profitepaper pakistantoday 06th may, 2012

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Uncle Sam could spare some cash for our coal sector Page 03

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Sunday, 06 May, 2012

COMPLACENCY KILLED THE DUCK

COMMENT

Coalition support and funds

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We’re dead ducks… oh yes we are Owing to sovereign default on non-payments to IPPs, financial analysts believe we’d soon be asked to duck off by the World Bank, after a quack too many g Oh and federal govt’s move puts the country’s financial ratings on stake, not to mention jeopardising over Rs200b investments g And instead of clearing its outstanding dues, govt keeps asking IPPs to withdraw their notices, for reasons best known to them g

LAHORE

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IMRAN ADNAN

y sovereign default on Rs34 billion non-payments to Independent Power Producers (IPPs), the federal government has not only jeopardised over Rs200 billion investments made in power sector, but also put the country’s financial ratings on stake that could cause irreparable loss to Pakistan. Speaking to Pakistan Today, financial analysts indicated that if the sovereign default issue is rose on any international forums outside the country, Pakistan would have to face very very serious repercussions. The country’s fiscal ratings will nosedive. Global financial sector will stop honouring financial instruments of Pakistani banks, which would badly affect the country’s international trade. They further pointed out that foreign loans, including from World Bank and IMF, for the country would become a dream. Under the law, the government was bound to honour its sovereign guarantee as it was the only guarantee that attracted investment in the country, they underlined. On the other hand, sources in the IPPs’ Advisory Council warned that if the government did not honoured its commitment, foreign investors could even go to the extent of attaching Pakistan government’s properties in foreign countries to recover their losses. “We are in a catch-22 situation because of the impasse created by the government that is not prepared to act rationally,” said an official of the Advisory Council. IPPs Advisory

Council officials also hinted that managements of these IPPs did not want to go to point of no return, but wanted to persuade the government to honour its commitment. Because they recognised that once the case was put in the global financial market their investment would go in drain, they highlighted. The government had defaulted on payment of Rs34 billion to eight IPPs on Friday, which had severely shaken to confidence of foreign stakeholders in the energy sector amid acute power shortage. On Thursday, eight power produces served a fresh notice of payment of Rs12 billion to the government.

This was the fourth notice in row by these eight IPPs that are generating around 1700 MW of electricity. ‘From now on, we will be defaulting on our projects’ loans amounting to $1.6 billion, in which various banks are involved. One can imagine, how massive our loss will be,’ said a member of IPPs Advisory Council. He revealed that these eight power produces owed Rs40 billion bank loans. In addition, their projects costs of $1.6 billion (with 80 per cent bank loan), so in actual it amounts to the total investment of around Rs200 billion, he maintained. Ironically, he said, the government instead of clearing its outstanding dues kept asking IPPs to withdraw their notices. Despite a number of meetings between the representatives of IPPs and Ministry of Water and Power along with Finance Division before submitting the final notice, the government was still nonchalant towards the financial woes of the IPPs, which were producing around 1,700MW.

FRUITFUL INTENTIONS DOWN UNDER

Need juice, mate? g

Australia to invest in Pakistani citrus: Tim George LAHORE

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STAFF REPORT

ustrAliAn High Commissioner tim George has said that Australian is planning major investment into the citrus sector in the Pakistan, including construction of a juice extraction plant.

Addressing a news conference, the Australian envoy said that a delegation

led by the senior trade commissioner in south Asia called the Punjab chief minister to brief him on the project, which is collaboration between Pakistani citrus growers, Australian citrus and juicing company expertise and Middle East investment. senior trade Commissioner for Australia in south Asia Peter linford and Honourary Counsel of Australia for the province of Punjab salim Ghauri were

Pak-China joint energy group to meet on Monday ISLAMABAD: The Pak-China joint energy group will begin its two-day meeting here on Monday to devise strategy for cooperation in the energy sector and meet Pakistan’s critical energy needs. Federal Minister for Water and Power Syed Naveed Qamar will lead Pakistani side, while Wu Guihui will lead the Chinese delegation in meeting.

The high level Chinese delegation will reach Islamabad on Sunday (today). This will be the second meeting of PakChina joint energy working group. The first one was held in Beijing in July last year.

Sources told INP that different proposals would be debated at the meeting for energy projects. Pakistan has sought Chinese technical and financial assistance to generate electricity through coal, hydel, thermal, nuclear plants and alternative sources of energy. The projects proposed by Pakistan include 2,000MW from coal, 7,000 from hydel and construction and maintenance of transmission lines. The sources said that talks are also expected to cover exploration of oil and gas resources. Talking about the meeting, Syed Naveed Qamar said the government was making all out efforts to overcome the energy crisis. He said energy projects are being fast tracked through Chinese support.

He hoped that the projects being negotiated and implemented with Chinese cooperation would meet the current and future energy needs of the country. INP

Pakistan seeks Chinese technical, financial assistance for 9000MW of coal and hydel energy projects

also present on the occasion.

He said Australia was already active on the front of education and training for Pakistani youngsters with increasing focus and delivery of in-market training to develop work ready graduates. He said these graduates are playing important role in sectors including agribusiness, tourism and hospitality, health and medical, infrastructure and importantly mining and energy sectors.

According to him, Australia is also keen to bring its expertise into the development of Pakistan’s abundant natural resources. He said he Australians companies have also shown interest to explore and potentially develop shale gas resources. in Agribusiness, he said, Australia is much focused on dairy development and presenting best-in-class supply to Pakistan milk producers and value add companies in Pakistan. speaking on the occasion, the sen-

ior trade Commissioner for Australia in south Asia Peter linford said the citrus growing region of Pakistan produces a fruit crop of 2 million tones, four times that of Australia.

However, he said the sector suffers losses up to 40 percent in wastage through handling, storage and cool change management, as well as lack of value-added manufacturing options and alternatives.

He said Australia is in an ideal position to support the Pakistan citrus industry through its citrus expertise, particularly offering improve crop pro-

His matter about the coalition support fund and resumption of nato supplies is settled easily enough. But sadly clarity of purpose has been a rarity on both sides. For the Pakistanis – wasn’t our geo-strategic and political position the only reason the “with u or without us” dilemma was shoved down our throats? And strange that we should have to remind one of this, but a crucial outside supply line into Afghanistan, indicative of faulty planning bordering on fatal, is ‘geo’ and ‘strategic’ and ‘political’ and all that. And since whatever services we provide must beckon appropriate reciprocity, there’s just the matter of calculating the opportunity cost for Pakistan, and gates opened if at all it is fulfilled. no good losing sight of purpose even if radical division clogs the legislature.

For the Americans – Afghanistan is coming to a close, and whichever position they are in by ’14, it will be bad considering the time, effort, men, material and finances put into the long war. Perhaps the only thing that can confound the adventure still is supply bottlenecks just as they begin unwinding. the alternate route, through russia and Central Asia, is a hell-of-a lot more expensive (the Pakistan route is already at a marked premium above market value), and cannot be relied on. if it takes a soft apology, so be it. it’ll still be a hell-of-a-lot better than having supplies cut and a stone faced withdrawal turned into a frantic retreat, with its obvious political spillover. it’s more an American decision than a Pakistani one really. But Washington will not have the luxury of time, no dilly-dallying till the elections. there’s another spring offensive underway, the pattern again showing upgraded fighting power after the usual winter quiet, when the severe Himalayan winter forces all fighting to cease in Afghanistan since time immemorial. it’s always the bunch that postures better when the previous summer’s endgame is analysed. unfortunately, the militants have regrouped better each time, and the us and Pakistan have fallen apart more and more with time. there lies the fine line between success and failure in Afghanistan.

cessing facilities that will deliver increased fresh juice supply to Pakistan, and additionally create and develop export markets, especially to the nearby Gulf region. the Australian Honourary Counsel for the province of Punjab salim Ghauri said a good number of Pakistani-Australians, including himself, have returned in recent and invested heavily to create thousands of jobs for Pakistani graduates. He said Australia has been friendly towards Pakistan and is keenly interested in developing trade relations ahead. He also appreciated the Chief Minister Punjab for its support to the Australian plans in the province.

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Sunday, 06 May, 2012

news

AUTO POLICY

PAK-AFGHAN TRADE

President Karzai meets Pakistan investors in Kabul g

Weekly inflation falls 0.14 percent KABUL ONLINE

Dear EDB, You’re clearly out of your mind Yours mockingly, PAAPAM New auto draft invites India to take over our industry: PAAPAM g Says AIDP-II a trading, assembling policy

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LAHORE

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STAFF REPORT

HE Pakistan Association of Automotive Parts & Accessories Manufacturers (PAAPAM), taking strong exception to the new tariff structure under the proposed Auto Policy (AiDPii) of Engineering Development Board, has said that this is a well-conceived strategic move to invite india to take over Pakistan’s comparatively tiny auto manufacturing sector. Addressing the hurriedly called meeting of PAAPAM managing committee, Chairman syed nabeel Hashmi, who is also the chairman of Business Forum of Punjab, said that AiDP-ii is being drafted actually by the Planning Commission on dictation of the iMF without taking the industry’s stakeholders on board and without considering the harsh realities faced by

the local industry. He stated that the proposed measures are bound to play havoc with plan of localization as well as the vending industry. the draft is a dream, aimed at abolishing support to local industry, he said, adding that the proposed cut in tariff structure actually indicated that the Planning Commission had a distorted view of industry, as it is not providing a roadmap of progress for domestic players.

He said that under the new policy the EDB is proposing to import vehicles rather than supporting the locally manufactured units. And consequently, the biggest gainers will be the importers of Pajero, land Cruisers, BMWs and Mercedes vehicles, he added. He said that progressive growth in the motorcycle sector has so far been maintained by a policy which allows incentives for localization, but at the same time permits introduction of new

technologies by allowing import of components against a different tariff.

However, the proposed policy shift, to favour a single entrant which will import 100% parts at 5% duty, means that the new entrant will need to invest next to nothing to gain access to this market. Motorcycle manufacturing in the future will simply be an assembly operation, he noted. He said that auto industry in Pakistan has welcomed new investment in all sectors, but urged that new investments should not endanger the existing industry and a level playing field. PAAPAM Vice Chairman Munir K. Bana told the managing committee that PAAPAM favours step-wise trade opening with indiaafter structural reforms, policy changes and capacity building of government departments, besides managing Pakistan’s trade policies and import regimes.” He suggested the tDAP to initiate a detailed study on the impact of opening doors to india with a focus on auto sector. He requested the industries Department that tDAP should be given a target of supporting over 200 auto parts manufacturers annually with a target of $ 250 million export by 2014. Mr Bana informed the committee that PAAPAM has conveyed its disagreement to the minister over new tariff structure of Auto Policy. He said that PAAPAM representatives also sought the industries Minister’s help to impose restrictions on import of five year old cars which have massively hurt the local industry.He appreciated the Federal industries Minister, who has assured them that government would protect interests of the local industry before finalising any decision.He said that after hearing the viewpoint of the auto industry, the minister has constituted a core group with the direction that the group should meet again and finalise the draft auto policy with consensus which will be sent to the Cabinet for approval.

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rEsiDEnt Hamid Karzai met with some investors of Pakistan during which among others the head of Hajweri Group of Pakistan was also present, according to Bakhtar news Agency. this group is engaged in construction spheres in Afghanistan. this group is already engaged in construction of science Faculty in nangarhar, a kidney medical center and in Kabul the Allama iqbal arts faculty buildings. At the meeting discussions took place about expansion of economic and trade relations and they expressed satisfaction that trade

exchanges between the two nations has been upgraded up to 2.2 billion dollars. they reiterated that this figure needs to become sustainable. touching on the existence of insurgency in this region President Karzai said that there is need that joint and honest struggle should be launched against terrorism and this ugly phenomenon should be fully eliminated and the region is cleared of insurgency. He added that there is need that ties between Afghanistan and Pakistan is expanded and that the civil society, media and traders of the two countries should join hands and tries to eliminate the threats of insurgency in the region.

INSPECTING WHEAT PROCUREMENT CENTRES

Punjab Food Secretary wants growers’ issues resolved… and soon LAHORE STAFF REPORT

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unjAB Food secretary irfan Ali has directed all the District Coordination officers (DCos) and Director Food Punjab to immediately resolve the issues of those growers who some how could not be enlisted in gardawari list due to any reason.

He expressed these views while inspecting various wheat procurement centers. He inspected centers in lahore, Kasur, nankana, sheikhupura, rahim yar Khan, Bahawalnagar, lodhara and others and appreciated the arrangements made by the administration. He urged the officers to work with full devotion and honesty and ensure to extend every possible facility to the farmers.

He hoped that the department would meet the wheat procurement target by May 30, 2012. Meanwhile according to a spokesman of the Punjab Food, the department has distributed 4383740 gunny bags to growers during the last four days while 31.7 million jute bags were in stock. He said gunny bags were available in abundance at every procurement center in every district. He further said that the gunny bags were being distributed on first come first serve basis continuously. small growers were being given up to 50 bags on priority basis. the spokesman also said that the department had bought 45000 bags of wheat during the last four days and procurement drive would continue without any break till May 30 to meet the target.

European elections have multi-pronged ramifications g

French, Greek elections have more than mere electoral victory at stake KUNWAR KHULDUNE SHAHID

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istory, they say, is a useful gauge to understand both the present and indeed the future, meticulously.

While this argument has a not-sostrong flipside as well, the whole ‘understand the present from the history’ argument fits like a tailor-made glove on the European realm. the European union traces the origin of its formulation, on the basic concept of continental unity – along the lines of usA – and on ensuring that none of its countries feels left out or hard done by. the 36-month European debt crisis is a living mockery on these aforementioned ideals and of course on the existence of the Eu. And while the Eu “think tank” continues to mull over solutions, which have been imposed on the 17 countries in the eurozone, the two elections over this weekend would serve as the crystal ball which would divulge the voters’ stance on the debtcrisis resolution. on the French front, François Hollande is set to win the elections with his

antagonism with regards to Angela Merkel’s austerity policies being a well known fact. Hollande’s election would throw the proverbial spanner into the works in the whole debt debate, and could mean that the strong GermanFrench bond of the “Merkozy” era takes a nosedive. the Merkozy solution to the crisis touted more cost-cutting as the means of lowering debt and in turn reassuring markets. Hollande on the other hand is peddling “governmentsponsored stimulus” as his go-to play to cater to the growth needs. on the Greek Front – wherein the crisis traces its nadir from – Panhellenic socialist Movement and new Democracy are feeling the heat of mass dissent. the “lesser” parties have fanned the embers of the popular discontent on the previous Greek government’s constant lies about the excessive government debt – which in turn laid the foundation of the whole eurocrisis. And now as new parties start to gather momentum in Greece, their success in these elections could mean a change of direction in the Greek policy, which in turn would have its ramifications for Europe as a whole.

these elections – especially the ones in France – also have repercussions for international diplomacy with France being a nuclear-armed country and having a permanent seat on the un security Council. sarkozy was always an American chum and he followed the us lead on iran, Afghanistan, syria and of course in the whole libyan episode.

Hollande, au contraire, wants French troops in Afghanistan back in the country, and is ostensibly less keen on military action and meddling in the matters of other nations. there is also a massive disparity in the tax policy between Hollande and sarkozy. Hollande wants the rich to pay 75 percent in income taxes, and is eying upping the ante of profit-distribution companies as well. this when juxtaposed with sarkozy’s “let’s reduce the overall tax burden” stratagem sounds like the more fitting line of action. And then there is the immigration debate as well, with Hollande not sounding particularly perturbed by the current legal immigration level – which again, tilts matters in his favour.

Hollande’s victory coupled with the

change in status quo in Greece would have aftereffects on the whole eurozone, as the continent braces

itself for what indubitably be defining electoral results, in every sense of the term.

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Sunday, 06 May, 2012

news BOB’S YOUR UNCLE!

Uncle Sam could spare some cash for our coal sector g

American investors to be invited to invest in Pakistan’s coal sector: FPCCI ISLAMABAD

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NNI

MEriCAn investors will be encouraged to invest in Pakistan’s coal sector, which offers lucrative investment opportunities to foreigners, during the Federation of Pakistan Chambers of Commerce & industry (FPCCi) delegation’s impending visit to usA. this was relayed to Mr. Waseem rahim, President of the Pakistan Chamber of Commerce-usA, who paid a visit to the FPCCi Head office in Karachi on saturday and met leading members of the business community. shaikh Haroon rashid, Vice President-FPCCi welcomed Mr. rahim, and thanked him for visiting FPCCi to explore opportunities for cooperation between FPCCi and PCCusA. Also present on the occasion were Mr. Waheed shah, Mr. Kamal and Mir nasir Hussain, Director General (international Affairs)FPCCi. Mr. Haroon rashid informed Mr. rahim that FPCCi was in the process of organizing a visit of a high powered delegation to Washington DC, new york, Chicago and Houston later this year. He said that this visit would provide Pakistani businesses with an opportunity to meet their counterparts in usA, and promote Pakistani products in the American market more actively. He said that Pakistan would like to have product placement deals with us retail giants for key sectors such as textile, footwear and leather, for which PCCusA may be able to provide assistance. He also said that FPCCi was exploring the viability of

organizing a B2C event in Houston towards the end of the year, and said that FPCCi would keep PCC-usA posted in this regard.

Mr. rahim said that PCC-usA was organizing a trade Forum this year, which may be held to coincide with the FPCCi delegation’s visit to usA. He pointed out that coal was used to generate 45% of energy in usA, while Pakistan was still lagging far behind in this regard, despite having large coal reserves. He mentioned that owing to the prohibitive cost of alternative energy, fossil fuel based energy would remain dominant for at least the next few decades, and Pakistan must capitalize its coal reserves more effectively. “this would also ease the burden currently borne by the gas sector, which would eventually facilitate other key sectors, such as fertilizers”, he said. He stressed that participation in the trade Forum this year would allow Pakistani businessmen to highlight opportunities for investment in energy (particularly coal), infrastructure and other key areas of Pakistan’s economy to the American business community.

MOU signed between Sindh Board of Investment and Royal Emirates Group ISLAMABAD

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five-Member high powered indonesian Parliamentary Delegation, led by the Chairman Bilateral Cooperation Group Mohammad Hatta, saturday visited lahore Chamber of Commerce and discussed bilateral trade and investment. the lCCi President irfan Qaiser sheikh gave a detailed briefing to the indonesian Parliamentarians on available trade and investment opportunities in Pakistan. Vice President saeeda nazar, Executive Committee Members Husnain reza Mirza and sheikh Mohammad Ayub also spoke on the occasion.

Both the sides also exchanged views on bilateral cooperation in different sectors of economy. the leader of the indonesian delegation Mohammad Hatta said that indonesia also values high its relations with Pakistan and desires to further strengthen the existing relations.

While underlining the need for frequent

exchanges of business delegations between the two brotherly countries, he said that it will ensure opportunities of better understanding and to learn from the experiences of each other.

He said that the Chambers of Commerce in the two countries should play a proactive role to jack up the volume of two-way trade to $ 5 billion in coming years.

He said that a number of parliamentary Committees had already been constituted in indonesia to finalise a strategy to give boost to trade and economic relations with brotherly countries. speaking on the occasion, the lCCi President invited indonesian businessmen to visit Pakistan to have first hand knowledge about the available business opportunities as the lCCi wants to further strengthen the existing relations through enhanced interactions and economic cooperation. irfan Qaiser sheikh said that despite being the members of the organization of islamic Countries (oiC) and having old historical links and cordial relations these distinctive

respective countries and will assist each other in organizing business delegations, and facilitating their business interest. sulaiman Boti said that they are very pleased to enter into this mutual understanding with the sindh Board of investment which, he said will provide them opportunities to tap the immense resources of the sindh Province of Pakistan. He pointed out that sBi will also assist royal Emirates Group in development of Pak Arab skill Development Centre in sindh to train Pakistanis and find them suitable jobs in the united Arab Emirate. sBi will also assist royal Emirates Group in developing 10 MW solar Power Plant in sindh to help reducing the power shortage in sindh Province and in developing Bilge Water treatment Plant at Port Qasim Karachi to meet the environmental requirements of the port, he added. royal Emirates Group will also develop an Agriculture research Centre in sindh, sulaiman pointed out. royal Emirates Group of Companies is an emerging leading group with diverse business interests in the local and international markets. Formed and chaired by His royal Highness sheikh Butti Bin suhail Al Maktoum, the royal Emirates Group has practically mirrored the development of modern Dubai, standing tall as one of the country’s most dynamic business groups today.

Ably guided by the visionary leadership of His Highness sheikh Mohammad Bin rashid Al Maktoum, the group has emerged as a valuable contributor to the development of united Arab Emirates.

APMSPIDA’s one and a half cents on curbing motorcycle smuggling KARACHI NNI

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o smash the smuggling trend and smugglers out of business the only solution is to curb smuggling by cut in custom duties on commercial import of motorcycle spare parts. All Pakistan Motorcycle spare Parts importers and Dealers Association (APMsPiDA) suggested this in its budget proposal for

MPs ask for more trade, LCCI nods in agreement LAHORE

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inDH Board of investment (sBi) and royal Emirates Group of companies signed a Memorandum of understanding (Mou) to expand and deepen economic and industrial cooperation and create favorable conditions for investment by businessmen of united Arab Emirates in sindh Province. the Mou was signed by secretary sBi naheed shah Durrani and sulaiman Boti, Project Manager of the royal Emirates Group of Companies in Dubai, says a message received here. sheikh Butti Bin suhail Al Maktoum of uAE chaired the Mou signing ceremony.

Zubair Motiwala, Chairman sindh Board of investment while talking to the media after the signing ceremony said that in order to mutually promote trade and investment cooperation between sindh province of Pakistan and united Arab Emirates, sindh Board of investment and the royal Emirates Group according to the principles of equality and mutual benefit, have agreed to promote the development of bilateral economic relations. the Mou will provide a platform for businessmen to meet, discuss and explore business opportunities in trade, investments, transfer of technology, services and other industrial sectors. He said that they have agreed to regularly exchange information/publications and materials concerning economic development, foreign trade and investment policies of their

TRADE WITH INDONESIA

STAFF REPORT

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attributes hardly get reflected in our trade and investment relations. the lCCi President said that two way trade figures show that in 2008, we were trading with each other to the tune of us$ 1.26 billion which had dropped to us$ 750 million in 2010. that drastic drop in two way volume was due to substantial decrease in imports from indonesia which stood at us$ 1.19 billion in 2008 but fell to the level of us$ 750 million in 2010. We will certainly like to increase the volume of our exports to indonesia which are far too low in proportion to the size of our economies. in last four years, our exports have averaged around $ 67.5 million.

Although indonesia has offered market access to 220 Pakistani items and in response to that Pakistan has agreed to reduce duty on 288 indonesian products but this list needs to be expanded in coming future for greater trade opportunities for the businessmen of both the countries. “Certainly, we together can expedite these things in the best interest of both the economies.”

the year 2012-13. the association further pointed out towards serious and alarmingly growing problem of smuggling of motorcycle spare parts on massive scale from China through sust Border and Afghan transit trade, this is because of the high rate of duty. the association further proposed that additional duty should be removed and maximum Custom Duty on motorcycle parts should be 15 percent to 20 percent.

ICCI to hold industrial expo in federal capital ISLAMABAD: islamabad Chamber of Commerce and industry (iCCi) has signed an agreement with an event management company to organize an industrial Expo in september this year in the Federal Capital titled ‘Expo 2012’ to showcase the country’s industrial products and promote exports.

A Memorandum of understanding (Mou) signing ceremony was held at Chamber house, in which it was decided that the appointed event management company will manage all the activities of industrial expo. the initiative is aimed at promoting a soft image of the country and give boost to trade and exports. Foreign delegations from many countries would also be invited to Expo 2012.

Moreover, in order to introduce Pakistani products in international market, the Expo Committee of iCCi would

organize exhibition of Pakistani products in foreign countries. yassar sakhi Butt, President iCCi said that Expo 2012 would be a landmark initiative in accelerating economic activities as it would provide an ideal platform where the industrialists of Pakistan would put up stalls and showcase the potential of their products to local and international visitors.

Mr Munawar Mughal, Chairman iCCi Exhibition Committee, who has vast experience of organizing exhibitions, said that Expo 2012 and shopping Festivals would provide industrialists and traders good opportunities of promoting business activities and increasing trade & exports. iCCi is also planning to organize shopping festivals in commercial centers of islamabad on the pattern of Dubai shopping Festival to accelerate business activities and provide customers an opportunity to buy quality products at affordable prices. NNI