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BUSINESS Wednesday, 25 September, 2013
PBC REPRESENTATIVES STRESS NEED FOR DOCUMENTING ECONOMY AND ENHANCING TAX TO GDP RATIO TO STEER COUNTRY OUT OF CRISIS ISLAMABAD
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he government and the Pakistan Business Council (PBC) are on the same page over the issue of economic revival through a comprehensive future roadmap featuring indigenous growth, energy security, boosting competitive exports, modernisation of infrastructure, social capital development and continuation of polices. Planning and Development Minister Ahsan Iqbal along with economists of the Planning Commission held a session with the PBC representatives on Tuesday to take feedback from the top business forum on the next long-term and medium-term policies the government is devising to put the country on growth path. Addressing the PBC representatives, the federal minister said that the country was passing through serious problems. he, however, expressed the hope that right decisions of today would lead to right results tomorrow. he termed the political stability and
Corporation: An ingenious device for obtaining profit without individual responsibility. — Ambrose Bierce
Govt, pbc on same page for economic revival continuation of policies as a basis for development adding that the nations that ensured political stability have progressed and prospered. he lamented that nothing was done during the past twelve years to formulate sustainable policies and that was why the country was going through serious challenges nowaIf we fail AHSAN IQBAL days. FEDERAL MINISTER devise policies to he said that the government the country would to 15 percent besides focuswould finalise savings. be in serious trouble ing on its Long Term he said that moderniPlan, Vision sation of infrastructure was 10 years down, 2025 and another feature of the govparticularly M e d i u m - Te r m ernment plan as the current Plan 2013-18 with system was outdated, citing in water the consultation of an example of power distribusector stakeholders and best tion system which has lost capabilpractices of other nations. ity to pass on energy to the end he said that the government was consumers. Iqbal said that there was also working on developing a model to chalk need for exploring export markets, adding out a roadmap to secure future and warned that value to county's products to boost that if "we failed to devise policies, the exports. country would be in serious trouble 10 Building of social capital is another years down, particularly in water sector". area where government is looking, he said he said that first thrust of the govern- adding so far much focus has been given ment was energy security through an in- on infrastructure development so there is tegrated energy policy and secondly it need to develop human resources through intends to move away from exogenous inculcating teachings of values and ethics. growth to indigenous growth adding so far he said that private sector being the the growth has been dependent on Inter- engine of economic growth can also play national Monetary Fund, aids and remit- their vital role in the socio economic prostances only. perity of the country. The growth on externalities has not he assured the private sector that govbeen sustainable, he said adding that the ernment would extend all necessary help government wants sustainable growth as facilitator and policy maker in order to through promotion of taxes from 9 percent further their businesses for sustainable
economic growth in the country. he said clerics and religious scholars could play an important role in educating the people about the country's challenges including meeting the Millennium Development Goals, fighting poverty, and issues like malnutrition. On the occasion, the representatives of the PBC assured the minister of their support to government's roadmap for future development. They were of the view that the country had huge resources, adding, “however, what we need is implementation of policies.” They informed the minister that PBC has conducted various studies which could be fruitful for developing the future roadmap. They stressed the need for documenting economy and enhancing tax to GDP ratio to steer the country out of crisis and decrease its dependence on external resources. They also highlighted the importance of focusing on development of rural economy, remittance sector and demographic dividend in terms of youth bunch the country has. They said that large population youth was a challenge as well as an opportunity for the country, so there is need for creating more jobs for them. Both, the planning commission and PBC agreed to share their studies to incorporate these in the upcoming long-term policy for the good future of the country. Among others, the PCB representatives included Chairman PBC, Sikandar Mustafa Khan, Chief executive Officer, Kamran Y Mirza, Abdul Razaq Dawood and other members of the forum were present.
Ailing BlackBerry agrees to $4.7 billion buyout OTTAWA
per cent of its shares. Watsa resigned from BlackBerry's board when it announced in August its inBlackBerry announced on Monday it has tentions to search for a suitor. Under the proposed deal the consoragreed to a $4.7 billion buyout by a consortium would offer $9 for tium of investors who plan to take the each outstanding struggling Canadian smartphone share, and Fairfax maker private. The company would conThe company said in a formerly known tribute statement that it has i t s “signed a letter of intent as Research In Motion agreement under unveiled a new corporate which a consortium to be led by Fairfax name and a new platform Financial holdings in January as it sought to Limited has offered to acquire the comregain momentum, but pany subject to due its most recent numbers diligence.” Fairfax, a Canadian suggest this has been a firm headed by billionspectacular failure aire Prem Watsa, is already BlackBerry's largest shareholder with approximately 10 AGENCIES
own shares in the transaction. BlackBerry said its board of directors support the plan. A firm deal, once due diligence is completed, is expected to be announced by November 4. It hinges also on the consortium obtaining financing. BlackBerry said it would continue a search for a possibly better suitor in the interim. BlackBerry stock was down six percent to $8.23 before trading was halted just prior to its announcement. Its shares climbed back up to $9.07 in afternoon trading. Analysts meanwhile reacted with measured optimism. “This is probably the best possible outcome of several unattractive options for BlackBerry,” said analyst
Jack Gold of J. Gold Associates. While BlackBerry helped create a culture of mobile users who were glued to the company's smartphones, many of those customers have since moved to Apple iPhones or other device makers such as Samsung, mainly using Android. According to International Data Corporation (IDC), BlackBerry's global market share had slipped to 3.7 per cent in the second quarter, the lowest since tracking began, while Android accounted for nearly 80 per cent. The company formerly known as Research In Motion unveiled a new corporate name and a new platform in January as it sought to regain momentum, but its most recent numbers suggest this has been a spectacular failure. On Friday, the company announced it was laying off 4,500 staff or one-third of its global workforce after a dismal launch of new smartphones earlier this year that were meant to revive BlackBerry.
Expo pakistan to bE hEld in karachi from 26th KARACHI: All preparations are complete for the biggest ever Expo Pakistan which will commence here from September 26. This was stated by an official of the Trade Development Authority of Pakistan (TDAP), on Tuesday. More than 1,000 buyers from about 70 countries are expected to attend the four-day event. The major delegations are expected from Japan, Malaysia, South Korea, Brazil, Poland, Hong Kong, Bangladesh, Libya, China, Bahrain, Azerbaijan, Afghanistan, Egypt, Saudi Arabia, the Netherlands, the US, Morocco, United Arab Emirates. Major interest of the buyers was stated to be in textile, leather, garments, sports goods, surgical equipment, agro-products, engineering goods and traditional items. Besides this, the trade missions have also sent confirmation of 44 international chain stores' participation in the event. Some 550 exhibitors would be showcasing their products in six halls at the Karachi Expo Centre- the venue of the event. The inaugural ceremony of the event is scheduled to take place on September 25. The organisers were of the view that over the last eight years, the Expo Pakistan has developed into a reputable international event where the Pakistani exhibitors showcase their products to the international buyers. APP
pia paid rs 80.81 million finE in last fivE yEars
ISLAMABAD: Pakistan International Airlines (PIA) has paid Rs 80.81 million fine in last five years to various countries on various charges, says a document produced in the Parliament. According to the document Rs 6.14 million were paid in year 2008, Rs 31.27 million in 2009, Rs 16.66 million in 2010, Rs 4.98 million in 2011 and Rs 21.76 million in the year 2012. The fine has been imposed in Doha, Dhahran, Milan, Birmingham, Manchester, London, New York, Toronto, Beijing, Dubai, Bangkok, Hong Kong, Riyadh, Frankfurt, etc. The fine was paid on the charges for detecting forged or no documents, Change of date of birth on passports, expired or re-entry visa, photo change, non submission of original visa by sponsor at airport, Child visa (not traveled with parents) and fraudulent passport from different passengers. The document says that 138 compensation claims have so far been received from the legal heirs of Air Blue air crash victims, all of them have been compensated Rs 5 lac each as per announcement by the then prime minister. APP
SBP’S MONETARY POLICY TO HAVE MACRO-ECONOMIC IMPLICATIONS EXPERTS DON’T FORESEE MAJOR IMPACT ON FINANCE COST OF PSO IN CASE OF INCREASE IN DISCOUNT RATE KARACHI STAFF REPORT
The monetary policy announced by the State Bank of Pakistan (SBP) on September 13 is likely to have important macro-economic implications in the days ahead. According to analysts, a 50 basis points (bps) hike in discount rate to 9.5 percent led by expectations of inflation to settle higher in FY14 were the key highlights of this MPS. "We foresee this to be an indication of a rising interest rate scenario ahead," said the analysts at InvestCap Research. In addition to this, acute depreciation
of the Rupee 5.7 percent against the dollar was also witnessed FYTD. Analysing the impact of these macroeconomic changes on different energy sector stocks, the economic observers said that Pakistan was an oil-deficit country where 60-65 percent of oil needs were met through imports. The PSO's share is 90 percent (hSD and FO) to total fuel imports (11mn tonnes) with a total market share of 63.5 percent. "Because of the absence of currency hedge, PSO suffers an exchange loss of Rs 700 million per 1 percent depreciation of PKR against USD on an annualised basis," said the analysts. The 5.7 percent Rupee depreciation during FYTD is in turn likely to have a major drag on PSO's profitability (Rs1215/share haul) during 1QFY14. "however, we don't foresee any major impact on the finance cost of the company in case of increase in discount rate," they said.
The company has no long-term bank borrowing whereas the short term borrowing has reduced from Rs 50 billion to Rs 30 billion after circular debt settlement (28 June 2013). On the other hand, lower valuations backed by higher discounting factor will have a significant impact. Going forward, higher expected inflation will lead to higher operating costs for PSO and other OMCs. The sector has al-
ready demanded a pricing mechanism shift from fixed rate to percentage terms. The Petroleum Ministry has assigned this task to the Pakistan Institute of Development economics to determine fair margins for OMCs. "however, keeping in view the continuously rising POL prices, we don't expect any change in pricing mechanism or margin hike in near term," said the analysts. They said APL was likely to take minimal impact from the depreciating rupee as the company had no
significant POL imports. A debt-free balance sheet will add nothing to finance cost in case of interest rate increase. however, the valuation impact can come from a higher discounting factor. The expected impact of such a movement in the aforementioned macro-economic variables is somewhat mixed for NCPL and the power sector as a whole. The higher expected inflation and rupee depreciation will increase earnings of the power companies as their tariff structure is indexed to the said variables. “however, we anticipate that the rising PIB yields will augment the opportunity cost of investing in IPPs and decrease their valuations therefore affecting the scrip's attractiveness," said they and added, "Going forward, we anticipate that company valuations will be downward sticky if macroeconomic variables move as expected." At an aggregate level, market can also face some pressure on the back of these unfavourable movements, they said.