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N 1999, Nawaz Sharif’s government was toppled by General PervezMusharaf mid-way into its five-year term. Since then a lot has changed in Pakistan. Musharaf enjoyed eight years in power and is under arrest now. Benazir Bhutto, leader of the Pakistan People’s Party (PPP) and daughter of legendary Pakistani politician Zulfikar Ali Bhutto came back to Pakistan from self-imposed exile and was killed. Then in an unexpected turn of events Asif Ali Zardari became president. He led the country into the abyss of corruption, economic woes, militant insurgency and power and gas shortage. After bleeding for five long years, the worst seems to be over for Pakistan. Nawaz Sharif is on course to become Pakistan’s Prime Minister for the third time. According to unofficial results, beating expectations and tough competition from Pakistan Tehreek-e-Insaf (PTI), PML-N has overwhelming majority in National Assembly. He should be able to get the re-
Don't let your ego get too close to your position, so that if your position gets shot down, your ego doesn't go with it. — Colin Powell
What to expect from the new govt quired majority with the help of independents. Since winning the election, Nawaz Sharif is expressing his intentions to give top priority to the resolution of power crisis and Pakistan’s faltering economy. I feel that in this regard the new government will have the following political and economic outlook.
closely watched. Historically Pakistan government under Nawaz Sharif has remained close with both the US and Saudi Arabia. Nawaz Sharif’s initial statements post-election have revolved around maintaining this trend going forward. The Iran-Pakistan (IP) gas pipeline will present him with an interesting challenge as both U.S and Saudi Ara-
Political Nawaz Sharif’s success also brings a new political chapter for Pakistan. He is set to re-align both internal and external policies which will have far-reaching consequences for the country. On the internal front, Nawaz Sharif’s handling of the civilarmy relationship will be closely watched. It is widely expected that the civilians will retake some of their lost ground. Army’s influence over Pakistan’s foreign policy should also subside though not completely. Nawaz Sharif does not hide his bitterness at being overthrown in 1999 and will ensure that history does not repeat itself. In this regard, General Kayani’s impending retirement will be an important litmus test. Nawaz Sharif has already mentioned that contrary to PPP’s government which continued to give extensions to the army chief, he will be inclined to offer the post to the next senior most army man. Nawaz Sharif’s biggest challenge will come from the external front. Relationships with US, India, Afghanistan, Saudi Arabia and Iran will be
FPCCI rejects NEPRA’s increase in power tariff KARACHI STAFF REPORT
The Pakistan Federation of Chambers and Commerce and Industry (FPCCI) has strongly opposed the massive raise in electricity tariff by Rs 5.82 per unit and termed it an unjustified act by the caretaker government. In a statement issued on Saturday, FPCCI President Zubair Ahmed Malik said that the caretaker government is not empowered to make such decisions and it should leave all major issues to the incoming elected government to resolve. “At this particular moment when elections have already held and newly elected house is almost going to meet in a few days and the formation of new government is on the corner, NEPRA has announced Rs 5.82 per unit increase in electricity tariff which is unjustified and uncalled for,” Malik said, adding that trade and industry is already suffering badly due to frequent increases in utility prices particularly electricity by the outgoing regime while power outages have made lives of the people miserable. He said that during the last five years no effort had been made at any level whether it was federal or provincial governments except lip service. While rejecting any type of raise in tariffs of utilities by the caretakers, Malik said that even the elected government should refrain from raising gas and power tariffs and instead pay its full attention to the woes of trade and industry suffering due to massive load-shedding of electricity and gas. He said that PML-N government should seriously pay attention to find out resources of cheap electricity generation and announce execution of shelved projects of hydel power projects in order to overcome severe energy crisis.
Last time when nawaz Sharif was in power nominal interest rates came down from 19% to 13% and inflation cooled down from annual average of 11.8% to 5.7%. The nawaz government being probusiness would like to see the interests rate head lower from their present levels bia are not in the pipeline’s favor. Many believe the IP pipeline to be a lifeline for the faltering Pakistan economy, so Nawaz Sharif will have a difficult situation at hand. I believe project TAPI will get a new lease of life as an alternative. Nawaz Sharif is most clear about his ambitions to forge better relationship with India. Indian Prime Minister Manmohan Singh has extended an olive branch by congratulating and inviting Nawaz Sharif for a visit to India. The invitation will help in mending some of the ill-feeling between the two nations. Kashmir, MFN Status, water disputes, Afghanistan – all these issues need resolution and one hopes that
progress will be made on these under Nawaz Sharif.
Economic Nawaz is seen as a conservative and probusiness politician who favors a free market approach. A better relationship with India can serve as a catalyst in reviving growth in Pakistan through trade and if Nawaz Sharif’s early actions are anything to go by, he seems fully committed to this cause. The MFN status that India has been seeking should be around the corner. This would ensure ample supply of perishable commodities in Pakistan and a much needed price relief to the end consumers. As we are aware Nawaz Sharif initiated privatization of the insurance and banking sector in his 1st term; he might lean towards the privatization of the energy sector or involve business community in some capacity to tackle the issues of the power sector. He may get rid of the ailing public sector enterprises (PSEs) by privatizing them. He is also credited with ending the state monopolies in airline, shipping and telecommunication sector. With bulls already dominating Karachi stock exchange, the benchmark KSE100 index has crossed 20,000 points mark in the wake of the Nawaz led government. With KSE 100 gaining 49% last year it will not be surprise if it crosses 25,000 points mark by the end of year 2013. Knowing Nawaz government’s knack for heavy investment in infrastructure projects the biggest gains could be seen in cement and material sector. Financing of large infrastructure can lead to higher fiscal deficit if expenditures on non performing public sector enterprises are not controlled. Also if the new government starts borrowing for current expenditures (includes subsidies, defense, debt servicing etc.) it will become a burden on the economy, as the additional debt does not increase repayment capacity. The re-
sponsibility of preparing prudent budget is given to Ishaq Dar. Ishaq Dar also has an experience of negotiating the IMF bailout package for Pakistan during the Nawaz Sharif’s 2nd term. His past experience will play a significant role in negotiating another bailout package worth $5 billion to resolve the looming balance of payments crisis. This may happen as early as next month to service the upcoming IMF debt repayments. The Coalition Support Fund payment of $1.8 billion is expected to be made soon-after the inauguration of new government. This will help in bringing the current account in surplus. Additionally the inflow will allay any fears of a rupee collapse against the dollar. Revival of FDI will also be high on PML-N’s agenda. While there is no denying of Pakistan’s potential, political instability and security situation has hampered inflow of FDI. However Nawaz Sharif’s government, as we know, is known for infrastructure development, openness to trade & investment (reducing taxes on international trade and easing regulatory barriers) and improving institutional quality. This and his government’s amiable relationship with overseas Pakistani business community and royals in Middle East will play a vital role in attracting FDI. The change of government in Pakistan will afford a fresh approach towards tackling the problem of insurgency in Khyber Pakhtunkhwa (KP) and Balochistan. PML’s government is expected to be more serious about tackling this problem than the outgoing government of PPP. Last time when Nawaz Sharif was in power nominal interest rates came down from 19% to 13% and inflation cooled down from annual average of 11.8% to 5.7%. Nawaz government being pro-business would like to see the interests rate head lower from their present levels. Especially with inflation at its lowest level over last 5 years and reduced pressure on the rupee will create conducive conditions for a rate cut. Nawaz Sharif, during his election campaign, also promised disbursement of small loans to small & medium businesses. The figure below shows that during his 2nd term each year the amount of advances increased to private sector. Private sector which has been subdued for last five years might see an uptick in its credit appetite. Moreover this will help SBP fulfill its mandate of reviving economic growth. This time around you can sense maturity and conviction in Nawaz Sharif’s attitude. He sees this as an opportunity for redemption of his earlier mistakes. Would he be third time lucky is yet to be seen.
Private sector investment stressed in power generation ISLAMABAD APP
Managing Director Oil and Gas Development Company Limited (OGDCL) Riaz Ahmed Khan held a meeting with the delegation of the Islamabad Chamber of Commerce and Industry (ICCI) to discuss energy situation in the country. The ICCI delegation was led by its president, Zafar Bakhtawari. Riaz Ahmed Khan said that OGDCL is Pakistan's largest Exploration and Production (E&P) company. It has become the leading provider of oil and gas to the country by increas-
ing exploration and production domestically. "OGDCL is going ahead with its mission to fulfil the country's energy demand and its recent discovery will go a long way in this regard,” he said. “OGDCL will meet the expectations of its stakeholders through best management practices and by the use of latest technology,” he added. Bakhtawari expressed concern about the prevailing energy situation in the country and said that the future of Pakistan lies in attaining energy sufficiency. He informed Riaz Ahmed Khan that ICCI had already organised an energy seminar in which various representative of E&P compa-
nies discussed efforts that have been made to overcome the power and gas shortage in the country. Bakhtawari said that the government should launch a serious companies for adopting energy conservation measures by promoting energy efficiency programmes. He said there is a need to evolve a new policy to attract private sector investment in electricity generation to overcome the gap between the demand for electricity and its supply. He said the main reason for the growing electricity shortfall is not just the increase in demand but also the declining capacity to produce electricity because of inconsistent policies.
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A budget tells us what we can’t afford, but it doesn't keep us from buying it. — William Feather
Another roadblock hits cross LoC trade SRInAGAR
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ITH cross Line of Control (LoC) trade losing its sheen with every passing day, traders at Salamabad in Uri have accused Customs Department of demanding duty on apples being brought in from Muzaffarabad. The traders alleged that the list of the items being exchanged across the LoC has been regularly brought down and no revision of the list has been done over last so many years. According to a local news gathering agency KNS, the traders at Salamabad alleged that the department stopped the apples for they demanded to levy tax on them. The traders alleged that the list of the items being exchanged across the LoC has been brought down and “no revision of the list has been done over last so many years.” The traders said the custom au-
thorities at TFC stopped apples worth Rs 1.5 crore. “Custom officials are not allowing us to lift the apples from the TFC.” KNS quoted General Secretary Islamabad Chakoti Trade Union Hilal Turki as saying. He added that it appears that the officials want to levy customs duty on apples which is against the rules. “This is a custom free intra Kashmir trade and both India and Pakistan have already agreed to keep it custom free. I don’t know why these people are creating impediments in the process,” asked Turki. A custom officer at Uri however refused to comment saying he does not know anything about the matter. “I don’t know about this and can’t comment on it,” the official, who did not reveal his identity told KNS over phone. Cross LoC trade between the two divided parts of Kashmir began in 2008, however, the nature of the trade has been ‘barter’ and both the countries despite repeated demands, have not as yet agreed to open the banking and communication facilities.
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fbR seeks to revive excise duty regime MOnITORInG DESK In a major policy shift, tax authorities are contemplating holding back the process of abolishing federal excise duty on goods and services, started two years ago, and instead want to impose the duty on two dozen items in next year’s budget. The items include cosmetic products, racing cars, filter rods of cigarettes, lubricant oils, air conditioners, deep freezers and various types of other oils. Sources in the Federal Board of Revenue revealed that tax officials have proposed that the policy to phase out Federal Excise Act of 2005 over three years may be abandoned from the next fiscal year, 2013-14, following the previous government’s move to abolish duty on 25 revenue-generating items which hit tax collection hard. If the duty stays, it will generate billions of rupees next year, but the final decision will be taken by the Pakistan Muslim League-Nawaz government that is poised to take the reins of the country after winning general elections. Sources said excise duty on most of the goods
had been removed by the last government as an incentive to the private sector to bring down product prices. But the duty on some of goods like motor oil and waste oil was scrapped allegedly in the face of pressure from some vested interests and in return for kickbacks. The exchequer suffered a revenue loss of Rs 8 billion on just these two items, they said. Excise duty is universally imposed to curb consumption of luxury items, but this principle is violated by successive governments as the duty is levied on many essential items as well, said Ashfaq Tola, a renowned chartered accountant from Karachi and a tax expert.
CORPORATE CORNER TUV Austria merges with Moody International
LAHORE: The wait is finally over as Pakistan business industry has witnessed the recent merger of Moody International (Pvt.) Limited – Pakistan with TUV Austria Holding AG a company established since 1872, said the CEO of the company Rashid Mehr. He further elaborated its change of name from Moody International (Pvt.) Ltd. to TUV Austria Bureau of Inspection and Certification (Pvt.) Limited Pakistan. Moody International (Pvt.) Ltd., Pakistan began its journey in 1997 with almost no clientele or brand recognition, today it is the foremost company & brand in the field of Certification & Inspection and ranked as a market leader in our type of industry. Moody International (Pvt.) Limited Pakistan being an independent company, recently for the sake of good order decided amicably & concluded with Intertek Moody Group to part ways. As a result of that negotiation, between the management of Moody International Pakistan and Intertek Moody Group, the company Moody International (Pvt.) Limited Pakistan became 100% independent and subsequently TUV Austria Group AG., acquired shareholding in Moody International (Pvt.) Limited Pakistan. The board of directors of the company approved the change of name to TUV AUSTRIA Bureau of Inspection and Certification with immediate effect. As they say experience does matter The TUV AUSTRIA Group AG the parent company is an internationally renowned brand established since 1872 with its Head Quarters in Vienna - Austria, one of the world’s most beautiful capitals, providing high end technical and engineering services including but not limited to Certification and Inspection Services and additionally another 270 services internationally said Dr. Reinhard Preiss a PHD in mechanical engineering and International Main Board Director of TUV Austria Holding AG and a director in the newly formed company in Pakistan. He further added that we are very pleased with this investment as this is one of the major investments we as a group have done in the recent years in expanding TUV Austria Brand. After visiting Pakistan a few times I and my other Austrian colleagues felt that Pakistan is really a nice country but unfortunately a victim of perception and the reality is different from what you hear through International Media. I really like Pakistan its people and the unmatched hospitality and encourage all investors to make use of this opportunity and invest in Pakistan especiallyif they want to complete their Business Portfolio. We are also pleased with the recent elections results in Pakistan and now you will soon have a new government
sworn in under the able leadership of Mian Nawaz Sharif who is known to have business friendly policies and he is very sincere to change the perception and overall situation of the country, we congratulate the Pakistani people for having completed a successful election and for choosing the leader of their choice. We regard this invest in Pakistan very important to our future expansion plans and brand loyalty in South Asia and Middle East. Rashid Mehr said the motto of the company is QUALITY NOT QUANTITY with HSE being paramount factor in our business. From our initial experience with them we can tell you they inhale Quality and exhale Quality only. Their attitude is no compromise on Quality and “zero tolerance” policy towards unethical practices & HSE. PRESS RELEASE
Daewoo starts return tickets and seat booking at all bus terminals from 20th LAHORE: From May 20, the management of Daewoo Express is starting another facility for its customers by providing return tickets and seat booking for any route at all bus terminals. Naeem Ullah, Manager Marketing, said that the availability of return tickets would facilitate the passengers especially those who travel frequently from one city to another. Advance return ticket would help them to make their travelling plans. He added that the drivers and passengers have been suggesting that ticket booking should be available at all bus terminals. After considering the suggestions and
facilities of the passengers, now the tickets are available for all cities at every bus terminal. Daewoo Express is playing an important role in growth and development of the transport sector of Pakistan. Daewoo Express is a well-connected and organized bus network that connects the people of different provinces. PRESS RELEASE
centric company which is continually introducing new products and services to provide ever greater benefits to the consumers at large.” During his speech the MD also reiterated PSO’s vision of transforming itself into an integrated Energy Company. He stated that in its efforts to achieve this goal, the nation’s leading public company has been introducing new innovative ideas to offer increased value for its customers. PRESS RELEASE
Pakistan State Oil launches Fuel Smart Cards Pakistani executive KARACHI: Striving to provide ever greater value banker selected as Yale to its customers, Pakistan State Oil (PSO) has reached yet another technological milestone by World Fellow introducing chip-based Smart Cards. These fuel cards are the first of their kind to be launched by any OMC in Pakistan. The formal launch ceremony was organized under the theme of “Your World Just Got Smarter!" at DHA Golf Club, Karachi. The launch event featured high-profile guests and decision makers from across the corporate sector. The event highlights included performance by the country’s leading musical band as well as a laser show by a foreign artist. Introduced with the objective of providing increased convenience for PSO card customers, these fuel cards incorporate added security features in the form of chip-based encryption technology which secures all customer information residing in the chip from unauthorized access. Usage of these cards will benefit corporate customers by facilitating administrative supervision, economizing fuel expenses and selection of customized cards options. Speaking at the occasion, CEO & MD PSO, Mr. Naeem Yahya said, “Through the launch of this Smart Card, PSO has further underlined its standing as a customer-
KARACHI: Pakistani national and Doha Bank executive Raheela Khan has been named a 2013 Yale World Fellow, announced Yale University President Richard C. Levin. Khan is Assistant Manager of Treasury and Investments for Doha Bank, a major Qatari financial institution. A Pakistani national born and raised in Dubai, Khan currently manages a portfolio in excess of US$600 million. She is an experienced and knowledgeable professional with a deep understanding of the financial markets of Pakistan, UAE and Qatar. Previously, Khan was instrumental in transforming the investment culture in Pakistan through senior leadership roles at institutions such as the Pakistan Mercantile Exchange. She did this by introducing new financial products to the Pakistani market and convincing local institutions there to adopt cutting-edge international investment strategies thereby developing her domestic financial markets, which Khan believes have immense untapped potential. PRESS RELEASE
KARACHI: Indonesian Consul General Rassalis R Aadnan inaugurates Thai travel mart. Former cricketer Moin Khan is also present. STAFF PHOTO