Profit 22th November, 2011

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Islamic banking and finance Page 2 Devil wears Prada Page 3 PSM seeking Rs25 billion package for revival Page 8 Pages: 8

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profit.com.pk

Tuesday, 22 November, 2011

USAID to fund projects in energy, economic growth, agriculture, education and health sectors Project to award approximately 40 grants, worth between $50,000 and $250,000

USAID vows to fund projects LAHORE

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NAUMAN TASLEEM

NvOlveMeNT of citizens and civil society in governance of the country is vital for better decision-making. This way funds could be spent for citizens’ welfare and many

problems could be overcome. uSAid would fund projects in energy, economic growth, agriculture, education and health sectors. in the first phase, emphasis would be on energy sector, water rights and municipal services.

These views were expressed by speakers at launch

of uS Agency for international development (uSAid) programme’s Citizen’s voice Project (CvP). The $45 million project is to foster citizen engagement in policy advocacy. Programme was announced in a ceremony held at a local hotel. uS Consul General Nina Fite was guest

of honour, while other speakers throw light on importance of the project and involvement of civil society.

Trust for democratic education and Accountability (TdeA) will implement the project, which will work to increase citizen engagement in policy advocacy and govern-

Richest benefitting most from electricity subsidies LAHORE

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IMRAN ADNAN

ubSidieS on electricity to the richest 20 per cent of population have been significantly reduced from nearly 40 per cent to 29 per cent during the last three years. However, the richest of the rich remain the greatest beneficiaries of electricity subsidies in Pakistan.

World bank’s recently conducted study estimates that the share of electricity subsidies for the richest 20 per cent in Pakistan declined from nearly 40 per cent in March 2008 to 29 per cent in March 2011. Research reveals that under March 2011 tariff structure, it has been estimated that over 90 per cent of residential electricity consumers are net subsidy recipients; or in other words, less than 10 per cent of consumers pay more than costrecovery level. Study terms these improvements fragile in nature, because despite improvement in benefit incidence, biggest beneficiaries of electricity subsidies would still be the richest 20 per cent of population. it indicates that significant improvement in benefit incidence and fiscal implications can be largely attributed to reduction in real cost of supply as a result of reduction in oil prices since March 2008. if average cost returned to March 2008 level in real terms, almost all improvements in benefit incidence and fiscal burden would be lost, the research underlines.

Research highlights that Pakistan’s electricity sector is in real crisis. despite investments in generation capacity, electricity demand continues to exceed supply, with blackouts as long as 8–10 hours per day in cities and sometimes double that, in rural areas. it is widely recognised as a severe obstacle to growth and poverty reduction. it points out that in November 2010 government was forced to rent the world’s largest power ship to boost generation capacity. Meanwhile, gov-

ernment’s inability to finance its commitment to fund subsidies, inefficiencies of sector entities, including low collections, delays in determination and notifications and increased cost of fuel imports contribute to an increasingly severe circular debt problem.

Study advocates, “While significant reforms including tariff increases have been implemented, further adjustments are needed to stem the electricity crisis.” it suggests that in the short run, there is a need to implement fuel price adjustment policy in true spirit, in place since August 2009.

With oil prices now resurging, and fiscal burden and benefits incidence so dependent on cost of supply, continuing these adjustments will help prevent deterioration in fiscal burden of subsidies. it underscores that it is more important to move tariff rates further towards cost-recovery level, along with revisions on tariff structure.

Although multiple increases have been passed on in tariff rates since March 2008, even then tariff structure is still far from a cost-recovery level. As global oil prices resurge, more drastic and timely tariff adjustments will be necessary to make significant improvements in fiscal and distributional implications of electricity subsidies.

To achieve cost-recovery level, research recommends tariff structure revision as an option. it suggests simplification of tariff structure, means reduction in numbers of slabs from three to four and reevaluation of existing slab thresholds, to add more consumers in cost-recovery slab.

Furthermore, special attention is required to understand how poor might be protected from such changes; some poor households consume a relatively large amount of electricity. it estimates that approximate 25 per cent of the poorest quintile consume more than 100 kilowatt hours per month.

Rs75 minimum charge for lifeline users needs careful reconsideration. because of minimum charges, average cost of

electricity for many lifeline users is far higher than other users, even though their marginal rate is the lowest. Having a lifeline tariff is ineffective alongside Rs75 minimum charge, research maintains. Study suggests that despite improvements in distribution of subsidy benefits, rich households still receive a disproportionate share. There is a need of alternative policy instruments such as a targeted conditional cash transfer program will likely be more efficient in protecting the poor. in this situation, a package of policy instruments could be considered, including gradual transition from subsidies to conditional cash transfers. Pakistan could benefit from iran’s experience, which recently introduced similar program, report concludes.

CirCular Debt (inter-Corporate Debt): Circular debt is created when end-customers (both public and private) do not fully pay their electricity bills and government is not able to fully furnish its commitment to fund subsidies paid to distribution companies. As a result, distribution companies are unable to pay their power purchase cost to Central Power Purchasing Agency (CPPA) or single-buyer, who in turn is unable to fulfill his obligation to power generation companies. And power generation companies and independent power producers (iPPs) fail to pay fuel suppliers. Fuel suppliers in turn default on their payment to refineries, gas producers and international fuel suppliers. in addition, high dependence on imported oil (and associated price volatility in 2009 and 2010), system of electricity subsidies in particular is a major cause of intercorporate debt issue. This includes inability for distribution companies (diSCOs) to pass on cost of electricity to customers, along with an inability of government to pay tariff differential subsidy (TdS), difference between applied tariff and determined tariff in a timely manner.

ment in energy, economic growth, agriculture, education and health sectors. Through the project, uS government would issue up to 500 grants over next three years.

Speaking on the occasion, uS Consul General Nina Fite said that the project represents largest single investment in civic and social organisation in uSAid’s 50-year history in Pakistan, and complete set of uSfunded civil society support programmes that will exceed uS$ 100 million during the next four years. “We hope that Citizen’s voice Project will enable more Pakistani organisations to constructively engage with their government on issues of national and local importance. When civil society works in concert with state institutions to address citizens’ needs and aspirations, the impact can be unlimited,” said uS Consul General. She appreciated TdeA

and hoped that things would change with the project.

CvP Chief of Party Mukhtar Ahmad Ali while presenting overview of the project said that in the first cycle of project, grants would be allocated in three fields including citizen oversight of municipal services, energy sector and improved water rights. He said in the first phase number of grants would be up to 24 while maximum total value is $ 2.6 million. He said that supporting initiatives to assess government performance on specific themes as well as efforts to advocate for changes in law, policy and government action. “Facilitating productive partnerships between state and non-state actors to enhance government’s ability to provide basic services and be responsive citizens,” Ahmad Ali said adding enhancing the organisational capacity of civil society groups and other partners through organisa-

tional development and targeted trainings is also another object of the project.

He said in each quarter, project would award approximately 40 grants, worth between $50,000 and $250,000, through a transparent and competitive process. He said activities should be related to issues of local and national importance in sectors of energy, economic growth, agriculture, education and health. TdeA Chief executive Officer Muddassir Rizvi said that TdeA has around 40 civil society organisation members based in every province and working in every district of the country to facilitate citizens’ Constituency Relations Groups and monitor performance of state institutions at every level. Collective mission of TdeA is to facilitate greater citizen involvement in democratic processes in order to foster greater government transparency and accountability.

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Tuesday, 22 November, 2011

debate

Islamic banking and finance M

DuRDAnA nAjAm

ANy people think that islamic banking and finance is a cure to all the financial woes. in fact that is not the case. islamic banking and finance is as man-made as the conventional banking. The only difference is that islamic banking and finance seeks basic guidance from islamic sources like the Quran, Sunnah, ijma and Qiyas. Only because of this islamic banking and finance is free from some of the weaknesses and problems besetting conventional banking. There is very strong theoretical evidence that the principles of islamic banking and finance are superior to the principles of conventional banking. This is why one would be inclined to assert that had islamic banking and financial principles been implemented in the financial markets the problems we are facing today in financial industry would have been avoided to a great extent.

The woeS of convenTIonAl bAnkIng Conventional banking is based on interest rate mechanism, which encourages people and businesses to borrow and lend heavily. Of course there is a motive behind borrowing in the cooperate sector. For instance if i am a corporate, i would borrow from a bank only if i can anticipate some business opportunities coming up. but many times borrowing or lending takes place without any reference to economic activity. it could be purely speculative. For example, many of those who are involved in interest rate arbitrage and currency arbitrage may borrow money purely to benefit from interest or exchange rates differentials in different markets. These kinds of opportunities allow the players in financial services markets to borrow without practically having any intention to invest in the real economy. if this type of speculation persists for some time, it may lead to a financial bubble. Such frequent and heavy borrowing and lending do not go into real economy; rather it simply puts further pressure on prices. When the bubble gets enlarged, it is bound to burst and bring a financial crisis. in islamic banking and finance, the possibility of this happening is smaller. islamic banking and finance restricts trading in debt and other financial papers. Furthermore, there is an islamic economic principle that disallows selling something that someone does not own or rightfully possesses. in the presence of such a restriction, financial bubbles cannot occur. This is why one could say that if the islamic principles had been followed in conventional financial system we could have avoided the current financial crisis.

InTeReST mAkeS All The DIffeRence interest plays a huge role in the contemporary economic systems, and in the absence of an interest rate mechanism, the whole banking system changes. islamic banks are required to be involved in trading, i.e., buying and selling of assets, of commodities, of other items, whereas conventional banks simply borrow and lend money. For example, Habib bank, which is a commercial bank, would not like to be involved in trading in its normal routine business. let us say i am a corporate i go to a commercial bank to borrow one million rupees. if the bank is satisfied with my credit worthiness, it would offer me the loan for a specific period and on a specific rate of interest. However, if i had gone to an islamic bank, it would have first asked me why i needed the one million. Had i told that i wanted to buy a few computers with the one million, the islamic bank would decline to offer me money but would be happy to buy the computers from the market, for one million, to sell those on to me for one million plus profit. From that view point the whole transaction is very different. The bank is getting involved in trading – buying and selling the assets. islamic bonds, called Sukuk, are structured in the same way.

SUkUk An islamic bond in many cases is an asset backed security. if a corporate or government wants to issue an islamic bond it must first identify an asset that it is willing to sell to the investors. in case of Pakistan, a $600 million Sukuk, which was issued about six years back used M2 motorway as the underlying asset. National Highway Authority sold the said motorway to Pakistan Sukuk Corporation, which issued islamic bonds sold to different corporations all over the world.

InTenTIonS mATTeR intentions are certainly important. if you go to an islamic bank for an islamic transaction, then you certainly would be rewarded for conducting a religious act, because you opted for a Riba-free banking transaction. The point is that it is the process of carrying out the transaction that makes all the difference. One thing that we have to understand is that all the religions put heavy emphasis on nomenclature. How does a person enter into islam; by uttering a few words? even in matters related with matrimony, it is utterance of a few words (ijab and qubool) that establish marriages, one utters a simple word three times and the marriage breaks up! Nomenclature, i.e., the way you say a thing makes the real difference. islamic banking is islamic because such banks call themselves islamic. Why Hbl and all other banks would not like to call all their operations islamic? because the banks themselves know that whatever they do in the name of islamic banking is different from conventional banking. Otherwise if it were exactly the same thing then MCb would have said that from now on all our operations are islamic. Many banks shy away from becoming islamic banks because implementing islamic banking requires much more effort, dedication and resources, especially in a country where laws are not entirely islamic; as is the case in Pakistan.

There is nothing to be surprising about it, as all the former british colonies have inherited their laws from former imperialistic power. This is the case everywhere in the world. An islamic banking and finance is actually a phenomenon allowing different Muslim countries to islamise their laws gradually starting from banking and finance then moving on to other

areas. islamic banking and finance is an excellent opportunity for the governments to islamise their laws. in that case one could say that islamic banking and finance is bringing a social reform as well…

SocIAl RefoRmS ThRoUgh ISlAmIc bAnkIng islamic banking and finance is modernising islamic communities. When we look at average users of islamic banking and financial services, we find them to be young people, in their late twenties, educated and who have also lived for sometime somewhere in europe or America. They are exposed to multiculturalism. They believe in coexistence of cultures. This is a modern perspective on life held by those who use islamic banking. This is a social reform. This social phenomenon is allowing the Muslims to recognise that there are other practices which are not necessarily islamic but could be allowed to be part of a system they live in. in a country like Pakistan there is recognition at least at the government level of a dual banking system. in other words the government is saying that “To those who like to have islamic banking services we offer them an opportunity. Those who still like to have conventional banking must also have a choice.” This permission is the recognition of the fact that every person has the right to exist. Today the government of Pakistan is promoting islamic banking in a dual banking system. What does it mean? it means that it is ready to recognise the importance of those who would like to use islamic banking. This is also an acknowledgement of their contribution to a modern islamic society. This means that those who have been so far averse to a conventional banking system

could be engaged. They would start getting engaged in the market. Once someone starts getting engaged in the market their perspective changes. if someone is not disengaged from what is happening in the market he or she become a very different kind of person. A person who believes in doing and letting other people do. He is a person who believes in doing things, a person who believes in observing other people doing things. From that viewpoint i still emphasise that islamic banking and finance has a role to play in bringing social reforms in a number of countries including Pakistan.

An InveSTmenT Tool islamic banking and finance can be used by the government to attract investment from other islamic countries. Malaysia, for example, has used islamic banking and finance as a tool to generate investment, as a result of which they are receiving a lot of capital from the Middle east. They are receiving a lot of investment from non-Muslim countries as well. Malaysia has developed expertise in islamic banking and finance, and there is a need for a country like Pakistan to study the Malaysian model to get implications for further development of islamic banking in the country. Malaysia is the number one player in islamic banking and finance. Malaysian islamic financial market has a number of islamic banks, Takaful (islamic insurance) companies, islamic investment banks and fund management companies, and a very vibrant and highly developed islamic capital market. The country has almost all the universities and other institutions of higher learning producing human resources for islamic banking and finance industry. Many countries, for examples in Africa, are looking into islamic banking as well. For them Malaysia provides a good example to follow and emulate. Pakistan has also done wonders in developing comprehensive a framework for islamic banking and finance. it is important that Pakistan, like Malaysia, must start marketing its experience and expertise in islamic banking and finance in Muslim and non-Muslim countries. This should bring some good revenue to the country.

PAkISTAn AnD ISlAmIc bAnkIng lack of vision and political will has contributed to the slow growth of islamic banking and finance in Pakistan. The Government of Pakistan in a way has given the whole islamic banking and finance to State bank of Pakistan. The people in the ministry of finance, planning commission etc. have no idea of islamic banking and finance, which means that there is no ownership of islamic finance and banking at the government level. Once the government decides to use islamic banking and finance as a tool for bringing more foreign investment and capital, it can bring home a lot of islamic capital. Though there is already a lot of investment coming into Pakistan from the islamic financial institutions. The likes of dubai islamic bank, Al baraka bank, bank islami and others have foreign ownerships. if the government comes up with a vision of 2020 for islamic banking and finance and starts pitching islamic Republic of Pakistan as a friendly state for islamic banking and finance, a number of institutions, governments and countries would like to come here.

A Role chAngeR There are islamic financial institutions in Canada, France, America and uK. in uK alone five islamic banks operational. The uK government is very supportive of this movement because it believes that this is a tool to bring Muslims into the mainstream. Right now, if one takes islamic banking and finance out of the Muslim communities, a very narrow perception of a Muslim as an extremist or a terrorist is left behind. islamic banking is giving a new identity to the Western Muslims. All the major banks are doing islamic banking, which gives a lot of credibility to islam. One could say that islamic banking and finance has a role to bring about a change in the perception of our Western counterparts about us. in uK, the government has come up with a very comprehensive package for issuing islamic bonds. Why? because they think that there is a bright future and a lot of potential for growth in islamic finance. in next five years the size of islamic banking and finance industry would be one to two trillion dollars. looking at this phenomenal size the Western governments and countries would like to benefit from this by engaging themselves in islamic banking and finance.

“Durdana Najam is a freelance financial feature writer. She can be reached at durdananajam456@hotmail.com”

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Tuesday, 22 November, 2011

EDITORIAL

Scenario of inter regional collaboration

Politics and markets I T is common knowledge in the complicated world of capital markets that while fundamentals do matter, the marketplace acts primarily on sentiment. Seen in this backdrop, periodic ‘talk up’ of market sentiment by prominent figures in advanced economies makes sense, especially when they are without viable options to turn things around.

As a result, while the market eventually reverts to fundamentals, it gets breatherwindows, when investment picks up and signs of recovery provide hope of better times around the corner. Across europe and the united States, even in the bleakest of times, central figures have postured towards optimism, bidding up the market to ensure solvency. That such windows have become few and far between is less a fire-fighting failure and more an indication of how deep the current downturn is, but that’s another matter. in Pakistan, if political agitation and cross-party rivalry were not bad enough, we have yet another potential existential dilemma for the government as pieces from the memogate disaster fall where they may.

And regardless whether the presidency, sources in the government, the ambassador’s seat in Washington, or more shady characters have been at play, two things are assured. One, heads will roll, one way or another. Two, and more importantly, the drama will deal another tragic and unnecessary blow to our weak and strained financial markets, already suffering from investors fleeing for safer pastures.

The norms of democracy dictate that whenever political uncertainty reaches a critical threshold, all parties should proactively calm matters, as well as public sentiment, or risk compromising their own political and social habitat. unfortunately, such understanding is missing in even our most astute politicians. in some bizarre cases, selfperceived notions of party loyalty run counter to the country’s bigger interests. We must inculcate an understanding of the strong correlation between politics and the marketplace.

Not only will it provide some manner of support to the economy, it will also make our politicians more aware, of their own duties as well as the greater national interest.

Amjad Riaz

F

OR peace to ultimately prevail in Afghanistan so that economic development can happen is an issue and task to deal with by the people of that very country alone. The recent crisis in the euro zone has also focused the thinking towards these themes. by forging a single market eu was confident of handling the economic problems in a collective manner but the application of one set of economic principles did not help to assuage the woes of other economies in the common market. The question of governance and taking decisions by the different capitals themselves in the region has assumed a different kind of significance now. edmund burke very aptly described the setting up of the institution of a government as “a contrivance of human wisdom to provide for human wants”. The significance of appropriate actions by the state at the right time and at the right place is undeniable for many reasons. if we take the question of steering the economy in the direction where it is required to fulfill the desired objectives of provision for human wants the concomitant question of provisions of resources to meet those demands props up for the state to deal with also. in the academic circles the role of the state and that of the private individual is a matter that is continually discussed. The balance has changed with variations not only in political economy but also around the key question as to the use of available resources in social and economic terms.

The enlargement of corporate economy around the globe has benefited through expansion of international trade and investment. The economic preference of seeking profitable markets and regions for trade or investment is making the international economy strong. but at the same time the level of risk for a big business to falter or for a siz-

Mutual understanding needs to develop on the principle of economic cooperation MFN not to harm local industry

Islamabad chamber urges govt to tackle declining FDI

Pakistan decision to grant india the Most favoured Nation (MFN) is not something that the country’s trade bodies and business associations should fear about. The domestic market has just created a lot of hype of the issue. This is not the first time that Pakistan has relaxed its trade policies with other countries. it has happened a lot of times and granting india the MFN status only implies that Pakistan will give the same treatment to the imports of india as it does to imports from united States, brazil, Thailand etc. However, the government is still taking measures to safeguard and protect the local industry.

There is a negative growth in the Foreign direct investment which is adversely affecting Pakistan. The decline in Fdi is not the only factor that is affecting the country’s economic growth. Surprisingly, the repatriation of profits and dividends overseas by foreign investors has also doubled in the first quarter of this fiscal year 2011-2012, as compared to the same period last year. Repatriations are now 75 per cent of Fdi inflows, which is a big jump up from 32 per cent last year. Government urgently needs to work with existing investors to overcome business bottlenecks in the current difficult environment.

ERum ALi

KHALiL HAmDAni

able economy to weaken has also grown manifold. Monitoring by international institutions like iMF or the european central bank considerably falls short of pinpointing the weak and vulnerable areas of concern; both at the state and private enterprise level. These institutions were once developed on models of economy that were not faced with the diverse challenges of tackling the economic issues in varied regions. These other areas are now centers of strong economic growth. The world economy has now a diversity which was unimaginable only a few decades ago. The solutions found in one region or in one particular set of economic activity may not necessarily apply to other regions or other types of economic activity. The international competitiveness in economic terms has an upward trend in many areas of economy that were once a sole concern of just one country or a few business enterprises.

The ongoing talks on the inter-regional trade in the subcontinent have taken an importance which no one can afford or allow to be derailed on some whimsical grounds or the other. indo-Pak trade is an important part of such developments. The international players must be watching closely the outcome of these negotiations but it is essentially the responsibility of these two very countries to realise the prominence attached with these issues. They must assiduously work out the nuances involved to these very difficult economic and social questions. The future map of economic cooperation in the region shall have a lot to do with the serious thinking that must go in resolving these issues now. There are large number of public and private concerns as to how the outcome must benefit all and sundry. The economic future of the people of this region should be the prime concern for everyone on both sides of the border. The mutual understanding needs to develop on the principle of economic cooperation for the benefit of businesses and enterprises on all the sides. A serious and sincere approach towards taking up each issue in a congenial atmosphere which must be devoid of repetition of throwing blames will help settle the problems more efficiently. The efforts put in by the different players will determine the economic future of nearly one third population of this globe. The role of the state in assuming and taking up its prime role of looking after the specific economic demands of the economy has never been more important than in these times of international competition.

The write has served has consultant to the United Nations and other developing economies on the issues of trade and development and can be reached at amjadriazzz@yahoo.com

LAhoRE

LAhoRE

Devil wears Prada

‘P

Maheen Syed

AKiSTAN is on the verge of an economic crisis and collapse’, read the headlines of newspapers, nationally as well as internationally. While skimming through these daily headlines, it dawned upon me that i live in a crisis-ridden country wherein, lately there has been more economic recession than growth, more inflation than deflation and more horror than happiness.

The fiscal deficit is high and growing,

inflation seems to be rising at an unprecedented rate, investment is low, poverty has grown over the years and industries are facing huge losses. However, remarkably, the country’s ‘fashion industry’ remains noticeably unaffected by the general depression of trade along with the austerity of these harsh realities. it is truly incredible how people are capable of finding happiness and harmony under the shadows of crisis and with the heritage of unbearable losses. likewise, for many people, blindly following fashion and compulsive shopping offer a state of happiness and contentment. Can we see this phenomenon as a means to forget stress and an escape from harsh realities? it seems like this is one of the reasons for the flourishing fashion industry of Pakistan. Come to think of it, the fashion industry is perhaps the only industry that remains unaffected by the economic conditions of Pakistan which principally makes the niche of high value

fashion products to be elites; who are not affected by recession or inflation. is the fashion industry further increasing the gap between the rich and the poor?

Most Pakistani people would admit to owning at least a good quantity of items from branded fashion stores. Pakistani women especially, continue to spend hundreds of thousands on fashion products every day. Probably, for them, this might to be their way of contributing towards the economy of Pakistan: i cannot afford the price hike in fuel, gas or electricity, but what i definitely can afford is an expensive branded bag whose name i cannot even correctly pronounce. i will also refuse to wear the clothes ever again or preferably bury them stealthily; pretending i never owned one, if i see some other woman standing next to me at the crosswalk, wearing the exact same dress. Funny, how the serious loathing for the massproduced fashion items would still not

ShAhAb JAfRy Business Editor

kUnwAR khUlDUne ShAhID Sub-Editor

bAbUR SAghIR Creative Head

AlI RIZvI News Editor

mAheen SyeD Sub-Editor

hAmmAD RAZA Layout Designer

Is the fashion industry further increasing the gap between the rich and the poor?

stop the ‘economy concerned’ lady from spending hundreds and thousands on a fashion item that she will most likely see another other woman carrying and that also in almost 100 times less price than what she had paid. Thank the phenomenon of globalisation shall i, or the grey markets and cheap labour?

Fashion trends change so drastically that they rival the changing weather.

These fashion industrialists know exactly what they’re doing, and are doing it really smart. The dictum of the age is to draw the audience towards the new fashion trends where any gimmick would sell!

Nowadays we come across a prodigious number of advertisements of fashion items. Also, every other advertisement in Pakistan bears resemblance to fashion in some way or the other. ‘Fashion’ is being used as an appeal by other industries as

well just in hope that may be things for them can change too. They must be playing safe because Pakistani fashion industry is successfully maintaining itself as an attractive and the safest industry to exploit. if we take it to a next level, the fashion industry can play a big role in current economic situation of Pakistan to spread our culture and traditions to other civilisations across the border, according to many economic analysts. They believe that the dying film industry of Pakistan took away the investors from lollywood, but the flourishing fashion industry is bringing them back as indian, Arab and other foreign designers flock to hold shows in Pakistan. Can fashion be an image merchant for Pakistan?

The writer is sub editor, Profit. She can be reached at syedmaheen@hotmail.com

For comments, queries and contributions, write to: mUneeb eJAZ Layout Designer

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

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Tuesday, 22 November, 2011

04

The key issues and vital factors should be addressed on priority basis to improve the bleak foreign investment condition

news

President IccI, yasir Sakhi butt

SBP overstates accounts for financial year 2011 KARACHi

S

ISMAIL DILAWAR

TATe bank of Pakistan (SbP) is found to have “overstated” its consolidated financial statements for fiscal year 2010-11 by over Rs25 billion, this was observed by auditors of bank’s financial accounts in their qualified opinion. Observation was made by central bank’s auditors, M/s ernst and young Ford Rhodes and M/s KPMG Taseer Hadi and company, in their “independent report” to shareholders on financial statements of SbP and its subsidiaries, SbP banking Services Corporation and National institute of banking and Finance (Guarantee) limited.

According to auditors, central bank had “overstated” financial statements of two of its departments, banking department and issue department, by a huge

accumulated sum of Rs25.734 billion for previous financial year. SbP, as audit report states, has overstated assets of issue department and banking department by Rs5.987 billion and Rs6.880 billion, respectively. “Accordingly, assets of the issue department and banking department are overstated by Rs 5,987 million and Rs6,880 million,” audit report says under the head of “basis for qualified opinion”. Auditors further observed that financial accounts of bank’s banking department had been exaggerated on account of liabilities and gold reserves the department held. Overstatement amounts to Rs12.867 billion, auditor report shows.

“The liabilities and unrealised appreciation on gold reserve of the banking department are overstated by Rs8,522 billion and Rs4,345 billion, respectively,” report noted.

Moreover, central bank also con-

fused auditors by not netting off assets and liabilities of banking department on account of provisioning related to banks’ assets recoverable from governments of india and bangladesh (former east Pakistan). According to audit report, SbP and its subsidiaries, denominated together as group in the report, had shown a provisioning of Rs2.464 billon as “other” liability. “The group has maintained a provision of Rs2,464 million relating to net assets recoverable from the Reserve bank of india, the Government of india and those pertaining to transactions in bangladesh.”

“This provision has been recorded as other liability of the banking department and the relevant assets and liabilities have not been netted off,” report added. in their “qualified opinion”, auditors declared that except for financial effect of aforementioned over-statements, the consolidated financial statements were

giving a true and fair view. “in our opinion, except for the financial effect of the matter stated in the preceding paragraph, the consolidated financial statements give a true and fair view of the financial position of the group,” audit report concluded. Clarifying some of the auditors’ reservations, State bank in Note 4.12 of its Consolidated Financial Statements said income on balances with bangladesh was recognised as income on receipt basis. While on assets recoverable from india SbP’s Note 6.2 says realisation of these assets was subject to final settlement between governments of Pakistan and india. About provisioning, central bank said, provisions were recognised when group had a present legal or constructive obligation as a result of past events. “it is probable that an outflow of resources will be required to settle obligation and a reliable estimate of be amount can be made,” it said.

Sugar mills start sugarcane crushing season laHore: in order to facilitate growers, sugar mills have started the crushing season of sugarcane to fulfill their corporate obligation. Now, it is the turn of government to speed up process of buying 0.2 million stocks from the sugar mills in order to make payments to growers on time. if government takes this action, the liquidity of the sugar industry would increase, as said by Chairman Pakistan Sugar Mills Association, Javed Kiani, in an issued statement. despite floods in Sindh, sugarcane production was estimated to be 54 million tonnes and resultantly, refined sugar production was about 5.00 million tonnes during the current season. Chairman PSMA said the millers have paid 100 per cent dues to the growers belonging to last crushing season, and all credit goes to millers for clearing out all outstanding dues. The millers are making efforts to pay price of sugarcane on time during this season. For this, government has to accelerate the process of buying 0.2 million tonnes of refined sugar to facilitate the growers.

Javed Kiani said the prices of refined sugar have come down from 20 to 25 per cent this year in November as compared to last year, when the sugar millers had produced refined sugar more than what was required. Prices per kilograms in November 2010 were Rs80-90 and Rs62-66 during November 2011, he clarified. PSMA chairman said the sugar industry has started sugarcane crushing season in November, while it was started in december last year. He said this drive of the sugar millers would benefit the farmers of sugarcane. STAFF REPoRT

PSm losing utility services

APTMA assured of four days a week gas supply LAHORE STAFF REPoRT

P

eTROleuM Minister, dr Asim Hussain, has reassured the leaders of All Pakistan Textile Mills Association (APTMA), the gas supply of four days a week, during winter.

This would further to up-graded to five days a week as new gas reservoirs are in place during next three months.

Minister was responding to the panic situation in textile in-

dustry in the wake of latest APTMA press ads, fearing colossal losses, due to likely disruption of gas supply ahead. it may be noted that failure of economic Coordination Committee (eCC) load management plan, envisaging supply suspension to industry during winter season on SNGPl network has panicked the textile industry.

The industry has already faced a gas curtailment for 120 days during outgoing summer season of current calendar year, which

means SNGPl has already curtailed gas supply to textile industry for more than 90 days.

Also, the gas supply curtailment for three days a week has crippled down 40 per cent of the installed capacity, which means if continued, some four million bales shall remain unutilised due to the forced closures. Cotton growers are already under pressure as textile mills are not in a position to procure two million bales at present due to energy shortage.

govt to assist energy department in balochistan iSLAmABAD STAFF REPoRT

F

edeRAl government has offered complete assistance to balochistan in establishment of a separate energy department in the province to better address various energy issues. Offer was made during a meeting of Chief Minister balochistan, Nawab Mohammad Aslam Raisani, with Secretary Petroleum Muhammad ejaz Chaudhry. CM balochistan was informed that a branch office of inter State Gas System limited (iSGS) would be established in Gwadar and Sukkur to expedite work on iran Pakistan pipeline project.

Volumes on KSE dip as investors remain cautious on new SBP policy rate KARACH STAFF REPoRT

K

ARACHi stocks market was bearish, with trade volumes dipping as low as 31 million shares on the back of, what market observers viewed, investors’ cautious approach days before scheduled announcement of discount rate to be made by State bank. day saw benchmark, KSe 100share index, losing 43.02 points or 0.36 per cent to stand at 11,894.79 points against 11,937.81 of the previous day. index hit respective intraday high and low of 12,002.76 and 11,866.96 points. “bearish activity witnessed at KSe as investors remained cautious ahead of policy announcement this month,” commented Ahsan Mehanti, director at Arif Habib investments.

Total shares traded at readycounter were counted at 31.097 million, just two million up from last week’s historic low of 28.661 million. Friday, last week, had seen traded volumes at 38.838 million shares at country’s largest bourse.

According to Mehanti, major fall in global stocks and commodities on united States and european debt fears affected investors’ senti-

KaraCHi: Woes of financially strapped Pakistan Steel Mills (PSM) have been multiplied as Karachi electric Supply Company (KeSC) has disconnected electricity supply to former due to non-payment of dues. According to sources, PSM which was defaulting over Rs50 million to privately run public utility was deprived of power supply at a time when the institution was already receiving notices from Sui-Southern Gas Company (SSGC) against non-payment of around Rs5 billion.

Confirming fresh development, sources at KeSC claimed that PSM was not paying huge amount despite repeated notices issued to it by the power company. disconnection was part of a move recently started by the company against defaulters. besides, PSM, according to sources, was already facing a scheduled gas load shedding after failure of paying billions of rupees worth dues that mills owed to the gas company. As both SSGC and KeSC have started disconnecting supply to various defaulting departments against non-payment of dues, production and out put of affected organisations were also on the cards, sources said. However, spokesman of SSGC claimed that despite disconnection notices issued by the company gas supply to PSM was not suspended. earlier, SSGC had issued notices to all defaulting institutions which collectively owe around Rs45 billion to the gas company as it was unable to keep uninterrupted supply of gas under acute financial crisis.

According to official sources of SSGC, as the company was meeting supply through borrowing credits from banks, it will no longer be able to ensure uninterrupted supply to various government and private institutions including Pakistan Steel Mills, Karachi electric Supply Company which default around Rs5 billion and Rs30 billion to SSGC respectively. Though notices of disconnection have been issued to defaulting organisations, SSGC has not disconnected gas supply so far. but, he said, company would not be in a position to keep supplying fuel in near future as it also has to pay gas suppliers. He said besides KeSC and PSM, there were many organisations and government institutions defaulting billions of dues to SSGC. STAFF REPoRT

fbR restores SRo 283 ment. “investors stayed put despite strong fundamentals in local commodity stocks in fertiliser, oil and cement sector,” analyst said.

Trading value also moved downward and contracted to Rs1.1 billion compared to Rs1.3 billion last Friday.

Market capital slid to Rs3.093 trillion, compared to Rs3.104 trillion previously. Of total 327 traded scrips, 68 were declared as “plus”, 141 as “minus” and 118 as “unchanged”. “institutional support in blue-chip stocks like Fauji Fertilizers, OGdC, MCb (bank) and National bank led intra-day recovery in the bearish session,” Ahsan Mehanti said. bank Al-Falah was the day’s volume leader having 5.49 million of its shares traded at the highest per share rate of Rs12.31. banks’ share price declined to Rs12.04

after opening at Rs12.07.

Other scrips that followed were Wateen Telecom, National bank of Pakistan, Nishat Mills Xd, Fatima Fertilizer Company, byco Petroleum, Fauji Fertilizer Xd, lucky Cement, lotte PakPTA and PTCl that counted their traded shares, respectively, at 2.0 million, 1.9 million, 1.8 million, 1.5 million, 1.1 million, 1.1 million, 0.908 million, 0.900 million and 0.873 million.

Turnover at future market, however, witnessed an upset and increased to 6.773 million shares from 2.243 million shares of preceding day. Scrips that were rated as plus numbered 43, as minus 96 and one unchanged. ANl-NOv was the volume leader on this side having 1.354 million of its shares traded during the day “local bourse gives a de-

serted look as the turnover shrinks further,” said Hasnain Asghar Ali of Aziz Fidahusein and Company. Analyst said rising uncertainty on political front along with tough economic and financial situation, with international lenders like iMF seeking guarantees before moving forward, kept pressure intact.

However, Hasnain said, likely recovery of lost money from various RPPs on order of Supreme Court did allow the beneficiaries from the banking sector to invite turnover on strength. “The absence of follow-up support, however, kept the day traders on the sidelines,” he said.

Analyst said lackluster-led price erosion remerged after low volume gains registered during early trade, thanks to OGdC for allowing index to test 12000.

KaraCHi: After a detailed discussion with a high level business delegation of Karachi Chamber of Commerce and industry (KCCi), Federal board of Revenue (FbR) has restored SRO-283. it has also been decided that fate of SRO1012 will be decided with further consultation. An emergency meeting was held with Salman Siddique, Chairman FbR, regarding havoc created by SRO-1012 with changes in zerorated tax regime for five export sectors. delegation of KCCi was led by Siraj Kassam Teli, Chairman, businessmen Group (bMG) and former President KCCi. After intense negotiation with FbR Chairman by Siraj Teli, Haroon Farooki, vice Chairman bMG group and former President KCCi, the successful negotiation restored SRO 283. And fate of SRO 1012 will be decided after consultation with KCCi committee and FbR on mutual consent. Notification for restoration of SRO 283 is being issued by FbR. drastic and unilateral changes had adverse affects on trade causing huge loss to economy and national exchequer since many containers were held at port due to manipulation of the said SRO by relevant collectorate officers. business community welcomed the move and praised efforts of Siraj Kassam Teli, Haroon Farooki and other KCCi leadership who made efforts to get resolved this hard issue amicably. STAFF REPoRT

profit 22-11-2011_Layout 1 11/22/2011 1:24 AM Page 5

Tuesday, 22 November, 2011

There is a major flaw in the euro system ... I do know the system as presently designed has a major flaw and that flaw won't be corrected just by words

news

billionaire Investor, warren buffett

Debt crisis strikes at heart of Europe BRuSSELS

T

REUTERS

He euro zone's debt crisis struck again at the heart of europe on Monday despite a clear-cut election victory in Spain for conservatives committed to tougher austerity. Spain's Socialists became the fifth government in the 17-nation single currency area to be toppled by the debt crisis this year. Portugal, ireland, italy and Greece went before. but an absolute parliamentary majority for Mariano Rajoy's center-right Popular Party brought no respite on financial markets increasingly alarmed by the absence of an effective firewall to halt a meltdown on sovereign bond markets.

The risk premiums on Spanish, italian and French government bonds rose as investors fled to safe-haven German bunds, while european shares fell more than 2 per cent after Moody's warned that France's credit rating faces new dangers. "This crisis is hitting the core of the euro zone. We should have no illusions about this," european economic and Monetary Affairs Commissioner Olli Rehn said. He defended the european union executive's advocacy of austerity policies blamed for choking off growth and jobs. "One simply cannot build a growth strategy on accumulating more debt, when the capacity to service the current debt is questioned by the markets," Rehn told a brussels seminar.

"One cannot force foreign creditors to lend more money, if they don't have the confidence to do it. in Greece, the starting point of market turmoil now felt around the world, more political wrangling cast a pall over the new technocrat prime minister's bid to win the nod from european leaders on Monday for bailout funds. borrowing costs for both Spain and italy hit levels regarded as unsustainable last week before the european Central bank stepped in to stabilize the market. Two newspapers said the eCb's governing council had imposed a weekly limit of 20 billion

euros on purchases of euro zone government bonds, a figure analyst say prevents it acting as an effective firebreak.

FRENCH RATING RISK Ratings agency Moody's said a recent rise in interest rates on French government debt and weaker economic growth prospects could be negative for France's credit rating. "elevated borrowing costs persisting for an extended period would amplify the fiscal challenges the French government faces amid a deteriorating growth outlook, with negative credit implications," Senior Credit Officer Alexander Kockerbeck said in Moody's Weekly Credit Outlook dated November 21. France's government spokeswoman reaffirmed on Monday that Paris would not impose a third package of budget savings, despite market pressure on its cost of credit. Talk of a possible break-up of the 12-year-old single currency has grown among economists and market analysts, mostly outside the euro area, as eu paymaster Germany has rejected most of the widelytouted solutions to the debt crisis. The chairman of Goldman Sachs Asset Management, Jim O'Neill, said the crisis of european economic and monetary union (eMu) had reached a point where "big decisions have to be taken pretty quickly." "it's not obvious to me that eMu could survive without italy," he told a Confederation of british industry conference. "it's not obvious to me that italy can survive with 6-7 per cent bond yields, so something's going to have give pretty quickly. italian bond yields have got to come down pretty quickly or eMu will have some severe challenges." dutch Finance Minister Jan Kees de Jager, one of berlin's closest allies, acknowledged that the euro zone could splinter.

Asked whether a break-up of the euro

would cause an economic depression, he told bNR radio: "This could be a consequence from the euro zone falling apart, that is correct. "you never know it for sure but it is a likely outcome if the euro zone falls apart. Therefore all our efforts are to prevent that scenario," de Jager said.

Spaniards gave the People's Party a clear mandate for more austerity against a background of 21 per cent unemployment and one of the highest budget shortfalls in the region. "We will stop being part of the problem and will be part of the solution," party leader Mariano Rajoy said after the vote. Analysts said they expected Rajoy, who will not be sworn in until december, to move quickly to turn the economy around. "This could calm markets but until the new government does what it says it is going to do, nothing will change," said Angel laborda, analyst at Madrid think-tank Funcas.

Nicolas lopez, head of research at M&G valores, said the government had to introduce convincing measures.

"While these measures are being taken, the eCb will have to buy up bonds as it has been doing to

last week, could face a battle to win backing for greater austerity or liberalization than Silvio berlusconi was able to achieve. italian newspapers said on Sunday that new budget measures were likely to be unveiled within two weeks, with a property tax abolished by berlusconi set to return, plus moves to tackle tax evasion and a cut in payroll taxes to lift employment.

euro zone not working, words alone won’t fix it: buffett iwAKi

GREEK POLITICS

REUTERS

Greek Prime Minister lucas Papademos will meet eu Commission President Jose Manuel barroso and eurogroup head Jean-Claude Juncker on Monday after eu, iMF and european Central bank representatives held tough talks in Athens.

Fearful of alienating voters, Antonis Samaris, head of the conservative New democracy party, refused to give a written commitment to the terms of a second bailout program, no matter who wins an election expected on February 19. The leader of the far-right lAOS party said international lenders would not release the 8 billion dollars Greece needs to avoid default in mid-december without the guarantee. euro zone wide planning to improve the region's economic governance and restore market faith in the single currency is also mired in disagreements. details of how the european Financial Stability Facility (eFSF), the bloc's rescue fund, will act as a bond insurer and attract foreign investors are still undecided and the eCb says it will not act as a lender of last resort.

The european Commission will propose much tighter control of budgets on Wednesday along with three options for joint debt issuance of the 17 countries sharing the euro, but without any conclusions or suggestions of which one to choose.

maint a i n confidence," he said. in italy, newly-installed Prime Minister Mario Monti, who easily won confidence

votes in both houses of parliament

05

b

illiONAiRe investor Warren buffett said europe's debt crisis had shown up a "major flaw" in the 17-member euro zone system and it would take more than words to fix it. "There is a major flaw in the euro system ... i do know the system as presently designed has a major flaw and that flaw won't be corrected just by words," he told CNbC during his first trip to Japan on Monday. buffett, dubbed the 'Oracle of Omaha' for his long track record as a value investor, said he had no idea how europe's sovereign debt crisis, which started in Greece two years ago and rages on, would end, though he noted there were good valuations among companies in europe. "Not in the debt space, but in the equity space there are opportunities. i can think of a dozen euro stocks that are attractive ... there are stocks i like and wonderful businesses. "We bought Tesco (TSCO.l) earlier. i could buy more if the price came down," said the 81-year-old chief of berkshire Hathaway inc (bRKa.N), referring to the british retailer. buffett earlier told reporters in iwaki City in northeast Japan that he also sees opportunities to invest in the country and was not deterred by either the March earthquake or a scandal engulfing camera and medical device maker Olympus (7733.T). Making a trip that he had canceled in March due to the earthquake and tsunami, buffett told reporters: "My view on Japanese people and Japanese industries is unchanged. We just had a demonstration over months that the tsunami did not stop Japanese business and the people." "Olympus doesn't change my view at all on Japanese investments," buffett said, referring to a widening accounting scandal at the company, which has admitted hiding losses for decades through improper accounting, raising questions about Japanese corporate governance standards. buffett earlier opened a new plant at cutting tool maker Tungaloy Corp, a unit of an israeli firm in which berkshire Hathaway holds an 80 per cent stake. The factory is just 40 km from the Fukushima daiichi nuclear power plant that was crippled by the disaster in March.

CORPORATE CORNER PTcl awards Top Agent of contact center

iSlaMabaD: in recognition of the outstanding efforts for provision of best customer outreach services by Pakistan Telecommunications Company ltd (PTCl), Humaira Riaz was given the award of "Top Agent of the Contact Center” at the annual dinner gala and awards ceremony of PTCl, contact centre Rawalpindi. PTCl Outbound Contact Center, Rawalpindi reaches out to customers spread all over Pakistan for conducting telemarketing, feedback and other outreach activities. PRESS RELEASE

warid organises Dengue Awareness campaign for winters iSlaMabaD: The threat of dengue, reappearing after winter season is something very alarming. in this regard, Warid Telecom recently organised a

massive awareness campaign, aimed at helping communities to be more prepared in fighting smartly against dengue. Adopting a unique approach towards engaging communities, over 300 young leaders were trained to volunteer for the cause including, Warid staff members and students of Government College for boys, Gulberg lahore. PRESS RELEASE

internet users. it also delivers a perfect solution with its attractive packages. Wi-tribe’s Marketing director, Ali Fahd said, “With this launch, we aim to provide users with a convenient, portable solution to instantly connect.” PRESS RELEASE

Ufone arranges breast cancer Seminar for its employees

laHore: Samsung electronics Co ltd, a market leader and award-winning innovator in consumer electronics and telecommunications, has won 30 prestigious awards in the international Consumer electronics Show (CeS) 2012 innovation Awards.

Managing director, Samsung Pakistan, Mr Hee Chang yee said, “We’re honoured that CeS recognises Samsung’s commitment to research and development.” PRESS RELEASE

iSlaMabaD: ufone recently arranged a seminar for its female employees for highlighting the alarming increase in the rate of breast cancer patients in Pakistan. The seminar was conducted in collaboration with Pink Ribbon Pakistan and underlined the importance to significantly reduce breast cancer mortality in the country by creating widespread awareness on early detection and increased access to treatment. PRESS RELEASE

Samsung wins 30 Innovation Awards

LAhoRE: Chairman, higher Education Commission, Dr Javed Leghari (r) taking a visit to the University of Lahore. PRESS RELEASE

wi-tribe introduces Pocket modem KaraCHi: With an aim to provide internet users the opportunity to access richer broadband and to further enhance their online experience, Wi-tribe has launched the Pocket Modem, a convenient plug ‘n’ play device that allows users to connect to the internet from absolutely anywhere. Through its easy-to-carry, portability feature, the Pocket Modem adds immense value to the experience of

SAhIWAL: Managing Director Bank of Khyber (BoK), Mr Bilal Mustafa, inaugurating BoK, Sahiwal Branch.

BoK Executive Director, Mir Javed hashmat is also present on the occasion. PRESS RELEASE

ISLAMABAD: Mr Mohi ud Din Chawla (BoSCh Pharma) is being warmly received by General Manager Pearl-Continental hotel Muzaffarabad, Mr Aamir h Kazi, on his arrival at hotel. PRESS RELEASE

profit 22-11-2011_Layout 1 11/22/2011 1:24 AM Page 6

Tuesday, 22 November, 2011

06 Markets top 10 sectors

49% 09% 10% 04% 04%

Chemicals

01% 03% 01% 02% 17%

Real Estate & Investment

Construction & Materials Electricity Banks

Fixed Line Telecommunication

Oil & Gas

Financial Services

Personal Goods

Equity Investment Instruments

STOCK MARKET HIGHLIGHTS Index 11894.79 3114.95 2680.25

KSE-100 LSE-25 ISE-10

Change -43.02 -3.78 -4.63

Volume 24,226,364 1,188,486 76,800

Market Value 1,099,481,208 27,316,038 1,730,630

top 5 perForMers sector wise

Major Gainers Company Pakistan Cables Ittehad Chemical Ashfaq Textile Wazir Ali Crescent Sugar

Open 31.00 23.25 7.10 10.60 12.00

High 32.50 24.41 8.10 11.60 13.00

Low 30.50 23.00 8.10 11.60 12.99

Close 32.17 24.41 8.10 11.60 12.99

Change 1.17 1.16 1.00 1.00 0.99

Turnover 877 2,000 5,000 1,570 771

5479.96 780.01 2986.39 879.71 318.77

5597.99 780.01 3000.00 875.00 319.90

5250.00 741.01 2952.00 875.00 313.10

5362.40 747.72 2979.39 875.00 314.52

-117.56 -32.29 -7.00 -4.71 -4.25

62 2,200 47 56 26,476

Volume Leaders Bank Al-Falah Wateen Telecom National Bank Nishat Mills XD Fatima Fert.Co.

12.07 1.85 44.18 44.17 23.05

12.31 2.00 45.00 44.30 23.32

12.00 1.82 44.05 43.10 22.91

12.04 1.88 44.52 43.36 23.01

-0.03 0.03 0.34 -0.81 -0.04

5,499,424 2,098,153 1,981,921 1,863,093 1,582,268

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

Per Tola (PKR) 55,729.00 51,608.00 1,023.00 1025.00

Per 10 Gm (PKR) 47,829.00 44,245.00 878.00 880.00

Per Ounce US$ 1,706.00 – 35.05 –

hIgh

low cURRenT

412.75 127.68 23.89 7.38 97.00

406.10 125.01 23.22 7.19 93.15

chAnge

volUme

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

411.14 126.72 23.22 7.20 96.00

Agritech Ltd. Arif Habib CoXDXB SD Bawany Air Products Clariant Pakistan Dawood Hercules

15.00 29.85 5.00 156.34 39.08

-4.15 -1.35 0.00 0.05 -2.26

18,325 226,908 1 1,147,404 47,325

1.51 9.20 33.86 10.80 6.97

15.48 29.90 5.25 156.74 39.35

15.00 29.45 5.00 155.00 38.50

15.00 29.51 5.25 155.18 38.62

0.00 -0.34 0.25 -1.16 -0.46

1,002 252,944 1,000 2,897 15,788

1.91 52.50 1.95 14.18 6.00

1.59 9.48 33.00 11.00 7.25

1.46 9.06 32.18 10.77 6.97

1.48 9.06 32.53 11.00 6.97

-0.03 -0.14 -1.33 0.20 0.00

71,503 2,002 16,754 5,352 205

28.15 3.10 39.88 9.00 89.50

AL-Ghazi Tractors Bolan CastingXD Ghandhara Ind. Hinopak Motor K.S.B.Pumps

87.2598 136.8931 1.1355 117.2946

169.86 28.00 6.94 96.11 26.95

2.19 52.52 1.98 13.70 6.50

1.90 52.40 1.95 13.70 6.00

1.90 52.49 1.95 13.70 6.00

-0.01 -0.01 0.00 -0.48 0.00

3,005 1,288 100 500 1

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

International Oil Price WTI Crude Oil

Sell 87.70 117.53 136.84 1.1317 85.44 11.26 23.79 23.28 87.49

Brent Crude Oil

Agriautos Industries Atlas Battery Ltd. Atlas Honda Ltd. Bal.Wheels XD Dewan Motors

60.27 172.01 125.27 26.00 2.15

28.60 3.15 40.50 9.38 92.00

27.80 2.85 39.00 8.53 85.03

27.86 3.11 39.34 9.38 88.55

-0.29 0.01 -0.54 0.38 -0.95

14,445 110,806 1,261 502 17,243

172.00 28.55 7.40 95.76 27.13

168.00 28.00 7.34 91.31 25.61

60.99 172.01 126.00 25.99 2.60

60.27 172.00 125.00 24.70 2.11

110.49 111.43 150.02 150.00

169.86 28.00 7.38 95.76 26.95

$107.58

60.27 172.01 125.00 24.84 2.13

109.00 111.18 145.05 145.58

AL-Noor Suger Mills Bawany Sugar Clover Pakistan Colony Sugar Mills Crescent Sugar

55.09 11.10 51.41 1.90 12.00

55.09 12.00 53.00 1.90 13.00

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

Amtex Limited Artistic Denim XD Ashfaq Textile Azam Textile Azgard Nine

1.31 19.50 7.10 1.35 3.71

1.44 19.45 8.10 1.40 3.85

AHCL-DEC AHCL-NOV ANL-DEC ANL-NOV ATRL-DEC

29.94 29.94 3.74 3.74 127.13

29.94 29.76 3.80 3.80 127.50

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

102.51 76.66 69.25 29.29 12.78

103.20 78.00 69.90 29.50 13.29

0.00 0.00 0.44 -0.35 0.00

68 4,001 500 11 418

0.00 0.00 -0.27 -1.16 -0.02

50 100 500 537 79,586

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

55.09 11.10 51.41 1.63 12.99

0.00 0.00 0.00 -0.27 0.99

35 1 100 14,431 771

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

1.30 19.00 8.10 1.34 3.62

1.38 19.01 8.10 1.35 3.66

0.07 -0.49 1.00 0.00 -0.05

26,864 74,958 5,000 5,200 672,596

29.80 29.55 3.71 3.65 127.00

29.89 29.61 3.75 3.65 127.23

-0.05 -0.33 0.01 -0.09 0.10

9,000 34,500 1,286,500 1,354,000 12,000

102.74 76.66 69.00 29.38 13.18

0.23 0.00 -0.25 0.09 0.40

6,920 100 3,312 3,502 9,773

102.50 76.66 69.00 28.70 12.80

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

0.36 37.11 0.68 1.63 17.01

0.42 37.15 0.68 1.71 17.00

0.32 37.00 0.64 1.63 16.61

0.32 37.01 0.65 1.70 17.00

-0.04 -0.10 -0.03 0.07 -0.01

3,307 416,249 164,679 232,001 300,022

62.23 10.95 5.69 12.07 29.87

62.80 11.00 5.80 12.31 30.00

62.10 10.80 5.62 12.00 29.75

62.23 10.86 5.65 12.04 30.00

0.00 -0.09 -0.04 -0.03 0.13

216 77,973 350,983 5,499,424 71,128

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

oPen

hIgh

low cURRenT

chAnge

volUme

Non Life Insurance 52.35 11.10 51.41 1.63 12.99

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

Symbol

Adamjee Ins Atlas Insurance Century Insurance Cres.Star Insurance EFU General Ins

47.94 36.49 7.23 2.40 36.61

47.59 36.49 6.80 2.99 36.51

46.80 35.27 6.36 2.00 36.50

47.07 36.49 6.51 2.01 36.51

-0.87 0.00 -0.72 -0.39 -0.10

15,293 2 10,100 1,123 1,713

13.50 1.40 65.53

14.50 1.40 65.53

0.00 0.00 0.00

2 1 157

0.25 16.40 15.97 1.25 0.86

-0.10 0.00 -0.06 0.00 -0.23

36,032 101 2,207 4 631

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

0.35 16.40 16.03 1.25 1.09

0.33 16.40 16.29 1.29 1.07

0.25 15.56 15.96 0.75 0.83

Equity Investment Instruments 1st.Fid.Leasing Mod 1.52 Allied RentalModXDXB 21.64 Atlas Fund of Fund 5.86 B.R.R.GuardianXD 2.00 Cres. Stand.ModXD 0.49

1.53 22.45 5.85 2.00 0.44

1.53 21.64 5.85 1.72 0.34

1.53 21.64 5.85 2.00 0.42

0.01 0.00 -0.01 0.00 -0.07

2,500 1 29,600 493 69,931

13.20 30.50 35.06 30.50 15.70 68.32 1.53 69.00 24.47 59.70 133.00 28.55 15.50 7.80 1.96 28.29 17.36 20.00 68.36 27.13 1.63 10.25 3.00

13.24 30.60 35.20 32.17 15.71 70.00 1.59 70.00 25.00 61.65 140.00 29.73 15.50 7.96 1.98 28.29 17.44 20.00 68.36 27.13 1.72 10.46 3.00

-0.26 -1.40 0.00 1.17 -0.27 -0.50 -0.01 -0.60 0.00 -0.74 0.00 0.23 0.00 0.00 -0.02 0.00 -0.25 -0.16 0.00 0.00 0.04 -0.27 0.00

6,625 4,462 100 877 6,500 1,703 789,439 3,891 10 406 13 2,350 3,010 52 13,170 100 18,118 7,675 25 50 191,889 162,695 1

Miscellaneous Century Paper Pak Paper Prod.

Security Paper Pakistan Cables P.N.S.C.XD Pak.Int.Con. SD TRG Pakistan Ltd. Murree BreweryXDXB Grays of Cambridge Pak Tobacco Co. Philip Morris Pak. Shifa Int.Hospitals Hum Network XD Media Times LtdXR P.I.A.C.(A) Pak Hotels Sui North GasXDXB Sui South GasXDXB EFU Life Assur AKD Capital Ltd.XD Pace (Pak) Ltd. Netsol Technologies Pak Telephone

13.50 32.00 35.20 31.00 15.98 70.50 1.60 70.60 25.00 62.39 140.00 29.50 15.50 7.96 2.00 28.29 17.69 20.16 68.36 27.13 1.68 10.73 3.00

13.75 32.50 35.20 32.50 16.00 71.00 1.60 70.45 25.00 62.90 140.00 30.45 16.00 8.96 2.12 28.29 17.70 20.40 68.36 27.13 1.77 10.94 3.44

Mutual Funds fund

$97.41

volUme

Fixed Line Telecommunication

Beverages Murree Brewery Co. Shezan Int’l

chAnge

Pharma and Bio Tech

Automobile and Parts Buy 87.00 116.38 135.61 1.1250 83.33 11.03 23.65 23.17 85.12

low cURRenT

Future Contracts

General Industrials Cherat Packaging ECOPACK Ltd Ghani Glass LtdXD MACPAC Films Packages Limited

hIgh

Personal Goods

Construction and Materials Al-Abbas Cement Attock Cement Bal.Glass Berger Paints Buxly Paints

oPen

Household Goods

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

Symbol

Food Producers 406.99 125.37 23.22 7.25 93.74

Industrial Engineering

Interbank Rates US Dollar UK Pound Japanese Yen Euro

oPen

Chemicals

Major Losers UniLever Pak Ltd. Bata (Pak) Ltd. Nestle PakistanXD Siemens Pak National Ref.XD

Symbol

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

offer 501.2900 114.7196 103.6501 100.6900 519.3500 519.0900 516.9700 453.1500 82.9800

Repurchase 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

profit 22-11-2011_Layout 1 11/22/2011 1:24 AM Page 7

Tuesday, 22 November, 2011

In India, nothing can be imported which is produced within the country. This protection is provided through trade and non-trade barriers such as emission control standards known as bharat I and bharat II

news

07

chairman Atlas group, yusuf h Shirazi

Ministries differ over MFN status to India g

no cooperation between ministries of commerce and textile g Senate standing committee on textile takes strict notice of situation iSLAmABAD

T

JALALUDDIN RUMI

AKiNG strong notice of not taking the Ministry of Textile into confidence over the grant of Most Favored Nation (MFN) status to india by Ministry of Commerce, Senate Standing Committee on Textile decided to write a letter to Prime Minister Syed yousaf Raza Gillani, complaining the sole flight of the ministry.

Senate Standing Committee on Textile was held under the chairmanship of Senator Gul Mohammad lot. He termed the situation very serious and said that this lack of coordination between the two ministries would ultimately harm the interest of the country. lot Chairman of the Committee, Senator Gul Mohammad, while terming the situation very serious said even both ministries are not on the same page

which would ultimately harm the interest of the country, especially on granting india MFN status.

Chairman, Textile Committee has asked both ministries to submit report over the matter in next fifteen days to find out the impediments causing lack of coordination between the two ministries.

Federal Minister for Textile, Makhdoom Shahabuddin, protested against Ministry of Commerce for not taking Ministry of Textile into confidence regarding the grant of Most Favorite Nation (MFN) status to india.

He said the Ministry of Commerce does not recognise textile as a separate ministry and authorities in commerce division have also never considered consult the Ministry regarding any matter.

Chairman of the committee asked both the ministries to submit report over the matter in fifteen days to find out the impediments causing lack of coordina-

tion between the ministries.

Secretary Textile, Shahid Rashid, informed committee that the commerce officials did not consult Textile Ministry while saying that South Asian Free Trade Agreement (SAFTA) has more impact than giving MFN status to india. it is important to mention here that the items mentioned in the negative list of both countries would also be diluted after 2012, according to the joint declaration between india and Pakistan. Pakistan and india was signatory of regional South Asia Free Trade Agreement (SAFTA), according to which more than 80 per cent of trade can take place on tariff rates below or equal to 5 per cent only, The only barrier from Pakistani side is Appendix-G of Trade Policy Order through which Pakistan has restricted imports from india via land route and around 1946 tariff lines.

The present trade negotiations are in-

tended to eliminate Appendix-G which has restricted imports from india under MFN and SAFTA, he said. This will not only bring a normal trade relationship, but in fact implementation of free trade agreement thus, allowing imports from india without any custom duty for majority of items, he added.

Committee was told Pakistan has been given General Most Favored nation (GMFN) status since 1996. despite of that, Pakistan has not been able to export goods of more than $272 million to india whereas; india’s exports to Pakistan are estimated to be around $1.5 billion. in case of textile, Secretary Textile said Pakistan only exported $45 million worth of textile products to india whereas, india exported $566 million worth of textile products to Pakistan in a calendar year.

Committee was also briefed regarding TdAP’s participation in interna-

PSM seeking Rs25b package for revival g

S-korean ambassador proposes steps to enhance cooperation Urges lccI office-bearers to arrange business delegation to South korea g expresses optimism about trade volume g

cabinet committee to recommend new ceo PSm

LAHORE

S

iSLAmABAD

l

AMER SIAL

OSS-MAKiNG Pakistan Steel Mills (PSM) has sought Rs25 billion financial bailout package from government to revive premier industrial enterprise to enhance its output to 1.1 million tonnes from 215,000 tonnes currently. An official source said a five year business plan developed by international consultancy, deloitte, which has cash flow estimates for each succeeding year, has been submitted to Cabinet Committee on Restructuring (CCOR) for consideration and approval. Committee is likely to discuss the plan within next few days.

Committee will be also recommending three names to Prime Minister, appointing one of them as chief executive of the company. Appointment of new chief executive and approval of new business

tional textile exhibitions. The Committee members were of the view that Trade and development Authority of Pakistan (TdAP) should try to find new markets for exports instead of just focusing on europe. Committee emphasises on expanding the trade volume instead of showing enhanced figures of exports.

Chairman committee said commodity prices are coming down and ministry should try to find new markets, especially in Africa and South America.

The committee was told that even after 80 per cent cotton crop was destroyed due to the rains and flood in Sindh; the country will produce record cotton production this year. it is also important to mention here that despite invitation by the parliamentary committee, Federal Minister for Commerce, Amin Fahim and Secretary Commerce, Zafar Mehmood did not appear before the committee.

plan will allow government to conclude an investment deal with Russia that has assured an investment of $500 million in upgradation of the mill. Mill was built with financial and technical cooperation of Russia. Government initially plans to enhance output to 1.5 million tonnes that would be subsequently enhanced to over 3 million tonnes. CCOR, he said, was likely to provide financial assistance from banks which would enable PSM management to enhance output to maximum level of 1.1 million tones. without enhancing output there was no other method available to bring the company out of current financial crisis he added. PSM has incurred losses of Rs26 billion in fiscal year 2008-09, Rs11 billion in 2009-10 and Rs11 billion in 2010-11. Government helped the entity by rescheduling its loans of Rs7 billion and providing cash assistance of Rs3 billion in fiscal year 2009-10. While it helped in

restructuring loans of Rs8 billion and injected a cash assistance of Rs2 billion in 2010-11. Source said government had injected close to Rs5 billion in cash during last two fiscal years but PSM output had remained less than 20 per cent which was keeping the company in the red. Company management claims that a production level of 70 per cent was required to attain break even level. PSM meets close to one fourth of steel requirements in the country.

PSM, he said, was stressing for providing full assistance of Rs25 billion in one go instead of installments as they impede efforts of raising output of the entity to maximum limit. Company has more that 17,000 employees and even their per month salary bill was more than Rs700 million. Fixed per month cost was a heavy burden that required a huge financial assistance of Rs25 billion for a turn around in the entity.

STAFF REPoRT

OuTH Korean Ambassador to Pakistan, Choongjoo Choi expressed resolve to contribute to Pakistan’s economy.

While agreeing with lCCi proposal for transfer of technology, early formation of Pak-Korea business Council and joint ventures between the two sides, Korean Ambassador proposed expediting work on issues hurting two-way collaboration to ameliorate Pakistani economy.

South Korean Ambassador was talking to lCCi President irfan Qaiser Sheikh, Senior vice President Kashif younis Meher and vice President Saeeda Nazar at a lunch arranged exclusively by the Ambassador for lCCi officebearers. Ambassador said consistency in policies and better infrastructure for investment and stability in the country is necessary to enhance pace of its economic recovery. He said Korea is ready to cooperate with Pakistan in all sectors of economy, particularly electronics and iT. Ambassador said his aim was to boost bilateral trade and play a positive role in Pakistan’s development. He said to implement his plan he will utilise exchange of business delegations, work with private sector, remove hurdles in bilateral trade and make long standing relations between chambers of commerce in the two countries.

South Korean Ambassador expressed optimism that volume of trade between Pakistan and South Korea was bound to increase as both governments are taking measures to get desired results.

He said non-availability of required trade-related information was the biggest hurdle in way of South Korean investment in

Pakistan. He admitted Korean investment in Pakistan is very little when it compared to potential exists in the two countries. diplomat, while identifying a number of areas for mutual cooperation, said there was a need for expertise-sharing as both countries have a lot to learn from each other. He said there is a big potential in SMe sector therefore Pakistani business community could avail opportunities in this particular area. He urged lCCi office-bearers to arrange a business delegation to South Korea, so that Pakistani businessmen could have first hand knowledge about opportunities there. Speaking on the occasion, lCCi President stressed the need for early formation of Pak-Korea business Council so that business community could be able to maximise its interaction with their Korean counterparts.

He said that Korean expertise in the field of electronics offers many openings to Pakistani businessmen and a little attention

by Korean side could do miracles in this regard. irfan Qaiser Sheikh suggested that to create a win-win situation for both countries, Koreans need to increase their imports from Pakistan. Presently, most of its demand is being met

by Korea from sources other than Pakistan and only a small quantity is being imported from Pakistan, he added. A little attention by Korean Government and businessmen can increase Pakistan’s exports to Korea considerably.

Speaking on occasion, lCCi Senior vice President Kashif younis Meher and vice President Saeeda Nazar said there was need for a workable methodology for more Joint ventures between entrepreneurs of the two sides as this would pave the way for transfer of technology.