profitepaper pakistantoday 11th september, 2012

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Tuesday, 11 September, 2012

SBP cuts refinance rate by 1.5pc under financing schemes KARACHI: The State Bank of Pakistan (SBP) has with immediate effect reduced the refinance rate under the Export Finance Scheme (EFS) and the service charges under the Long Term Financing Facility (LTFF) and the Scheme for Financing Power Plants using renewable energy by 1.5 percent. Now the exporters can get financing from the banks under EFS at 9.5 percent per annum (p.a.).

Earlier, the exporters were getting the financing under this scheme at 11 percent.

It had been decided that rate of refinance under the EFS applicable from September 10 this year and onward till further instructions shall be 8.50 percent per year. The central bank through issuing IH&SMEFD circular No. 4 on Monday, asked the commercial banks to ensure that where financing facilities are extended by them to the exporters for availing refinance facilities under the EFS, their maximum margin/spread does not exceed 1 percent. The reimbursement of mark-up rate benefit to exporters, on excess performance under Part-II of the scheme, as specified in SMEFD circular no.15 would be adjusted accordingly keeping in view the revised mark-up rates, the bank added. STAFF REPORT

HSBC says agrees to sell banking business in Pakistan LONDON: Banking giant HSBC on Monday said it had agreed to sell its operations in Pakistan comprising 10 branches to the Asian country’s JS Bank Limited for an undisclosed sum. The British lender said the sale, which it expects to complete in the final quarter of the year, represented further progress in its strategy to shed non-core assets to slash group costs. “HSBC Bank Middle East Limited (HBME), an indirect wholly-owned subsidiary of HSBC Holdings plc, has entered into an agreement to sell its banking business in Pakistan to JS Bank Limited,” it said in a statement. “The transaction, which is subject to regulatory approval and the approval of the direct shareholders in HBME and JS Bank Limited, is expected to complete in the final quarter of 2012. “It represents further progress in the execution of the HSBC Group strategy.” HSBC said that as of June 30, the bank’s Pakistan business had gross assets of about $635 million (496 million euros). HSBC is Europe’s biggest bank by assets, was founded in Hong Kong, and sees Asia as its main market despite being headquartered in London. AFP

President signs Special Economic Zone Bill 2012 Islamabad

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RESIDENT Asif Ali Zardari signed the Special Economic Zones (SEZ) Bill and with the presidential approval the SEZ Bill has become Special Economic Zone (SEZ) Act 2012 from Monday.

The incentives announced through the SEZ Bill, exemption from customs duties and taxes for all capital goods imported into Pakistan for the development, operations and maintenance of a SEZ; exemption from all taxes on income accruable in relation to the development and operations of the SEZ for a period of 10 years, starting from the date of signing of the development agreement will become affective for the investors.

The National Assembly had approved the SEZ Bill 2012 on July 13, 2012. The bill took more than three years for its processing as it involved large consultative process with the provinces stakeholders.

The incentive package was approved in 2008 by the Economic Coordination Committee of the Cabinet (ECC) but it remained under discussion. The cabinet accorded approval in principle for initiation of legislation in 2010.

The Council of Common Interests (CCI) also considered this bill due to introduction of 18th Amendment. After hectic efforts, CCI approved the bill in August 2011. The bill

had further undergone the microscopic examination by the Standing Committee on Law, Justice, Human Rights and Parliamentary Affairs. The Upper House (Senate) approved this bill in January 2012 and National Assembly accorded its approval on July 13, 2012.

The law had been made to meet the global challenges of competitiveness to attract foreign direct investment. The law or bill will allow creation of industrial cluster with liberal incentives, infrastructure, investor facilitation services to enhance productivity and reduce cost of doing business for economic development and poverty reduction.

The law further envisages to reduce processes through SEZ in Pakistan. The law will ensure consistency and transparency in economic policies beyond political divide and restore investor confidence. The bill will provide guaranty that incentive once granted would

not be withdrawn due to conflict of interests.

Salient features of the draft SEZ Act 2012 include, extending to the whole of Pakistan and override other laws, all SEZ whether public, public-private or privateprivate to be governed under this act; the Board of Approval (BoA) headed by the prime minister with the minister for finance as the vice

New strategies, new categories Dr Asim to meet KaRaCHI STAFF REPORT

Morgan Stanley Capital International (MSCI) would take a feedback from the end users as Pakistan wants the world’s leading provider of market indices to restore its status as an emerging market in the wake of comprehensive reforms Islamabad has recently introduced.

Karachi Stock Exchange (KSE), Managing Director, Nadeem Naqvion told the reporters here at KSE that a KSE delegation was due to meet the MSCI Board of Directors on September 3 in London to upgrade Pakistan’s capital market’s status from frontier

to emerging markets The said meeting was held as per schedule at the MSCI London-based office and concluded on a positive note.

Led by KSE Chairman Munir Kamal, the KSE delegation comprised MD Nadeem Naqvi Central Depository Company of Pakistan, CEO, Muhammad Hanif Jhakura, KSE Deputy Managing Director Haroon Askari and other market participants.

According to the KSE, the delegation updated the MSCI on the demutualization of the stock exchanges in Pakistan, structural changes and comprehensive reforms in regulatory framework, risk management and op-

erations of the exchange.

The delegation also highlighted underlying signs of economic stabilization in Pakistan, change in monetary policy stance, centralization of Capital Gain Tax (CGT) at National Clearing Company of Pakistan and implementation of KYC and antimoney laundering regulations in the stock brokerage industry.

It specifically accentuated the steps taken by the government including the 18th Amendment and the improvement in trade relations between Pakistan and India to accelerate development of bilateral business and investment between the two countries.

So where did the revenue go? g

Senate body seeks details of revenue collected on various petroleum products Islamabad OnlinE

While expressing deep concern over rising trend of petroleum products, the Senate Standing Committee on Petroleum has sought the details of revenue collected under levies imposed on various petroleum products in last three months.

Meeting of Senate Standing Committee on Petroleum and Natural Resources was held under the chair of Senator Muhammad Yousaf here on Monday for detailed briefing over recent increase in the petroleum prices and CNG. Standing committee said that once prices increased have not decreased and government put burden on price stricken masses. Senator Osman said that increase

chairman shall meet as frequently as required but not less than twice a year and decisions shall be taken by a majority of the total membership present and voting; SEZs will have exemption from customs duties and taxes for all capital goods imported into Pakistan for the development, operations and maintenance of a SEZ; exemption from all taxes on income accruable in relation to the development and operations of the SEZ for a period of 10 years, starting from the date of signing of the development agreement.

Zone enterprises have exemption from custom duties, etc, on imports of capital goods; exemption from taxes on income for a period of 10 years starting from the date the development certifies that the zone enterprise has commenced commercial operations in the relevant SEZ. BoI with the approval of the BoA and after consultations with the provincial governments and concerned SEZ authorities shall frame rules and regulations necessary for implementation of this act. The establishment of SEZs will attract both domestic as well as international investors. Some of the investor countries like Korea, China and Japan are expecting to benefit from this scheme as soon as it becomes operational. The provincial governments would be requested to start the process as soon as rules are framed.

in petroleum prices should not be passed on to masses as country’s economy is weak and can not afford such massive hike.

Standing committee said that government should provide subsidy in the petroleum products and reduces taxes to provide maxim relief to masses.

Petroleum Federal Secretary Dr Waqar Masood said that government was taking Rs 24.42 tax on petroleum prices which was lower in the world. He said that weekly prices determination formula was on three month trials basis adding that, if price determination would be on monthly basis then it would cause extra burden on masses which will lead massive hike in basic commodities. He said that ministry alone can not remove GST and petroleum levy from products therefore legislation is required in

this regard. Committee resented the purchase of petroleum products on credit basis instead of cash.

During the meeting Chairman OGRA informed the Senators that authority compute the petroleum prices according to the formula given by the ministry. He said that OGRA informs government before price determination and final decision comes from federal government.

Secretary Finance Abdul Wajid Rana told that government was already giving Rs 2.25 billion subsidy weekly on petroleum prices and if prices were decreased by fifty percent then government would have to bear burden of extra burden of Rs 9 billion.

He said that if petroleum levy decreased then GDP would increase by 0.4 and result to inflation in the country. He

suggested that federal government should take provinces on board and provinces should share tax collection with federal government to reduce prices. Officials of PSO told the committee that PSO imports 93% of crude oil and while rest 13 % has been imported by other 12 oil marketing companies. He said that major volume of crude oil has been imported from Kuwait and trade is on government level. He said that in case of shortage of any petroleum product in the country PSO floats tender in the market and ensures availability of product in the market. Standing committee asked the Secretary petroleum to give details of appointments made under provincial quota in the ministry of petroleum and natural resources and also give the details of provincial quota.

Kuwait oil minister Islamabad OnlinE

Advisor to the Prime Minister on Petroleum & Natural Resources Dr. Asim Hussain has been invited by State of Kuwait Oil Minister Hani Hussain to discuss opportunities regarding investment in the Oil and Gas sector of Pakistan by Kuwait Foreign Petroleum Exploration Company (KUFPEC). Dr. Asim Hussain along with a delegation of Senior Officers from the Ministry of Petroleum, Pakistan Petroleum Limited, OGDCL and Pakistan State Oil will hold meetings on Tuesday (Today)with Kuwait’s Oil Minister, CEO of Kuwait Petroleum Corporation (KPC) and other Senior Executives of the Oil Industry. The meetings would focus on possible investment opportunities available in the Oil and Gas Sector of Pakistan, particularly with regards to avenues created after announcement of new Petroleum (Exploration & Production) Policy 2012.

It may be noted that KUFPEC has been operating in Pakistan since 1987 and has invested over US $ 1 billion in the Oil and Gas Sector with plans of making additional investments.

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Macroeconomic activity improves in 2011-12: PRSP Report Islamabad

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H E half yearly data of fiscal year 2011-12 depicts an improvement in overall macroeconomic activity, particularly in agriculture and service sector, according to the Poverty Reduction Strategy Paper (PRSP) Midyear Progress Report.

The 27th PRSP Midyear Progress Report was released here on Monday by the Ministry of Finance that monitors pro-poor budgetary and non-budgetary expenditures.

According to the report stable weather conditions have resulted in a better yield of rice and cotton crops while services sector has also registered an increase due to growth in trade and profitability of banking sector. The risks to macroeconomic activity during the first half of FY2011-12 mainly stemmed from the external sector and fiscal imbalances, it said adding the Budget deficit was limited to 2.5 percent of GDP during H1- FY 2011-12 - lower than the 2.7 percent deficit registered in H1-FY 2010-11. Nevertheless, strict fiscal discipline is required to achieve the targeted deficit during the latter half of FY 2011-12, it added.

The Pro-poor expenditures substantially increased till the second quarter of FY 2011-12.

Overall Year on Year (YoY) increase of 90.46 percent was recorded, from Rs 482,815 million in H1-FY 2010/11 to Rs 919,564 in H1-FY 2011/12.

Asia asked the European question Eurozone crisis threatens emerging east Asia’s booming bond markets g

Islamabad APP

Emerging East Asia’s local currency bond markets have expanded to nearly $6 trillion, but policymakers in the region should brace themselves for further shock and volatility from the global financial markets, says a report published by the Asian Development Bank (ADB).

“Our local currency bond markets are emerging as a safe haven in the midst of the crisis, but we should not be complacent,” said Iwan J. Azis, Head of ADB’s Office of Regional Economic Integration, which produced the Asia Bond Monitor report.

“Volatile markets can deter long-term investment and hurt the economy by making it costlier for governments and companies to raise funds. Moreover, uncertain market reaction to policy action is undermining the predictability and thus the effectiveness of conventional policymaking,” Azis said.

Greater regional participation in emerging East Asia’s bond markets and cooperation are needed to counter the volatility from external shocks and to strengthen regional financial safety nets.

A special section in the Asia Bond Monitor shows that the spillover of the Lehman Brothers’ collapse and the ongoing eurozone crisis in many markets has been significant and may well continue.

These spillover impacts will be felt not only in the bond markets but in other financial markets in the region too, including through foreign exchange rates.

The Asia Bond Monitor notes that despite the uncertainty and volatility in global financial markets, the bond markets in the region continue to expand, with $5.9 trillion in paper outstanding at the end of June, 1.9% more than at the end of March and 8.6% more than at the end of June 2011.

Overall, corporate bond market growth is still outpacing the expansion of the government bond markets, as corporate bond yields have fallen and tighter bank lending has encouraged firms to tap the capital markets.

As of the end of June, there were $2.0 trillion in corporate bonds outstanding, 15.2% higher than a year earlier, while the $3.9 trillion government bond market was only 5.5% bigger.

A significant increase in expenditure has been observed in all the sectors including Market Access and Community Services, Human Development, Rural Development and Governance.

The maximum YoY increase was witnessed in Peoples’ Works Programme II. There was reduction in expenditures in Benazir Income Support Program (BISP), Pakistan Bait-ul-Mal (PBM) and Natural Calamities and Disasters. The remarkable growths in subsidies however lead to an overall positive growth in Social Safety Nets while on the provincial level, all the provinces depicted an increase in PRSP expenditures, except Sindh owing to decrease in education expenditures. The composition of expenditures changed during the period under review while the percentage share of development expenditures increased by 3.03 percentage points during the first half of FY201112 against the same period in FY2010/11.

The expenditures in education sector showed a minor growth as compared to previous trends, it said adding this obviously was a matter of concern since the education expenditures were already limited. However, the Health sector expenditures increased substantially. Overall transfers for protecting the poor and vulnerable registered a negative growth of 13.7 percent in grants and 21.4 percent in beneficiaries during H1 of FY 2011/12 when compared with the same period last year. During H1 of FY2011/12, Rs 24.96 billion (78 percent) of the grants were of the budgetary mode and Rs 6.84 billion (22 percent) were of the non-budgetary mode against 86 percent and 14 percent respectively during the same period of PFY.

Business 02 Major Gainers OPEN COMPANY Nestle Pakistan Ltd. 4000.00 Pak Gum & Chemical 245.95 Indus Dyeing 400.70 Gatron Ind. 101.97 EFU Life AssuR.SPOT 77.28

HIGH 4175.00 257.00 405.00 106.00 81.14

LOW 4175.00 250.00 397.99 106.00 79.15

CLOSE CHANGE 4175.00 175.00 251.40 5.45 405.00 4.30 106.00 4.03 81.14 3.86

TURNOVER 20 12,700 5,000 500 18,000

195.00 146.00 214.00 350.00 183.00

183.65 146.00 208.00 345.00 178.00

185.15 146.00 209.00 345.00 178.87

-8.09 -7.68 -5.00 -4.00 -3.94

17,000 300 1,100 500 173,900

7.45 20.99 6.35 22.44 49.99

6.43 19.55 5.85 21.40 48.60

7.45 19.61 6.20 22.43 48.75

1.00 -0.96 0.44 1.05 -0.78

23,658,000 19,115,500 15,507,000 13,534,000 10,518,500

Major Losers Service Industries Shield Corpor AL-Ghazi TractorXD Mithchells Fruit MCB BankXD

193.24 153.68 214.00 349.00 182.81

Volume Leaders K.E.S.C. P.T.C.L.A JS Bank Ltd Sui South Gas D.G.K.Cement

6.45 20.57 5.76 21.38 49.53

Interbank Rates US Dollar UK Pound Japanese Yen Euro

94.7210 151.5441 1.2093 121.0155

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

Crude mixed in Asia sINGaPORE AFP

Crude was mixed in Asia Monday as traders balanced US stimulus hopes with disappointing Chinese industrial output numbers, analysts said New York’s main contract, light sweet crude for delivery in October, shed 14 cents to $96.28 a barrel while Brent North Sea crude for October delivery gained seven cents to $114.32. Traders were mulling hopes for fresh US stimulus after a disappointing jobs report as well as data showing Chinese industrial output growth weakening to its slowest pace in more than three years, IG Markets said in a report.

“In Asia today, markets could show some volatility with a mixed bag of US news and reaction along with China’s weak economic data,” the report stated.

US jobs data released Friday showed the economy of the world’s largest oil consumer adding a meagre 96,000 jobs in August as the official number of jobless fell by a quarter of a million people to 12.5 million.

But about 368,000 people gave up searching for jobs and left the labour force, leading to a substantial net rise in the total number of working-age Americans out of work.

In China, data released by the National Bureau of Statistics showed industrial production increasing by 8.9 percent year-onyear last month, the lowest figure since a similar rise of 8.9 percent in the depths of the global economic crisis in May 2009.

China’s economy has seen a marked easing over the past year, expanding 7.6 percent in the second quarter of 2012, the worst performance in three years and the sixth straight quarter of easing.

BUY

SELL

94.50 119.61 149.71 1.1911 95.56 11.96 25.53 25.01 96.55

95.00 121.22 151.68 1.2066 97.32 12.18 25.84 25.29 99.27

E-banking on the up g

Transactions registered an increase of 5.6 %: SBP Islamabad OnlinE

The volume of overall e-banking transactions in the country registered an increase of 5.6 percent to reach 74.6 million from April to June 2012, State Bank revealed. However, the value of transactions at 6.6 trillion was 4.4 percent less than transactions reported in the quarter ended March 31, 2012 due to a 5.4 per cent decrease in Real Time Online Branches (RTOB) transactions. A State Bank official said the volume of transactions increased slightly by 1.8 percent. In terms of volume of overall e-banking transactions, ATMs with a major share of 60.6 remained the leading channel. ATM transactions value and volume also showed an increase of 5.9 percent and 7.4 percent respectively. The average value per ATM transaction stood at Rs 9,693. The volume and value of transactions through POS terminals stood at 4.7 million and Rs 21.49 billion depicting 4.5 and 2.1 percent growth respectively as compared to the figures reported in the third quarter (Jan-Mar) 2012.

CORPORATE CORNER

Renowned industrialist and PIA former Chairman Ahmed Saeed inaugurated Link International Exchange Company at M.M. Alam Road, Gulberg.

Madrid. Wearing jerseys with the Huawei logo, Atlético Madrid beat rival team Chelsea by 4 to 1, to win the European Super Cup.

New Pakistani social network targets nation’s youth

Second decade of Asian Forum on corporate social responsibility

KARACHI: Forget Facebook and Twitter, there’s a new social network in town. And this one’s been conceived and created right here in Pakistan. Amalteam.com is a community portal of Pakistan’s fastest growing social movement, Azme Alishan. It aims to inspire a new generation of volunteers by providing young people with real opportunities to contribute to their local communities. The site brings charities, NGOs and civil society organizations together with the largest database of volunteers in Pakistan.

LAHORE: The annual AIM Asian Forum on Corporate Social Responsibility (AFCSR) enters its second decade with its biggest conference yet as it travels to Thailand to hold the 11th AFCSR at the Bangkok Shangri-La Hotel on October 25 and 26, 2012.

NADRA chief strengthens information security system ISLAMABAD: National Database and Registration Authority (NADRA) has assured the citizens of Pakistan that their data is fully secure, and no incidents of data breach have ever been recorded to date, NADRA spokesperson said this in a statement issued yesterday.

Huawei reaches global Audience KARACHI: During the final of the 2012 UEFA Super Cup on Friday night, Huawei Device connected with global audience through its sponsorship of Atlético

Photo shows FFC, Chief Executive & Managing Director, Lt-Gen. (Retd) Naeem Khalid Lodhi and Project Director Brig (Retd) Tariq Izaz being briefed by senior engineers of the project and partners from Nordex Germany and Descon Engineering.

National Defence University delegates visit NESPAK LAHORE: A delegation from the National Defence University (NDU) Islamabad led by NDU Commandant National Security College Maj. General Noel I. Khokhar, paid a visit to the NESPAK House Lahore here today.

Tuesday, 11 September, 2012