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From blitzkrieg to geldkrieg: A German tale of power Page 02
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Sunday, 18 March, 2012
Traders bear Rs 3b EDB to forward budget loss over proposal to finance ministry extortion protest Bike manufacturers submit proposal to EDB g
KARACHI
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STAFF REPORT
ngIneeRIng Development Board (eDB) is likely to put forward to finance ministry the joint budget proposal sent by bike manufacturers and vendors through PAMA and PAPAAM in a meeting called for the purpose today 16th March. The assemblers and vendors of two and three wheelers in their budget proposal have urged the government to rationalize tariff in order to bring down the costs to provide relief to the consumers and also allow the import of machinery, parts and molds at zero duty rates, sources at Manufacturers’ and vendors’ said today. The meeting held in Islamabad under the Chairmanship of CeO eDB Aitezaz niazi discussed the proposal for the coming budget. The assemblers have asked eDB to support their proposal enabling the industry to lower unit price of bikes made in Pakistan so that better margins could be achieved through exports as well. According to sources despite recession and adverse economic conditions the bike industry in Pakistan has shown tremendous growth with total production reaching around 1.5 million and targeting 1.7 million mark for next fiscal year, while it has also started exploring new markets in the region for exports. The industry has already been exporting motorcycles to Bangladesh, South Africa and Afghanistan. The industry has demanded reduction in CKD rates from 15 percent to 10 percent, while CBU rate should also be reduced from 65 percent to 55
percent. Besides, reduction in sub-assembly from 20 to 10 percent and reduction on duty of components from 10 to 7.5 percent have also been proposed, sources said. While pointing out an anomaly in the SRO 655 they said it provides advantage to non-documented manufacturers because process materials has substantial cost impact on the manufacturing process, but, unfortunately, the definition of process material is not covered in SRO 655(1)/2006. “This is an anomaly as regardless of legislative interpretation they are a cost component of production process and are required to be treated as such,’ they added. ‘It is the misuse and improper implementation of SRO 656 (Manufacturing (Assy. Rules) in letter and spirit that is creating an unfair advantage in the favor of unorganized sector in the two/three wheeler sector of the auto industry,’ they added. They also demanded that the components attracting lower rates of duty than CKD rate should be allowed at statutory rates. Other budget proposals aimed at accelerate the growth, competitiveness and exploiting the export potential of the industry include: Pak II (euro II) complaint parts for 2-3 Wheeler sector should be zero rated as after implementation of Pak II (eURO II) the cost of vehicle has gone up. Moreover, restoration of issuance of income tax exemption certificate at import stage to manufacturers; withholding tax on the proceeds of exported good at 01 percent should be reduced to 0.5 percent as recommended by the engineering Development Board (eDB) in the national engineering & exports Development
Strategy (neeDS) report in 2010. And to promote the business and attract the investment corporate tax rate should be brought down from 35 percent to 30 percent, 25 percent and 20 percent gradually as entities that can prove that 90 percent of their purchases are from registered suppliers get a 2 percent lower corporate tax rate. If the government plans to implement the RgST, the rate of sales tax should be brought down to say 15 percent from existing 16 percent because in addition to other advantages it would make evasion less-attractive and will help increase the tax net. Their proposals further suggest that section 8-B in the Sales Tax Act, 1990, should be abolished, while the role of Pakistan Automotive Manufacturers Association and & PAAPAM in determining fair value of auto-parts by Federal Board of Revenue should be institutionalized with active participation of engineering Development Board. In order to develop export markets the government has to support the industry through funding for developing distribution networks and establishment of brand name exercise. It is also proposed that the Research & Development facility should again be made available to the industry of two/three wheelers with proper cover under the scheme, as it will help the industry to remain competitive at least in those markets where they have established their brands. ‘Moreover, listed companies should be allowed to spend upto 50 percent of their contribution on technical training programs, and alternatively the rates of WPPF (Workers Profit Participation Funds.)& WWF (Workers Welfare Funds) be reduced by 50 percent.
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Give 72-hour ultimatum g Countrywide strike on cards
Tajir Ittehad (traders’ alliance) said that the extortion, number of which has been multiplied this year, has also forced many he small traders and business markets to keep their shops closed as in community of the country’s case of failure to fulfill the demands of the financial hub have braved over Rs unknown extortionists there was of risk for 3 billion losses on Saturday amid both life and valuables. their strike call against increasing number “It seams that the government and law of extortion in the city. enforcement agencies have given a free As the city’s all markets, shops, retail and hand to the extortionists as they are openly wholesale outlets doing their illegal remained closed practices across the entirely on March 17, city,” he said adding the businessmen have that how the traders, estimated to face who have already billions of rupees faced huge losses losses which they under the present law beard to launch their and order situation, protest against the could pay huge alarming situation of amount to these extortion. groups. The extortion The strike observed is not confined to the by traders with the city’s old and busy support of markets but it has transporters, and also spread to the some political parties, whole markets, paralyzed the routine industrial areas of the and social life of megapolis. he said Karachi on Saturday. that traders complain, The ever increasing the extortionist were Atiq Mir incidents of target distributing the slips CHAIRMAN ALL KARACHI TAJIR ITTEHAD killings, extortion and demanding as per the violence have, apart worth and business of from the routine life, any shopkeeper badly affected the city’s business as the ranging from Rs 20000 to Rs 100000. he people are not ready to take risk of said the traders have given a 72 hours’ shopping when their lives are insecure. ultimatum to government to control the While the inflation has already cut down criminal activities in the city otherwise the the spending on routine spending, the fear traders would launch a countrywide strike. of loss of life and valuables in shopping As traders across the country have assured centers, streets and roads the people are to observe the strike with businessmen of reluctant to come out of their houses thus Karachi, a countrywide strike was on the affecting the traders. Talking to Pakistan cards if things were not improved during Today, Atiq Mir, Chairman All Karachi next three days.
KARACHI
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GHULAM ABBAS
It seams that the govt and law enforcement agencies have given a free hand to the extortionists as they are openly doing their illegal practices across the city
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From blitzkrieg to geldkrieg: A German tale of power Historically, a powerful Germany scares the daylight out of Europe. However, despite establishing itself as the de facto EU capital, Berlin ostensibly has qualms over its own might KUNWAR KHULDUNE SHAHID URIng the late 1930s, leading up to the first couple of years of the World War II, around the time when Adolf hitler was giving neville Chamberlain, Charles de gaulle et al a continuum of sleepless nights, german militaristic wherewithal was there for all to see, accept and fear. hitler had all the strings of europe firmly in his grasp, and was possibly a second thought on his Russian manoeuvre away from fulfilling his desire of cementing german hegemony over the continent. There are scores of arguments that can be put forward to try and pinpoint the causes of hitler’s downfall in the Second World War, but regardless of the rationale the fact was that germany had failed in its quest to overpower europe – again – despite having the most daunting martial repertoire in europe. germany, and Prussia before it, always had the most intimidating warring arsenal in europe, but despite all the menace within its ranks, the nation was outdone by its adversaries, and forestalled en route to continental supremacy. What germany had hankered after, but failed to realise in 1945, the current crop has conjured up – with a similarly scary cult figure at the helm. Angela Merkel has those very strings that were snatched from hitler’s grasps by The Allies, but present day germany has not achieved its current position by unrelenting warfare, but by diplomacy and fiscal management that the rest of europe can only envy. While they had failed to win the battle of blitzkriegs at the time, the germans are in the driving seat in the geldkrieg – the money war. Berlin is now the nerve centre of europe; and the future of the continent lies in german hands – there are no two ways about either fact. They alone can bailout greece, while the rest of the Who’s Who in the eurozone – including France – have lost their triple-A rating. The new rules that David Cameron vetoed in De-
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cember, but could not stop, connote that germany would be checking the budgets of 16 fellow eurozone members – like ‘a teacher marking the homework of students’. even so, in spite of this rise and the ever so conspicuous presence at the helm of european matters, there is no palpable feel of festivity brimming out of germany with regards to this turnaround in fortunes. Like Jonathan Freedland pointed out in his column a couple of days back, if it would’ve had been nicolas Sarkozy in Merkel’s position, we’d never hear the end of it. And imagining Cameron in a similar scenario is a terrifying prospect for anyone who has even the slightest of acquaintances with the British media’s tendency of waxing lyrical centered round an ever-so-obvious bias, with logic exhaustively thrown out of the window. hence, one begs the question: where are the german trumpets? One possible reason for Berlin downplaying its position could be the immediate ‘responsibility’ that is the logical corollary of this dominance – the task of bailing out greece. Considering the fact that the greek economy
is about the volume of hessen, it is quite a manageable exercise. The other, and the more plausible, reason for this relative hush, as expounded by quite a few noises in the country and in the continent, is the shadow of the german past. The history of a nation that has blown its lead, so to speak throughout the past, by over-the-top displays of might and by showcasing war as their go-to play whenever the prospect of power looms. The germans might just have qualms over misusing this new found clout. horst Kohler, famously – or infamously if you will – had to resign from the presidency for a statement, that for many countries is a daily Presidential house rhetoric, when he stated that sometimes ‘military force is needed to protect the country’s economic interest’. Similarly a german defence minister’s refusal to use the word ‘war’ for german exploits in Afghanistan, was another awkward manifestation of the nation frowning upon the possibility of being lured into aggression. And a domineering position connotes the possibility of
hostility – few nations understand the concept better than germany. This wariness regarding its own might is what ensures that Berlin is at an intriguing crossroads. The overwhelming popularity of Merkel – a prudent, low-key figure – is the vindication of what the germans want: stability, durability and not an iota of conflict. They want a united europe, not merely for trade reasons or for fiscal prosperity; but the germans need a european identity to ensure that they steer clear of aggres-
sion of all kith and kin. Maybe it’s best for the zone that it’s the country that needs continental togetherness the most, which is in the most commanding position. For it is impossible to know the menace of a powerful germany that does not give a rabbit about europe’s unity; and it’s pretty clear that the germans don’t want to find that out. The writer is Sub-Editor, Pakistan Today. He can be reached at khulduneshahid@gmail.com
CCP nominated for ‘Agency of the Year’ Award by Global Competition review LAHORE
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STAFF REPORT
he Competition Commission of Pakistan (CCP) has earned yet another international recognition as it has become the first regulatory authority from South Asia to be shortlisted by the global Competition Review for the enforcement Award in the category ‘Agency of the Year – Asia-Pacific, Middle east and Africa’ for 2012. The London-based global Competition Review (gCR) is the world’s leading anti-trust and competition law journal that is chiefly consulted by lawyers, competition authorities, economists and academics to keep abreast with the latest developments in competition law. CCP’s nomination for gCR award has brought a great accolade to the country, as other nominees in this category are: China’s Ministry of Commerce, Korea’s Fair Trade Commission, China’s national Development & Reform Commission and Australia’s Competition and Consumer Commission. ‘gCR Awards’ is held annually to recognize achievements of teams and individuals from private practice firms, academic organizations and competition authorities in the preceding year. This is only the second time these awards are taking
place and it is commendable for the CCP to be considered for the award. The “Agency of the Year’ award for enforcement is based on numerous factors, such as the creative, strategic and innovative aspect of enforcement techniques used by the agencies. For the Commission, the assessment, thus, will pivot on its enforcement activities in 2011 during which it has issued 13 orders, 46 show cause notices, 6 enquiry reports besides 8 ongoing enquiries, and 7 search and inspections in important sectors such as, jute, edible oil, shipping, concession agreements, liquid chemical, entertainment, cable TV service, electric power, telecom, fertilizer, tea, and pharmaceutical. Moreover, the Commission also granted 82 exemptions and issued 76 merger nOCs during the year. The gamut of activities undertaken by the Commission in 2011 is indicative of its commitment to expeditious enforcement albeit within the confines of a limited budget, thus making its nomination for the enforcement Award all the more satisfying. The nominations are decided by the international competition law community through a nomination and online poll over a period of three months. gCR will announce the winner on 27th March, 2012. This is the second time CCP has been applauded and has been recognized for its work by the gCR. In 2011, the
CCP was the only new entrant to be granted a rating of 2½ stars out of five in the gCR “Rating enforcement’ for being an effective enforcer in the year 2010 despite being only three years old at that time. It has been able to shine once again, to become the only competition agency from South Asia to be shortlisted for the 2nd annual gCR enforcement Award in 2012, which bears testimony to how the CCP definitively positioned itself to be a driven and effective enforcer in the region. With such a nomination, it can be unequivocally stated that the CCP has developed into an effective world-class organization, as a result of the dedication and hard work of the Commission’s staff in its unceasing efforts to rigorously enforce the four pillars of the law i.e., the prohibition on the abuse of dominance, prohibited agreements, acquisitions & mergers, and deceptive marketing practice. It is pertinent to mention here that CCP’s work also received the due acknowledgement from the government of Pakistan during the recent international conference, “Competition enforcement challenges and Consumer Welfare in Developing Countries” held in Islamabad on 1-2 December 2011 in which the Prime Minister and Federal Finance Minister appreciated the work being done by CCP.
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Karachi bourse remains range bound during the week
iCCi says skill development programmes vital for remittances ISLAMABAD ONLINE
KARACHI,
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STAFF REPORT
he Karachi stocks market remained range bound with corrective spells during the week as KSe-100 index lost 56 points week-on-week (WoW) to close at 13,297pts. The investors’ confidence remained intact as daily average volume stood at 400mn shares compared to 355 mn shares last week, increasing by 12.7% WoW, said the analysts at InvestCap. “In line with previous week most of the activity was witnessed in low tier scrips as total traded value declined by 11.99% to USD 78.5 million,” viewed hasan Raza. With the net selling by foreigners during last two days of the week, FIPI witnessed an inflow of USD 1.6mn during the week compared to inflow of
USD 7.5mn in the previous week, the analyst said. higher oil prices and better foreign remittances figures fueled, he added. On the fiscal side, he said, figures released related to tax collection during 8MFY12 portrayed optimism over govt. financial position as increase of 28%YoY to PKR 1,222bn was witnessed, however during the same period govt. borrowing exceeding whooping PKR 916bn took the gloss away from the excitement. The govt. also conducted PIB auction during the week in which PKR 25bn were raised against maturity of PKR 28bn, with upward shift in yield curve. Meanwhile, expected decline in water availability to Rabi crops has raised concerns over the govt. agriculture growth target of 3.4% during FY12. There were also few positives vibes for banking sector related to increased penetration from branchless banking
(growing 15%YoY during 2QFY11) and recovery of overall nPLs of banks and DFI. The analyst said the market’s open interest position during the week declined by Rs 94mn (down 3.9% WoW) to stand at Rs 2.3bn. Future volumes followed the same path as they declined by 10.7% WoW to 13.1mn shares. however, futures spreads went up by 284bps WoW to 10.40%. The top-5 scrips at the futures counter holding 64% of the total open interest were engRO, nBP, FFC, DgKC and POL. “With the corrective spell this week, market seems to consolidate at these levels,” said Raza. The CgT issue, he said, will remain a key driver for the investors’ confidence and hence would define the trend in the market. “For the coming week, we expect market to remain sensitive to fresh political situation in the country,” he concluded.
President ABF touts regional trade as economic crisis solution LAHORE
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STAFF REPORT
ReSIDenT American Business Forum (ABF) Salim ghauri has urged the government to focus on increase in regional trade in order to come out of economic crisis. According to him, only improved regional cooperation can generate required momentum to the economic activities, as already different trade regions in the world are on the path of progress by interlinking their economies. he said the governments of both Pakistan and India should join hands with private sector of their respected sides to promote investment and business activities. he said the non oil producing countries like Pakistan and India are paying high price of abnormal rise in oil prices. This is the right time to look for regional cooperation to avoid nega-
tive impact of high oil prices on economies ahead, he added. Salim said total trade among eastern europe states has reached to 27 percent against South Asia where regional trade is not more than one percent of total trade. President ABF said both Pakistan and India should act prudently to tap the regional trade potential by mitigating bilateral political and cultural disputes. It is an irony that the business community of both countries faces problems in availing travel visas for each side. Particularly, he said, adding: There is a general impression that procedure for business visa is cumbersome due to non-cooperative behaviour of officials concerned. Salim said both India and Pakistan can benefit from each other by promoting Joint Ventures in different areas of economy. he said the business community in Pakistan is in favour of extending
status of Most Favoured national (MFn) to India provided the non Tariff Barriers (nTBs) are removed by India. According to him, Pakistan has been demanding market access to the US throughout last decade while playing the role of frontline state in the war against terrorism. But the volume of bilateral trade between Pakistan and US is not more than $4 billion. Salim said the volume of bilateral trade between Pakistan and India could be many times higher than rest of the world provided that the political leadership is ready to forego decades old disputes and ready to work in the larger interest of commoners on both sides of the border. President ABF expressed the hope that sanity would prevail and the political leadership of both Pakistan and India would not let the political disputes hamper business interests of their respective masses.
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TRUCTUReS and strategies are needed to be developed for diversifying skill development opportunities as par with international standards to increase the rate of remittances inflow, Yassar Sakhi Butt, President, Islamabad Chamber of Commerce and Industry (ICCI) said Saturday. he said foreign remittances is considered to be an important part of country’s foreign exchange earnings, but in Pakistan it have increased at a much lower rate as compare to other countries of the region. “Therefore, government should device strategies to initiate various skill development programs for people to work abroad which would ultimately increase the rate of remittances inflow, The President ICCI was of the view that 73 percent of our local labor force was employed in the informal sectors as they have lower level of skill. government should address skill development needs of workers and develop programs comprising language
courses and preparatory information regarding the social and economic structure of the host economy. Yassar Sakhi Butt said that remittances could accelerate the growth momentum of our fragile economy by maintaining macroeconomic stability at a time when foreign investment was on steep decline. Thus, training programs should be in line with international standards because types of skills demanded in the international job market are also changing rapidly, he maintained. ICCI President said that the rate of remittances flow should go up as par the countries of our region like India with the highest remittances-receiving country worth of $58 billion followed by China $57 billion. he also called upon the financial institutions to become more proactive and increase the speed of remittance transactions for sustained growth of the economy. he said that government should develop its own capacity to conduct research and facilitate other organizations involved in research related to skill development of people which would enhance their positions in the national and international labor market.
Korea pledges rs.20b for it center ISLAMABAD ONLINE
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hAIRMAn national Vocational and Technical Training Commission (nAVTTeC) Mumtaz Akhtar Kahloon has said that Korean government has pledge to provide Rs 20 billion to establish Information Technology (IT) centre in the country. Talking exclusively with Online here on Saturday, Mumtaz Akhtar said that China, Organization of Islamic Countries (OIC) and Islamic Bank have promised to provide financial assistance to Pakistan for promotion of technical education in the country. he said a local ngO Akhuwat foundation has also signed an agreement with nAVTTeC and under this agreement Akhuwat foundation would provide fifty thousand rupees to those students who have completed their technical education. he said that with this assistance these students would be able to start their busi-
ness in their relevant field of study. Chairman nAVTTeC during last six years curricula of different technical courses have been revised while another new eight curricula have been prepared to provide technical education to youth in the country and to make them skilled. he said that all these curricula are prepared according to international educational standards therefore these courses are acknowledged globally. Kahloon said that administration has constituted five members committees at tehsil levels to supervise the business of technical centers which have been established at local levels and providing technical education to people in remote areas of the country. he said these committees are also responsible to ensure transparency in the progress of these local technical centers. Mumtaz Akhtar Kahloon further stated that data preparation of student who has passed their education is under progress and soon this process would be finalized.