniLever Pak Ltd. Rafhan Product National Refinery Oil & GasXD Dadex Eternit

5397.42 2513.28 232.98 146.37 60.14

5397.42 2410.00 233.40 146.90 57.15

5202.00 2405.00 222.00 139.22 57.14

5226.10 2405.00 225.75 140.55 57.15

-171.32 -108.28 -7.23 -5.82 -2.99

202 15 344,505 989,334 500

Volume Leaders Arif Habib Co SD Lotte PakPTA Fauji Fert Fauji Fertilizer National Bank

27.87 10.19 43.72 157.00 44.23

28.00 10.25 43.74 158.70 44.44

27.00 9.98 42.50 155.40 43.69

27.23 10.02 42.63 156.52 44.04

-0.64 -0.17 -1.09 -0.48 -0.19

2,351,596 2,096,556 2,014,844 1,730,895 1,667,054

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

Per Tola (PKR) 54,517.00 51,608.00 982.00 1025.00

Per 10 Gm (PKR) 46,790.00 44,245.00 842.00 880.00

Per Ounce US$ 1,609.00 – 35.05 –

Al-Abbas Cement Attock Cement Bal.Glass Berger Paints Cherat Cement

2.60 51.54 1.78 13.60 8.99

18.30 1.10 8.11 33.51 9.57

18.30 1.10 8.11 33.54 9.57

-0.51 0.00 0.02 -1.71 0.00

6,639 3,480 12,150 10,504 10

27.37 3.65 41.03 7.78 82.29

2.70 51.90 1.78 13.90 9.97

2.61 51.54 1.72 13.60 8.56

2.61 51.54 1.78 13.88 9.25

0.01 0.00 0.00 0.28 0.26

11,500 202 100 7,300 222,766

5.45 186.78 28.50 0.75 6.56

Atlas Battery Ltd. Atlas Engineering Atlas Honda Ltd. Bal.Wheels Dewan Motors

163.61 58.00 122.18 26.12 1.70

Adam Sugar AL-Abbas Sugur Ansari Sugar Chashma Sugar Mills Clover Pakistan

18.50 89.79 7.58 7.95 54.60

18.85 89.89 7.50 8.24 55.00

27.50 3.85 41.50 8.00 82.10

26.75 3.55 41.03 7.97 80.25

5.80 189.00 28.50 0.75 6.50

5.75 181.20 28.50 0.75 6.36

164.00 58.00 122.18 26.12 1.79

26.76 3.65 41.03 8.00 81.10

-0.61 0.00 0.00 0.22 -1.19

10,377 5,002 177 5,195 380

18.69 89.89 7.50 8.00 54.60

0.19 0.10 -0.08 0.05 0.00

4,071 2,199 3,000 2,012 160

5.76 186.78 28.50 0.75 6.40

1,880 64 200 9 10,004

163.31 58.00 122.18 26.12 1.70

-0.30 0.00 0.00 0.00 0.00

2,224 4,627 106 305 97,184

109.00 111.18 145.05 145.58

0.69 -4.44

1,170 203

Beverages 110.49 111.43 150.02 150.00

24.50 8.20 3.49 15.94 8.20

25.50 8.93 3.64 15.94 8.30

24.50 8.20 3.35 14.94 8.01

24.50 8.20 3.40 15.94 8.22

0.00 0.00 -0.09 0.00 0.02

1 1 18,006 1 3,417

Amtex Limited Artistic Denim Mills Ashfaq Textile Azam Textile Azgard Nine

1.36 21.75 8.50 1.11 2.91

1.40 21.50 8.50 1.60 2.98

1.26 21.00 8.50 1.11 2.87

1.38 21.45 8.50 1.11 2.94

0.02 -0.30 0.00 0.00 0.03

24,704 5,547 1,000 1 540,170

28.00 112.18 20.10 97.58 44.65

AHCL-JAN ATRL-JAN DGKC-JAN ENGRO-JAN FFBL-JAN

28.20 113.90 20.55 98.30 44.90

27.70 112.11 20.07 96.21 43.75

27.99 112.52 20.11 96.56 44.01

-0.01 0.34 0.01 -1.02 -0.64

37,500 456,000 273,000 629,500 627,500

Abbott Laboratories Ferozsons (Lab) Ltd. GlaxoSmithKline Pak. IBL HealthCare Sanofi-Aventis

100.12 79.00 67.84 18.65 144.81

100.00 77.10 68.00 19.60 141.00

100.00 77.00 67.84 19.40 141.00

-0.12 -2.00 0.00 0.75 -3.81

409 400 291 45,144 500

99.85 77.00 67.65 17.91 141.00

Fixed Line Telecommunication 0.31 0.00 0.00 0.00 -0.16

162.00 58.00 119.00 25.00 1.70

AL-Abid Silk Mills Diamond Ind. Pak Elektron Ltd. Singer Pakistan Tariq Glass Ind.

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

10.39 34.50 0.80 1.79 1.00

10.17 36.20 0.84 1.89 1.05

10.00 34.50 0.77 1.75 0.91

10.09 34.50 0.80 1.82 1.00

-0.30 0.00 0.00 0.03 0.00

219,504 1 6 60,883 410,692

0.30 34.66 0.64 1.66 1.50

0.39 35.31 0.65 1.67 1.70

0.30 34.71 0.60 1.62 1.50

0.30 35.05 0.64 1.62 1.50

0.00 0.39 0.00 -0.04 0.00

4 1,405,470 203,501 46,105 241

56.21 10.25 5.94 11.75 28.72

58.00 10.30 6.08 11.75 28.90

55.16 10.06 5.76 11.54 28.61

57.79 10.12 5.85 11.60 28.76

1.58 -0.13 -0.09 -0.15 0.04

46,257 135,530 585,795 305,232 21,374

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

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

syMBoL

opeN

hIGh

LoW CurreNT

ChANGe

voLuMe

Non Life Insurance 18.55 86.00 7.50 8.00 51.95

Pharma and Bio Tech

Industrial Engineering Ados Pakistan AL-Ghazi TractorsXD Bolan Casting Dewan Auto Engg Ghandhara Ind.

voLuMe

Future Contracts

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

ChANGe

Adamjee Ins Atlas Insurance Century Insurance EFU General Ins Habib Insurance

47.77 36.21 6.80 37.51 10.00

48.40 37.00 6.99 39.00 10.00

47.00 36.00 6.80 37.70 9.90

47.74 36.00 6.80 38.81 10.00

-0.03 -0.21 0.00 1.30 0.00

133,097 4,900 300 2,601 802

13.50 1.40 65.53

14.50 1.40 65.53

0.00 0.00 0.00

2 1 157

0.31 14.36 14.99 0.65 1.00

-0.07 0.00 0.16 0.00 0.06

30,974 10 9,643 10 9,000

Life Insurance American Life East West Life Assur EFU Life Assur

14.50 1.40 65.53

14.50 2.34 68.80

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

0.38 14.36 14.83 0.65 0.94

0.39 14.90 15.30 1.09 1.00

0.30 14.36 14.21 0.65 0.90

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

1.55 4.20 4.00 2.26 0.50

1.58 4.07 4.49 2.26 0.49

1.56 4.07 4.00 2.25 0.40

1.57 4.07 4.00 2.26 0.49

0.02 -0.13 0.00 0.00 -0.01

12,973 1,000 100 150 26,517

13.01 32.60 5.50 12.91 70.00 1.19 65.00 3.36 14.94 8.20 53.50 26.50 15.75 11.41 525.00 2.00 131.72 10.01 0.78 1.72 0.93 15.90 18.85 14.01 72.00 22.60 1.30 8.70

13.28 33.57 6.50 13.00 70.06 1.20 66.50 3.41 15.94 8.26 56.29 27.29 16.05 12.40 525.00 2.07 138.65 10.08 0.82 1.73 0.98 15.91 18.90 14.05 72.01 22.60 1.35 8.84

-0.02 1.34 0.00 -0.58 -0.96 0.00 0.24 -0.01 0.00 0.06 0.00 1.09 0.05 0.00 -2.00 0.06 0.00 -0.01 0.00 -0.03 0.01 -0.19 -0.37 0.04 -1.93 -0.46 -0.01 0.09

2,390 3,105 30,000 20,615 7,892 244,826 2,395 25,057 76 7,120 173 2,950 650 2 10 7,511 50 167,675 11,207 831,437 47,306 9,620 8,795 1,800 1,147 850 142,969 144,673

Miscellaneous Century Paper Pak Paper Prod. Climax Eng. P.N.S.C. Pak.Int.Con. SD TRG Pakistan Ltd. Murree Brewery Pak Elektron Ltd. Singer Pakistan Tariq Glass Ind. Pak Tobacco Co. Shifa Int.Hospitals Hum Network Ltd. Media Times Ltd Dreamworld P.I.A.C.(A) Pak Services P.T.C.L.A Telecard Limited Wateen Telecom Ltd WorldCall Telecom Sui North Gas Sui South Gas American Life EFU Life Assur AKD Capital Ltd. Pace (Pak) Ltd. Netsol Technologies

13.30 32.23 6.50 13.58 71.02 1.20 66.26 3.42 15.94 8.20 56.29 26.20 16.00 12.40 527.00 2.01 138.65 10.09 0.82 1.76 0.97 16.10 19.27 14.01 73.94 23.06 1.36 8.75

13.30 33.83 7.50 13.55 72.50 1.22 66.50 3.55 15.94 8.69 56.29 27.50 16.47 12.40 525.00 2.09 138.65 10.13 0.92 1.90 1.00 16.15 19.25 14.25 72.10 23.99 1.49 9.18

Mutual Funds Buy 90.30 115.04 139.57 1.1662 87.85 11.46 24.53 24.04 91.74

International Oil Price WTI Crude Oil

$102.54

18.89 1.20 8.65 35.50 9.95

Construction and Materials

Murree Brewery Co. Shezan Int’l

90.4136 140.8102 1.1773 116.3352

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

18.81 1.10 8.09 35.25 9.57

LoW CurreNT

Personal Goods

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

hIGh

Household Goods

Automobile and Parts

Interbank Rates US Dollar UK Pound Japanese Yen Euro

0.01 27.88 5.68 152.56 40.57

opeN

Food Producers

Chemicals

Market Value 1,383,841,928 16,207,018 786,640

Major Gainers Company Nestle PakistanXD Millat Tractors Ltd. J.D.W.Sugar Sanofi-Aventis ICI Pakistan

416.39 111.37 22.52 6.80 85.28

syMBoL

Sell 91.30 116.84 141.40 1.1778 90.25 11.71 24.75 24.22 94.46

Brent Crude Oil

$113.70

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 Crosby Phoenix Fund Dawood Islamic Fund Faysal Income & Growth Fund Faysal Islamic Savings Growth Fund Faysal Money Market Fund Faysal Savings Growth Fund First Habib Cash Fund First Habib Income Fund First Habib Stock Fund HBL Income Fund HBL Islamic Money Market Fund HBL Islamic Stock Fund

501.2900 114.7196 103.6501 100.6900 519.3500 519.0900 516.9700 453.1500 82.9800 102.5100 0.0000 103.9600 101.4000 101.1400 101.4400 100.8800 100.8900 101.4400 98.8551 100.2278 105.1082

501.2900 111.8516 102.6136 100.6900 514.2100 513.9500 516.9700 444.2600 81.3500 102.5100 0.0000 102.9300 101.4000 101.1400 101.4400 100.8800 100.8900 99.4500 98.8551 100.2278 103.0473

NAv 501.2900 111.8516 102.6136 100.6900 514.2100 513.9500 516.9700 444.2600 81.3500 102.5100 0.0000 102.9300 101.4000 101.1400 101.4400 100.8800 100.8900 99.4500 98.8551 100.2278 103.0473

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 Lakson Equity Fund Lakson Income Fund MCB Cash Management Optimizer Fund MCB Dynamic Cash Fund MCB Dynamic Stock Fund NAMCO Income Fund National Investment Unit Trust PICIC Income Fund UBL Capital Protected Fund II UBL Islamic Savings Fund UBL Savings Income Fund

100.2768 87.0103 97.6745 101.8987 112.3545 121.5000 104.1200 0.0000 106.3763 102.2115 100.5994 103.2259 83.2931 108.2753 26.55 101.3261 106.7800 100.4576 101.9855

100.2768 85.3042 95.2922 100.8898 109.6141 111.5200 96.5000 0.0000 103.2779 100.7009 100.5994 101.6775 83.2931 108.2753 25.74 101.3261 101.4400 100.4576 100.9757

NAv 100.2768 85.3042 95.2922 100.8898 109.6141 117.3900 101.5800 100.1087 103.2779 100.7009 100.5994 101.6775 85.4288 108.2753 25.74 101.3261 106.7800 100.4576 100.9757

PRO 06-01-2012_Layout 1 1/6/2012 12:23 AM Page 7

Friday, 06 January, 2012

The legal structure needs to be changed, so that people know that if you are unable to pay back to the banks, it will be decided in six months and you will be declared bankrupt

news

uBL president, Atif Bohkari

sBp and finance ministry give conflicting estimates of fiscal deficit g

sBp projects over 6 per cent fiscal deficit Finance ministry claims to retain it at 4.7 per cent

search for hydrocarbon reservoirs remains muted in 1hFy12 KARACHI

ISLAMABAD AMER SIAL

TATe Bank of Pakistan (SBP) and Ministry of finance gave contradictory estimates to the Senate Standing Committee on finance about the fiscal deficit, which the central bank projected over 6 per cent whereas finance Ministry claimed would be contained at 4.7 per cent of GdP during the current fiscal year.

Foreign exchange reserves might fall by $5 billion

Slowdown in exports and energy shortages could hamper GdP growth, which was projected at 3.8 per cent as compared with the budgetary target of 4.2 per cent. The growth in consumption appears to be declining due to inflation. investment declined in last fiscal year a n d trend

The central bank warned that in case the projected foreign inflows did not materialise during the current fiscal the foreign exchange reserves might fall by $5 billion from current level of $17 billion. it said the foreign exchange reserves were likely to register a sharp fall during the second half of current fiscal year due to large repayments of external debt, including $1.2 billion of the iMf loan. The meeting of the committee chaired by Senator Ahmad Ali was briefed on the State of economy by the Governor SBP Yaseen Anwar and Secretary finance dr. waqar Masud Khan. Briefing the committee, Governor SBP said that if projected foreign inflows did not materialise then the country’s fiscal deficit will be over 6 per cent of GdP at the end of the current fiscal year. However Secretary finance dr waqar Masud claimed that the fiscal deficit would be contained at 4.7 percent of GdP. He said estimates of fiscal deficit were 2.5 per cent of GdP during the first half of current fiscal year.

pak rupee depreciates by 4.4pc against us dollar The committee was informed by SBP that the pressure on foreign exchange reserves and exchange rate has already increased, and reserves have declined by $1.2 billion till december 31. Pak Rupee has depreciated by 4.4 per cent till dec 31, against uS dollar. The meeting was informed that inflation was declining but still price trends in cotton and oil prices were severely affecting the external current account. Net capital and financial flows are inadequate to finance the current account deficit. The budget deficit was better than last year but not in line with annual target. financing of the budget deficit is tilted towards the banking system, complicating liquidity and monetary management.

yoy inflation at 9.7 per cent appears to continue this fiscal year. The year-on-year inflation in december 2011 was 9.7 per cent; but the full year inflation is expected to remain close to the target of 12 per cent. inflation in second half of current fiscal year is expected to increase on account of adjustments in adminis-

tered prices and exchange rate changes. SBP proposed that to reduce fiscal deficit measures to increase the tax revenues were required as tax to GdP ratio was less than 10 per cent in Pakistan. Overall expenditures were under control, but the untargeted subsidies were still a major burden on current and development expenditures, which are crucial for productive capacity and growth.

Government borrowing rs648 billion this year The meeting was informed the government’s borrowing from banks was Rs648 billion till december 15, 2011 as against Rs96 billion in the corresponding period last fiscal year. even after excluding Rs391 billion settlement of circular debt, borrowings were high. The deterioration in external account balance and increased borrowing from banks squeezed the money market rupee liquidity increasing pressure on the money market overnight repo rate. SBP mentioned that the public debt to GdP ratio was 59 per cent of GdP and the total foreign debt has reached to $61.5 billion by december 31, 2011. Secretary finance said the government plans to issue euro bonds of $500 million by March this year whereas international Sukuk Bonds of $500 million would also be launched later this year. He said the outstanding payment of $800 million from uAe owned etisalat would be received by third quarter of current fiscal year. He said the auctioning of three 3G licenses would help earn $800 million. He said the total receivables of CSf from uSA were $2.5 billion and it did not include billing after May 2011. Chairman fBR informed the committee that they have referred 21 cases to National Accountability Bureau, including one against former member customs Munir qureshi, under the NATO container case in which a loss of Rs55 billion occurred to the national exchequer. President of Bank of Punjab Naeemuddin Khan informed the committee that they would be soon auctioning the confiscated property including jewelry of Shaikh Afzal of Harris Steel Mill in Rs8.4 billion scam.

STAFF REPORT

He country’s search for new hydrocarbon reservoirs continues to remain muted in first half of the current fiscal year (1HfY12) as only six exploratory wells have been spudded, similar to that of last year, said the analysts. “The circular debt and challenged security situation particularly in KPK and Balochistan continue to bode ill on the sector’s exploration program while some carry-over wells were also completed,” viewed Nauman Khan, an analyst at Topline Securities. during this period, the analyst said, the e&P companies continued to focus on maximum utilisation of their existing reservoirs, spudding 15 development wells, a notch above 13 wells drilled in comparable period last year. Pakistan Oilfields (POL) and Oil and Gas development (OGdC), during 1HfY12, drilled one exploratory well each while Pakistan Petroleum (PPL) has yet to spud for new reserves. despite sluggish e&d activities; the sector is expected to optimise production from existing reservoirs and show attractive valuation, he said. during 1HfY12, Khan said, sector spudded a total of 22 e&d wells accomplishing only 29 per cent of the full year target of 76 wells. in the same period last year, the sector drilled 23 per cent of its target of 80 wells. “The activity continue to be skewed towards development activities, with 15 development wells as against full year target of 45, while only seven exploratory wells were drilled versus fY12 target of 31 wells,” Khan said. The listed sector, he said, remained muted in their own operating lease with major dependency on their Jv partners. POL spudded one exploratory well and no development well, while PPL was on the other end of spectrum, with company drilling one development well and no exploratory well. OGdC has recently started working on their first exploratory well of the year, while have spudded six development wells. Among the last year carried over wells, majority of them have concluded with not so encouraging results. it yielded only one discovery in the Zin block, with that also falling short of industry’s expectation. The major excitement of the year has come from discovery of augment reservoir size from Tal and Naspha block, with PPL and POL standing at prime beneficiaries.

CoMMoDITy rouND up 2011

Traded volumes at pMeX skyrocket by 335pc to rs802b KARACHI

ISMAIL DILAWAR

N 2011 a downward trend in commodity prices was witnessed locally and globally, observed Pakistan Mercantile exchange (PMeX) in its overview of international domestic commodity markets for the year 2011. Commodities posted the first annual drop since 2008, paced by declines in cotton, copper and cocoa, on concern that the sovereigndebt crisis in europe and a cooling Chinese economy would sap demand for raw materials. during the year 2011, the traded volumes at the exchange increased to Rs802.2

billion from Rs184.4 billion in the corresponding period of the previous year, a growth of 335 per cent. Analysts said a rebound rally is possible in the near term but gold is far from retesting all-time highs. Gold prices fluctuated between $1309.9 and $1900.2 per ounce in the year, 2011. The precious yellow metal gained nearly 10 per cent this year despite a last quarter dip and a steep decline from September’s highest ever hit of $1,900 an ounce, its smallest annual rise in three years. it remained down 18 per cent from a record $1,900.2 set in September, and finished the fourth quarter with its first quarterly loss in more than

three years. during 2011, the gold saw its traded volumes at the exchange increasing to Rs581 billion from Rs137 billion in the corresponding period of previous year, a growth of 324 per cent. Crude oil price fell from $113.83, the highest in the month of April to its lowest $76.56 a barrel in the month of October. Crude recovered in last quarter of the year. during 2011, crude oil witnessed its traded volumes at the exchange increasing to Rs98 billion from Rs29.3 billion in the corresponding period of previous year, a growth of 234 per cent. Oil prices ended 2011 up eight per cent as a fresh wave of supply concerns

capped a year of unrest and disruptions in North Africa and Middle east that overwhelmed concerns about the economic health of large consuming nations. Silver logged its first annual loss in three years on friday, backtracking from a neardoubling in price during 2010, as worries about the global economy and silver prices fluctuated between $26.60 – 48.40 in synchrony with a recent slide in gold hurt demand. Silver shattered by almost 10 per cent over the year of 2011. A continuous growth has been witnessed in the first quarter of year. during 2011, silver saw its traded volumes at the

exchange surging to Rs123 billion from Rs17.2 billion in the corresponding month previous year, a growth of 612 per cent. Silver prices peaked near $50 in late April. in the following months, it was a bumpy ride as markets were driven more by eurozone headlines than fundamentals. Silver experienced a sharp selloff in September, but found support near $26 per ounce. in domestic market a downward trend in the prices of iRRi-6 has been witnessed in last quarter of the year, 2011. Price movement fluctuated wider; maximum price was Rs3,850 per 100 Kg in July and minimum price was Rs2,900 per 100 kg on the second last

trading day of december. A drop of 15.22 per cent has been observed over the year 2011. in international market, despite the rise, palm oil posted its first annual decline since 2008. it lost more than 16 per cent this year, a performance that pales in comparison to the 42 per cent gain in 2010. in domestic market, a downward trend in the prices of palm oil has been witnessed over the year, 2011. Maximum price Rs5,560 was in the month of february while the minimum price was Rs4,500 per 37.324 kg noticed in the month of October. A drop of 11.59 per cent has been observed in prices in 2011.