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Monday, 23 July, 2012
‘Friendliness is the key to textile revival’ ICCI calls for adopting investor-friendly policies to promote textile sector
The solution lies nearby Govt urged to focus on regional trade promotion LAHORE APP
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AhOrE Chamber of Commerce and Industry here Saturday urged the government to focus on promotion of regional trade for being more efficient in terms of cost and logistics. "The country needs to develop a strategy of engagement with regional countries to maximise mutual economic and commercial benefits," said LCCI President Irfan Qaiser Sheikh. Pakistan occupies a strategic location and can play a major role in transforming the region into a trade and manufacturing hub, he said, adding, the promotion of regional trade also offers very promising benefits to the industry as it would enable it to use raw materials from the region that reduces the cost of production and creates
opportunities to improve economy of scales by having easy access to neighboring markets on the other hand. The LCCI president said the growth in the South Asian Association for regional Cooperation (SAArC) region with 22 percent of the world population has been projected to surpass 50 percent of the world's GDP by 2030 and that calls for immediate steps by the government to boost intra-regional trade. The SAArC is the biggest trading bloc in the world with lowest level of trade. Contribution of South Asia in the global GDP is less than two percent and its share in exports in only 1.5 per cent, which does not reflect true potential the region owns, he added. Irfan Sheikh said that pace of growth in SAArC region has been slower at five percent as compared with other blocs like European Union, ASEAN and
NAFTA where intra regional trade is estimated at 62 percent, 58 percent and 28 percent respectively. "For greater Asia, we should enhance cooperation with China, Iran, Afghanistan and Myanmar while a freer movement of businessmen can transform this region into a bloc like European Union where the people of eight nations will remain in peace like as a family," he maintained. Irfan Sheikh said, "Our region has lost momentum but it has the ability to bounce back as we have over 50 percent of young population, 12 percent of known global natural resources and all prerequisites to become a developed nation." he said that with markets in the US and Europe expected to experience prolonged weaknesses, South Asian countries have the opportunity to rethink and pursue new sources of growth in both domestic and external markets.
ECB adds more sorrow to the Greek tragedy ISLAMABAD
June oil demand drops 3 percent from year ago: API
The European Central Bank turned up the heat on Greece ahead of a review of its bailout program, saying it would stop accepting Greek bonds and other collateral used by Greek banks to tap ECB funding, at least until after the review
ONlINE
FRANKFURT
Textile and garment sector is the backbone of country’s national economy that needs to be further strengthened by adopting investor-friendly policies and ensuring unremitting power supply to export oriented industries. Textile industry is the only hope for the revival of country’s economy which is currently jolted by the high cost of energy and prolonged power outages. It was stated by Islamabad Chamber of Commerce and Industry President Yassar Sakhi Butt, while commenting on the decline of textile exports by 10.38 percent in Fiscal year 2011-12. ICCI President was responding to the released figures of the Pakistan Bureau of Statistics which shows that textile sectors cumulative exports have declined to $12.35 billion against $13.78 billion in the same period last year. he said that energy shortage was the prime cause of decline in exports because 40 percent of production capacity of textile industry is dysfunctional due to short supply of electricity and gas. he said that Pakistan is one of the largest cotton-producing countries of the world that employs the largest number of human resource. Government should immediately review the situation and provide uninterrupted power supply to textile industry as country has already missed the export target of $26 billion and hardly reached the mark of $23.64 billion at the end of FY2011-12, he maintained. Yassar Sakhi Butt said that the textile industry has been facing strong competition at international markets from regional competitors where electricity cost is lower and manufacturers are also enjoying special exemptions. he urged the Government to direct the concerned authorities to provide smooth electricity and gas supply to the textile industry in the larger interest of the industry and textile exports. he called upon the government to take serious steps to endure the textile industry and focus should also be on the value addition as textile sector need to enhance quality and production capabilities.
AGENCIES
The ECB move, which analysts said was aimed at stepping up pressure on Athens to adhere to the commitments of its EU/IMF bailout, will force Greek banks to turn to their national central bank for Emergency Liquidity Assistance (ELA) funds. Those funds will be more expensive than funds available in the ECB's regular liquidity operations. The ECB said the collateral exclusion was due to the expiration of a temporary 35 billion euro scheme agreed with Greece and euro zone leaders whereby the ECB would continue to accept Greek bonds after they went into default this year. "The ECB will assess their potential eligibility following the conclusion of the currently ongoing review, by the European Commission in liaison with the ECB and the IMF, of the progress made by Greece under the second adjustment program," the central bank said in a statement. European and IMF officials are due to visit Athens next week to decide whether Athens merits another tranche of aid from its latest bailout package and analysts said the ECB move was designed to step up pressure on Greece ahead of the visit.
Greek leaders this week pushed back talks to hammer out nearly 12 billion euros of austerity cuts demanded by their lenders until next week after a deal proved elusive. "In this way the ECB could be putting pressure (on the Greek government) to bring about a positive review by the troika," Alpha Finance bank analyst Nikos Lianeris said. "If there is a positive review by the troika then the Greek banks will regain direct access to ECB funding." Greek bankers took the decision in their stride. "It's something we were expecting," one banker speaking on condition of anonymity said. "The only difference is the borrowing cost for the banks." NO GUARANTEES ECB Executive Board member Joerg Asmussen said late last month that Greece's fraught elections in May and June appeared to have pushed the country's austerity program off track. This is the second time this year that the ECB has stopped accepting Greek government bonds and governmentbacked assets as collateral, the first being in late February. The ECB said that Greek banks would be able to continue to get funding from the Greek central bank. "There has been a switch to na-
tional central banks bearing the credit risk. This move is ... in line with what we've seen in the past," ABN Amro economist Nick Kounis said. "Once there is clarity, there would be a switch back to ECB financing." It is likely to leave the government underwriting around 135 billion euros of central bank loans that Greek banks have taken. Greek banks had tapped a total of 62 billion euros in ELA funds from the Greek central bank by the end of June, in addition to 74 billion in regular ECB liquidity operations. They would almost certainly go bust if their central bank funding was withdrawn, as their foreign peers are unwilling to lend to them as doubts about Greece's future in the euro zone persist. Although ELA funds are released by the national central bank, they need to be approved by the ECB, which could limit this program as well if Greece does not make progress on its bailout program. "The bigger issue is if ELA can run forever, if the program is not on track," Kounis said. Banks in other euro zone countries also own large chunks of Greek debt, though they are more likely to have other assets to use as collateral and will thus not be hit as hard hit. The ECB requires guarantees in the form of eligible collateral from all banks that seek central bank funds in its lending operations. In a separate statement, the ECB said it would start accepting some Greek credit claims as collateral, but this move was unlikely to make up for much of the exclusion of the country's sovereign bonds. The ECB also said it had agreed to extend the collateral use of credit claims by banks in struggling euro zone members Cyprus, Portugal and Italy. The ECB could not provide immediate estimates of how much extra collateral the changes would provide for banks. Spain, whose ailing lenders will receive a bailout, said it was not on the list because did not ask the ECB to extend the use of credit claims by its banks as collateral.
WASHINGTON AGENCIES
Petroleum consumption in June declined 3 percent from a year ago to 18.691 million barrels per day. Demand was down 2.6 percent for the first half of the year from the same period in 2011. "A weakening economy requires less fuel, and this by most measures is a weakening economy," said API chief economist John Felmy. "The fall in demand in June is particularly notable and consistent with other disappointing metrics in the economy, including falling retail sales and contraction in the manufacturing sector." Gasoline demand was down 2.5 percent in June at 8.821 million bpd. Consumption of the fuel was down 1 percent for the first six months of the year. API's oil demand figure for June is lower than the U.S. Energy Information Administration's preliminary estimate of consumption at 19.125 million bpd for the month. The EIA issues its revised June demand number at the end of August. Demand for distillate fuel, which includes diesel and heating oil, fell a slight 0.7 percent to 3.876 million bpd in June. Jet fuel consumption climbed 0.7 percent to 1.555 million bpd for the month. Total imports in June accounted for 58.5 percent of U.S. oil demand, down from 60.3 percent a year earlier.
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Business 02 Bashing capitalism is no substitute for an agenda Monday, 23 July, 2012
WEEK AHEAD
APPLE, FACEBOOK TAKE THE SPOTLIGHT
NEW YORK AGENCIES
Apple accounts for a significant proportion of the overall earnings of Standard & Poor's 500 .SPX components. S&P 500 earnings are expected to show a rise of 5.7 percent in the second quarter from a year ago. Excluding the maker of the iPad, the rise is 4.8 percent, according to Thomson reuters data. Apple's results, due Tuesday, could help stocks build on this week's gains and counter investor worries over the euro zone crisis. More signs of financial stress in Spain on Friday caused stocks to give back some of the week's increase. The S&P 500 ended 0.4 percent higher for the week. "Apple can drive the whole (tech) group," said Daniel Morgan, who helps manage about $3.5 billion at Synovus Trust Company in Atlanta. "There's a huge psychological component as it relates directly to Apple. If they just blast numbers like they did last quarter, then obviously the perception will be everybody else did pretty good and Apple did fabulous." Apple's expected strong performance is mainly why technology earnings growth has held up better than other S&P 500 sectors. The expected growth rate for the sector has gone from 6.9 percent in April to 8.7 percent as of Friday, the data showed. Apple's earnings for the quarter are seen at $10.38 a share, based on Thomson reuters I/B/E/S, which includes estimates from 43 analysts. That compares with a profit of $7.79 a share for the year-ago quarter. Morgan said Apple's growth has largely depended on the success of its new products. "For the stock, to continue its trajectory at the pace it has, it's critical that they release these new products," he said. Apple's shares are up 49.2 percent for the year so far. Apple does not give any clues on its future products, but the California company is widely expected to release its next-generation iPhone later this year. Wall Street has also set its heart on Apple launching a new "mini iPad" and the long-awaited television set in the near future. Investors are likely to be just as keen to hear from Facebook when it reports on Thursday. Facebook's first results following its market debut could give investors another chance to indicate how they feel about the stock since its disappointing initial public offering. Shares of Facebook, one of the most closely watched IPOs ever, lost ground after technical problems with its market debut on Nasdaq and as investors questioned its ability to rapidly increase advertising revenue. Analysts said an earnings miss by Facebook could be disastrous for the stock, which closed Friday at $28.76, below its $38 offering price. Investors are looking for executives to address a litany of concerns about the business, such as the efficacy of its online ads and the company's nascent efforts in mobile advertising.
B
CLIVE CROOK
ArrACK Obama’s allies are praising his re-election campaign for the ferocity of its attacks on Mit rommney and his business record, and for shaping the contest around the theme “the rich against the rest.” The U.S. president’s enemies deplore it for the same reasons. My feelings are mixed. The strategy isn’t wholly wrong, just woefully incomplete. Obama is right to attack his opponent, a weak candidate defending an unintelligible policy platform. he’s also right to hammer away at romney’s elaborate tax-avoidance arrangements: That’s a legitimate target, and romney is a fool for failing to open his records at the outset. Above all, Obama is right to make fairness an organizing principle of his campaign -- right on substance and right tactically. he’s wrong, though, to leave it at that. While attacking romney, he should also be defending his own record. I find his near silence on the Patient Protection and Affordable Care Act inexplicable. Also, not all of his attacks on romney make sense. The fuss over Bain Capital LLC and outsourcing is unworthy of an intelligent politician. The Obama campaign’s biggest mistake, though, is its fixation on restoring pre-Bush tax rates for the rich. On all these matters, the president is underestimating the country. Start with taxes. TAx POLicy Voters understand that inequality has surged in the U.S., and polls show that most Americans agree that the rich should pay more tax. Voters also know that reversing the Bush-era tax cuts for families making more than $250,000 -- a goal that Democrats have raised to a kind of sacred quest -won’t be close to enough to solve the country’s fiscal problems. Obama should be offering a coherent program for long-term debt reduction, combining phased tax increases (for the middle class as well as the rich) with moderate cuts in public spending. Would such honesty be suicidal? Only if you think voters are idiots (which, I grant you, appears to be the operating assump-
tion of both campaigns). Voters might be initially startled to be addressed as intelligent adults, but they would come to appreciate the candor, and reward it. As things stand, Obama’s fiscal intentions are no clearer than romney’s. In the resulting fog, the difference between the two comes down to this: Obama is avid to raise some people’s taxes, whereas romney is reluctant to raise anybody’s. I doubt that gives Obama the edge with uncommitted voters, receptive though they might be to the fairness argument with all the fiscal implications spelled out. The obsession with the Bush-era tax rates is mistaken in another way, too. It opens Democrats to the charge that their notion of fairness is about leveling down not leveling up. That’s still a profoundly unAmerican idea. You don’t improve the prospects of the unemployed, or of people with limited skills in low-wage jobs, by increasing taxes on the rich. Where is Obama’s agenda for expanding economic opportunity? Shouldn’t he have one? And shouldn’t it have at least equal standing with the quest to hammer the 1 percent? The U.S. is still a country that reveres rather than resents success. It isn’t a place where everybody making more than $250,000 a year (or $500,000, or $1 mil-
lion) is seen as greedy or corrupt and deserving of punishment. I’m amazed by how often the Democrats’ rhetoric invites exactly that interpretation. raising taxes on the rich isn’t a regrettable necessity, according to their worldview, but a basic requirement of social justice, regardless of the use, if any, to which the money will be put. Even if the government didn’t need the revenue, the rich have it coming. This is a political platform with limited appeal in Europe, let alone in the U.S. BOwLES-SimPSON Why isn’t Obama presenting a more comprehensive tax-reform proposal, along the lines suggested in the Bowles-Simpson plan, for instance? An overhaul that broadened the tax base by limiting deductions, increased the rates applied to investment income and taxed inheritance more equitably would raise more revenue, and more fairly, than merely reinstating bits of the pre-Bush code. romney’s tax plan, to be sure, is no better. he makes a couple of gestures in the Bowles-Simpson direction, yet they’re dishonest. he proposes to cut marginal rates across the board and to make good the revenue loss entirely by limiting deductions, without saying which deductions will be curbed or how much. That’s not good
enough. The most expensive deductions -for mortgage interest and for employerprovided health care - - are popular and will be difficult to cut back. Curbing or eliminating the health-care deduction puts health-care reform back on the table, another question romney prefers to avoid. By failing to present a good fiscal plan of his own, however, Obama is letting his opponent get away with this. The president’s attacks on romney’s record at Bain are no more likely to impress independent voters. True, romney dealt with those attacks so incompetently he almost justified them -defending himself from the charge that he outsourced jobs by calling Obama the “outsourcer in chief.” But Obama’s criticism was ill-conceived in the first place, and most voters know it. Outsourcing isn’t new, and it isn’t capitalism carried to an unacceptable extreme. It’s part and parcel of the market economy. Companies strive to control costs, which lowers prices and raises real incomes. Buying goods and services from others, at home or abroad, that would cost more to produce for yourself is a good thing. I outsource all building work and car repairs. I’m glad that Apple Inc. outsources the manufacture of its iPads and MacBooks, because it means I can afford them. This isn’t an excess of capitalism. It’s just capitalism. If Bain made money by finding companies where costs could be squeezed and productivity increased, good for Bain. We need more firms like that. Obama would be right to say that fairness matters as well. he would be right to say that higher productivity is essential, though we also need to take care of the losers from market competition, widen opportunities for the unlucky and guard against extremes of wealth and poverty. That isn’t what he says. he attacks outsourcing in its own right, which is economic illiteracy of the highest order. And to fold that attack into a main narrative about rich, evil, profiteering businessmen is worse than economically illiterate: In the U.S., at least, it’s a self-defeating strategy. Courtesy: Bloomberg
Google shares rise as strong ad business eases macro fears Shares of Google Inc rose 3 percent in premarket trade after the company posted a healthy gain at its online advertising business, reassuring the Wall Street that it was performing well despite a slow economy NEW YORK AGENCIES
A slew of analysts reiterated their ratings and price targets on Google's stock, saying there were no real surprises and that the positives had offset the negatives in the quarter. "There is still material return on investment upside available to advertisers from search advertising, and that such upside will continue to fuel ongoing demand for search ads and revenue growth," Sanford C. Bernstein analyst Carlos Kirjner
said in a note. Google's advertising rates have been pressured as consumers increasingly use smartphones to access mobile versions of the Web, but the concern was alleviated as overall clicks on Google's search ads jumped 42 percent in the second quarter. "While the quarterly results were somewhat unremarkable, we believe shares may form a base at or near $600, in part because investors will soon shift attention to back-to-school and holiday shopping seasonality," Stifel Nicolaus said. The brokerage has a "hold" rating on Google's stock. The success of
Google's web browser, Chrome, will offset rising traffic acquisition costs (TAC), Barclays Capital analyst Anthony DiClemente said in a client note. TAC is the money paid by internet search companies to online firms that direct traffic to their websites. DiClemente is a five star-rated analyst for the accuracy of his earnings estimates on Google, according to Thomson reuters StarMine data. Chrome users nearly doubled by the second quarter to 310 million. Benchmark Co, which has a "hold" rating on Google's stock, raised its price target by $10 to $625.
CORPORATE CORNER Origins and Mausumery lawn open in Defence
NADRA Chairman reinstates terminated employees
Warid brings exciting Eid offer
LAHORE: Mausumery lawn and origins ready to wear launched its flagship store in Defence. As the store opened its doors, an influx of vanity conscious customers dropped in to buy their favorite pret/printed suits. Origins ready to Wear introduced its eagerly awaited new Eid collection at the launch while Mausumery lawn launched its detailed embroidered and print collection Chapter 2.
KARAcHi: National Database & registration Authority (NADrA) Chairman Tariq Malik has reinstated 61 terminated employees of NADrA who were involved in strikes, after personal hearing of each case. NADrA spokesman stated this in a statement issued here today.
KARAcHi: This ramadan, Warid Telecom brings an amazing offer for its prepaid subscribers (both existing and new). Upon using balance of rs 15 per day and up to rs 50 during the month, Warid subscribers will automatically enter in a lucky draw to get a chance to win 1 bumper prize of rs. 1 Crore, 12 Umrah packages, four 1300cc cars and 26 motorcycles!
KARACHI: Mrs.Fazilat Mehboob, inaugating Giorgenti, Flagship in Clifton.
KARACHI: the United Arab Emirates Consul General Mr.Suhail Bin Matar Al - Ketbi, handing over 13 tons of Khalas dates, on behalf of the UAE Red Crescent to Mrs.Farzana Naik, Red Crescent Sindh Chairperson of at her residence.
PSO committed to the uplift of the people of Pakistan KARAcHi: Pakistan State Oil (PSO) living up to its national responsibility intensified its CSr drive by pledging support through donations to various organizations engaged in Education, healthcare, Community building, Women empowerment, Special Children Welfare and relief Activities.