Profit 2nd December, 2011

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UAE companies to make long-term investment in Pakistan Page 4 Islamic interbank benchmark rate Page 3 Can the US afford to bail out Europe?

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profit.com.pk

Friday, 02 December, 2011

ECC approves Rs2.3b gas pipeline to curb shortage Sui Companies to make investment in 50km pipeline g Will help injection of 100 mmcfd gas in the system g Procurement of 200,000 tonnes of sugar allowed g Rs 6b financial guarantee for PSM approved g Food inflation falls from 21pc to 11.7 per cent

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ISLAMABAD AMER SIAL

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n a major policy decision, the economic coordination committee of the cabinet on Thursday approved diverting of gas available in dormant Latif gas field to nearest gas Sawan processing plant to reduce the natural gas shortages in the short term. The committee also allowed procurement of 200,000 tonnes of sugar from the local sugar mills. it approved in principle the low BTU gas policy and referred it to the council of common interests for approval. it also approved providing of sovereign guarantee of Rs6 billion on Pakistan Steel Mill’s (PSM) behalf, to the national Bank of Pakistan.

provided the Oil and Gas Regulatory authority allows this expenditure as admissible for determination of their revenue requirements and will become part of consumer gas price. approving the proposal, ecc formed a sub committee comprising Deputy chairman Planning commission and representatives from ministries of finance and petroleum and OGRa. The sub committee will be forwarded their recommendation to ecc regarding enabling steps and adjustments with the petroleum policy. Secretary finance said the meeting also approved in principle the low BTU policy that allows giving incentives for increasing the value of the gas to investors. He said the policy was referred to the council of common interests for approval.

soveReign guaRantee foR steel mills

Building capacity utilisation Secretary Finance Dr Waqar Masud Khan told Profit that ecc approved diversion of raw gas from Latif field to the nearby Sawan processing plant. He said it would allow injection of 100 mmcfd gas in the system. He said the state owned gas utility companies will make an investment of Rs2.3 billion to lay a 50 km pipeline to take the raw gas to Sawan plant. He said a sub committee was formed to suggest amendments in the Petroleum concession agreement of Latif field. He said the committee also directed bringing other dormant fields online.

oveRcoming gas shoRtfall ecc deliberated on the summary proposed by Ministry of Petroleum which considered laying of a new 50 km pipeline from Latif field to Sawan plant where surplus capacity is available that can be used for processing. Foreign operators were reluctant to make additional investment in the construction of pipeline connecting Latif field to Sawan plant saying it was not economically feasible due to low gas price capped at $2.64 per mmbtu as allowed under Petroleum Policy 2001. Since there is acute shortage of gas on the system of two state owned gas utility companies, it was decided to buy raw gas at Latif field gate and take it to Sawan plant for processing,

He said the committee also approved giving sovereign guarantee for a loan of Rs6 billion to PSM. The government, he said, was engaged in strategic thinking on how to run the entity. The cabinet committee on restructuring (ccOR) has already decided that PSM will be kept operational and for meeting its raw material requirements a financing facility will be provided to the entity. Only the ecc is authorised to provide sovereign guarantee. ecc also approved summary of Ministry of industries for purchasing 200,000 tonnes of sugar from local market for strategic sugar reserves and supply to Utility Stores in coming months. However the committee directed that the sugar should not be purchased at cost higher than the prevailing market value. it formed a sub committee comprising of finance, fndustries and commerce secretaries to formulate a mechanism to negotiate with the sugar mill owners the purchase of sugar below market price.

decreased with overall consumer Price index (cPi) in October, 2011 at 11 per cent as compared to previous year’s value of 15.3 per cent in same month. inflation on food items has decreased from 21.0 per cent to 11.7 per cent and non food items from 11.9 per cent to 10.5 per cent this year. He informed that there is a sudden downfall in Sensitive Price index (SPi) with a latest value of 5.70 per cent. The prices of most food items with the exception of rice have decreased, he said.

conceRns oveR falling fdi He highlighted that Large Scale Manufacturing has depicted great performance this year but export may come under pressure in the coming months due to the current economic crisis in europe and USa. Foreign exchange Reserves stand at $16.90 billion on november 28, 2011. He also pointed out that the falling Foreign investment can be a matter of concern, but this decrease is mainly occurring in portfolio investment. ecc directed the Board of investment and State bank of Pakistan to come up with a presentation on foreign investment in the next meeting covering the detailed processes of calculating investment, concerns of different companies for non-investment, reasons of low investment and their subsequent remedies for revival of investment. ecc also stressed that this current decreasing trend of inflation is not being projected among the general public properly. There is a dire need that this information gap be reduced, so people would be informed about all the positive changes as well. in this regard, media should play its role and inform the public about all positive indicators.

cpi falls to 11% Secretary finance briefed the committee on the key economic indicators and said inflation has

govt mulls over increase in power tariff by four per cent ISLAMABAD AMER SIAL

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iniSTeR for Water and Power Syed naveed Qamar will chair a crucial meeting that will decide issue of implementation of 4 per cent surcharge on power tariff from this month. an official source said a meeting has been convened in emergency to sort out difference between ministries of finance, water and power and law over interpretation of law for notifying increase in power tariff. The meeting will be attended by the secretaries of three concerned ministries. Ministry of water and power (MOWP) is withholding notification for imposition of 4 per cent surcharge on power tariff for last several weeks as law ministry views it to be a violation of stay orders granted against the previous surcharge of 2 per cent notified in May last fiscal year. MOWP is of the view that it can notify the new surcharge, but law ministry’s argument is that no surcharge can be imposed till stay orders were vacated. acting on instructions of international Financial institutions (iFis) government has notified imposition of 2 per cent surcharge on electricity bills in april last fiscal to reduce power tariff differential subsidy. However, the notified surcharge of 2 per cent in May was challenged and courts granted stay order. This has withheld imposition of surcharge for last five months of current fiscal year.

Pressed by iFis to increase power tariff to zero the subsidy during current fiscal year government had made an amendment in regulatory law allowing nePRa to notify monthly fuel adjustment charges. This was also challenged and stay was granted.

Government is losing close to Rs30 billion per month due to the subsidy. The source said ministries were involved in an unnecessary argument as there was a way out by implementing the nePRa determined new tariff for islamabad electricity Supply company (ieScO).

But government was not ready to implement it due to political backlash as it will allow double increase in power tariff as compared to planned imposition of 14 per cent surcharge this fiscal year.

However, he said finance ministry was interested in surcharge as it will go directly to their coffers while new tariff implementation will go to power distribution companies (DiScOs).

State unable to run institutions: Dr Sheikh ISLAMABAD

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JALALUDDIN RUMI

inance minister abdul Hafeez Sheikh admitted that the model of running institutions by the state has failed; as is evident from collapse of Pakistan Railways, Pia, Pakistan Steel Mills and other State Owned enterprises (SOes) which were not run on competitive basis. Speaking at inaugural session of the international conference on competition enforcement challenges and consumer welfare in developing countries, he said government was not interfering in affairs of regulatory organisations to provide a level playing field and they have performed well outside government’s influence.The minister said government is adopting public private partnership to run SOes so

that they could be run on profitable basis.

He said government has decided to run two trains; Gul train from Lahore to istanbul and Shalimar train from Lahore to Karachi with private sector participation in operation and maintenance of cargo and passenger train services. Giving example of banking sector that government privatised in last decade, he said after privatisation banking sector has flourished in last ten years and their capacity to deliver has grown. He said growth in country’s private sector has given boost to regulatory system of the country. He praised performance of competition commission of Pakistan and said it helped introduce the culture of competition in different sectors. He said china, indonesia, Korea and india, by changing their models in last two decades, have contributed enormously to

growth in their economies. He said due to prudent policies; the country’s economy was showing encouraging signs of recovery. He said exports and Foreign exchange Reserves have gone up and current account deficit has declined. He said Federal Board of Revenue (FBR) has collected Rs640 billion worth of tax during first five months with 28 per cent growth in current fiscal year. Later talking to reporters, the minister said that increase in petroleum prices was a difficult decision but said government had to pass on the impact in international markets to consumers. ccP chairperson, Rahat Kaunain Hassan while touching upon key areas of competition law enforcement, advocacy and challenges faced by ccP in implementing competition law said that we look forward to enrich ourselves by learning about experiences of developed and other

developing regimes. Speaking about performance of ccP, Rahat said despite being in its infancy it has taken significant enforcement actions. industries that have been taken on and penalised include banks (Rs205 million), cement (Rs6.3 billion), sugar (proposed maximum penalty), LPG (Rs318 million), poultry (Rs50 million), edible oil (Rs50 million), jute mills (Rs23 million), dredging (Rs200 million), etc. international competition conference aims to examine

status of competition enforcement in various jurisdictions with particular reference to emerging economies such as Pakistan. Participants of the conference are discussing five themes that include challenge for competition agencies to deal with cartels and cartels in disguise, deceptive marketing and consumer protection, lessons learnt and sharing of country experiences in advocacy and enforcement, state aid and distortion in competition, and public procurement and collusive bidding affecting consumer welfare.

Local panelists include representatives of consumer right associations, business community, cSF, and government of Pakistan. conference participants include senior management members of corporate firms, legal community, academia, state-owned enterprises and government of Pakistan.

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Friday, 02 December, 2011

debate

NAuMAN TASLeeM

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OveRnMenT should focus on expanding inner city markets, should not allow any development scheme to have plots of over 400 square meters, decrease fares in public transport to support the poor, encourage sub-national government financing, reduce commercialisation levy and local government be given financial autonomy. These are the few suggestions made by Planning commission.

The report has addressed certain issues like urban economy, transport, land reforms, etc, in detail and gave certain proposals to address these problems. although the report was made some eight months ago, still there is no progress being made in this regard. Demographic trends show that the country’s population has been rapidly urbanising, with an average annual rate of urbanisation exceeding four per cent, since 1951. it is estimated that by the year 2030, Pakistan will be predominantly urban with 45.6 per cent of its population living in urban areas and about 12 cities housing more than one million people. The urban population recorded during the 1998 census was nearly 43 million and is currently estimated at 63.1 million. The tremendous challenge of absorbing such a massive number of people in urban areas and providing them with shelter, food, employment, healthcare, education, municipal services and recreation facilities is made more difficult given shortage of urban facilities and resources, skilled manpower and good governance. Despite the challenges, urban areas demonstrate immense economic potential to generate growth in the country. economic activity in urban areas produces at least 78 per cent of the national wealth (GDP) of Pakistan and can be instrumental in enhancing prosperity and increasing per capita income.

Urbanisation

uRBan tRanspoRt

state of uRBanisation in 1981, about 24 million people were living in urban areas that represented 28 per cent of country’s total population. in the 1998 census, the urban population increased to 43.5 million, constituting 32.5 per cent of the total population (143 million). The total population of the country has now reached 173.5 million and the urban population 63.1 million, increasing the level of urbanisation to 36.3 per cent.

uRBan economy cities are growing fast and contributing to economic growth. For example, Karachi alone accounts for 60-70 per cent of the national revenue and 40 per cent of value-added in the manufacturing sector. changing structure of the economy indicates that manufacturing and the services sector are driven force in urban economy. informal sector also plays a major part in developing economies absorbing some 30 to 70 per cent of urban labor force, reflecting an inability of the modern formal sector to absorb the growing urban labour force.

Sectors like construction, wholesale and retail trade, transport and communication and, even manufacturing, operate with high levels of informal employment.

Recommendation: There are substantial market potential and marketing opportunities in the inner-city areas.

Market intelligence can help cities attract investment in often overlooked inner-city areas. The city cluster economic development process can be useful in accelerating economic growth in urban areas through infrastructure development, provision of financial inputs and creating better environmental conditions. The capacity building to improve local government management of urban areas is essential. The local governments should be given financial autonomy and should be encouraged to raise more revenues from local taxes.

uRBan poveRty a high unemployment rate, increase in prices and a deteriorating law and order situation in urban areas have increased

exemptions conferred on urban elites. allow low-income housing on 60 square meter plots, long and narrow, width to depth ratio 1:3, with permission to build ground plus 2-1/2 floors. The built-up area of the plots should be a maximum of 70 per cent and a density of 1,500 to 2,500 persons per hectare may be achieved. create independent neighborhoods around open spaces rather than along streets through planning. Develop (and locate) low-income housing within the city through incentives to developers and landowners, and a market based approach for providing subsidies to low income groups. Remove restriction on height of apartments for lower-middle and middle-income groups allowing a minimum density of 1,500 persons per hectare. Plan all commercial and office complexes mixed use with 30 per cent of the floor area reserved for residential and recreational purposes. Regulations for such areas should be developed as a result of an urban design exercise specific to the area in which such complexes are to be located.

Photo cREDIt: Sher Ali

the incidence of urban poverty.

Recommendation: improve employment opportunities for the poor in key sectors through technical education and provide quality and affordable healthcare infrastructure to combat urban poverty. This can be done through the promotion of affordable insurance cover and through the establishment of public sector utilities subsidised by local government taxes.

uRBan land almost all cities in the country are faced with acute shortage of land which has resulted in extremely high land prices.

Land at appropriate scale and price is not available for industrial and commercial enterprises or housing and infrastructure projects. The available land is also being used inefficiently due to extravagant nature of existing land use regulations and planning standards and prevalent informal processes. inability of cities to meet the land and housing shortage has led to large scale encroachment on public and private land and the proliferation of ‘katchi abadis’.

Recommendation: expand land supply in urban areas through renewal projects in the inner areas and promote densification in new development projects, reserve state land with metropolitan areas for low-income housing and deliver this land through market mechanisms and halt the use of the Land acquisition act 1894.

Building Bye-laws existing laws, byelaws, zoning regulations and policies impede an efficient and economical use of land. These laws and regulations are mostly anti-street, antipedestrian, anti-mixed land use, antihigh densities and anti-public space.

They do not provide sufficient space for amenities such as schools, health facilities, parks and playgrounds.

Recommendation: create a governing body to maintain and monitor standards and practices among property developers, regulate property dealers and agents and enforce professionally set standards. amend the zoning and building regulations and match the market preferences at different locations and zones to support high density, high-rise and mixed land use patterns. Review byelaws, such as those levying commercialisation charges, as these have become severe constraint on development of rental premises for residential and commercial purposes. introduce certification process for the property dealers in the formal sector that ensures a minimum knowledge of property law, property transference and the dynamics of property markets.

physical infRastRuctuRe Physical infrastructure continues to be a serious problem in urban areas. Generally, it is poor in quality and its coverage limited and inequitable.

Underground sources of water supply are fast depleting due to heavy withdrawal and surface water is threatened with municipal sewage and waste water discharges and pollution.

Recommendation: Divert sewage to treatment plants in large parks so that it can be used for horticulture purposes.

Similarly, in small towns, divert sewage for use in agriculture to generate revenue from its sale. Discontinue building open drains for sewage disposal in small towns. Make all sewage flow through an underground system. install bulk water metering for specific purposes and areas so that water theft and usage can be easily monitored. initiate solar pumping for water supply to save on energy costs and cater to disposal failures during periods of load-shedding.

Make pavement construction an integral part of all road construction within towns. Support all road construction and street paving through an effective, open and paved drainage system so that road surfaces are not damaged.

social infRastRuctuRe Socio-cultural and entertainment activities in the cities tend to play a leading role in economic diversification, enhancing social integration and engaging the younger generation in healthier activities. cities are losing multi-class social, cultural and entertainment activities and the infrastructure that support and promote them, such as art galleries, theatres, cinemas, exhibition halls, fair and festival grounds, parks and playing fields, public meeting places, city halls, tea and coffee houses, art schools and libraries: all are close to extinction except for the elite.

Recommendation: Develop and implement guidelines for an aesthetically pleasing, energy efficient, socially responsive architecture, signage and street furniture. integrate heritage conservation into the overall cities/towns planning and development process. allocate space for educational/academic, entertainment and recreational activities based on a study of demand. Develop in and around shrines, parks, transport and cargo terminals, sports facilities etc.

housing and Real estate Urban areas are confronted with enormous housing deficit, estimated to be 2.7 to 3 million units. The supply side is extremely weak, meeting about onethird of the requirements. Public sector housing schemes are few and take very long to develop. Hence the deficit is aggravating. in the recent floods nearly half a million housing units have been affected in the urban areas making the housing situation worse.

Recommendation: establish Housing Price index (HPi) and Housing access index (Hai) with the assistance of Federal Bureau of Statistics. Subsidize government land within metropolitan areas through market mechanisms for low income housing. Roll back the benefits and

Urban transport is a key factor in improving living conditions and lowering the cost of transportation and of doing business in the cities. Traveling between and within cities have increased manifold due to growth of population, increased economic activities and low density haphazard sprawl segregating homes from places of work. Due to bad traffic management, roads have become excessively congested.

Recommendation: Due to an absence of affordable, flexible and comfortable transport, the number of motorbikes as an option is on the increase in Pakistan.

The number of motorbikes, for example, in Karachi, has doubled in the last six years. The only problem with the promotion of motorbike use is that women do not drive motorbikes in Pakistan. This restriction can be overcome by the promotion of new societal values. Segregate vehicular and pedestrian movements to remove congestion. For this, proper pedestrian-friendly footpaths are required in addition to car and motorcycle parking arrangements. However, public money should not be employed in building parking infrastructure for the benefit of private automobile owners. instead, local governments should be encouraged to raise parking fees and promote taxi/public transport services. adopt Bus Rapid Transport options as opposed to rail-based systems on account of lower cost and the flexibility in selection and change of routes. Replace rolling stock for bus systems every six to seven years as opposed to thirty years for the train system. consider floating of municipal bonds to raise funds for the financing of transportation systems. Subsidize public transport fares for the urban poor. This can be done by raising road tax on over 1300cc vehicles, adding an insurance surcharge for vehicles of over 1300cc, removing duties on the import of buses, charging for advertising on transport vehicles and on bus stops.

uRBan secuRity Security of life and property is one of the most basic functions of the state.

This security is also related to prevention of accident through any form (fire, disaster, building collapse, terrorism, etc. Human security in urban areas has worsened. This is due to a breakdown in law and order as well as a result of societal transformation from caste-based to class-based social structures.

Recommendation: Provide a responsive governance system and efficient and accountable line departments. The creation of such a governance system and line departments cannot take place without political will and the creation of required and trained manpower, leadership and knowledge of the problems the people of Pakistan face in their daily lives. Review security arrangements provided to the officials of Pakistan’s establishment so as to minimise the socio-economic disruption and alienation that the current procedures are creating.

These arrangements cause hardship to urban dwellers, affect their livelihoods and healthcare systems.

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Friday, 02 December, 2011

shaRi’a matteRs

EDITORIAL

Islamic interbank benchmark rate

The SBP dilemma

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He central bank contradicts itself.

First it explains its (obvious) “dilemma” – excessive government borrowing has compromised advances to the private sector. Then it expects the incredible – the 200 percentage point cut so far this fiscal should translate into increased private off-take during the second half. in effect, cutting rate or holding steady, recent developments point towards a different sort of dilemma, where SBP autonomy is diluted by exogenous events no matter how strongly it postures to safeguard it.

Strangely, monetary policy has been revolving around the current account deficit practically since the onset of the ongoing fiscal year. First, inability to generate funds fueled excessive borrowing, diluting a tight monetary regime meant to pressure inflationary trends. Borrowing remained high even as unexpected export windfall swelled reserves.

Then when tightening screws did not (obviously) arrest high prices, the policy engine was reversed to stimulate growth and encourage private sector investment. Yet the government remained

excessively present in the money market, feeding into a risk-averse banking structure reluctant to extend liquidity to private initiatives.

The monetary policy statement fails to notice in as many words that the economic engine has stopped responding to interest rate toggling. But perhaps its most penetrating finding is the need for the government to initiate comprehensive tax reforms. Simply put, the sooner islamabad falls on its own funds to service its running expenses, the sooner banking sector liquidity will be channeled into investment, employment generation and GDP growth. That the central bank has been unable to impress this simple economic rule upon the government obviously does not speak well of its prized autonomy. and commercial banks, too, find it only too convenient to lend to the government as opposed to private investors. Best not indulge in risk management and turn attention to mounting nPLs again. at some point the government’s addiction to borrowing will have to stop. Unfortunately it seems that will not happen till hyper-inflation and public revolt deliver a stern message.

Humayon Dar

O

GM food necessary to overcome hunger?

The article reads like a thoroughly brainwashed outcome of the Mnc's corporate propaganda, without understanding how Biology and agriculture operate, or bothering to refer to independent research on what is wrong with GM – easily available on the internet all that has been demonstrated the world over.

How can the author, unload such false and dangerous disinformation and marketing hype on the public, especially in islamabad, which city already suffers from excessive and unwarranted influence from vested interests, both local and foreign?

There is a need to check out the updated information on global food security issues.

The world already produces enough to feed 11.5 billion people, but it does not reach the hungry in the South, whose fundamental rights to food and livelihoods have been sold out by rights-violating commodification of food, land and other essentials by self-serving governments and politicians to multinational agro-businesses, WTO’s (non-)free trade, and global financial and food trade speculators. GM technology development is self-contradictory and ultimately suicidal, as it depends on wild biodiversity to obtain gene traits it needs to fiddle with ("modify") to obtain so-called "new" varieties, which are then patented and also aggressively imposed on small farmers who do not need them. Yet GM is a continuation of monoculture that has already destroyed most of the world’s edible biodiversity. if not anything else, the author at least needs to read up on what the Un and FaO have to say about what will happen if we do not at the earliest return to traditional, organic, sustainable agriculture, and if the world continues doing industrial agriculture. This has already degraded most of the world’s soils, poisoned its water bodies, as well as wrecked the health of poverty-stricken peasants and farmers who work the land, by following the misguided, profit-oriented-for-the-Mncs path.

n november 22, 2011, Thomson Reuters launched what it claims to be the world's first islamic finance benchmark rate, designed to provide an objective and dedicated indicator for the average expected return on shari’a-compliant short-term interbank funding. The islamic interbank Benchmark Rate (iiBR), as Thomson Reuters would like to call it, uses the contributed rates of 16 islamic banks and the islamic sections of conventional banks to provide a reliable and muchneeded alternative for pricing islamic instruments to the conventional interest-based benchmarks used for mainstream finance. This is an interesting development that needs scrutiny from a shari’a and economic perspective. interbank lending and borrowing between conventional banks creates interest-based debt. in the case of islamic banks, however, interbank deposits are based on, by and large, what is known as commodity murabaha. although commodity murabaha has for some time been recognised as a shari’a compliant product, subject to some strict shari’a guidelines, the fact remains that such commodity murabaha based transactions and products are either priced in terms of LiBOR or a local interestbased benchmark. The question then arises: how will the newly launched iiBR be different from conventional interest rate benchmarks?

My feeling is that the financial behaviour of iiBR will be positively correlated with the benchmarks used for the participating banks' existing products. My suspicion is that the iiBR will be only marginally different from the respective local interest-based benchmarks and the LiBOR. However, if the proposed iiBR is used by a sufficient number of participating banks, the individual banks' portfolios will gradually change in favour of the iiBRlinked products. This in due time will create an islamic benchmark different from the interest-based benchmarks. This will, however, happen only if islamic banks "borrow" only from within the islamic financial services industry. in other words, if segregation of islamic funds is maintained on a systemic level and not on just institutional level, an islamic benchmark like iiBR will be useful.

This basically means that the countries where islamic

Should Islamic banks borrow only from other Islamic banks?

NAjMA SADeque kARAchI

Stardom of reinventing

H

Syed Omer Jan

OW strange this might sound to one’s ears, the truth remains that the world we live in has become perplexed and competitive. Masses have become impatient and appreciative of only the finished goods and products. The irony is that no one remembers or cares about the poor guy who came up with the idea in the first place. in the end, it’s all about perfecting the final product. So what is the image that comes to your

mind when you read the word ‘inventor’? Let me tell you what i think of an inventor; a petite skinny nerd wearing glasses, messy hair dressed up in a lab coat, playing with a computer or some gadget. as sad as this picture might sound, it’s the hard-line truth. interestingly enough, this hasn’t always been the case for there have been times when inventors too were in the limelight and mattered. They were revered and regarded as towering, romantic figure geniuses such as Leonardo Da vinci, alexander Bell or Thomas edison. But sadly, with the passage of time dynamics have changed and it seems like the inventors have lost their aura. if you ask me how this all happened and how the inventors lost their charm, then i’d blame the modern day marketers who with their linguistic charm and skills to market and present an idea, stole the show; analogous to someone stealing a candy from a baby. The most recent and

significant example that comes to my mind is that of Steve Jobs and i do not mean to discredit or take anything away from him. He was a true genius in every way who went on to revolutionise at least four different industries. Jobs had a natural gift which was to perfect other people’s inventions; he would optimise them and had the nag to buff and polish other people’s ideas in such a manner that they would turn into gold mines and simply irresistible commodities. in a way you could say that Steve was sort of a con artist or a remix artist. Take for instance the case of the spectacular graphical user interface of the Machintosh computer; the idea which Jobs very conveniently borrowed from Xerox PaRc. Have you ever thought about or wondered who in the world invented the first digital music player or for that matter, the smart phone? i don’t know and i am sure you don’t either. These people never saw any fame come their way or were never on

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banks exist, conventional banks should not be allowed to offer islamic financial services (similar to what Qatar has done recently). My own view is that the practice of commodity murabaha should be disallowed to "borrow" from or "lend" to conventional banks. Once, islamic banks start conducting commodity murabaha amongst themselves only, a distinct islamic market will emerge, which would maintain a separate benchmark for islamic banks. This "valve" between islamic banks and conventional banks would decrease the threat of arbitrage, which otherwise will always emerge if a separate and different islamic benchmark is introduced in a market where an interestbased benchmark already prevails. it is interesting to note that the iiBR uses data from16 participating banks, which also include some conventional banks offering islamic financial services through islamic windows. inclusion of the conventional banks in the list of the founding participating banks, in my opinion, is the basic flaw of the newly launched benchmark. involvement of the conventional banks in determining iiBR will necessarily retain conventional thinking on pricing of islamic financial products. after all, very short term lending and borrowing by conventional banks is driven by making money from money, as short-term lending (e.g., overnight deposits) does not lead to any real investments, and the lenders get a return on purely financial investments. a simpler solution is based on qard hasan (or interestfree loans) to borrow and lend on a short-term basis between islamic banks. in a cooperative environment, islamic banks with excess liquidity may decide to lend to other islamic banks in need of short-term liquidity. central banks must make it compulsory for islamic banks to offer a certain percentage of their excess liquidity in an islamic money market that would allow liquidity-deficit islamic banks to borrow that money on an interest-free basis. in case of Pakistan, for example, the State Bank of Pakistan can decide to issue a sukuk on its own buildings by way of selling the real estate assets to an independent fund, which would securitise these assets. The islamic banks wishing to manage their excess liquidity should be allowed to buy such a sukuk to receive rental income. The trade in such a sukuk may also take place on the Karachi Stock exchange allowing islamic banks to invest or divest at their discretion. This will also allow islamic banks to earn any capital gain arising from the secondary market trading. alternatively, the islamic banks may like to keep the sukuk either to maturity (which could be 30 to 90 days) or/and any intermediate redemption days, pre-announced by the central bank. in this context, the sukuk issued by the governments of Sudan and Bahrain should be studied to develop a comprehensive framework for development of a government-supported islamic money market in Pakistan.

The writer is a Shari’a advisor to a number of banks and financial institutions and can be contacted at humayon@humayondar.com

The times, they are a changing, once upon a time the inventor mattered

the cover page of Forbes or Time magazine. But we all know who came up with the iPad and the iPhone, just because he has been on the cover page over a dozen times. i mean, Jobs was a true visionary and when he looked at a smart phone, he saw a better smart phone. To be a visionary, you have to be different and think out of the box. a creative thinker is someone who would use electricity to put out fires rather than start them, who would look at an ordinary light bulb and see a wireless data transmitter that could replace WiFi? These aren’t ordinary thoughts; they’re not even different, rather they’re downright weird. Jobs had the talent to seek out and see through things what they were actually supposed to do. Take for instance, the digital music player – in 1979, a British engineer named Kane Krammer demonstrated the iXi, a digital audio

player. He wasn’t able to turn it into a commercial product, but apple has acknowledged the importance of Kramer’s work and came up with iPod. The world we live in today is such that it has given a downright cheap outlook to the inventors. They have become a necessary evil, but let’s not even for a second forget how crucial they are to the world and how much we need them. a lot of things we see around us aren’t pretty and a rough draft of the future is waiting for someone, like Jobs to handpick them and refine them into something that will change the world.

The writer is Texas A&M University graduate who is currently employed with Telenor in the Products - Commercial Division. He can be reached at syed.jan@gmail.com

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Friday, 02 December, 2011

A lot of our volume and value growth is a result of the evolution in the retail environment in Pakistan

news

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ceo unilever pakistan, ehsan a malik

UAE FIRMS TO MAKE LONG-TERM INVESTMENT IN PAKISTAN KARACHI StAFF REPoRt

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aKiSTan is a growing market and United arab emirates (Uae) based companies operating here are being touted to make long term strategic investment. Uae expo 2011, besides targeting manufacturing, trade, services, investment and tourism sectors, will strengthen public and private sector ties between the two countries.

These views were expressed by speakers at “Uae trade and investment conference”

held at Karachi expo centre. The international conference was held in collaboration with Federation of Pakistan chambers of commerce and industry (FPcci) on the second day of the expo. Pakistani ambassador in Uae Jamil ahmed Khan advised Pakistani businessmen to take full advantage of opportunities in emirates for re-export business. He said 40 per cent of exports to Uae are re-exported to african countries. He said Pakistani exports to Uae can be enhanced from 2 per cent of Uae’s global trade to 6 per cent with the help of planned efforts. current bilateral trade between Uae and Pakistan is

over $7 billion. ceO of Karachi electric Supply company (KeSc) Tabish Gauhar said management of Dubai based firm abraaj capital has already invested almost $500 million in the city’s power company while many projects have already been completed.

The 560-MW combined cycle Power plant which would be completed by next year, KeSc has also stuck a deal with a foreign firm to get power from Thar coal, he added.

President and ceO of Pakistan Telecommunication company Ltd (PTcL) Walid irshaid said that his company will make more investment in Pakistan to fully transform

CSF briefs govt on asset distribution to provinces ISLAMABAD

c

JALALUDDIN RUMI

OMPeTiTiveneSS Support Fund (cSF) while expressing its dissatisfaction over implementation of 18th constitutional amendment and 7th nFc award; urged government to form a commission with sunset clause to oversee completion of implementation while managing fiscal implications; enhancing provincial revenue generation; rationalising current expenses and PSDP. competitiveness Support Fund (cSF), a joint initiative of ministry of finance, government of Pakistan and United States agency for international Development (USaiD), made a presentation to key institutions responsible for economic management of the country on a recent study on intergovernmental finance.

Research team was led by Shahid Javed Burki, renowned economist and former finance minister of Pakistan. it also included Dr aisha G Pasha Director institute of Public Policy of BnU, former Federal Finance Secretary ahmed Waqar and cSF team consisting of Shahab Khawaja ceO, imran Khan and Mehr Shah. in his keynote presentation Shahid J Burki briefed participants about scope of study and impact of intergovernmental finance post 18th amendment and 7th national Finance award (nFc) and challenges

and opportunities for federal and provincial governments. Shahid J Burki in his briefing said "Two extremely important developments have taken place in Pakistan recently.

The first was the announcement of the 7th national Finance commission (nFc) award in november 2009. an unprecedented 56 per cent of revenue constituting divisible resources has been committed to the provinces under this award. The second was parliament's ratification in april 2010 of the 18th amendment under which 18 ministries have been devolved from the center to the provinces."

He further said together, the two initiatives aim at fundamentally restructuring fiscal and functional equation between central and provincial governments in the country. "although the 18th amendment is expansive in scope, the primary purpose of the cSF study was to focus on intergovernmental finance aspect of process of devolution. Study results will contribute to a better understanding of the fiscal implications of the 18th amendment in light of resource shifts from the federal to the provincial governments under the 7th nFc award,” he added.

Dr nadeem Ul Haque in his remarks commented that, "study has highlighted a number of key issues likely to impact the process of devolution, some of which require immediate attention from both federal as well as provincial governments." appreciating cSF's contribution to do the first ever research study

on the 18th amendment and its fiscal impact on the federal and provincial governments, he said, "the study has made recommendations on establishment of a commission to oversee implementation of 18th amendment, management of fiscal implications, strengthening of human resource pool, improved provincial budgeting, planning, and public finance management, assessing the regulatory fallout of the process and taking the devolution to the district level." These are some of the most important findings for improving governance and harnessing development and growth in Pakistan, he further added.

Speaking on the occasion, Shahab Khawaja, chief executive Officer of the competitiveness Support Fund said, "the cSF study includes an assessment of the current public finance management practices of provincial governments and the human resource and regulatory impact likely to arise out of the restructuring exercise. cSF will also be briefing leading development institutions representing asian Development Bank, DFiD, USaiD, the World Bank, UnDP, the agha Khan Foundation, eU delegation and ciDa; whereas academic scholars from LUMS, ceRP, cOMSaTS, PiDe and QaU will also participate in an interactive discussion. in addition to these, leading think tanks like center for Social Science Research and SDPi will also be participating in the conference.

PTcL into a world class telecom company.

“We have transformed PTcL into a modern company offering all icT products in Pakistan and we are here to stay,” he said while sharing the experience of his company in Pakistan and investment opportunities.

He said Pakistan is a growing market and we are making long term investment to offer world class network to local consumers who are quality conscious. Regional general manager asia Pacific north and indian sub continent etihad airways, Joost den Hartog said his airline was doing great in Pakistan.

We are running daily flights from Karachi,

cng stations open after talks between ssgc, apcnga KARACHI GhULAM ABBAS

T

He two days gas loadshedding to cnG stations in Karachi ended after successful talks between Sui Southern Gas company (SSGc) and all Pakistan cnG association (aPcnGa). But after restoration of gas supply to cnG stations across Sindh, sources in SSGc claimed that domestic consumers of the company fear facing gas load shedding as the gas company was bearing shortages of 250 to 300 MMcFD gas. as some areas of the city have already reported facing lower pressure of gas, supply to millions of consumers was likely to be affected after additional supply to Karachi electric Supply company (KeSc) and restoration of gas to cnG outlets, they said.

Supply to cnG stations was restored after protesting members of aPcnGa moved towards SSGc head office where they met the managing director of the company.

Under immense pressure from cnG sector the supply was restored at 6:00 pm in Karachi and other parts of Sindh. cnG stations were allowed to be opened six hours earlier than the scheduled time. SSGc and representatives of aPcnGa would meet again on Friday to discuss the issue as the shortage of gas was affecting many organisations including KeSc, industries and cnG consumers.

KSE gains 24pts backed by oil sector KARACHI

ceo ptcl,

walid irshaid

trade officers at missions to be appointed soon ISLAMABAD: Ministry of commerce has initiated the process of selecting Trade Officers in grade 18, 19 and 20 for posting in the Pakistan missions abroad. Officers of commerce and trade are entrusted with the responsibility of trade promotion, facilitation, regulation and development through different organisations and Pakistan's commercial missions abroad. Total number of officers in the group is 266. commerce and trade group officers have the role of career commercial diplomats. They are posted in Pakistan commercial missions abroad (presently 62 missions) right from commerce secretary to the position of trade minister. StAFF REPoRt

pol puts Rs40 billion additional burden on masses LAHORE: Government has put an additional burden of Rs40 billion on the masses by increasing petroleum products prices. agriculture alone will have to bear the brunt of Rs16 billion whereas elite will pay merely Rs3 billion. agri Forum Pakistan chairman Muhammad ibrahim Mughal estimated that farmers were using around four billion litres of diesel per annum for agriculture purposes. The steep increase in diesel price would put an extra burden of Rs16 billion on poor farmers, who were already being fleeced through blackmarketing of agriculture inputs. He indicated that rabi crops, including wheat, gram, sunflower, canola and vegetables, production could shrink from 10-15 per cent due to massive increase of petroleum products prices. StAFF REPoRt

offices of state Bank of pakistan, Kse to remain closed on monday and tuesday KARACHI: State Bank of Pakistan (SBP) and all offices of SBP Banking Services corporation, including Public Debt Offices, will remain closed on Monday and Tuesday, the 5th and 6th December 2011 (9th and 10th Moharram-ul-Harram). Both days are public holidays, declared by the government of Pakistan on the occasion of ashura. also, Karachi Stock exchange notified the members and other market participants that stock market would remain closed on aforementioned days and that the exchange shall reopen on Wednesday, 7th December. StAFF REPoRt

lcci delegation to leave for india today

StAFF REPoRt

T

He Karachi stock market remained positive on Thursday and gained 24.54 points on the back of what the analysts observed institutional interest in the blue-chip scrips from oil and banking sectors.

“Positive close was witnessed at KSe on institutional interest in oil and banking sector stocks,” said ahsan Mehanti, director at arif Habib investments. The day witnessed the benchmark 100-share index closing at 11,557.37 points against 11,532.83 points of Wednesday. The intraday high and low was, respectively, recorded at 11,613.24 and 11,532.83 points. Whereas the trading volumes remained as low as 27.472 million shares compared to 38.491 million shares of the previous day. The trading value, however, set in the red zone and fell to Rs1.259 billion against Rs1.546 billion on the previous day.

Of the total 313 traded scrips, 111

islamabad, Lahore to Uae and twice a week from Peshawar. We are planning to enhance our operations in Pakistan in future he noted.

advanced, 108 declined and 94 remained unchanged. The market capitalisation closed static at Rs3.00 trillion. The KSe-30 index also gained 19.63 points to close at 10,819.87 points compared to 10,800.24 points of the previous day. The intraday high and low for the index was recorded at 10,861.89 and 10,780.88 points.

The analysts said that the investors shrugged off the ongoing diplomatic tensions in the Pakistan-US ties and the affects of central bank’s static policy rate at 12 percent on Wednesday.

Jahanigir Siddiqui company maintained its position as volume leader of the day and counted its traded shares at 3.319 million with its share price, however, closing lower at Rs5.61 after opening at Rs5.83. Other best performers included Japan Power, Silkbank Limited, McB Bank Limited, DG Khan cement, Fauji Fertiliser Bin Qasim, engro corpSPOT, Fatima Fertiliser company, netsol Technologies and Oil and Gas Development company Limited. The companies’ traded shares were counted, respectively, at 2.5 million, 1.7

million, 1.2 million, 1.2 million, 1.2 million, 1.0 million, 1.0 million, 1.0 million and 0.920 million shares.

The future market also marked a downward activity and saw the trading turnover decreasing to 2.3 million shares against 3.3 million shares of the previous day. The scrips that gained numbered 45, those categorised as minus were 60 and three remained unchanged. engro-Dec continued to lead the companies with 0.606 million of its shares traded on the day.

LAHORE: a hundred-member Lcci delegation, led by its President irfan Qaiser Sheikh, is leaving for india today on a five-day visit to take up non-Tariff Barriers and other bilateral trade related issues with their counterparts. On the first day Lcci President irfan Qaiser Sheikh would inaugurate Punjab international Trade exhibition (PiTeX-2011) in the morning while in the evening delegation would have a working dinner at PHD chamber of commerce and industry. On 3rd December, delegation would meet chief Minister Haryana Bhupinder Singh Hooda wherein Lcci President would highlight issues coming in the way of bilateral trade and hand over a set of proposals to expedite the volume of trade. This would be the first Lahore chamber delegation that would be given chief Minister’s protocol and would be hosted by Haryana chief Minister. On 5th December, Lcci delegates would have a meeting with Federation of indian chambers of commerce and industry (Ficci) office-bearers and executive committee for a threadbare discussion on nonTariff Barriers. Ficci would be informed of sentiments of Pakistani businessmen regarding MFn status to india. in the evening of December 5, delegation would attend working dinner arranged by the World Punjabi Organisation (WPO). StAFF REPoRt

Layout Profit 7 pages_Layout 1 12/1/2011 11:37 PM Page 5

Friday, 02 December, 2011

You (US and Western states) impose sanctions on us, use many means against us and expect us to be ready to discuss the nuclear program with you?

news

president of iran, mahmoud ahmadinejad

05

Can the US afford to bail out Europe?

The Fed has promised the ECB an unlimited supply of the American taxpayers’ money, that too for free! g

T

Ali Rizvi

He global economic recession has taken its toll on the West. The growing fissures of socio-economic disparities have sparked protests that are not only limited to Greece, but have enveloped more than 900 cities of the developed world at the same time. Policy makers and economists were arrogant over the infallibility of their own self created theories. What they failed to take into account was the simple fact that economic paradigms are formed with the knowledge of the expected and not the unexpected. Therefore most of their observations turned out in ways that weren’t really anticipated and unfortunately even today, the unexpected, the blasphemous behaviour of the free market will not in reality go on to change economic paradigms.

The global economic recession can be attributed very simply to one inherent flaw of the developed world.

‘Hubris’ or according to the Merriam Webster dictionary ‘exaggerated pride or self confidence’. at the end of the day, what none of them realised is that capitalism is like a struggle between individuals, a tug of war, an attempt to gain control over scarce resources. it is like boxing perhaps, or poker, a softer restrained form of private warfare. in this context, let us analyse a surprising development on the euro front, comprising of a meeting of a few of the worlds most influential central bankers. To say, that the outcome of the meeting was even more surprising would be an understatement. in recent developments, it has come to the fore that the US central bank, the Federal Reserve has promised to bail out the euro, from the US tax payers money,

and that too very cheaply. The Fed, has promised the ecB of an unlimited supply of the american taxpayers money.

What is most surprising though is, at this crucial juncture where a double dip recession is on the cards, the policy of the Federal Reserve and the Obama administration do not fail to surprise the average Joe. according to Shan Saeed, a senior financial market expert, after analysing the 3 month US treasury bills, the investor received a rate of return on those bills of 0.0 per cent. in other words, ‘the US government is perfectly content paying investors absolutely nothing for the privilege of taking and using investor’s money.’ in theory, the actions of the US administration will go on to stimulate the economy, in reality it punishes those who save. Whoever said saving is bad for the economy? US debt has reached alarming levels of almost $15 trillion, add to that the lowered predictions of GDP growth rate of 1.6 to 1.7 per cent from the previously anticipated growth rate of 2.7 to 2.9 per cent.

Following the rendezvous, currency markets and traders are full of optimism about the euro. While such reassurances are fleeting to say the least, the only probable loser of such an arrangement seems to be the dollar that has considerably weakened compared to other currencies. The reason, for this weakening of the dollar is more than apparent. Following an announcement, from the ecB, the Bank of canada, the Bank of Japan, Swiss national Bank, the Bank of england and the Fed, it has been learnt that the lions share of the european bail out money will be provided by the US federal reserve.

"The purpose of these actions is to ease strains in financial markets and thereby mitigate the effects of such strains on the supply of credit to households and businesses and so help foster economic activity," read a

statement following the meeting. after china’s interest in bailing out the eurozone waned, and there were speculations floating about a possibility of the Fed bailing out european banks as it did for the american banks following the crisis in 2008. This speculation did meet strong denial from the Obama administration, however after the Monday meeting with top european Officials, european council President Herman van Rompy and european commission president Jose Manuel Barroso, President Obama certainly found a new found interest in europe with an intriguing statement, that the european debt imbroglio is of ‘huge importance’

for the US and that his administration was ready to play its part in keeping europe afloat. as is the case with all things american, no other details were given over what he really meant by playing ‘our part’ probably because he wouldn’t want to get into trouble with the american taxpayers who are increasingly unhappy with the way things are being governed at the present moment in time. However the Fed announced this deal two days later, why?

Because the Fed is everybody’s daddy, they really aren’t accountable to the congress or anyone else.

What was learnt of the agreement is, that the FeD extends lending to the

ecB, that will transfer money to the illiquid european banks. The lending is two times cheaper, in effect the american taxpayers will be bailing out europe that too almost free. Details of the agreement? Well, the ecB must pay the Fed a private sector overnight lending rate plus 0.5 per cent point that they previously paid in addition to 1 per cent point.

Following this deal, i almost imagined the Fed standing on a hill and laughing out loud, chuckling as it said, ‘Hey taxpayers, who’s your daddy now?’

The writer is News Editor, Profit.

For comments and queries email at ali.rizvi7957@ gmail.com

CORPORATE CORNER warid telecom helps deserving gcu students

KARACHI: in-line with its corporate social responsibility, Warid Glow, supported deserving Government college University students by donating Rs800,000 for GcU endowment Fund Trust (GcU eFT). Mr amer aman, Warid Head of Sales and Distribution handed over the cheque to GcU vc, Prof Dr Muhammad Khaleeq-ur-Rahman at a ceremony held at GcU. PRESS RELEASE

Qatar airways launches flights to chongqing DOHA: Qatar airways has expanded operations in china with the launch of scheduled flights to chongqing, the airline’s fifth chinese destination and 15th route start-up this year. Flight QR848 arrived at chongqing Jiangbei international airport to an impressive water salute following its non-stop journey from the airline’s operational hub of Doha.

Passengers and operating crew were given a red carpet arrival by airport officials. PRESS RELEASE

azme alishan launches online pledge for pakistanis at home and abroad ISLAMABAD: azme alishan, the nation’s newest and fastest growing social movement, has launched a new online pledge for calling on

Pakistanis everywhere to sign up as ambassadors for ‘real Pakistan’, in a bid to counter some of the negative perceptions of the country at home and abroad. The pledge hosted on the campaign’s website was signed by 10,000 people in its first few days. PRESS RELEASE

standard chartered contributes Rs2.4 million for underprivileged students

KARACHI: Standard chartered Bank signed a Memorandum of Understanding (MoU) with Sargodhian Spirit Trust School (SST), to contribute Rs2.4 million to support underprivileged students for a period of 2 years.

The agreement was signed by Mohsin nathani, chief executive, Standard chartered Pakistan and air cdre (R) ershad ahsan, chief executive Officer, SST. PRESS RELEASE

president aBf congratulates sherry Rehman LAHORE: President american Business Forum (aBF), Salim Ghauri congratulated Sherry Rehman, a human rights campaigner and former journalist, for her appointment as new ambassador to the United States of america. He said Ms Rehman carries proven credentials as a social progressive, advocating for women’s and

minority rights, besides having strong relationships with Pakistan’s political elite including late Benazir Bhutto. PRESS RELEASE

iso embarks upon project of hRm standardisation ISLAMABAD: iSO has embarked upon project of HRM standardisation with a view to standardise HR. The plenary technical committee meeting was held on november 10th 2011, in Washington. HR experts from 11 participating countries including US, UK, France, Germany, Sweden, Switzerland, austria, norway, netherland, Portugal and Pakistan attended the meeting. Zahid ali Mubarik GPHR, President SHRM Forum Pakistan represented the country in this meeting. PRESS RELEASE

nBp makes extra arrangements for pensioners KaRacHi: national Bank of Pakistan (nBP) took extra measures for the convenience of pensioners. in order to further facilitate old age pensioners, nBP set up additional counters for male and female separately and also made proper arrangements for water, washrooms and sitting area. The staff serving pensioners at the branches is strictly ordered to provide best possible service to pensioners and regional heads are also directed to visit the designated branches to ensure smooth disbursement of payments to pensioners. PRESS RELEASE

collectibles celebrates 15th anniversary KARACHI: collectibles celebrated its 15th anniversary with a glittering reception hosted at the

Swiss consulate, Karachi. ceO collectibles, Mr Rameez Sattar, speaking on the occasion said that the collectibles was the result of three generations of hard work, ensuring integrity and quality followed by superb after sales service which had made collectibles a familiar name in the country among the patrons of luxury watches. PRESS RELEASE

ptcl set to compete for 3g license

KARACHI: ceO and President, Pakistan Telecommunication company Limited (PTcL), Walid irshaid, has said that his company is going for 3G and it will be the first to compete for a 3G license in Pakistan. “We have no option but to succeed," said Mr irshaid, while addressing Uae Trade and investment conference 2011. "We are going for 3G and we will be the first to compete for a 3G license and our deep passion is to transform PTcL from a state monopoly dominating the market to a world-class telecom company which is able to favorably compete with 45 players on the ground." PRESS RELEASE

LAhoRE: Establishment Division, Government of Pakistan has notified Major General (r) Malik Muhammad Farooq hilal-e-Imtiaz Miltary, as Managing Director of Utility Stores corporation of Pakistan. PRESS RELEASE

Layout Profit 7 pages_Layout 1 12/1/2011 11:38 PM Page 6

Friday, 02 December, 2011

06 Markets top 10 sectors

49% 09% 10% 04% 04%

Chemicals

01% 03% 01% 02% 17%

Real Estate Investments

Construction & Materials Electricity Banks

Fixed Line Telecommunication

Oil & Gas

Financial Services

Personal Goods

Equity Investment Instruments

STOCK MARKET HIGHLIGHTS Index 1557.37 2952.33 2612.26

KSE-100 LSE-25 ISE-10

Change +24.54 -6.31 +15.37

Volume 20,924,315 1,392,044 2,790

Market Value 1,238,882,531 21,381,604 216,690

top 5 perForMers sector wise

Major Gainers Company Bata (Pak) Ltd. Attock Petroleum National Foods Packages Limited Pak Suzuki Motor

Open 730.70 410.08 62.26 70.30 66.16

High 765.00 419.00 65.37 73.81 69.00

Low 715.00 409.50 62.05 68.01 68.00

Close 760.26 416.24 65.35 73.18 68.94

Change 29.56 6.16 3.09 2.88 2.78

Turnover 628 111,533 5,613 182,724 103,383

2684.75 2755.15 5528.40 105.00 171.78

2722.99 2777.99 5539.00 102.25 171.00

2551.00 2670.00 5410.01 102.25 169.00

2569.45 2689.72 5474.80 102.25 169.09

-115.30 -65.43 -53.60 -2.75 -2.69

11 26 8 421 1,885

Volume Leaders Jah.Sidd. Co. Fatima Fert.Co. D.G.K.Cement PICIC Gro Fund Fauji Fert

5.58 22.95 20.44 12.27 54.43

5.92 23.57 21.22 12.60 54.65

5.51 22.78 20.49 12.30 54.00

5.83 23.12 20.75 12.57 54.11

0.25 0.17 0.31 0.30 -0.32

5,815,125 4,148,594 3,153,270 2,673,918 1,869,805

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

Per Tola (PKR) 58,063.00 51,608.00 1,103.00 1025.00

Per 10 Gm (PKR) 49,833.00 44,245.00 947.00 880.00

Per Ounce US$ 1,746.00 – 35.05 –

high

low cuRRent

change

volume

409.80 119.90 22.06 7.00 92.00

402.00 115.40 21.15 6.87 90.05

407.34 119.18 22.06 6.95 90.91

5.13 3.19 0.00 0.06 0.55

94,034 1,798,600 289 278,943 26,862

29.00 69.39 153.64 37.50 1.50

28.15 66.50 152.50 35.85 1.50

28.87 69.39 153.00 36.45 1.50

0.82 0.00 -0.64 0.56 0.01

1,689,569 10 1,804 101,880 2,982

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

402.21 115.99 22.06 6.89 90.36

Arif Habib Co SD Biafo Ind. Clariant Pakistan Dawood Hercules Descon Chemical

28.05 69.39 153.64 35.89 1.49

20.00 1.40 8.61 30.05 10.24

20.79 1.46 8.79 31.00 10.10

20.00 1.35 8.63 29.60 10.00

20.00 1.35 8.66 30.05 10.00

0.00 -0.05 0.05 0.00 -0.24

1.80 52.69 14.27 7.61 19.94

25.82 3.60 40.34 7.70 20.50

Ados Pakistan AL-Ghazi Tractors Ghandhara Ind. Hinopak Motor K.S.B.Pumps

88.7818 139.4407 1.1426 119.7223

5.25 161.88 7.49 78.54 26.95

1.97 53.00 14.30 7.98 20.53

1.83 51.02 13.27 7.70 19.90

1.83 53.00 14.13 7.87 20.44

0.03 0.31 -0.14 0.26 0.50

3,101 64,581 2,536 903 1,419,943

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

$100.50

Sell 88.90 119.77 139.50 1.1379 88.13 11.44 24.18 23.66 91.96

Brent Crude Oil

$110.52

Atlas Battery Ltd. Bal.Wheels Dewan Motors Exide (PAK) General Tyre

170.00 23.60 2.20 177.10 16.00

27.10 4.10 40.50 8.59 20.50

25.15 3.26 40.01 7.70 19.48

25.90 3.90 40.50 8.43 20.50

0.08 0.30 0.16 0.73 0.00

8,219 151,477 2,251 3,414 125

Dewan Sugar Engro Foods Ltd. Habib Sugar Mills Habib-ADM Ltd. Ismail Industr

2.25 23.95 27.23 13.30 65.00

2.49 24.25 27.48 13.69 64.99

5.99 161.99 7.95 79.95 26.95

4.60 158.50 6.66 74.62 25.61

172.89 23.70 2.20 178.50 16.83

169.00 23.70 2.05 173.00 15.71

110.49 111.43 150.02 150.00

AL-Abid Silk Mills Diamond Ind. Hussain Industries Pak Elektron Ltd. Tariq GlassXD

23.34 8.20 3.90 4.20 8.65

23.60 9.03 3.90 4.40 8.89

(Colony) Thal Ali Asghar Textile Amtex Limited Artistic Denim Mills Azam Textile

1.40 0.56 1.29 20.10 1.35

1.40 0.55 1.33 21.07 1.39

AHCL-DEC ANL-DEC ATRL-DEC DGKC-DEC ENGRO-DEC

28.90 3.50 121.61 20.25 126.68

28.60 3.47 119.49 20.25 123.99

5.25 158.63 6.66 74.65 26.95

171.50 23.70 2.20 177.10 16.80

109.00 111.18 145.05 145.58

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

100.37 76.20 67.51 28.20 12.74

101.60 76.90 68.00 29.25 12.50

0.00 -3.25 -0.83 -3.89 0.00

30 730 2,005 809 45

1.50 0.10 0.00 0.00 0.80

2,700 500 213 38 1,313

0.69 -4.44

1,170 203

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

10.80 34.50 0.96 1.85 1.11

2.25 23.98 27.40 13.19 64.97

0.00 0.03 0.17 -0.11 -0.03

3,000 19,195 179,447 1,775 1,504

23.34 8.20 3.80 4.20 8.65

23.34 8.20 3.90 4.25 8.65

0.00 0.00 0.00 0.05 0.00

2 2 6 8,650 10

1.40 0.55 1.26 20.15 1.16

1.40 0.55 1.30 20.98 1.35

0.00 -0.01 0.01 0.88 0.00

511 500 1,802 13,064 52

28.00 3.36 116.55 19.76 121.00

28.21 3.46 117.30 20.09 122.70

-0.69 -0.04 -4.31 -0.16 -3.98

220,500 629,500 165,000 55,000 454,500

100.00 76.31 68.00 29.25 12.30

-0.37 0.11 0.49 1.05 -0.44

2,094 1,113 10,200 7,001 14,060

100.00 75.99 67.99 28.00 12.00

10.95 34.50 1.00 2.00 1.17

10.70 34.00 0.89 1.82 1.05

10.74 34.50 0.90 1.88 1.06

-0.06 0.00 -0.06 0.03 -0.05

873,286 50 179,056 2,098,153 74,429

0.28 36.50 0.61 1.63 41.70

0.37 36.55 0.67 1.68 41.90

0.37 36.02 0.60 1.62 41.26

0.37 36.08 0.64 1.65 41.30

0.09 -0.42 0.03 0.02 -0.40

9,500 851,435 98,815 25,551 54,238

60.24 10.31 5.57 11.87 29.53

59.20 10.45 5.75 11.98 29.90

59.00 10.20 5.46 11.66 29.46

59.00 10.28 5.55 11.80 29.50

-1.24 -0.03 -0.02 -0.07 -0.03

6,927 25,619 422,339 805,934 182,086

Electricity Genertech Hub Power Co. Japan Power K.E.S.C. Kot Addu Power

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

symBol

open

high

low cuRRent

change

volume

Non Life Insurance 2.20 23.63 27.25 13.15 62.01

Fixed Line Telecommunication

Beverages Murree Brewery Co. Shezan Int’l

volume

Pharma and Bio Tech

Automobile and Parts Buy 88.40 118.05 137.60 1.1257 85.60 11.16 23.92 23.44 89.10

change

Future Contracts

General Industrials Cherat Packaging ECOPACK Ltd Ghani Glass Ltd MACPAC Films Merit Pack

low cuRRent

Personal Goods 1 6,507 1,100 414 9,012

Construction and Materials Al-Abbas Cement Attock Cement Berger Paints Cherat Cement D.G.K.Cement

high

Household Goods

Industrial metals and Mining Crescent Steel Dost Steels Ltd. Huffaz Seamless Pipe Int. Ind.Ltd. Inter.Steel Ltd.

open

symBol

Food Producers

Industrial Engineering

Interbank Rates US Dollar UK Pound Japanese Yen Euro

open

Chemicals

Major Losers Rafhan Product Nestle PakistanXD UniLever Pak Ltd. Sapphire FiberXD Exide (PAK)

symBol

Adamjee Ins Ask.Gen.Insurance Atlas Insurance Cres.Star Insurance EFU General Ins

43.20 8.00 36.50 2.00 35.80

43.78 8.50 36.75 2.20 36.00

42.12 8.00 35.99 2.00 34.46

42.76 8.42 36.51 2.00 35.96

-0.44 0.42 0.01 0.00 0.16

13,373 1,218 1,993 1,065 747

13.50 1.40 65.53

14.50 1.40 65.53

0.00 0.00 0.00

2 1 157

0.32 16.30 15.17 1.00 0.80

0.02 0.00 -0.02 -0.25 -0.01

12,419 101 36,007 5,008 90,802

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 Cap.Man XB Dawood Equities

0.30 16.30 15.19 1.25 0.81

0.33 16.79 15.59 1.00 0.96

0.27 16.30 15.00 0.80 0.70

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

1.63 21.64 5.78 2.24 0.42

1.60 21.64 5.90 2.32 0.44

1.60 20.90 5.78 1.92 0.37

1.60 21.64 5.85 2.24 0.44

-0.03 0.00 0.07 0.00 0.02

6,000 125 250,001 101 503

12.06 30.75 36.00 14.48 68.00 1.40 64.00 3.25 115.96 24.00 59.69 140.00 29.40 16.00 6.96 2.00 26.88 17.15 19.00 68.00 25.01 1.47

13.01 30.75 36.00 14.48 68.71 1.42 64.13 3.25 115.96 24.00 59.69 140.00 29.40 16.00 7.96 2.01 28.29 17.24 19.22 69.70 26.16 1.47

0.01 0.00 0.00 0.00 -1.46 0.00 -2.39 -0.75 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.01 0.00 -0.06 0.10 1.61 0.00 -0.04

4,411 6 530 2 1,351 104,346 4,639 500 102 190 50 192 8 3,000 6 13,642 10 5,466 6,068 4,200 2 173,855

Miscellaneous Century Paper Pak Paper Prod.

Security Paper P.N.S.C. Pak.Int.Con. SD TRG Pakistan Ltd. Murree Brewery Shakarganj Food Shezan Inter.

Grays of Cambridge Pak Tobacco Co. Philip Morris Pak. Shifa Int.Hospitals Hum Network Ltd. Media Times Ltd P.I.A.C.(A) Pak Hotels Sui North Gas Sui South Gas EFU Life Assur AKD Capital Ltd. Pace (Pak) Ltd.

13.00 30.75 36.00 14.48 70.17 1.42 66.52 4.00 115.96 24.00 59.69 140.00 29.40 16.00 7.96 2.00 28.29 17.30 19.12 68.09 26.16 1.51

13.20 31.25 36.31 14.49 69.88 1.47 66.11 3.25 118.49 24.75 60.00 140.00 29.79 16.00 8.94 2.09 28.29 17.35 19.44 70.50 27.45 1.59

Mutual Funds fund

offer

Repurchase

Alfalah GHP Cash Fund Askari Islamic Asset Allocation Fund Askari Islamic Income Fund Askari Sovereign Cash Fund Atlas Income Fund Atlas Islamic Income Fund Atlas Money Market Fund Atlas Stock Market Fund Crosby Dragon Fund

501.2900 114.7196 103.6501 100.6900 519.3500 519.0900 516.9700 453.1500 82.9800

501.2900 111.8516 102.6136 100.6900 514.2100 513.9500 516.9700 444.2600 81.3500

nav 501.2900 111.8516 102.6136 100.6900 514.2100 513.9500 516.9700 444.2600 81.3500

fund

offer

Repurchase

HBL Money Market Fund HBL Multi Asset Fund HBL Stock Fund IGI Income Fund IGI Stock Fund JS Principal Secure Fund I JS Principal Secure Fund II KASB Cash Fund

100.2768 87.0103 97.6745 101.8987 112.3545 121.5000 104.1200 0.0000

100.2768 85.3042 95.2922 100.8898 109.6141 111.5200 96.5000 0.0000

nav 100.2768 85.3042 95.2922 100.8898 109.6141 117.3900 101.5800 100.1087

Layout Profit 7 pages_Layout 1 12/1/2011 11:38 PM Page 7

Friday, 02 December, 2011

we offer Korea to establish its economic zone in pakistan to boost trade ties between the two countries

news

07

president, asif ali Zardari

Rupee depreciates due to dollar ‘forward booking’ exporters hold back export proceeds to benefit reported devaluation g sBp should officially speak on issue, dealers g dollar appreciates to Rs88.80 on inter-bank market g

KARACHI

R

ISMAIL DILAWAR

UPee continues to lose face against US dollar as importers rush to sixmonth “forward booking” of the greenback on rumors that central bank was purposely letting local currency depreciate in line with regional trends. Thursday saw greenback appreciating by 5-paisa to 88.80 against the rupee compared to Wednesday’s Rs88.75 in the interbank market. currency dealers in the open market, however, sat back and comfortably traded dollar at Rs88.60 (selling) and Rs88.50 (buying). “The exchange rate’s difference between the open and inter-bank market ranges to 20 paisa,” a dealer told Profit. importers’ panic buying, as a currency dealer dubbed it, led to increased demand for dollar on the local inter-bank market where, market sources said, demand for american currency was at least $50 million.

On the other hand, exporters are adding fuel to the fire by holding back their export proceeds ranging from $150 million to $200 million, to get maximum benefit of the reported, but not officially announced, depreciation of rupee. What is the solution for ingraining panic in inter-bank market then? Market sources said the ball is in the court of State Bank of Pakistan (SBP) which should imme-

diately come up with a policy statement on the fate of rupee to bring present uncertainty to its logical end. according currency dealers, the importers, deeply panicked by media reports that central bank was following a regional trend on currency depreciation and was, as a matter of policy, not coming to the rescue of rupee which had devalued by over 2-rupee against dollar during last month. “The panicked importers are doing forward booking of dollar and the banks, remaining on the safer side, are giving them an exchange rate as high as Rs92 for the six-month bookings,” said Malik Bostan, president Forex association of Pakistan (FaP).

On the other hand, FaP chief said, exporters had held their export proceeds to the tune of $150 to $200 million to capitalise on the “rumours” of rupee depreciation. “Daily demand for dollar of the inter-bank market ranges between $250 million and $300 million but the ongoing panic buying had created a gap of about $50 million in the supply and demand,” Bostan said. The money exchanger said foreign exchange companies were surrendering almost 80 per cent of their daily surplus supplies, ranging between $5 and $6 million, on the inter-bank market as demand in open market was standing low at 20 per cent.

Factors like recent hike in international oil prices, crossing the $100

a barrel against $70 per barrel previously, and increased import of mobile phones had inflated the cost of imports to Pakistan. The dollar-hungry Pakistan’s import bill, State Bank figures for July-Oct FY12 show, amounted to over $13.4 billion, up 23 per cent compared to $10.879 billion of the same period in FY11. This widened the country’s deficit-prone trade balance to $5.2 billion against $3.7 billion of last year.

“State Bank should officially clarify its stance on rupee depreciation.

Only if depreciation rumors are clarified the current panic buying would end,” the FaP chief suggested. However, when contacted SBP chief spokesman Syed Wasimuddin said central bank would make “no comment” on the issue. Bostan went on to say that importers, fearing further depreciation of rupee, were resorting to forward booking of the greenback.

“This has increased demand on the inter-bank,” he added. Further, analysts said, rupee would face additional pressure with the country’s depleting foreign exchange reserves which, State Bank said, had contracted to $16.884 billion up to 25th november, down by 0.45 per cent compared to the preceding week’s $16.961 billion.

“Forget about foreign financing, only the recovery of embezzled money lying in offshore accounts can rid the country of its financial woes,” said economist asfar Bin Shahid.

equity market volumes plunge to 166-month low in nov KARACHI

n

ISMAIL DILAWAR

OveMBeR proved to be one of the worst for the country’s equity market which, analysts observed, remained almost “inactive” on various accounts during the previous month. The recently concluded month saw the benchmark, KSe 100share index, plunging by 4 per cent and average daily trading volumes crashing to the extraordinary 166-month low of n 45 million shares. according to analysts the lull period seen last month at local bourse was not observed since 1998. The reasons, market observers believe, is none other than capital Gains Tax (cGT) n that still keeps investors, mostly holding black money, away from stock market due to the fear of their previous gains being enquired and taxed by concerned quarters. “if last month is any indicator, then Pakistan’s stock market was almost inactive,” said Farhan Mahmood of Topline Securities. analyst said the lull period that was seen during last month at local equity market was unprecedented in last 13 years, since 1998. analysts said although trading volumes were globally thin over the last few months, the decline in volumes in Pakistan remained extraordinarily abnormal. Market observers said with risk-averse investors not making any money during this calendar year as the 100 index was down four per cent, seven per cent in dollar terms, all major players preferred to remain on the sideline on the back of uncertainty in global markets, local

political noise and ongoing taxation issues. “The volumes crashed in the month of november,” and making the once most liquid market of asia suffer from extraordinary low volumes. it was made impossible for stock market to execute large orders, said analysts. Last time in January 1998, lowest daily volume was recorded at 39 million shares, amounting to $31 million, but then, analysts said, market size was also small with average market capital of Rs489 billion or $11 billion. However, last month in november, market saw average daily trading declining to 45 million shares, amounting to $27 million.

“This is at 166-month low while market capitalisation is currently at Rs3.0 trillion or $35 billion in dollar terms,” said Farhan. Terming terrorism, bad governance, renewed tensions in Pakistan-US relationship and economic slowdown as key contributing factors to current low turnover at Karachi market, analysts said imposition of controversial cGT was the major stumbling block. “The imposition of capital Gain Tax (cGT) from July 2010 after a gap of almost three decades remains the main culprit,” said Farhan. The analyst said investors had a fear that their wealth, which they had accumulated over many years when tax was exempted, might come under scrutiny and tax authorities would enquire them about the source of their funds. another factor contributing to dwindling volumes is absence of investor-friendly derivative product, Farhan said adding that cash market alone could not develop in the absence of a vibrant futures options and margin trading.

Trading volumes were globally thin over last few months Nov witnesses average daily trading decline to 45 million shares, amounting to $27 million

ogdcl, ppl privatisation decision to be taken in January ISLAMABAD

P

StAFF REPoRt

RivaTiSaTiOn of Oil and Gas Development company Limited (OGDcL) and Pakistan Petroleum Limited (PPL) multi million dollar entities will be finalised by JanuaryFebruary next year. Members of national assembly Standing committee on Privatisation was told in a briefing in a meeting held under chairmanship of Malik Bilal Rehman to discuss privatisation of new entities and reports of the action taken on recommendations of the standing sommittee in its last meeting.

Secretary Privatisation Shahid Hussain Raja informed members of the committee that council of common interest (cci) has already approved of privatisation of three GencOs and nine DiScOs on 28th april, 2011. Standing committee has advised the ministry of privatisation to be more careful before the privatisation of said GencOs and DiScOs since government has faced

forex reserves down to $16.88 billion KARACH

T

StAFF REPoRt

He country’s liquid foreign exchange reserves continue their downward journey and shrank by 0.54 per cent to $16.884 billion during the week that ended on the 25th of last month. Last week, the country held $16.961 billion, $77 million more than what the country holds now. State Bank reported that the review week saw the bank possessing $ 13.122 billion against $13.202 billion of last week. This shows a decrease of 0.6 per cent or $80 million, central bank said.

On the other hand, the commercial banks’

LAHORe

G

problems after privatisation of Karachi electricity Supply company (KeSc). committee was also briefed regarding privatisation of Pakistan Mineral Development corporation (PMDc). The privatisation of PMD was postponed due to denial of fresh approval from the privatisation board. He added cci has already approved privatisation of PMDc in May, 1997 and august, 2006. However, fresh approval is required in this regard. committee was informed by federal minister for privatisation about the release of Rs276 million and Rs261 million by ministry of privatisation for flood relief activities during current fiscal year and he admitted that Rs261 million were spent on advertisement campaign of flood relief activities. committee decided to discuss the said matter later. Standing committee recommended holding a larger meeting to discuss policy of OGDcL privatisation in the next meeting by calling secretary finance, law and justice and cabinet division will be called in the next meeting of the standing committee.

IMRAN ADNAN

OveRnMenT has finally decided to take a U-turn from its earlier decision of imposing 16 per cent General Sales Tax (GST) on agriculture tractors. Ministry of industries has indicated that tax collection through this measure would not exceed from Rs3.7 billion against the projected target of Rs7-8 billion during current fiscal. Official documents made available to Profit show that tractor industry paid over Rs5 billion on account of taxes last year and it was estimated that government would collect around Rs7-8 billion after imposing GST as tractors production was expected to touch 80,000 units during current fiscal year. Ministry of industries in its summary, prepared for economic coordination committee (ecc) of the cabinet, has pointed out that association of tractors manufacturers and Pakistan association of automotive Parts and accessories Manufacturers (PaaPaM) approached the n ministry and registered their protest against imposition of 16 per cent GST on tractors, as it has affected the industry adversely, besides putting additional burden n of price on farmers. Summary states that in accordance with the policy laid down vide SRO 549(1)/2008, dated June 11, 2008, zero-rating of sales tax on agricultural tractors was provided with the intent to ensure availability of tractors to farmers at affordable prices.

However, it had been withdrawn in March, 2011, resulting in increase of prices of agricultural tractors by around Rs90,000 to Rs200,000. Ministry indicates that increase in tractor prices has made it difficult for farmers to purchase new tractors and convert traditional farming into mechanical farming for higher yields, especially when cost of other agriculture inputs has gone up substantially. in addition, Zarai Taraqiati Bank Limited (ZTBL) has also not been extending loans for purchase of tractors since april 2010, creating another

holding of the greenback surged slightly by $4 million or 0.1 per cent to $3.762 billion compared to previous week’s $3.758 billion. analysts said decline in country’s foreign reserves were due to import payments and retirement of external debts that have accumulated to $62 billion. about nominal increase in the banks’ reserves, analysts said it was because of increased deposits backed by the ongoing downing spree of rupee against the greenback especially on inter-bank market. State bank spokesman also attributes such ups and downs in country’s foreign exchange reserves to growth in the banks’ deposits and withdrawals and routine debt servicing.

govt likely to withdraw gst on tractors impediment for the farmers. Official documents state that production data maintained by engineering Development Board (eDB) indicates that production of tractors since March 2011 has declined drastically from over 72,000 units to around 20,000 units per annum. economic Survey of Pakistan also emphasises that accelerated farm mechanisation is the only tool to pace-up agriculture growth rate. it further highlights that available farm power is inadequate with only 464,000 tractors in operation. This means that per hectare horse power (hp) availability is 0.9hp only, as opposed to the required 1.4hp per hectare, as per Food and agriculture Organisation (FaO) recommendations. Official document states that the primary objective of levying GST on agricultural tractors was to enhance revenues. However due to decline in production, tax collection will not exceed Rs3.7 billion, which means less revenue as compared to last year. in addition, due to declining trend in the production and sale of agricultural tractors from 80,000 units per annum to around 20,000 to 25,000 units, economy will suffer an additional loss of over 35 billion rupees by reduced sales. Ministry recommends that for revival of tractor industry and to provide an impetus to agriculture sector, which is the backbone of the economy with 24 per cent share of the national GDP, GST zero-rating on agriculture may be restored or deemed price (25-30 per cent of actual price) may be fixed for sales tax purposes.

Tractor price increases around Rs90,000 to Rs200,000 Tractor production declines drastically to around 20,000 units per annum