profitepaper pakistantoday 15th october, 2012

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Monday, 15 October, 2012

5.839 billion rupees!

Rs 5.839b FED collected on petroleum products

ISLAMABAD ONlINE

T

HE incumbent government has collected Rs 5.839 billion federal excise duty on petroleum products during 2011-12 from Rs 5.120 billion in previous years with an increase of 14 percent.

Well informed sources told Online that petroleum products are the highest source of sales tax and

Private sector has PCCC’s power

contributed more than forty three percent of the total sales tax during 2011-12. The sources told that petrol (MS) is the leading source of sales tax at the import stage and the sales tax on petroleum products recorded a growth of 42.3.

Sources informed that apart from the tax collection on petroleum products, government is earning billion of rupees through custom duty these products as import bill of these products has been exceeded from 15 billion dollar in 2011-12. The source also apprised that total collection of taxes including general sales tax and federal excise duties stood at more than Rs 330 billion during 2011-12 showing increase of 14% as compared to the previous years.

Sources said that although government has no control over rise in international oil prices but what can do it to exempt the retail price of POL products from taxation to provide maximum relief to the price stricken masses of the country. Every rise in petroleum prices brings more profits to the oil companies and more revenue to the government exchequer at the cost of consumers. Every increase in price gives an opportunity to the government to raise the collection from general sales tax, custom duties and federal excise duty while hike in these taxes are born by the consumers, source added.

The source said that the weekly inflation price revision is causing an inflation impacts which is detrimental to the national economy and industrialists suffered million of rupees loss due to the weekly revision mechanism as it kept costs of production variable. Pakistan is developing country and the weekly price determination mechanism was not practical as it only suited developed economies. Government should keep the diesel price comparatively lower as it was used as an input for industries and agriculture. Such price variations might be absorbed by the taxes levied on petroleum products to keep the prices stable.

Deutsche Telekom aims closing MetroPCS deal in 2nd-quarter 2013: report Deutsche Telekom (DTEGn.DE) aims to complete the merger of its T-Mobile U.S. unit with MetroPCS (PCS.N) between April and June 2013, Chief Financial Officer Timotheus Hoettges told a German newspaper FRANKFURT: “The transaction is not likely be carried out until the second quarter of 2013”, Hoettges told daily Boersenzeitung. Deutsche Telekom and MetroPCS on October 3 said they planned to combine their American wireless services units in an effective reverse merger, in which U.S.-listed MetroPCS will buy T-Mobile U.S.[ID:nL6E8L3B1O] The merger marks a long-awaited consolidation in the U.S. mobile market, in which the fourth-largest mobile carrier Deutsche Telekom’s T-Mobile aims to get the scale it needs to compete with AT&T (T.N) and Verizon (VZ.N). It will also help Deutsche Telekom lessen

the burden of investing in the U.S. by making the local unit more independent, and give the former German monopoly a liquid asset it can sell down if it wants to exit the U.S. eventually. Hoettges reiterated that Deutsche Telekom’s shareholder remuneration policy for 2012 will not be affected by the merger plans and that shareholders are set to receive a dividend of at least 0.70 euros ($0.91) per share for 2012. “Given profits brought forward of 1.6 billion euros and retained earnings of 15.5 billion euros there can be no doubt in our ability to pay a dividend,” Hoettges told the newspaper. AGENCIES

ISLAMABAD ONlINE

The recently re-constituted Pakistan Central Cotton Committee’s (PCCC) powers have been given to private sector which may manipulate cotton date according to its own interests, say sources. “The reconstituting of Pakistan Central Cotton Committee will lead the country to an unbiased and unauthentic data in the future as APTMA will manipulate cotton date according to its own wish,” the sources said, adding that the government will also become helpless to fix unbiased cotton production target and release authentic date of it. The sources said after the reconstituting of Cotton Body the government’s role has almost ended to fix cotton production target and to present unbiased cotton date as the government will only depend on private sector’s data. While talking exclusively to this news agency here on Saturday Cotton Commissioner Ministry of Textile Industry Dr.Khaild Abdullah told that after the defunct Federal Committee on Agriculture (FCA) of the devolved Ministry of Food and Agriculture, the targets of any crop commodity could not officially fixed; rather provinces use their last year’s achievements as target of the next year.

He said that a report published in April this year, by Global Agriculture Information Network (GAIN) projected Pakistan’s cotton production for the year 2012-13 as 10 per cent increase in area and production. The author forecasted the Pakistan’s cotton cultivation on 3.3 million and production as 11 million bales (480 lbs per bale) equivalent to 14.1 million bales (170 kg). Dr.Khaild Abdullah said that the report apparently was not based on any authentic source or data. Such premature projections may damage the cotton market, shake investor’s confidence create bias estimates of global cotton stocks. Ministry of Textile Industry can not endorse such reports. According to notification, Shahzad Khan from APTMA would head day to day affairs of PCCC as Vice President; five more APTMA members will be in committee representing each province, three members each from Farmers Associate Pakistan, Pakistan Cotton Ginners Association and Karachi Cotton Association.

WALL STREET WEEK AHEAD

Investors turn wary as earnings picture dims Earnings season is heating up, but investors’ feet are getting cold NEW YORK AGENCIES

Central bank-fueled gains took markets within reach of five-year highs in September, but now U.S. stock market participants are shifting their focus back to corporate outlooks, and the picture is not pretty.

Early earnings reports have underlined those concerns, which may be exacerbated when dozens of major companies - including Dow components General Electric (GE.N), Microsoft Corp (MSFT.O) and International Business Machines Corp (IBM.N) - report next week. “Caution is definitely the operative word as Europe and China look to continue dragging on earnings,” said Michael Loewengart, director of investment strategy at E-Trade Financial in New York.

“The overall tone is so pessimistic that we may see some upside surprises, but we could still suffer considerable losses if the news is bad.”

Profits of S&P 500 .SPX companies are seen dropping 3 percent this quarter from a year ago, the first decline in three years, hurt by China’s slowing growth and Europe’s debt crisis, which recently

prompted the International Monetary Fund to cut its 2012 economic growth outlook. Financial stocks will be especially in focus, with Bank of America Corp (BAC.N), Citigroup Inc (C.N), Goldman Sachs Group Inc (GS.N) and Morgan Stanley (MS.N) all set to report.

Results on Friday from JPMorgan Chase & Co (JPM.N) and Wells Fargo & Co (WFC.N) generated some caution about the group despite both reporting stronger-than-expected profits. Wells Fargo posted disappointing revenue and a bigger drop in net interest margin than had been anticipated.

Wells Fargo shares slumped 2.6 percent to $34.25 while JPMorgan lost 1.1 percent to $41.62 despite bullish commentary about the housing market.

“We need to see big banks doing well, and JPMorgan or Wells didn’t give us the boost we were hoping for,” said Wayne Kaufman, chief market analyst at John Thomas Financial in New York. “Citigroup is the one we’re looking for. If profits come in worse than expected there, that would make me more bearish about the economy in general.”

FEWER COMPANIES BEAT THE

STREET: With only 6 percent of S&P 500 companies having reported, 59 percent of companies have topped profit expectations - less than the average beat rate of 67 percent for the past four quarters, according to Thomson Reuters data. Half of companies have beaten on revenue, while a quarter missed profit forecasts.

“We need to see the beat rate pick up well into the 60s if we want the market to have any support,” Kaufman said.

The S&P 500 .SPX fell 2.2 percent this week, its biggest weekly percentage drop since June, on caution about the season after a number of bellwethers cautioned on their outlooks, including Chevron Corp (CVX.N) and Alcoa Inc (AA.N). Profits are being dragged down by material .GSPE and energy .GSPE stocks. Material sector earnings are seen dropping 24 percent, and energy sector results are expected to slide 19 percent.

In contrast, aggregate profit growth for financials .GSPF is seen up 1.6 percent. Trading could be especially volatile in the Nasdaq, with a number of tech titans on tap, including Microsoft, Google Inc (GOOG.O), IBM and Intel Corp (INTC.O), which recently cut its outlook.

“Tech results can be a good proxy for business spending, which will give us a sense of how companies are viewing the future,” said John Carey, portfolio manager at Pioneer Investment Management in Boston. Carey, who helps oversee about $200 billion in assets, said outlooks were still too optimistic, “so I’ve pulled in my horns a bit, and have become more defensive.”

BLUE CHIPS, GREECE AND DATA McDonald’s Corp (MCD.N), UnitedHealth Group (UNH.N) and Johnson & Johnson (JNJ.N) are also scheduled to report earnings, along with General Electric, which E-Trade’s Loewengart said would be particularly watched, given the

company’s diversified operations.

Trading will also be influenced by the news flow in Europe, where a summit of finance ministers will take place. The Wall Street Journal reported that a deal on austerity measures for Greece could be reached in time for the meeting.

In the realm of U.S. economic data, investors will look ahead to reads on retail sales, the Consumer Price Index and existing home sales. September retail sales are seen rising 0.8 percent, while the overall CPI for September is expected to gain 0.5 percent, and September existing home sales are forecast to fall 2 percent, according to economists polled by Reuters.

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Business 02

Brent falls $1/bbl, spread to US crude narrows Brent crude prices fell more than $1 a barrel, outpacing losses on US crude and deflating the spread between the two contracts after it hit the widest level in a year this week

WASHINGTON

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AGENCIES

xpectations of a looser market weighed on prices after a report by the International Energy Agency's (IEA) forecast higher supplies and declining oil consumption after concerns about North Sea oil supplies and Middle East tensions supported Brent for most of the week.

Brent and U.S. crude posted weekly gains of around 2 percent as turmoil in the Middle East, especially tensions on the border between Syria and Turkey, intensified and Europe continued to grapple with its debt crisis.

Money managers raised their net long positions during the week by over 7,000 contracts to top 196,000 during the week. Oil markets have been balancing expectations of weaker fuel demand due to the struggling global economy against the risk of output disruptions from the Middle East in recent weeks.

Brent November crude fell $1.09 to settle at $114.62 a barrel, while U.S. crude for November delivery traded down 21 cents to settle at $91.86 a barrel.

Friday's moves narrowed Brent's premium to U.S. crude benchmark West Texas Intermediate to below $23 a barrel after it hit $23.69 on Thursday, the highest since October 2011. Brent's premium to U.S. crude rose more than $8 a barrel since falling to $15.57 a barrel on September 19 as the European benchmark was squeezed by lower North Sea output.

November output of crude from the four crude stream underpinning the Brent crude benchmark -- Brent, Forties, Oseberg and Ekofisk, was expected to average 780,000 barrels per day, down from 871,000 bpd in October and close to September lows of 720,000 bpd.

The Brent/WTI spread narrowing was "reflecting possible profit-taking in the Brent-WTI spread after it earlier rose to its highest level in a year," Addison Armstrong, senior director at Tradition Energy, said in a note.

One trader said some investors in the spread play were booking profits ahead of the weekend, with so much

uncertainty hovering over the market.

Tension between Turkey and Syria continued to build on Friday as Turkey scrambled two fighter planes to the border with Syria after a Syrian military helicopter bombed the Syrian border town of Azmarin.

Fighting along Turkey's border with Syria has repeatedly spilled over into Turkish territory in the past week.

The European Union (EU) provisionally approved new economic sanctions against Iran over Tehran's nuclear program, with senior diplomats giving their backing to measures against Iran's banking sector and industry.

The IEA said that Iran's oil production has fallen to the lowest in more than two decades, with the decline attributed to Western sanctions.

US GASOLINE, HEATING OIL PULL BACK: US gasoline and heating oil futures fell, with gasoline retreating more than 2 percent and testing support below $2.8790 a gallon, its 100-day moving average, a technical level monitored by chart-watching traders and analysts.

Heating oil futures fell more than 1 percent, but was retreating from a seven-month peak above $3.26 a gallon on Thursday. U.S. distillate stocks, which include diesel and heating oil, fell by 3.2 million barrels last week, the Energy Information Administration reported, far more than expectations. Total U.S. distillate inventories are now 33 percent below the level of last October as refinery closures and higher exports have cut into domestic supplies. <EIA/S> IEA CUTS DEMAND EXPECTATIONS: The IEA cut its global oil demand growth projection for 2011-2016 by 500,000 bpd compared with its previous report, easing the pressure on OPEC to produce more oil. <ID: nL5E8LC5QJ> The agency also cut its 2013 global oil demand projection by 100,000 bpd to 90.48 million bpd, citing lower consumption in Europe, the Americas and China. "It seems like the market has reacted on the negative side. Crude oil prices reversed from yesterday's gains amid concerns over confirmation of the global oil demand growth," said Myrto Sokou, a senior research analyst at Sucden Financial.

THE TRuTH AbouT SovEREignTy DANI RODRIK In the French parliament’s recent debate on Europe’s new fiscal treaty, the country’s Socialist government vehemently denied that ratification of the treaty would undermine French sovereignty. It places “not one constraint on the level of public spending,” JeanMarc Ayrault, the prime minister, asserted.

“Budget sovereignty remains in the parliament of the French Republic.”

As Ayrault was trying to reassure his skeptical colleagues, including many members of his own party, European Commissioner for Competition Joaquin Almunia was delivering a similar message to his fellow social democrats in Brussels. To succeed, he argued, Europe must prove wrong those who believe there is a conflict between globalization and sovereignty.

Nobody likes to give up national sovereignty, least of all, it seems, politicians on the left. Yet, by denying the obvious fact that the eurozone’s viability depends on substantial restraints on sovereignty, Europe’s leaders are misleading their voters, delaying the Europeanization of democratic politics, and raising the political and economic costs of the ultimate reckoning.

The eurozone aspires to full economic integration, which entails the elimination of transaction costs that impede cross-border commerce and finance. Obviously, it requires that governments renounce direct restrictions on trade and capital flows. But it also requires that they harmonize their domestic rules and regulations – such as product-safety standards and bank regulations – with those of other member states in order to ensure they do not act as indirect trade barriers. And governments must forswear changes in these policies, lest the uncertainty itself act as a transaction cost.

This was all implicit in the European Union’s single-market initiative. The eurozone went one step further, aiming through monetary unification to eradicate fully the transaction costs associated with national currencies and exchange-rate risk.

Simply put, the European integration project has hinged on restrictions on national sovereignty. If its future is now in doubt, it is because sovereignty stands in the way once again. In a true economic union, underpinned by union-wide political institutions, the financial problems of Greece, Spain, and the others would not have blown up to their current proportions, threatening the existence of the union itself.

Consider the United States. No one even keeps track of, say, Florida’s current-account deficit with the rest of the country, although we can safely guess that it is huge (since the state is home to many retirees living off benefits that come from elsewhere).

When Florida’s state government goes bankrupt, Florida’s banks continue to operate normally, because they are under federal rather than state jurisdiction. When Florida’s banks go belly-up, state finances are insulated, because the banks are ultimately the responsibility of federal institutions.

When Florida’s workers become unemployed, they get unemployment checks from

Washington, DC. And when Florida’s voters are disenchanted about the economy, they do not riot outside the state capital; they put pressure on their representatives in Congress to push for changes in federal policies. Nobody would argue that US states have an abundance of sovereignty.

The relationship between sovereignty and democracy is also misunderstood. Not all restrictions on the exercise of sovereign power are undemocratic. Political scientists talk about “democratic delegation” – the idea that a sovereign might want to tie its hands (through international commitments or delegation to autonomous agencies) in order to achieve better outcomes. The delegation of monetary policy to an independent central bank is the archetypal example: in the service of price stability, daily management of monetary policy is insulated from politics.

Even if selective limitations on sovereignty may enhance democratic performance, there is no guarantee that all limitations implied by market integration would do so. In domestic politics, delegation is carefully calibrated and restricted to a few areas where the issues tend to be highly technical and partisan differences are not large.

A truly democracy-enhancing globalization would respect these boundaries. It would impose only those limits that are consistent with democratic delegation, possibly along with a limited number of procedural norms (such as transparency, accountability, representativeness, use of scientific evidence, etc.) that enhance democratic deliberation at home.

As the American example illustrates, it is possible to give up on sovereignty – as Florida, Texas, California, and the other US states have done – without giving up on democracy. But combining market integration with democracy requires the creation of supranational political institutions that are representative and accountable.

The conflict between democracy and globalization becomes acute when globalization restricts the domestic articulation of policy preferences without a compensating expansion of democratic space at the regional/global level. Europe is already on the wrong side of this boundary, as the political unrest in Spain and Greece indicates.

That is where my political trilemma begins to bite: We cannot have globalization, democracy, and national sovereignty simultaneously.

We must choose two among the three.

If European leaders want to maintain democracy, they must make a choice between political union and economic disintegration.

They must either explicitly renounce economic sovereignty or actively put it to use for the benefit of their citizens. The first would entail coming clean with their own electorates and building democratic space above the level of the nation-state. The second would mean giving up on monetary union in order to be able to deploy national monetary and fiscal policies in the service of longer-term recovery.

The longer this choice is postponed, the greater the economic and political cost that ultimately will have to be paid.

Courtesy Project Syndicate

CORPORATE CORNER Yellow Diamond, the new luxury fragrance by Versace

KARACHI: Italian fashion company and trade name Versace launched their newest perfume Yellow Diamond at Shapes with the same class and style that is the trademark of the brand. The

evening started with a speech from the guest of honor H.E Roberto Franceschinis, counsel general of Italy who praised the rapid succession with which the brand has spread throughout the world and also the remarkable work done by Multitech to stop the sale of fake perfumes in Pakistan. The gorgeous Pakistani actress and recent award winner for best actress at New York Film Festival Amina Sheikh clad in a gorgeous Maheen Kareem creation glorified the evening with the unveiling of the perfume Yellow Diamond. The evening proceeded with a presentation with models that were made up to look like Greek goddess in customized golden togas by Maheen Kareem and Yellow Diamond Jewellery by Nazneen Tariq walked the ramp to dramatic Italian music and displayed the perfume. The entire theme paid homage to the greek Goddess Medusa and the pure lustrous beauty of diamonds. The evening attended by the crème of Karachi was embezzled with more celebrities like Humayan Saeed, Nazia Malik, Deepak Perwani, Anita Ayub, Arjumand Rahim, Momal Sheikh, Nazia Malik, Nazneen Tariq, Neshmia Ahmed, Saima Acharia, Adnan Pardeysi, and many more.

Fashion ComPassion, a unique online shopping portal

KARACHI: Launched in November 2010, by social entrepreneur Ayesha Mustafa, Fashion ComPassion is a unique online shopping portal that provides a platform to skilled and creative women artisans, by stocking brands that work with them.

The company retails products across the world, working in Jordon, Lebanon, U.A.E, India, Bangladesh, Afghanistan, Cambodia and Kenya.

Fashion ComPassion is now considered to be one of the most influential retailers in the field of socially conscious fashion with prominent celebrities such as Anne Hathaway, Livia Firth, Lily Cole, Eva Longaria, wearing the collection. The collection is sold at high end international retailers Bloomingdales, S*uce and The British Museum in London.

PIA Managing Director Junaid Yunus flanked by Syed Adil Gilani advisor Transparency International Pakistn (TIP) and justice (Retired) Trustee TIP Signing an MOU at PIA Head Office.

Monday, 15 October, 2012