Profit 20th December, 2011

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The ramifications of Kim Jong Il’s death Page 5 National Youth Policy and its grey areas Page 2 Improving the HD indicators Page 3

Pages: 7

profit.com.pk

Tuesday, 20 December, 2011

Govt revises GDP growth target ISLAMABAD

T

JALALUDDIN RUMI

He government has revised the Gross domestic Product (GdP) growth target from 4.2 per cent to 3.6 per cent due to September floods in Sindh, war on terror and overall energy crisis in the country.

istan borrows this money and spends on war on terror and delay in CSF funds are covered by the tax payers money. Pakistan has time and again raised this issue with US authorities in CSF review meetings.

Govt curtails spendinG On the expenditures side, government spending in the first six months were sup-

8 per cent. explaining the savings in expenditures, the sources informed that overall current expenditures have been recorded at 39 per cent in first five months (Jul-Nov), interest payments have remained at 39 per cent of the total allocation and amounted to rs34 billion, defense expenditures stood at 38 per cent of the total allocation and amounted to rs187 billion, and other expenditures stood at 39 per cent or 368 billion.

deficit financinG explaining the resource mobilisation for deficit financing, the official sources informed that auction for Sukuk Bonds worth rs50 billion is to be completed by december 20 for M2, having a valuation of rs250 billion. Sources further informed that other options that are in hand are exchangeable bonds, international Sukuk and commercial borrowing.

2011. The overall price of oil in international market was $75 per barrel which has increased to $105 to $110 per barrel and a base effect of $40 per barrel has been faced by the economy. Some 40 per cent, or rs.100 billion is to be spent under Public Sector development Program till december 31, 2011 out of a total local components of rs.220 billion, sources said.

11.5pc increase in exports

3G license auction Sources well informed with the current economic situation in the country told profit, the government is all set to launch the auction of 3-G licenses to telecommunication companies as the formalities for the launch have almost been completed. The first advertisement for the auction is to appear in news papers by next week and bidding is expected to be completed by mid March next year. More spectrums would be made available for 3/4G services and offered for auction with the provision that winners of such auction will receive amended licences and allocated frequencies by March 2013 and as such will be able to start their services thereafter.

agriculture growth outlook is positive and federal revenues have shown remarkable growth. exports have also registered a growth of 11.5 per cent in first five months of the fiscal year and imports have witnessed a growth of 20 per cent on receipts basis.

Sources informed that government has projected 10 per cent growth in imports and 5 per cent growth in exports in it’s balance of payment plan and so far trade deficit has been recorded at $6.4 billion in the first five months. In the remaining seven months government has a cushion of adding a further $8 billion in deficit to reach a target fixed for overall trade deficit at $14.4 billion.

etisalat to release $800m

12pc power tariff increase The sources further explained that government is eyeing no major increase in imports and if exports go even in the negative the balance of payments would still remain in control. The government has projected that a 12 per cent increase in power tariff will be required for ongoing fiscal year. large Scale Manufacturing (lSM) however, exhibited growth and against the target of two per cent the lSM growth has been recorded 3.6 per cent in first six months of the ongoing fiscal year 2011-12. remittances have witnessed a growth of 80 per cent during first five months and stood at $5.2 billion.

The government is also eyeing to receive $800 million from etisalat in the privatisation process of Pakistan Telecommunication Company limited (PTCl) as 95 per cent work on transfer of properties has been completed and it is expected that etisalat will release this amount within the targeted period. Sources informed that Pakistan’s arrears against United States on account of Coalition Support Fund (CSF) are $2.5 billion and government has budgeted only $800 million for the ongoing fiscal year 2011-12. US has already completed the processing of $400 million so far and these funds should come with no further delay. The sources said Pakistan’s claim is valid as it has incurred these expenditures and therefore the said payment is not part of an aid package but rather reimbursements.

us reimbursements explaining the historical trend of approval of Pakistan’s CSF claims, the sources said that some 60 per cent to 65 per cent claim of CSF are normally accepted by the US and 35 per cent claims are not accepted owing to different reasons. The sources said that Pak-

3pc drop in consumer price index posed to stand at 50 per cent of total expenditures by december 31, 2011, however, due to austerity measures ministry of finance has managed it to keep them at 38 per cent of the total expenditure and the final figure is expected to touch 42 per cent of the total with savings of

FBR collects Rs712b tax revenue ISLAMABAD

F

JALALUDDIN RUMI

ederal Board of revenue (FBr) has collected rs712 billion, depicting a 28 per cent increase in the first five and a half months of FY12 against rs555 billion in the same period last year. The remaining amount of rs1240 billion has been left to meet the tax target of rs1952 billion in the next six months of the current fiscal year. This was said by Chairman Federal Board of revenue (FBr) Salman Siddique while talking to Media on Monday.

FBr Chairman said rs50 billion would be added in total collection through administrative measures, rs21 billion from flood surcharge arrears, rs10 billion from court cases, rs27 billion from withholding tax recovery out of which 14 billion have already been recovered from banks and telecommunication companies. detection of wrong GST input tax adjust claims have reached at rs32 billion and FBr has managed to recover 12.2 billion last fiscal and rs.1.2 billion this fiscal year. He also informed revenue leakages are being plugged with the help of revenue advisory group’s consultation.

Chairman FBr said if present trends in economic growth and inflation remain till the end of current fiscal year, FBr would achieve the tax target. He further said FBr has also decided to launch risk Based audit Plan based on central risk benchmarks for selection of income tax returns from January 2012. This plan would remain under implementation for next six months and risk criteria would be forwarded to 21 regional Tax Offices (rTO) for selection of income tax returns for total audit of income tax returns and said hopes are high that this audit would yield good results, he added.

Federal Board of revenue (FBr) has identified 0.7 million non taxpayers under broadening of tax base drive and as they have created their assets from agriculture income so as to book them under provincial agriculture income tax net. He informed that a major step is being implemented from January 2012 under which no input tax adjustment would be allowed to GST registered persons who not be demand and mention in their monthly returns CNIC and NTN of their un-registered buyers. This would not only help document the economy, but, would also help increase in revenues within this fiscal year, he added. Salman Siddique,

FBr Chief said 60 per cent of 0.7 million non taxpayers; have reported that they have created the assets either from agriculture income or foreign remittances. He said once the verification of such details to be received from provinces for those who don’t have agriculture income then FBr would be taking next step to enforce Income Tax returns from them.

Salman Siddique also informed that economic Coordination Committee (eCC) in its last meeting has discussed the demand for restoration of GST exemption on tractors. The demand is being raised that local manufacturers have decreased the production of tractors owing to low demand because of GST. He informed that FBr has held meeting with tractor manufacturers and they have negated this impression and said that ZTBl has frozen the credit line for purchase of tractors that is the main reason behind this. He said that in next eCC meeting decision would be taken on this demand. FBr Chief also informed that regime for five export oriented sectors is being revamped and soon a new regime with standard five per cent confessional rate would be implemented and final consultation would be held on the proposed regime on 23rd december.

48b subsidy to power sector Government has so far given rs48 billion subsidy to the power sector in the first five months of FY12, highest in all subsidy sectors. Some rs20 billion would be disbursed under Benazir Income Support Program till december 31,

Consumer Price Index (CPI) has shown a declining trend and declined from 14 per cent to 11 per cent in the first five months while Sensitive Price Index (SPI) also depicted a declining trend and stood at 4.9 per cent, sources remarked. Federal Board of revenue (FBr) has also collected rs712 billion in tax revenues, depicting a 28 per cent increase in the first five months of FY12against rs555 billion in the same period last year.

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Tuesday, 20 December, 2011

02

debate europe, heal thyself

National Youth Policy and e DurDAnA nAjAM

T

He only National Youth Policy of Pakistan was born after sixteen years of gestation. It was perhaps, the longest period in the life of policy making.

The year 2008, marks the beginning of a new era in the political development of Pakistan. after a lapse of eleven years, democracy was returned to the country through popular representation. The political atmosphere was charged with the desire to bring Pakistan its lost democratic glory and political stability by defeating terrorism and through institution building. Though, in the course of time, none of these could be achieved, and the situation on economic front moved from bad to worse. The last nail in the coffin was hammered by the devastating flood of 2010 that gobbled billion of rupees worth of agricultural assetsthe lifeline of Pakistan. The military operation of 2009 in Swat is another saga that rendered a wide majority of our population especially the youth helpless and directionless. In addition to these, the war on terrorism at different levels and parts of Pakistan had disarrayed the nation in many respects. amidst this chaotic situation, somewhere in 2008, the Youth Policy was laid on the table. It was as messy as the leadership could possibly make it look so.

Wrong solutions to right problems: The policy talks about everything that one could think of, it appeals to one’s emotions through words like awareness, patriotism, good citizenship, skilled labour, scholarships, intellectual development, micro financing so on and so forth. The policy, however, fails to define or perhaps, infuse any life into these words. The funniest part is that without having any archaeological support, since we are dismantling whatever we have in the name of archaeology, without any economic provision since a lot of our fund is funnelled in things other than infrastructure and without any reference to the education budget that lingers at 2 per cent of the GdP, and without considering that almost 80 per cent of this country’s youth lives in the rural setting who may not even be knowing what it means to have a disciplined education system, the policy goes on suggesting vocational and academic trips across the country, and educating youth through video conferencing, seminars and by interacting with noble laureates. The policy talks about National Youth Fund, not a single reference is made to the indigenous fund raising

methodology, it is again left to the donors, philanthropists and banks to provide for the funds. In short the policy is not specific in actions and clear about its achievement objectives.

Lack of interconnectivity in policy formulation: In theory, no policy can deliver unless all the stakeholders are taken on board to the aims and objectives of the policy. Putting things in black and white rarely serve the purpose of facilitating the target group of the policy. lack of interconnectivity emerges when one sees disconnect in reality and in the implementation strategies of the policy.

Skill development: a good level of thrust is laid on skill development through need assessment but there is no reference to research and development. If one is to prepare the youth for the modern 21 century how could it be possible without the provision of research and development facilities. Science, research, and technology are the prerequisites for the youth to join the global scientific revolution.

Hazy employment strategy: as far as employment is concerned, the mention of internship could be a good proposal for the fresh graduates, but there is no reference to the provision of employment opportunities and labour market information by the government to the youth. Training and preparing youth for the job market is missing.

Provision of skills does not ensure job opportunities (as suggested in the report) it can only raise the chances of getting a job. In the absence of a job market, no skill set can be helpful in making the ends meet.

Revival of international sport neglected: Sports activates are reduced to parks and street games, the matter of fact is that Pakistan has been systematically driven out of sports arena, squash is the right example. No solution is sought on its revival. What would all those patrons do to sport is also left to guess.

Youth in jails: The youth in jail needs to be rehabilitated through counselling, that is the only way to helps them relate back to a normal life. There are references of skill development and creative activities in the policy for youths in jail but the psychological part is not mentioned which would eventually help them become non violent in the future.

No reference of art and culture: The policy is silent over art and culture and its utility in developing self-respect and sense of identity in the youth. The idea of journeying around the country to get a sense of history and heritage makes little sense, unless people are engaged in cultural activities applying arts and crafts.

The radicalisation of youth: The year 1979 and the decade following it gave Pakistan a new identity- incubator of Mujahedeen, with its periphery loaded with people who could be used to

combat war on the strength of Islam against the proposed and at times designed enemies. all through those years, the young lot of this country, in the absence of any direction, flew into the ranks of those who could afford them not only direction, but board and lodging as well, minimising the burden of poverty laid on the parents of these youth by the misplaced financial priorities of the government of Pakistan. The aim of life designed for these young recruits was simple: Obeying the decree of allah, which actually meant standing against any force that could be a threat to Islam. The definition of threat was defined by the providers. On the same tone in the urban setting; in the absence of government intervention, the universities like Punjab, Karachi and Peshawar became heavily radicalised. Punjab University got into the tangles of Islamisation, while Karachi and Peshawar varsities brewed ethnicity. Schools in Baluchistan had banned the singing of Pakistan anthem. This disconnect within the society further exacerbated through different education systems that were allowed to operate within Pakistan without any check and balance. We have had public schools, private schools, madrassaa and GCSe or IB certification systems. The mix is not as disturbing as the syllabus and curriculum followed by these systems of education. No coherence, no linkages and no coordination. a school can choose to teach all that it wants to teach to its students. The famous Oxford school books developed time and again under different agenda had their own bidding to make.

Ways to go forward: From the discourse above, one could only deduce that this Youth Policy needs a complete over haul. One of the major flaws in the policy is its inability to envision the outcome it expects from different actions it desires to take. The National Youth Policy of Ghana 2010, a far less developed country than us has managed to do so, though there is some similarity in the National Youth Policy of Pakistan and that of India but, Indian Youth Policy has very clearly stated the responsibilities of youth and state, since both the entities have stakes in the peace and neutrality of a society. India’s Youth Policy has also very clearly stated the definition of youth, making easier for policy makers to determine need specific programmes and projects.

In the same lieu, australian government have established a “Youth Monitoring Grant programme” to de radicalise its society. The way forward designed by the australian

policy maker in the context is to engage youth in community development by making them the ambassador of peace, i.e. giving them the responsibilities to eradicate radicalisation from the society. We need to define what we expect from the actions given in the policy.

Let Education Policy be the lynchpin: Youth Policy should intersect at some point with the education Policy. as has been envisaged in the National education Policy of Pakistan (2009), the education budget awaits revision from 2 to 7 per cent of the GdP. Policymakers, both inside and outside Pakistan, should give careful consideration to whether and how education investments can promote peace and stability, taking into account what we now know about the state of education sector and the roots of militancy.

Defining obligations: The obligations of different groups should be made part of the policy so that it becomes clear as to who is responsible of what. The obligations of state, family, teachers, youth and private sector should be discussed in the policy.

Then there is a clear need of inculcating the ideas of democracy, governance and leadership in the youth. Good governance and civic responsibilities are the recipes to development. Interestingly, there is no reference in the policy about transparency, accountability, protection of rights, obedience to rule of law, etc. The development of these key principles is necessary for the development of what is called a patriotic citizen, which the policy claims to achieve. The issue of moral values is left to the ministry of religious affairs. This is bound to make the society more conservative and myopic; having multiple religious sects and extreme religious views.

The writer is a freelance journalist and can be reached at durdananajam456@h otmail.com

DAnIeL GroS

UrOPeaN policymakers like to extol the strength of the eurozone: relative to the United States, it has a much lower fiscal deficit (4% of GdP, compared to almost 10% for the US). Moreover, unlike the US, the eurozone does not have an external deficit, which means that the monetary union holds enough savings to finance all of its members’ budget deficits and resolve their debt problems. But, despite this relative strength, the european Union’s leaders seem incapable of resolving the eurozone’s sovereign-debt crisis. despite meeting after meeting, heads of state and finance ministers have failed to reassure markets. Now, europe’s policymakers are appealing for help from the International Monetary Fund and asian investors. This appeal for outside help is misguided, given the reasons why the euro crisis has gone from bad to worse, despite the eU’s abundant resources. The key problem is the distribution of savings within the eurozone. The countries north of the alps have excess savings, but Northern european savers do not want to finance indebted Southern european countries like Italy, Spain, and Greece. That is why the risk premium on Italian and other Southern european debt had risen at one time to 5%, and why, at the same time, the German government can issue short-term debt at negative real interest rates.

Northern europeans’ reluctance to invest in their southern neighbors is the problem behind the problem. The German government could change this if it were willing to guarantee all Italian, Spanish, and other eurozone debt. But it is understandably loath to do so, owing to the high risk involved. The european Central Bank could also help solve the problem by agreeing to buy debt that has been shunned by financial markets. But, like Germany, the eCB understandably lacks enthusiasm about this solution. So the standoff continues, and the crisis worsens. The world’s major central banks recently agreed to make more dollar liquidity available, mostly to european banks. This has eased the immediate liquidity crisis, but the fundamental debt problem remains, because the Italian government cannot fund itself at reasonable interest rates. a month ago, the eurozone’s heads of state arrived at another way to appeal for foreign funds: the european Financial Stability Facility (eFSF) could package euro debt and sell it to foreign investors such as the Chinese and other asian central banks. Here the same question arises: Why should China buy Italian debt when Germany shuns it? even if China agreed to buy the debt, it would likely consider buying some of the special paper that the eFSF plans to issue only if it obtained some political concessions and an implicit guarantee from Germany. But it makes no sense for Germany to pay a political price for doing something – guaranteeing other countries’ debt – that it has consistently refused to do. The political concessions that China would probably demand – for example, eU recognition of the country as a market economy, or a greater voice within the IMF – may be overdue. Nevertheless, these issues should not be linked to the eurozone’s inability to solve its own problems. Moreover, a large inflow of funds from the IMF, China, or elsewhere could do more harm than good to the extent that it puts upward pressure on the euro’s exchange rate – and thus makes recovery in the crisis countries even more difficult. German growth could survive a stronger euro, because its exports are much less price-sensitive, but countries such as Italy and Greece, which must compete on price, would be weakened further. europe’s policymakers cannot offshore the eurozone’s problems. europeans can and must deal with this crisis themselves. One option discussed these days is a special fund, financed by the eCB’s major national central banks and placed at the IMF’s disposal to help Italy and Spain. This would harness the eCB’s resources without formally violating the eU’s lisbon Treaty, which forbids central-bank financing for governments.

Daniel Gros is Director of the Center for European Policy Studies. A version of this article was first published on Project Syndicate.

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Tuesday, 20 December, 2011

EDITORIAL

Improving the HD indicators

Alive to challenges?

N

OT admitting a problem makes it worse. So when government spokesmen claim being “alive to economic challenges”, one cannot be faulted for foregoing any expectations that ambitious budget projections might have triggered. For, considering on-ground reality, the optimism immediately following dr Sheikh’s budget speech can no longer be justified. like many, we genuinely believed that ambitious growth and revenue expectations implied a thorough FBr overhaul coupled incorporation of serious value addition in exports. and after dr Sheikh’s enlightening lecture on the benefits of privatisation immediately preceding the budget – at our traditional Pre-Budget Seminar – we expected this fiscal year to finally record unprecedented progress on PSe privatisation. These measures are essential to ease the government’s fiscal burden. Both exports and tax reforms are necessary to improve national earning, and that will not materialise absent PSe privatisation, since they bleed the national exchequer of billions every year. That the claims followed the 18th amendment, there were

also hopes of the centre and provinces finally working like a well oiled machine, leaving the days of fiscal deficits and financial leakages blissfully behind. alas, that was not to be.

Instead, neither tax reforms nor a quantum jump in exports have materialised. exports are actually sinking as the international market commodity boom that bid up cotton prices last year has crashed. Provincial authorities have been exposed as incapable of generating revenue or handling the additional responsibility that has come their way. The result has been increased uncertainty and inefficiency. If the government were indeed “alive to economic challenges”, we would have seen steps to increase output, improve earning, and stop leakages. Half the fiscal is already behind us, with not much time to show results considering obvious lags between policy implementation and results.

It’s safe to say budget targets will not be met. and considering the next presentation will be the last one before the next general election, it is difficult to justify official satisfaction with the economic situation. rather than forward empty boasts, those in charge are advised to put some sense in national earning before it is too late.

Syed Asad Hussain

I

Not a good news for general masses

NATO supply disruption

This is with regards to the news report, ‘Ticket sales of first private train start’ published yesterday. Ticket sales of the first private train in Pakistan might sound like a good news for regular commuters in lahore and Karachi generally, because the air fares are skyrocketing and buses or any other public transport do not provide necessary facilities to the passengers. This venture is no doubt a successful example of public-private partnership, but the real thing is that it will cater the business class only and not the general masses. The fact that this train is providing excellent food and catering facilities and air conditioned compartments narrow down its target audience to only business class.

This is with regards to the news report, ‘NaTO supply disruption reduces tea smuggling’ published yesterday. It is indeed funny that the durand line has become a perpetually permeable membrane with regards to open smuggling. Now, the news report has highlighted the smuggling of tea and how the NaTO supple disruption seems to have halted the act for the time being. Thankfully this has resulted in some legal import finally and one hopes that this trend continues; mind you not only in the realm of kitchen items. I hope we continue to enhance the legal set up and legal trade continues and stops being a nuisance that it undoubtedly is.

AAMIr SuLtAn

ShAkeeD AhMeD hAShMI

T seems that the current political developments which are capricious have overshadowed the findings of the recently released UNdP report on the Human development Index (HdI). Thus far it has failed to magnetise the attentions of Pakistani mass-media, government, political leaderships, bureaucracy, NGOs, and the civil society at large - a serious neglect indeed. This article is an attempt to raise the issue and draw attention of policymakers and the political leadership.

There are startling statistics that we all should debate around. South asian countries in general and Pakistan in particular have been struggling to improve the Hd indicators which currently stand at the bottom of the ranking’s table. Out of 187 countries Pakistan stands at the 145th position, India 134 and Bangladesh 146. Pakistan’s life expectancy at birth stands at 65.4 years, India 65.4 and Bangladesh 68.9. expected years of schooling in Pakistan are 6.9, India 10.3 and Bangladesh 8.1.

Pakistan’s mean years of schooling is measured at 4.9, India 4.4 and Bangladesh 4.8. Gross National Income per capita as measured in Purchasing Power Parity, for Pakistan, is $2,550, India $3,468 and Bangladesh $1,529. according to the UNdP report, the overall HdI value for Pakistan is 0.504, India 0.547 and Bangladesh 0.500. Interestingly, tall claims have been made on India’s economic performance; however, given the India’s current HdI ranking it can be concluded India’s robust economic growth has failed to improve the socio-economic indicators of the country.

All provincial governments should realise the gravity of the situation, and showcase serious efforts to improve HD indicators

The writer is an Islamabad based freelance contributor, researcher and trainer. He can be reached at syed311@hotmail.com

RAwALpINDI

FAIsALAbAD

Blog for business

B

Pakistan’s story is no different than other regional countries, indeed. due to our own neglect, the economy stands in deep waters and socio-economic indicators have worsened over the last years. Population explosion, poverty, unemployment, poor economic governance, prevailing high level of corruption in the society, low tax-toGdP ratio, increasing domestic and foreign debt, energy crisis and unsatisfactory security situation are stated to be real barriers which have negatively affected the socioeconomic indicators of the country.

Ironically, Pakistan’s spending on education and health is one of the lowest among the developing world. It is now said that after the 18th amendment, provinces have been empowered to manage health, education, social welfare and other ministries. Clearly, the onus is now on provincial governments to step up the process and make ministries, which they have inherited from the federal government, more vibrant, focused and professionally driven.

Nonetheless, it seems that education and health are given the lowest priority by all provincial governments and that they don’t have the capacity to run these ministries. It is also felt that the working of the ministries, which is run by the incompetent corrupt bureaucracy, is painfully slow with deep cracks and holes in it. These, however, can be filled if the incompetent and corrupt bureaucracy is replaced by a new delivery system which is fair, fast and transparent and is run by dedicated and honest professionals.

To enable the system to work more effectively and diligently, a more focused and coherent approach is required. Besides making the health and education ministries more effective, Poverty alleviation Cells are to be established in all provinces which are focused on providing effective and immediate social safety nets to the poor.

To meet this end a strong nexus of the development sector, local governments, academia, communities, and civil society is to be created. This is the only way forward. all political parties must give priority to education and health in their manifesto and practically demonstrate it instead of doing the lip-service.

However, all provincial governments should realise the gravity of the situation, and showcase serious efforts to improve Hd indicators. The capacity of the relevant ministries must be scaled up to ensure timely and smooth delivery of services. This is not a mission impossible job-it can be achieved if the will of the political leadership exists.

S A J Shirazi

lOGS have become a new ecommerce buzz. Marketers are blogging for organisations, products, ideas and or for other goals and achieving. a business blog is the one published by or with the support of an organisation to reach that organisation's goals. In external communication the potential benefits include strengthened relationships with important targeted segments and positioning of the publishing organisation as industry experts.

Blogs are also referred to as tools for collab-

oration, engagement and knowledge management.

Once an organisation has a blog, it offers immediate and high impact interaction with its target audience. as more people have online access, they will want more than the standard online newsletter or typical Pr response. long gone are the days when companies simply fed information to their customers. Now everyone asks for a dialogue - a meaningful exchange of information.

Consumers also want to know that organisations are listening to them and paying heeds to what is being suggested.

From a business point of view there are several potential reasons to blog particularly in less connected country like Pakistan. Blogs are no different from channels like video, print, audio and other forms of presentations.

This word of mouth (or call it word of mouse) marketing delivers results including stronger relations with important targeted segments.

Who should blog for the businesses? Ideally, front line people who know the business

in and out should blog about it. Marketing professionals can also use this powerful tool. Organisation can hire professional writers to blog for them under company's name or blog under their own. depending upon the feedback and information provided by audience, internal bloggers can develop the ability to write in their own voice and create content for business blog.

On the other hand, external bloggers can view business with an objective eye and offer fresh marketing ideas and strategies. external bloggers can study company's marketing materials, reports, other collateral information, and meet key people in organisation to learn about what organisation does and how best to market the product through blogging. earlier, online marketing and websites never picked up in Pakistan because of obvious "digital divide that exists due to individual disparities in levels of income, education standards, psychological reasons, age, gender, rural urban divide, and quality of life or collective deprivations like lack of physical infrastructure." Things have changed for the

shahab Jafry Business Editor

Kunwar Khuldune shahid Sub-Editor

babur saGhir Creative Head

ali riZvi News Editor

maheen syed Sub-Editor

hammad raZa Layout Designer

Business blogging is being taught in business schools as a part of business studies and/or as a part of mass communication courses

better. Now the stage is set for Pakistan corporate sector to look at blogging as an opportunity to reach out and take advantages. Best thing is that local businesses have noticed the growing readership and influence of these Internet postings and the buzz corporate blogging can create particularly as a process of Search engine Marketing or targeting online segment of consumers. let me add that businesses cannot afford to ignore blogs because blogs are simply the most explosive outbreak in the information era since the Internet itself. elsewhere, blogs are already shaking up just about every business.

Blogs are a phenomenon that no futuristic business can postpone any further. Given the changes barreling down upon us, blogs are not a business elective rather a prerequisite. like anywhere else, blogs can be a welcome mat for

local businesses to reach out across the world. Pakistan bloggers are exceptionally good. They have expertise for corporate writing. Their language and blogging skills and networking capabilities can be compared with any bloggers' community in the world. Internet coverage and users' base is constantly growing. even trend to shop online is taking off. Given chance, blogging can help any business directly as well as indirectly. and the whole world is your market as they say.

My recommendation is that every business, large or small, must start thinking out of the four ‘p’ marketing paradigm and have a blog.

The writer is Deputy Controller of Examinations at Lahore School of Economics. He blogs at http://logicisvariable.blogspot.com/ and can be reached at sajshirazi@gmail.com

For comments, queries and contributions, write to: muneeb eJaZ Layout Designer

email: profit@pakistantoday.com.pk ph: 042-36298305-10 fax: 042-36298302 website: www.pakistantoday.com.pk

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Tuesday, 20 December, 2011

If you only work for money, you will never be a rich man

news

04

bestway Group founder and chairman, sir anwar pervez

Economic Cooperation Organisation insists upon container train reactivation kArAChI

e

wAqAR HAMzA

CONOMIC Cooperation Organisation (eCO), while giving a trade body of Pakistan a proposal, insisted upon reactivating eCO containers train, and also asked for usage of the Pakistani route that is currently with Turkey and Iran. Moreover, the organisation also asked Pakistani trade body Federation of Pakistan Chambers of Commerce and Industries (FPCCI) to increase the volume of trade which is very minimal (around 0.2 per cent) at the current stage. One of the members of transportation committee of eCO told Profit that during the last meeting held in Pakistan eCO insisted upon increasing the share of trade of Pakistan.

He further said that merely 40 per cent of NaTO trade is being routed from Pakistan and the rest 60 per cent is being transported through Uzbekistan; yet one of the main issues of low cooperation from Pakistan is that eCO secretariat at Tehran does not share information with Pakistani trade bodies. But, Pakistan has to sign many important international contracts in order to have a plausible increase in its trade volume with eCO countries, and the main contracts the Ministry of Commerce has to sign are TIr (Transports Internationaux routiers) and a Carnet de Passage, he added. It is to be noted that over 50 countries using TIP as the international customs transit system, while Carnet de Passage is a document that allows one to cross interna-

43pc imported urea goes untraceable LAHORE: Nearly half (43 per cent) of the imported urea fertiliser is going to untraceable destinations, despite marketing through state-run National Fertiliser Marketing limited (NFMl).

This has been reported by divisional commissioners in Punjab, who are monitoring urea sales. It was disclosed by Punjab agriculture Minister Malik ahmad ali aulakh, while chairing a meeting to review urea position across the province, here on Monday. sTAFF REpORT

tional borders with a vehicle and avoid paying customs charges. It is pertinent to mention that eCO containers train was inaugurated in 2009, but only after one journey it was annulled. So the reactivation of this train would surely help Pakistan to get better results in terms of trade increase, therefore, it should be a necessary step for government in the long run benefit of the country, he added.

ECO TRAIN RAILROAD The efficiency, growth and output of regional economic agreements come after the creation of infrastructures and increase in trade facilities in the region on a gradual basis.

Since the establishment of eCO the smoothening of transportation and transit among the member countries have been deemed necessary and many efforts have been made. In this respect, in the wake of the agreement between Iran, Pakistan and Turkey the railroad for eCO container train was determined and in 2009 was tentatively inaugurated in a ceremony at presence of officials of these countries and heads of railroad administrations of eCO member countries. Then a contract with an International consultant group was endorsed on finding the shortfalls of the railroad.

The authorities in charge of the train have stated that it was tentatively inaugurated to consider the possible problems arising from discrepancies of rail and lading systems of these countries. as a result, international consultants accompanied

eCO Train through the path IslamabadZahedan-Tehran-lstanbul in 2009 to verify the flaws which were presented to eCO Secretariat in a comprehensive report.

ACHIEVEMENTS This train has made great achievements in curtailing the transit route of the goods initially during 15 days it passed from Pakistan to Istanbul which was decreased to 11/5 days with measures adopted while it was necessary to spend 45 days in order to pass a cargo from Islamabad to Istanbul previously. after consideration over the train route by the international consultants a meeting was held in eCO Secretariat in Tehran where the soft and hard flaws of the railroad route were discussed as the consultants offered their proposals and ultimately decreasing the passage time of the train to the minimum possible was put on the priority in planning of the 3 countries.

SPECIFICATIONS OF RAILROAD The length of the Islamabad-TehranIstanbul exceeds to 6,500 kilometers as 2,570 kilometers pass through Iran, 2,000 kilometers through Turkey and about 1,900 kilometers on the Pakistan soil. The running time of this route is half that of marine cargos and in comparison to road route is safer and more environment friendly. Capacity for load carriage by the train is currently 20, 40 feet cars. extensive studies carried out and opera-

Country

Tariff rate for 20feet container per kilometer

Iran Turkey Pakistan

25 cents (euros) 25 cents (euros) 18 cents (euros)

tionalisation of the plan has resulted in its introduction as an international corridor which was fortunately recognised by the United Nations.

FURTHER POTENTIAL Moreover the freight capacity of the eCO train along the route, the simultaneous capability to carry cargos and passengers should be noted. Based on considerations made by the consultants of the project, it is predicted that in case of establishment of Zahedan-Bam route it will be possible to carry 500 thousand passengers and two million tonnes of cargo whose final capacity would be one million passengers and eight million tonnes of cargo annually.

Nevertheless the capacities of the eCO train for cargo and passenger purposes have not yet been meticulously verified. eCO train currently operates once a month although in case of addressing the flaws and provision of infrastructures as well as availability of demand, the cargo transportation will be made on a weekly basis. In this project, the role of Iran as a linking hub of Pakistan to the

State Bank developing comprehensive liquidity management solution for IBIs KARACHI: Governor, State Bank of Pakistan (SBP), Yaseen anwar has disclosed that the central bank is currently at an advanced level of development of a comprehensive liquidity management solution for Islamic Banking Institutions (IBIs) following extensive efforts made both by the industry and SBP. according to a statement issued by SBP on Monday, delivering his keynote address at a two-day international conference – Oman Islamic economic Forum – in Muscat, the governor said that this comprehensive liquidity management solution would include 1) development of Islamic interbank money market, 2) development of Islamic Interbank Offered rate (IIBOr) for use as a benchmark for pricing of Islamic finance products, 3) transformation of a sizeable portion of conventional sovereign debt in the books of central bank into Shariah-compliant debt, 4) allowing IBIs to place surplus liquidity with the central bank to be remunerated based on the central bank’s earnings on Shariah-complaint assets and investment portfolio, and v) lender of last resort facility for IBIs. The most challenging and time consuming aspect of this mechanism is the transformation of sovereign debt into Shariah-complaint debt as it involves identification of the assets to be used for transformation, their valuation and documentation etc, he said. ‘However, I am confident that with the help and grace of almighty allah, we should be able to finalise this mechanism in the near future.’ sTAFF REpORT

Jittery KSE gains 54.89pts on Zardari’s return kArAChI sTAFF REpORT

a

FTer a beat down in the last two consecutive sessions, local bourse posted a recovery in today’s session albeit a weak one. return of the president appeased jittery investor sentiments as local interest lent some support to benchmark KSe-100 at around the 11090 level. However, foreign investors dwindling interest continued to put downward pressure whilst eNGrO hit the lower circuit breaker. amidst dreary participation, thinly traded NeSTle and SCB along with index heavy OGdC significantly influenced index’s overall performance. although attractive valuations are in the offerings, political uncertainty and

external account worries might bring the bears back.

The KSe 100 index closed at 11083.03 levels with the gain of 54.89 points, while KSe 30 index bagged 7.04 points to close at 10161.18 levels. all Share index closed at 7674.09 levels after gaining 35.53 points. Total 116 scrips

advanced 95 declined and 90 remain unchanged out of total 301 scrips traded.

Total volume stood at 36.45m against the previous volume of 47.64m with the negative change of 23.48 per cent. While total trade value was valued at rs1.36b against the previous value of rs2.00b with the net

change of negative 32.05 per cent.

Market capitalisation was rs2,876.23b against previous rs2,862.75b with the change of 0.47 per cent. Volume leaders of today’s session were lOTPTa, JSCl, eNGrO, dGKC, and FFBl. While major gainers at the KSe 100 index were SIlK, aGl, SePl, PKGS, and NeSTle.

Tariff rate for 40feet container per kilometer 31 cents (euros) 31 cents (euros) 27 cents (euros)

Indian Peninsula as well as Turkey and europe is of supreme importance.

EXPANDING HORIZONS as it was endorsed in the trilateral agreement between Iran, Turkey and Pakistan, it was accorded that other countries may join as government of India was aiming to access the Middle east and european markets has formally requested for accession into the eCO Train railroad project.

Pakistan railroads Company has also received a similar request from Bangladesh where both countries have consented to use the Pakistan railroad services to transport cargo to Middle east and europe. although this project has been designed to promote the economic relations among eCO member countries admittedly it is counted as a short, safe and low cost route for transportation of goods between asia and europe. This rail road counts as the gate of South east asia and europe on the two sides playing a major role in cargo transit and economic development of the three countries.

Govt to ban gas to new skyscrapers kArAChI GHULAM AbbAs

T

He helpless government, which is yet to formulate a policy to minimise the energy crisis in the country, has decided to ban gas connection to new skyscrapers in the country. New buildings would however, be supplied liquefied Petroleum Gas (lPG) instead of natural gas, in view of gas shortages and lower pressure in the distribution systems. as no significant work has been done on exploration of gas reserves in the country despite everincreasing demands of the fuel, the present government, as a short term step, has claimed to add at least 200 Million British Thermal Units (MMBTU) additional gas in the system by June 2012. addressing a press conference here at the head office of Sui Southern Gas Company (SSGC) Minister for Petroleum and Natural resources dr asim Hussain said on Sunday in order to run gasfired 650-megawatts Combine Cycle Power Plant of Karachi electric Supply Company (KeSC) government was working on air-mix of lPG and natural gas to be supplied to the project at Bin Qasim through a direct line. lPG-air mix/blending is an invisible application of lPG. The air -mix match that of the Natural Gas. as government was already encouraging the use of lPG in the country, all CNG stations have been allowed to sell lPG to consumers. Under new strategy, PSO has already established the first and fully operational lPG auto gas stations and conversion centers in the country. Talking about $7.5 billion Pak-Iran Gas Pipeline Project, the minister said that, there was no pressure from any foreign country on the issue and work on the important project was already ahead of schedule. In reply to a query, he claimed, the gas supply project from Iran would be completed by the end of 2013.

PRO 20-12-2011_Layout 1 12/20/2011 12:51 AM Page 5

Tuesday, 20 December, 2011

The banks have to make borrowing look both attractive and safe

news

consumer credit counselling service (cccs) founder, malcolm hurlston

05

The ramifications of Kim Jong Il’s death Stocks nosedive, South Korea on high alert and transformation in global politics looms as North Korea braces itself for ‘heir apparent’ g

kunwAr khuLDune ShAhID

O

Ne of the world’s most influential figures and the “Generalissimo” of the North Korean nation passed away owing to “great mental and physical strain” on Saturday. However, his death has been announced by the North Korean government today. King Jong-il was a cult figure much like his father Kim IlSung, and North Korea is anticipating that ‘heir apparent’ Kim Jong would follow suit – even though apprehensions over his upbringing, biography and qualification still remain. The news has reverberated all over the globe and the repercussions are going to encompass all global powers and the myriad of stakeholders. What the newsflash has also done is that it has upset the applecart of asian markets, as stocks take a nosedive. as asian stocks plummeted, earlier losses sparked by Fitch ratings were extended, and there is authentic concern that the aftereffects might cut credit ratings of european nations. Hong Kong’s HSBC Holdings Plc (europe’s biggest lender), Samsung electronics in South

Korea, China Overseas land and Investment ltd and Billabong International ltd in australia were all on the receiving end of a stock market walloping. and it’s only natural, considering the fact that whenever something unforeseen takes place the instinctive reaction of the dealers is to lunge towards safety. Obviously the news of the death and its concerns catered far and wide and the shares of financial companies and european exporters also fell owing to the fear that earnings might decline if the region’s sovereign debt-crisis were to expand.

The timing of King Jong-il’s death has been quite inopportune for the west, as things were beginning to approach something bordering on tranquility on the North Korean front, with the North Korean hierarchy conspicuously gesturing towards suspension of a few fragments of its nuclear programme. This by no means implies that all the aforementioned developments are dead and buried; but that all the noises and trends that was whetting the appetite of western powers might be shelved for the time being. Of course, much like pretty much every place on the world map, US has a special concern with regards to North Korea. and hence as the administration changes hands, Washington will be keeping a watchful eye on the unfolding events.

North Korea and US have had a long ‘love hate’ relationship – more hate than love, one has to admit – tracing all the way back to the Korean war. and recently Washington had been busy imposing the nuclear nonproliferation treaty and its skewed facets at Pyongyang and the latter has kept on smacking them out of the ball park. However, considering the fact that US had become one of the foremost aid

donors of North Korea after the culmination of the Korean war in 1953, intermittent agreements pertaining to Pyongyang taking the foot off the gas over its nuclear armaments programme were said to be on the horizon. Now, with the heir apparent donning the garb of sovereignty, the american-North Korean relationship and indeed other allied matters might have to be reshaped into a new sculpt.

US has agreed on providing food aid to North Korea in a recent meeting between the two nations in Beijing and in turn North Korea gave its word about suspension of its uranium enrichment.

Obama and Kin Jong Il recommenced talks over the matters concerning their nations in October as well; for, despite upping the ante in sanctions the Korean leader didn’t move an inch away from his stance over the nuclear programme.

Washington in turn has been unequivocal in their stance that any further bilateral talks depend upon North Korea transforming its “provocative behaviour”.

Neighbour South Korea, meanwhile, are on a high alert as uncertainty regarding the actions in the northern vicinity persists. and as far as the South Korean market is concerned, its central bank would have an eye fixed on the matter and might even eye international cooperation if things threaten to blow out of proportion. There are massive implications for South Korea in whatever North Korea vies to conjure up, but in the current nitpicky situation, the potential consequences are predictably gargantuan. domestically, in North Korea, there are also veritable concerns with regards to a potential Military coup. However, experts opine that since the country has braced itself for succession for a good part of a year, the likelihood of either a coup or

indeed an uprising among the masses is minimal. It is also being predicted that since Kim Jong Un is a relative newbie and is inexperienced, his complete takeover would take its time and that a governing body should be at the helm till the new

leader is considered ripe enough to orchestrate matters on his own.

The writer is Sub-Editor, Profit. He can be reached at khulduneshahid@gmail.com

CORPORATE CORNER university of management and technology hosts iccs-11

LAHORE: University of Management and Technology (UMT) hosted the 11th Islamic Countries Conference on Statistical Sciences (ICCS-11) at its campus. addressing on the occasion, dr Hasan Sohaib Murad, rector UMT, welcomed all delegates from Pakistan and abroad to the ICCS-11. He commended the leadership of Islamic Countries Society of Statistical Sciences for their unwavering commitment to the cause of organising and networking all statistical professions. dr Hasan said that statistics has been a strong suit of Muslims throughout history and even today. He appreciated the efforts of the Islamic Society of Statistical Sciences on the progress that it has made to network all in statistical profession from academia as well as public and private sectors. pREss RELEAsE

pemra launches complaints call centre ISLAMABAD: PeMra (Pakistan electronic Media regulatory authority) has established a round the clock complaints call centre (080073672), to facilitate public complaints against any aspect of broadcast media or cable TV networks and to take prompt necessary action to address the same. dedicated and trained staff would be available at service of the callers on 24/7 basis.

The public can now lodge their complaints, suggestions or comments with regard to services, quality of content of the private TV channels, FM radios and cable TV networks through toll free

number. pREss RELEAsE

unido helps women entrepreneurs in developing creativity ISLAMABAD: UNIdO’s Women entrepreneurship development Programme concluded a two week long home textile training workshop that was organised to develop the creativity of women entrepreneurs for design business. The workshop which was conducted in partnership with the First Women Bank limited’s Women Business development and Training Centre in Islamabad, aimed at teaching the women entrepreneurs creative designing in the home textile sector so that innovative product range and value addition in existing products could be ensured. UNIdO through its Women entrepreneurship development Programme is facilitating synergies between government/institutions level and public and private sector support services, to further initiate and to provide gender- sensitized support. pREss RELEAsE

university school system opens in islamabad ISLAMABAD: Universal School System (USS), a world class institution opens its doors for the provision of Pre–School and day care services in e-11/4 Islamabad. USS believes to offer international standard pre-school and day care services and will encourage constructive, supportive partnership between home, school and community. USS with fully equipped classrooms, smart interactive boards, spacious and well equipped art and activity area and experienced faculty members, aims to introduce a unique educational yet interesting training methodology to nurture young minds. While addressing the audience at the opening ceremony, Max Shaw Chairman USS, highlighted the quality education that will be provided to the children at USS. He also talked

about how the latest British Curriculum would be taught in the school and that all the teachers are TKT(Teaching Knowledge Test) trained by the British Council. pREss RELEAsE

ifrc world disaster report 2011 stresses need to deal humanitarian crisis ISLAMABAD: International Federation of red Cross and red Crescent Societies (IFrC) suggested in the World disasters report (Wdr) 2011 that the emerging agenda of future humanitarian action will require transformations in the behaviour of most humanitarian organisations besides changes in the ways that the international community deals with future humanitarian crisis. pREss RELEAsE

MUzAFFARAbAD: Chairman pRCs AJK state branch Abdul Hameed sheikh poses for a group photo with volunteers. PRESS RELEASE

uaf signs mou on research and training FAISALABAD: University of agriculture Faisalabad signed Memorandum of Understanding (MoU) with National Institute of Banking and Finance, Islamabad (NIBaF) and Green Circle Organisation (GCO), respectively in order to collaborate in the areas of research, training and biogas. The MoU with NIBaF was duly inked by UaF Vice Chancellor Prof dr Iqrar ahmad Khan and NIBaF Managing director amer aziz. It was decided that UaF will provide its education training and research facility while NIBaF will collaborate in research projects at UaF. pREss RELEAsE

LAHORE: sAARC Chamber’s Vice president Iftikhar Ali Malik is addressing the seminar upon the visit of senator Jehangir badr at the Lahore Chamber. PRESS RELEASE

KARACHI: Mr Masood Hashmi, Orientm McCann, with Mr D shikvakumar, senior Vice president Nokia India and Middle East, Mr Imran Khalid (Nokie pakistan), Mr A Hussain A basrai (KpMG) and Ms saadia Naveed (English biscuits) present during MAp Convention 2011. PRESS RELEASE

KARACHI: senator shah Mohammad Afridi is present along with the honorable ambassador of Kazakhstan at the ceremony held in the celebration of the Independence Day of Kazakhstan. The honorable ambassador of UAE is also present among others at this occasion. PRESS RELEASE

PRO 20-12-2011_Layout 1 12/20/2011 12:52 AM Page 6

Tuesday, 20 December, 2011

06 Markets top 10 sectors

24% 09% 35% 10% 08%

Chemicals

01% 07% 02% 03% 01%

General Industrials

Construction & Materials Electricity Banks

Fixed Line Telecommunication

Oil & Gas

Financial Services

Personal Goods

Equity Investment Instruments

STOCK MARKET HIGHLIGHTS Index 11083.03 2751.26 2559.03

KSE-100 LSE-25 ISE-10

Change +54.89 +59.07 +17.66

Volume 30,482,479 1,121,357 48,005

Market Value 1,328,143,106 29,287,599 2,509,447

top 5 perForMers sector wise

Major Gainers Company Nestle PakistanXD UniLever Pak Ltd. Rafhan Product Wyeth Pak Limited P.S.O.

Open 2228.27 5327.60 2503.89 653.12 228.02

High 2339.68 5480.00 2599.00 685.00 237.80

Low 2240.51 5276.02 2491.02 650.01 230.99

Close 2329.29 5387.25 2540.00 685.00 233.91

Change 101.02 59.65 36.11 31.88 5.89

Turnover 43 43 11 58 288,100

96.73 74.10 167.24 48.40 41.79

99.00 72.00 167.99 47.90 40.99

91.90 71.00 159.25 46.00 40.00

91.97 71.08 164.39 46.24 40.05

-4.76 -3.02 -2.85 -2.16 -1.74

3,493,105 1,550 24,643 3,822 5,676

Volume Leaders Lotte PakPTA Jah.Sidd. Co. Engro Corp D.G.K.Cement Fauji Fert BinXD

8.68 4.52 96.73 18.69 45.15

9.10 4.61 99.00 19.08 46.50

8.70 4.25 91.90 17.90 45.05

9.07 4.27 91.97 18.10 45.87

0.39 -0.25 -4.76 -0.59 0.72

4,913,936 4,317,752 3,493,105 2,764,383 2,364,934

Bullion Market Gold 24K Gold 22K Silver (Tezabi) Silver (Thobi)

Per Tola (PKR) 53,439.00 51,608.00 971.00 1025.00

Per 10 Gm (PKR) 45,864.00 44,245.00 833.00 880.00

Per Ounce US$ 1,592.00 – 35.05 –

hiGh

low current

421.50 107.60 21.00 6.70 87.05

413.10 104.08 19.92 6.35 85.00

chanGe

volume

Oil and Gas Attock Petroleum Attock Refinery Burshane LPG Byco Petroleum Mari Gas Co.

421.38 107.86 20.96 6.66 88.49

Agritech Limited Arif Habib Co SD Biafo Ind. Clariant Pakistan Dawood Hercules

15.55 26.59 64.99 150.06 32.72

-3.27 -1.65 -1.04 -0.23 -3.05

29,477 844,912 1,534 284,523 26,293

19.69 1.17 8.01 27.26 10.00

15.55 26.60 64.99 149.90 32.72

15.00 25.80 61.75 145.00 31.09

15.55 26.35 64.99 147.61 31.21

0.00 -0.24 0.00 -2.45 -1.51

50 1,368,405 10 3,570 81,461

2.25 51.25 2.17 14.12 8.40

19.00 1.22 8.50 27.90 9.95

18.72 1.05 8.00 25.91 9.11

19.00 1.06 8.50 26.53 9.14

-0.69 -0.11 0.49 -0.73 -0.86

1,001 52,881 7,937 13,718 59,304

27.65 3.32 40.48 7.05 77.59

Ados Pakistan AL-Ghazi TractSPOT AL-Khair Gadoon Bolan Casting Ghandhara Ind.

89.8042 139.0798 1.1524 117.0149

4.89 195.84 5.00 28.50 6.17

2.40 51.50 1.90 14.00 8.40

2.11 48.70 1.76 13.13 8.40

2.24 51.50 1.90 13.99 8.40

-0.01 0.25 -0.27 -0.13 0.00

26,352 1,178 1,001 4,200 1,600

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

International Oil Price WTI Crude Oil

Sell 90.50 117.59 140.02 1.1533 88.18 11.63 24.57 24.04 91.06

Brent Crude Oil

Agriautos Industries Atlas Battery Ltd. Atlas Engineering Atlas Honda Ltd. Dewan Motors

58.50 165.00 58.00 121.50 1.97

27.50 4.31 40.00 7.05 80.50

26.60 3.25 40.00 6.60 73.72

27.02 4.22 40.00 6.78 75.16

-0.63 0.90 -0.48 -0.27 -2.43

11,025 623,366 1,000 1,502 34,311

5.80 198.00 5.95 28.50 6.84

4.01 191.00 4.40 27.10 5.91

57.00 166.90 58.00 123.00 1.98

57.00 163.10 58.00 115.55 1.70

110.49 111.43 150.02 150.00

4.89 191.46 4.88 28.50 6.84

$105.90

57.00 165.02 58.00 121.50 1.94

109.00 111.18 145.05 145.58

AL-Noor Suger Mills Bawany Sugar Colony Sugar Mills Dewan Sugar Engro Foods Ltd.

52.69 12.10 1.65 2.15 23.20

55.32 13.10 1.69 2.39 23.59

Diamond Ind. Hala Enterprise Pak Elektron Ltd. Singer Pakistan Tariq Glass Ind.

8.20 6.01 4.06 14.07 8.30

9.18 6.90 4.38 15.06 8.50

Amtex Limited Artistic Denim Mills Azam Textile Azgard Nine Bannu Woollen

1.19 20.00 1.11 3.08 14.54

1.25 20.00 1.11 3.15 15.20

AHCL-DEC ANL-DEC ATRL-DEC BAFL-DEC DGKC-DEC

26.51 3.09 108.51 11.63 19.60

26.60 3.10 108.25 11.50 19.45

Abbott Laboratories Ferozsons (Lab) Ltd. GlaxoSmithKline Pak. Highnoon (Lab) IBL HealthCare

101.11 74.10 66.12 29.60 12.60

102.00 76.80 66.25 29.75 12.99

0.00 -4.38 -0.12 0.00 0.67

12 4,442 502 50 503

-1.50 0.02 0.00 0.00 -0.03

500 811 162 140 55,019

0.69 -4.44

1,170 203

P.T.C.L.A Pak Datacom Ltd Telecard Limited Wateen Telecom Ltd WorldCall Telecom

9.99 35.09 0.75 1.75 0.86

55.32 12.10 1.59 2.15 22.96

2.63 0.00 -0.06 0.00 -0.24

2,430 23 757 35 17,099

9.18 6.90 3.94 13.07 8.31

9.18 6.90 3.94 15.06 8.39

0.98 0.89 -0.12 0.99 0.09

1 50 389,302 501 11,224

1.15 19.50 1.11 2.94 14.50

1.15 19.94 1.11 3.05 14.56

-0.04 -0.06 0.00 -0.03 0.02

64,200 2,400 1 952,018 4,501

26.00 2.86 104.60 11.45 18.60

26.40 3.07 106.81 11.49 18.74

-0.11 -0.02 -1.70 -0.14 -0.86

214,000 53,000 342,000 2,000 268,500

101.00 75.50 65.12 29.30 12.99

-0.11 1.40 -1.00 -0.30 0.39

227 21 1,593 1,151 1,014

101.00 75.50 65.11 29.30 12.60

10.12 34.00 0.87 1.89 0.98

9.85 34.00 0.70 1.53 0.77

10.05 34.00 0.77 1.71 0.84

0.06 -1.09 0.02 -0.04 -0.02

1,058,174 920 159,564 990,262 470,939

0.28 35.15 0.60 1.60 1.50

0.40 35.45 0.68 1.60 1.70

0.27 35.00 0.50 1.53 1.60

0.30 35.29 0.60 1.53 1.60

0.02 0.14 0.00 -0.07 0.10

3,723 580,517 5 51,837 524

56.18 9.96 4.97 11.51 28.71

56.40 10.00 4.92 11.69 28.94

54.50 9.60 4.60 11.20 28.22

54.92 9.87 4.72 11.42 28.26

-1.26 -0.09 -0.25 -0.09 -0.45

7,724 108,302 1,600,698 976,432 39,928

Banks Allied Bank Ltd Askari Bank B.O.Punjab Bank Al-Falah Bank AL-Habib

open

hiGh

low current

chanGe

volume

Non Life Insurance 52.99 12.10 1.55 1.90 22.72

Electricity Genertech Hub Power Co. Japan Power K.E.S.C. Kohinoor Power

symbol

Adamjee Ins Atlas Insurance Central Ins Co. Century Insurance EFU General Ins

41.00 36.02 50.18 6.80 35.00

42.75 36.00 50.18 6.78 35.00

39.11 35.00 49.60 6.22 33.25

40.68 36.00 50.18 6.78 34.60

-0.32 -0.02 0.00 -0.02 -0.40

15,326 4,524 321 18,100 17,566

13.50 1.40 65.53

14.50 1.40 65.53

0.00 0.00 0.00

2 1 157

0.32 14.43 14.15 0.66 2.51

-0.03 0.00 -0.08 -0.27 -0.02

6,625 16 23,540 5,410 14,762

Life Insurance American Life East West Life Assur EFU Life Assur

14.50 1.40 65.53

14.50 2.34 68.80

Financial Services AMZ Ventures A Arif Habib Investmen Arif Habib Ltd. Dawood Equities F. Nat.Equities

0.35 14.43 14.23 0.93 2.53

0.36 15.35 14.99 0.90 3.44

0.30 13.50 13.60 0.65 2.45

Equity Investment Instruments 1st.Fid.Leasing Mod Atlas Fund of Fund B.R.R.Guardian Cres. Stand.Mod Equity Modaraba

1.60 5.83 2.26 0.49 0.78

1.60 5.83 2.35 1.48 1.00

1.50 5.30 2.01 0.40 1.00

1.50 5.83 2.35 0.50 1.00

-0.10 0.00 0.09 0.01 0.22

5,003 400 1,501 12,018 1,002

12.80 31.00 35.00 31.64 12.70 1.14 63.05 6.47 3.30 13.06 8.25 25.37 56.10 15.85 1.75 10.07 0.75 1.62 0.83 15.90 17.95 62.00 1.22 9.10

12.80 31.37 36.75 33.30 13.00 1.17 63.55 6.53 3.32 14.06 8.25 25.37 57.92 15.93 1.83 10.10 0.79 1.75 0.84 16.00 18.37 62.97 1.27 9.10

-0.45 0.08 1.75 0.00 0.00 -0.02 0.50 0.06 0.00 0.00 0.10 0.00 0.00 -0.07 0.01 0.05 0.02 0.04 0.00 -0.01 0.14 -1.05 0.01 -0.14

510 2,517 2,300 225 180 916,357 2,907 14,000 14,694 66 1,502 305 404 1,399 9,203 412,121 1,505 26,118 36,564 10,519 20,588 6,649 263,072 32,099

Miscellaneous Century Paper Pak Paper Prod.

Security Paper Pakistan Cables P.N.S.C. TRG Pakistan Ltd. Murree Brewery Shakarganj Food Pak Elektron Ltd. Singer Pakistan Tariq Glass Ind. Khyber Tobacco Pak Tobacco Co. Hum Network Ltd. P.I.A.C.(A) P.T.C.L.A Telecard Limited Wateen Telecom Ltd WorldCall Telecom Sui North Gas Sui South Gas EFU Life Assur Pace (Pak) Ltd. Netsol Technologies

13.25 31.29 35.00 33.30 13.00 1.19 63.05 6.47 3.32 14.06 8.15 25.37 57.92 16.00 1.82 10.05 0.77 1.71 0.84 16.01 18.23 64.02 1.26 9.24

13.00 32.00 36.75 33.30 13.40 1.40 65.00 7.45 3.40 14.06 8.80 26.60 60.00 16.00 1.90 10.27 0.85 1.89 0.93 16.59 18.50 65.00 1.45 9.45

Mutual Funds fund

$93.60

volume

Fixed Line Telecommunication

Beverages Murree Brewery Co. Shezan Int’l

chanGe

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nav 100.2768 85.3042 95.2922 100.8898 109.6141 117.3900 101.5800 100.1087

PRO 20-12-2011_Layout 1 12/20/2011 12:52 AM Page 7

Tuesday, 20 December, 2011

07

Rise in global commodity prices and devaluation have propelled increases in prices.

In such high inflationary times, unfortunately, the consumer bears much of the burden

analysis

procter & Gamble pakistan country manager, Qaiser sharif

sbp annual report

Country’s economy grows by 2.4 per cent in FY 2011 g

6.6m labour force remained out of work for 2 to 3 months g manufacturing sector suffers serious setback kArAChI

P

sTAFF REpORT

aKISTaN’S economy managed to grow by 2.4 per cent in fiscal year 2010-11 (FY11), despite devastating floods in the early part of FY11, says State Bank’s annual report on state of the economy released here Monday. according to report one-fifth of the country’s agricultural heartland was inundated, which interrupted production processes and disrupted subsequent supply of both labour and capital. It is estimated that 6.6 million of Pakistan’s labour force was out of work for two to three months, and capital stock worth $2.6 billion (1.2 per cent of GdP) was lost.

SBP report said that while international response to the devastation was below expectations, it is commendable that government was able to address these challenges despite severe fiscal constraints. Furthermore, the inherent resilience of the agriculture sector allowed it to post a bumper wheat crop in the rabi season and sizeable production of minor crops (potato, onion, pulses, etc), which spearheaded the revival, the report said, adding that a spontaneous community effort towards rehabilitation and government support in the form of cash payments to flood affectees and providing free seeds and fertilisers, allowed the country to overcome this natural disaster. according to the report, manufacturing sector suffered a serious setback. Industrial growth was negative 0.1 per cent in FY11, due to flood-driven supply chain interruptions; prolonged power outages; and reduction in gas supplies. Services, on the other hand, supported growth on the back of a rise in government salaries and defense spending. The overall growth in services was 4.1 per cent in FY11, which was lower than the target 4.7 per cent, but this still accounted for 90 per cent of real GdP growth, the report added.

It said Pakistan’s fiscal position remained under stress during FY11, with a budget deficit of 6.6 per cent of GdP, compared to a target of 4.0 per cent. The implementation of the reformed general sales tax; the broadening of the income tax net to include agriculture and serv-

ices; the phasing out of subsidies in a timely manner; and the restructuring of loss-making public sector enterprises – were either delayed, or not implemented, the report added.

On a positive note, government was able to contain its spending compared to FY10. Budgetary expenditure in FY11 was 18.9 per cent of GdP, against 20.5 per cent in the preceding year, the report said, adding that large fiscal deficit directly impacted Pakistan’s debt burden, as stock of public debt and liabilities (accumulated deficits) posted an increase of rs1,763 billion in FY11, to rs11.0 trillion (60.9 per cent of GdP). Interest payments alone accounted for 32.8 per cent of government revenues last fiscal year, which means a further squeeze on government’s ability to use fiscal policy to promote economic growth, it added.

However, Pakistan’s external debt remains comfortable, especially within the context of the acute problems facing the eurozone, the report said and added that during FY11 most of the increase was on account of currency revaluation, as US dollar lost value against other hard currencies. The funding that Pakistan actually received during FY11 was largely utilised for the servicing of external debt, it added.

SBP report stressed that the financing of the fiscal deficit was, and still remains, challenging. ‘With a decline in external funding following the suspension of the IMF Stand-By arrangement (SBa), the government had little choice but to rely increasingly on domestic sources. during FY11, government borrowed rs1.1 trillion from domestic resources, which accounted for 91.0 per cent of the fiscal deficit,’ it said, adding that within domestic sources, the heavy reliance on commercial banks not only crowded-out the private sector, but also complicated monetary management, as banks focused increasingly on shortterm T-bills to place their surplus liquidity. as a result, private sector credit only grew by 4.0 per cent in FY11, as compared to an increase of 74.5 per cent in government borrowing from commercial banks, it said adding: ‘In our view, since commercial banks were lending to the government at attractive rates, this left little incentive to fund private businesses.’

It said that retail prices also increased because of supply side factors, including the impact of floods and the rise in international commodity prices. ‘Food inflation was particularly hard hit, posting a sharp 21.3 per cent year-on-year increase in September 2010, compared with 10.4 per cent in the same month a year earlier – food inflation remained about 19 per cent in the first half of FY11, SBP report said, adding that with headline CPI inflation also in double-digits throughout the year (it averaged 13.7 per cent for the year), SBP resorted to monetary tightening with an increase in the policy rate from 12.5 per cent in end-FY10, to 14.0 per cent in November 2010 – for the remaining part of FY11, the policy rate was kept unchanged. acknowledging the importance of energy as a key factor of production, the report devoted a full chapter to assess Pakistan’s energy shortage. It pointed out that the government’s response to energy shortfall was threefold: (1) commissioning of rental power projects (rPPs); (2) resolving circular debt issue by injecting rs120 billion; and (3) increasing electricity tariffs to pass on the higher cost of production. In spite of these measures, the overall situation remained largely unchanged.

The report said that commissioning rental Power Projects (rPPs) to increase generation capacity was misplaced, as Pakistan is operating well below its installed capacity due to the circular debt problem. It also noted that the rs120 billion injected by the government (to restart the funding of furnace oil) only happened in May 2011. In effect, for most of FY11, the acute problems in the power sector went unaddressed, the report added.

Presenting the FY12 projections, the SBP report said: ‘we project GdP growth to be in the range of 3-4 per cent’ and added that the likelihood of achieving the non-tax revenue target (as shown in Federal Budget) is also low for several reasons. ‘In view of this, SBP projects a fiscal deficit of 5.5 to 6.5 per cent of GdP, with a bias on the upside,’ it said, adding: ‘In our view, policymakers may consider formulating a comprehensive medium-term fiscal reform masterplan, which is staggered and sequenced on the basis of the hard lessons of the recent past.’ ‘Coordi-

nated documentation; transparent collection with oversight; an equitable plan to capture all commercial businesses and institutions into the tax net; a restructuring agenda for loss-making PSes; and a credible enforcement mechanism, must anchor this masterplan,’ the report added.

SBP expects inflation to be within a band of 11.5 – 12.5 per cent in FY12, which is broadly in line with the annual target of 12 per cent,’ the report added.

On the monetary policy side, the report said, the sharp cut in discount rate in FY12, has surprised the market. ‘With inflation easing somewhat and banks increasingly inclined to place funds with the government, the degree of crowding out of the private sector required policy intervention’ it said, adding that although SBP is still watchful to ensure that lending rates do not become negative in real terms, we share global concerns about stagnant growth and rising unemployment.’ SBP identified a window of opportunity, whereby private investment and employment generation would be given due importance, the report said adding that there was also a need to halt the growing dominance of debt servicing in the federal budget.

‘Finally, the outlook for Pakistan’s current account balance remains a source of concern, but we remain hopeful of some upside on strong worker remittances and a possible recession in the global economy,’ the report said and added: ‘although data for the first four months of FY12 shows a current account deficit of $1.6 billion, we attribute this to temporary events (bulky oil payments and a seasonal pause in remittances in September 2011, and an engineered shortage of hard currency in the parallel FX market).’ Going forward, we expect a current account deficit of 1.5 to 2.5 per cent of GdP, which is relatively small given our past performance, it said, however adding that the financing of this current account deficit could be challenging.

‘We also think the market is over-reacting to Pakistan’s FX debt payments in FY12.

One must realise that while repayments on the IMF’s US$ 8.9 billion SBa will start this fiscal year, outflows are only $ 1.4 billion and are scheduled for the latter half of the fiscal year, the report pointed out.

Govt gives green signal to new car manufacturers LAhore IMRAN ADNAN

T

O cut the prices of locally manufactured cars, federal ministry of finance, economic affairs, statistics and revenue finally give go ahead to new entrants to import complete knock down (CKd) kits at customs duty rate of 32.5 per cent and 20 per cent in case of cars and light Commercial Vehicles (lCVs), respectively. Ministry of finance has issued notification (SrO 1098(1)/2011) on Friday, which amends SrO 693(1)/2006, dated 1st July, 2006.

The notification states, “…the additional customs-duty leviable under this notification shall not be charged on subcomponents and components, imported in any kit form by an assembler or manufacturer declared to be a new entrant by engineering development Board (edB), for the vehicles specified in the said table for a period of three years from the start of assembly or manufacturing of respective vehicles, subject to following conditions, namely: (i) The new entrant assembler or manufacturers shall chalk out a plan for progressive manufacturing of the vehicles spreading over a maximum period of three years within which, he shall catch up with the localisation or indigenisation level of respective vehicles, as approved by auto Industry development Committee (aIdC) of edB; (ii)The continued non-levy of said additional customs-duty shall be contingent upon the achievement of indigenisation as determined by aIdC of the progressive annual edB. In case of any material deviation by the new entrant, aIdC shall determine the stoppage or withdrawal of the incentive of non-levy of said additional customs-duty, allowed as such, retrospectively; (iii) The new entrant shall abide by all the terms and conditions laid down in the separate notifications issued by the ministry of industries and FBr for assembly or manufacturing of the said vehicles under auto Industry development Programme (aIdP) and Tariff Based System (TBS); (iv)The additional customs duty shall be levied on the sub-components and components which become indigenised by the new entrant assembler or manufacturers, in accordance with the said plan for progressive manufacturing.”

us dollar touches all time high $350 million variation in sbp, fbs data kArAChI sTAFF REpORT

O

N Monday, US dollar has touched its all time high selling at 90, and one of the main reasons conducive for Pakistani rupee depreciation is widening current account deficit. That made the PKr depreciate sharply after hitting a 116day low of PKr 90 per US dollar in interbank on december 19. On december 16 rupee posted a slight rebound to 89.565. rupee has seen more volatility since the start of december 2011, primarily owing to liquidity shortage and secondly as concerns over Pak-US ties intensified. Over the period PKr has shredded almost 4.2 per cent FY12Td while on annual comparison this translates into 9.5 per cent depreciation.

PKR LIKELY TO REACH 91.6/USD : Saad Khan at aHl said that in coming weeks we expect PKr to broadly remain stable after a recent boost in FX reserves of $10 million, allowing the total reserves to reach its $16.69 billion mark.

FY12 C/A DEFICIT FORECASTS TO USD3.3BN: He further said we expect a

sharp downward adjustment in the c/a deficit in FY12. Our revise estimate suggests c/a deficit likely to reach $3.3 billion

by FY12-end or 1.4 per cent of total GdP. This in our view is likely to come on the back of sluggish export growth of five per cent YoY to $26 billion, due to lower commodity prices but also due to the noticeable slowdown in energy constraints. While our import projections remain on the higher side at $41.1 billion (15per cent YoY) owing high energy based consumption. Incorporating these changes we estimate the trade deficit likely to hover around $14.7 billion against $10.5 billion in FY11, he added.

IMPORTS DROP TO LOWEST DURINg THE 5MFY12: The latest balance of payments data for the period 5MFY12 pointed to a current account (c/a) deficit of $2.1billion, against $478million corresponding period last year. However, interestingly the break-up of current pattern of deficits reveals that it is not based on rising import bill, which for the month stood at $2.99 billion, down by seven per cent MoM. The overall energy based import still showed a handsome growth of eight per cent MoM (two per cent YoY).

kArAChI

T

JAVED MAHMOOD

Here is a huge contrast in the exports statistics reported by the State Bank of Pakistan and the Federal Bureau of Statistics. as per SBP data, exports of the country amounted to $1.9 billion in November 2011, whereas the FBS has estimated $1.55 billion exports last month that indicates a variation of about $350 million in just one month. as SBP maintains the balance of payment account, analysts give more importance to SBP’s statistics, says Muzzammil aslam of JS research. This variation in estimates of exports by SBP and FBS is available only for the month of November 2011. according to FBS, in five months of FY12, exports showed 7.64 per cent growth in dollars and 9.02 per cent in rupees. From July-Nov FY12 the exports increased to $9.38 billion, from $8.72 billion in same period in FY11. Pakistan posted a current account deficit of $2.1 billion in 5MFY12 compared to $589 million in the corresponding period last year. The surge in current

account deficit is due to a combination of slowdown in exports and surge in imports, driven by higher oil prices. In this financial year the imports growth is expected to recede due to decline in oil prices globally.

This can be validated from Saudi arabia’s plan to increase its oil output while shattered confidence in the western economies is expected to lead to slower global demand.

Hence, demand for oil is likely to be on the lower side in the coming months. after a brief spell of a surplus of one year, Pakistan’s external account has reverted back to its usual deficit track. The deficit is mainly led by higher import bill, up by 20.5 per cent during 5MFY12. already in 4MFY12, both petroleum products and crude oil registered a hefty growth of 46 per cent YoY and 76 per cent YoY, respectively. as a result, the share of oil imports rose to 41 per cent of the total import bill against 33 per cent in last year.

The rise in oil imports is mainly driven by higher international oil prices which registered an average growth of 38 per cent YoY. average oil prices in 4MFY12 were reported at $107 per bbl versus $77 per bbl in the corresponding period last year. Going forward,

we expect import growth to recede due to decline in oil prices globally. Compared to the 5M average of $1,048 million, November witnessed a drop in remittances to $925 million. “We believe the slowdown in remittances could be attributed to the sharp rupee depreciation and the deepening political crisis,” Muzzammil added. looking forward, analysts expect remittances to revert back on track once political uneasiness in the country calms down. Pakistan’s financial account surplus has rapidly been depleting and was reported at $169 million in 5MFY12 compared to $563 million last year.

The decline is primarily attributed to slowdown in FdI to $408 million vs. $577 million reported last year. also the global recessionary woes have reinforced foreigners to cut down their portfolio investments as $99 million worth of outflows were witnessed in 5MFY12 versus $173 million inflows last year. due to sharp increase in trade deficit, slowdown in current transfers and financial flows, country’s balance of reserve witnessed a depletion of $1.70 billion.

It may extend further as IMF payments are due from February 2012.