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Volume - 1
Issue - X
s
Feb 2012
Chief Editor Dr. Zeeshan Khalid
chief.editor@valuechain.com.pk
Advisor Editorial Team A.B Shahid adivsor@valuechain.com.pk
Editor Nadeem Abdul Ghani editor@valuechain.com.pk
Deputy Editor Jauhar Ali
dy.editor@valuechain.com.pk
Research Editor Mustafa Ali Shaikh
res.editor@valuechain.com.pk
Assistant Editor
Global & National Briefs Editorials
Benazir Bhutto: a legend that continues to inspire Evaporating investment flows—the unheaded warning An opportunity that is worth capitalizing on Of the hangover of imperial grandeur
Politics
Risks embedded in over-popularity Political solutions to economic problems
Economy
Denying harsh realities-a self-deluding pastime Who ruled the world? Gallup Survey 2011 on Corruption: Good governance needed to root it out
Syed Asif Ali
Cover Story
Director Marketing K. Jehangeer Khan
Voice of Industry
Visualizer Ali Siddique Dadi
Banking & Finance
asst.editor@valuechain.com.pk
marketing@valuechain.com.pk
visualizer@valuechain.com.pk
General Manager Mahmood Khan gm@valuechain.com.pk
Bureau Chiefs
Syed Saqibullah
lahore@valuechain.com.pk
Ajmal Khan
multan@valuechain.com.pk
Mumtaz Abbasi
hyderabad@valuechain.com.pk
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Contributors
Mr. Tariq Iqbal Khan Mr. Rauf Nizamani Mr. Faizan bin Abdul Majid Mr. Iftikhar Mobeen Dr. Shahid Shamim Mr. Mubarak Ahmed etc. Prof. Dr. Anis Ahmad
9-12 13 14 15 16 17-18 19-21 23-24 25-28 29-30
2012: Moving the wheel of economy is the only way forward
31-33
Increasing regional trade for economic independence --Mian Abrar Ahmad
35-37
Risk-aversion isn’t the solution, better risk management is the way forward
35-37
Ethical business practices: A recurrent theme in the Quran
41-42
Strong marketing and research needed for stock market Growth –Ahsan Mehanti
43-45
Development of fish and poultry in Pakistan
46-50
Islamic Banking Interview
Agriculture
Research & Development
Quality based marketing of wheat a need of overhauling
51-52
Stress Ulcars
54-55
Health Events
5th Pak microfinance conference – 2011 48th Independence Day of the Republic of Kenya Voters list authentication Developing communication PFDC Bridal Week – 2011
56 57 58 58 59
Nobel Prize Award Ceremony – 2011
60-61 62 63 64 64-65
Awards
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L etters to the Editor Not one government official has thus far uttered a word on this subject to wake-up the traditionally sleepy administrations in these provinces. Democracy, it seems, is a toxin that overtakes even the common sense of the politicians. Zahid Jamali Thatta
State – the worst borrower?
Politically driven priorities
Sir, your cover story was very well written because it covered the whole spectrum of the economy and pointed to the need for putting the economy back on track for the much needed growth. But things are moving in the opposite direction. Earlier, the SBP had estimated that exports in FY12 could touch $25 bn but now Trade Development Authority is predicting that exports could, at best, be around $23bn. That’s no surprise; with power shortages keeping industrial units virtually frozen for a month courtesy the flawed policy of prioritizing domestic consumption over industrial production, nothing else could be expected in terms of results. Does the government believe that laid off workers’ first priority is staying warm? Don’t they need food first? Isn’t it to (dumbly) entice voters to vote for the PPP in what seem imminent elections? Ahmed Hassan Faisalabad
Democracy – killer of commonsense?
Sir, this year the expectation is that winter would be severe and till mid-March snow will just keep falling all over the north of the country as well as in Baluchistan. This is both a good and bad sign. It foretells availability of a much larger quantity of water than in 2010 and 2011 but the down side is that it also foretells a bigger flood tragedy in the summer of 2012 than that experienced in 2010 and 2011. All indications are that the governments in Sindh and Punjab have not done much to repair the losses caused to the physical infrastructure by the earlier floods. What is most likely is that we will face far more misery in the floods that are highly likely in 2012.
Sir, the state, it seems, is now the worst borrower, no matter which country you are looking at. As a matter of fact, bigger the democracy it is, worse is its record, Pakistan being the seventh largest. What on earth is happening, because we are told that democracies are ‘government of the people, by the people, and for the people’? Can such dispensations be as bad as we see today? Or is it that democracies today don’t fulfil these pre-conditions? What exactly do the democracies do with the tax revenue? Is the bulk of it simply wasted or pocketed by the politicians and their cronies? Atop thereof, the state now squeezes public savings out of the banks leaving nothing for the private sector. Are we to believe that democracies will destroy the private sector as well? Where exactly are we headed? Can’t we devise a better governance mode wherein the state will be managed only by those who both know what is the best for the people, and have professional ability therefor and integrity to correctly spend tax revenue. Shahid Jafri Karachi
A nation undeserving of Jinnah
Sir, your editorial on Quaid-e-Azam was an eye-opener. Indeed, when we look at ourselves, there is very little that is in line with his philosophy about integrity, sense of responsibility and concern for Pakistan. But the fact is that we have reached this state because we have been led for far too long by what the Quaid had very aptly nicknamed “fake coins” –leaders without conscience–that have led us for decades. Leaders set examples that nations follow; all we have are bad examples of conduct. But while all this is true, it cannot become an excuse for not changing our conduct. Khalid Raza Karachi
Sovereignty of the parliament
Sir, recently, the government has released some startling figures. For instance, it has disbursed Rs 93bn under Benazir Income Support Programme while PSDP has been cut drastically. It
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shows that we believe in living in ‘today’ with scant concern for the future. What is worse is the fact that the billions dished out under Benazir Income Support Programme often went to fake individuals. What is the parliament doing? Can’t it see where we all are headed? The tragedy is that despite its utter blindness, the parliament still claims sovereignty. Is this what we are to get in return for giving sovereignty to the parliament? Mohmand Khan Peshawar
MFN status for India
Sir, I read with interest the article that very rightly focused attention on increasing regional trade with special reference to the recent positive developments that have taken place in our relations with India. For once we are observing positive changes in sentiment in India, including in the BJP as pointed out by the visiting BJP member of the parliament Shatrugan Sinha. We must not lose this opportunity, and build on these sentiments to put to rest the divisive issue so that, in the coming years we focus more on bilateral trade than on fighting wars. Increased dependence on each other will convince people on both sides to resolve all issues through negotiations. Batool Omar Dubai
Fate of the Rupee
Sir, the promise of foreign inflows that both the Federal Finance Minister and Governor SBP have been holding out, is unlikely to materialize. Given the fact that exports too are now on slide and oil prices can also rise following sanctions on Iran, the Rupee is headed for a big fall and inflation for a new high. Sameen Siddiqui Islamabad Value Chain welcomes the views of its valued readers. Please send us your views on the address below:
Fatima Khalid Publications (Pvt) Ltd. Room No. 612, Clifton Centre, Block 5, Clifton, Karachi Email: ask@valuechain.com.pk
The Editor reserves the right to edit your letters for making it brief or for any linguistic flaws therein February 2012
G lobal Briefs Global events last month On Jan. 1, 2012 Iran announced a nuclear fuel breakthrough and test-fired a new radar-evading medium-range missile in the Gulf.
British Defence Secretary Philip Hammond said on January 5 that any attempt by Iran to close the Strait of Hormuz would be illegal and would not succeed. He said that disruption to the flow of oil through the Straits of Hormuz would threaten regional and global economic growth. British oil giant BP has sued US energy services firm Halliburton to pay for all the costs BP incurred in the 2010 Gulf of Mexico oil spill, the worst environmental disaster in US history. Reacting to the news that a Pakistani Commission was seeking records for a probe into an unsigned memo purported to ask for Washington’s help to rein in Pakistan’s military, the Canadian firm Research In Motion ( RIM) cowed on January 3 to defend the legal privacy rights of Black Berry users. On January 6, a Pakistani national was sentenced to 37 months in a US prison after pleading guilty to conspiring to illegally transfer nuclear-related materials to his home country from the United States. The convict reportedly took direction from the owner of a trading company in Karachi who had business relationship with Pakistani government entities.
The head of Swiss central bank, Philipp Hilde brand on January 9 announced his immediate resignation after being caught up in a scandal over foreign exchange trades by his wife.
On January 16, UN Chief Ban Ki-moon called for an end to Israeli occupation of the Palestinian territories, saying the illegal building of settlements worked against two-state solution.
Guinea Bissau President Malam Bacai Sanha died on January 9 in a Paris hospital he was undergoing treatment.
On January 16, British Foreign Secretary William Hague warned that Iran’s nuclear program could spark a Middle East arms race, and that all options to deal with the threat were being considered.
Iranian and Western sources said on January 9 that Iran had switched on a uranium enrichment plant deep inside a mountain. Iran also announced it had sentenced to death an Iranian-American dual citizen it arrested last month as a spy. Syrian President Bashar Assad vowed on January 10 to respond to threats against him with an iron hand and refused to step down insisting he still has his people’s support. An Iranian nuclear scientist was blown up in his car by a motorbike hitman on January 11. Tehran blamed Israel and US agents for the killing but insisted that the killing would not derail Iran’s nuclear program. China on January 11 warned the United States against interfering in its domestic affairs after Washington expressed “serious concern” over a spate of self-immolations by Tibetan monks. Nicaragua’s President Daniel Ortega on January 10 urged Israel to destroy its nuclear weapons to foster peace in the Middle East. Mosco’s departing ambassador to Nato said on January 13 that “Iran is our neighbor and if Iran is involved in any military action it would be a direct threat to our (Russia’s) security.” He said Israel was pushing United States towards war with Iran.
Saudi Arabia has begun the trial of 16 suspected al-Qaida members accused of killing a policeman and plotting attacks on government officials and military weapons facilities.
Russia’s Foreign Ministry has accused the US of breaking international law by keeping terror suspects in indefinite custody without trial at the Guantanamo Bay prison.
UN Secretary General Ban Ki-moon on January 24 warned that UN Conference on Disarmament could fail because of a three-year stalemate over Pakistan’s reluctance to discuss nuclear power.
JP Morgan’s chief executive Jamie Dimon told German newspaper Die Welt on January 16 that Europe is the biggest threat to the global economy.
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On January 16, Bahrain’s King announced constitutional amendments giving parliament more powers of scrutiny over government, but the opposition said they fell far short of demands for democracy that have driven a year of unrest in the Gulf Arab state. Britain on January 16 condemned Israeli settlements as deliberate vandalism of efforts to establish a Palestinian state, and warned that time was running out for the peace process in the Middle East. European Commission President Jose Manuel Barroso said on January 17 that 27 members of the European Union executive had decided to take action against Hungary over threats to the independence of its central bank and data protection authority. A senior US official urged South Korea on January 17 to reduce purchases of crude oil from Iran in line with a US-led drive to sanction Tehran for its suspected nuclear weapons programme. The head of Norway’s intelligence service , widely criticized after the July 22 attacks last year, has resigned after hinting Oslo has agents in Pakistan. Iran’s foreign minister warned on January 19 Arab neighbours not to put themselves in a dangerous position by aligning themselves too closely with the United States in the escalating dispute over Tehran’s nuclear activity. Bangladesh army said on January 19 it foiled a coup attempt by retired and serving officers late last month which intelligence sources said was driven by a campaign to introduce Sharia law throughout the majority Muslim country. February 2012
G lobal Briefs Global economy last month US President Barack Obama signed a defence bill which inter alia also applies penalties against Iran’s central bank in an effort to hamper Tehran’s ability to fund its nuclear enrichment program. The Head of Iran’s Chamber of Commerce Mr. Mohammad Nahavandian rejected the move as unjustifiable and said the Iranian nation and those involved in trade and economic activities will find other alternatives. According to Estado de S. Paulo newspaper report, Brazil may cut as much as 60 reais($32 billion) from spending in 2012 in an effort to control its deficit and inflation. Singapore’s trade-driven economy shrank in the last quarter of 2011 raising the prospect of a technical recession as Europe grapples with its debt crisis. Singapore’s economy is regarded as a bellwether for Asia’s exporters , which depend heavily on electronics and other manufactured shipments to North America and Europe for growth. On January 4 European governments agreed in principle to ban imports of Iranian oil. EU countries buy about 450,000 barrels per day of Iran’s 2.6 million bpd in exports. British Prime Minister David Cameron said on January 8 he would veto a European-wide financial transaction tax unless it was imposed globally, deepening a confrontation with European Union heavy-weights France and Germany. Prime Minister Vladimir Putin reportedly boasted on January 12 that Russia was one of the world’s three best-performing major economies with growth of 4.2 percent in 2011 but warned of a tougher 2012 and the need for reforms. Russia is in third place among the major economies of the world, behind only China and India.
British oil and gas tax revenues could rise by billions of pounds this year as high oil prices boost earnings and tempt operators into opening new fields after a decade of sharp declines. China’s official reserves slipped to $ 3.18 trillion in the final quarter of 2011, signaling that the days of rampant exportled accumulation of foreign currency are numbered and that new monetary policy steps may be needed to counter capital outflows.On January 16 Iran warned Gulf Arab oil producers against boosting production to offset any potential drop in Tehran’s crude exports in the event of an embargo affecting its oil sales. Dr. Murtuza Mughal, President, Pakistan Economy Watch, has said that the US policies had been damaging Pakistan while “our government seems reluctant to move forward with a plan to import natural gas from Iran.” He said the government was wasting time on a costly and highly uncertain Turkemenistan- Afghanistan -Pakistan -India gas pipeline project while ignoring the only viable option of importing gas from Iran. Chinese Premier Wen Jiabao pressed Saudi Arabia to open its huge oil and gas resources to expanded Chinese investment against a backdrop of growing tension over Iran and worries over its crude exports to the Asian power. Iran’s efforts to recover some $ 1.75 billion frozen in a US bank faces a new obstacle due to a law President Barack Obama signed last month, potentially further squeezing Tehran’s economy and exacerbating tensions between the two countries. A United Nations study said on January 17 that the global economy will grow by only 0.5 percent in 2012, unless there is rapid action to create jobs, prevent sovereign debt distress and shore up fragile banks. China’s economy expanded by 9.2 percent last year, slowing from 2010, as global turbulence and efforts to tame high inflation put the brakes on growth. South Korean’s Samsung Group announced on January 17 it would invest a record 47.8 trillion won ($ 41.56 billion) this year and hire an all-time high of 26,000 new employees despite global economic gloom.
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Russia on January 18 insisted it would not back sanctions on Syria and accused the West of suffocating the Iranian economy as it warned against military intervention targeting either regime. The IMF is seeking to boost its war chest by $ 600 billion to help countries reeling from euro zone debt crisis, but some nations insist that Europe must first do more to support its ailing members. European Union governments have agreed in principle to freeze the assets of Iran’s central bank alongside a planned embargo on the OPEC producer’s crude, but have yet to agree how to protect non–oil trade from sanctions. European Union diplomats are trying to reach an agreement on a new treaty enforcing stricter budget rules in the euro zone and other participating countries. According to Reuters polls of around 600 economists , the world economy will lose momentum in 2012 but it will keep moving in the right direction while Asian economies will again power the expansion of the world economy this year but with relatively subdued performances. The United States on January 23 imposed sanctions on Iran’s third largest bank, Bank Tijarat, making it harder for Tehran to access the world’s financial system and fund its nuclear activities. On January 23, the European Union banned imports of oil from Iran and imposed a number of other economic sanctions. The World Bank on January 23 lifted a funding freeze to Yemen and said it would resume relations with the new power-sharing government after closing its office in March 2011 due to political turmoil and unrest. Big emerging economies such as China, India and Saudi Arabia will not aid the West in its financial crisis unless they are given more influence in running the global economy. Warning that the escalating euro zone debt crisis could derail the global economic recovery IMF on January 24 called for urgent action to restore confidence. February 2012
N ational Briefs Pak politics last month Former Ambassador to US Mr. Hasain Haqqani’s lawyer in memo case, Ms. Asma Jehangir, accused the apex court judges of acting as acolytes of the establishment. She said she had no confidence in the judicial commission constituted by the Supreme Court to investigate the memogate scandal.
involved in looting $ 1.5 billion from the national coffers and that the sum allegedly came from illicit profits through kickbacks in every sphere of government activity. Election Commission of Pakistan said on January 23 that the Supreme Court’s order to stop by-elections was tantamount to violation of constitution as the commission was legally bound to hold elections within a stipulated period of 60 days. About electoral rolls he said they can not be finalized before May 2012.
Pakistan Bar Council Vice President Mr. Latif Afridi backed lawyer Asma Jehangir’s stance regarding Supreme Court’s judgement in the memo scandal saying that the superior judiciary cannot play the role of an investigator in any matter. The All Pakistan CNG Association accused Petroleum Minister Dr. Asim Hussain of creating artificial shortage of gas to favor two tycoons by paving the way for the import of LNG and LPG. Addressing a public meeting in Karachi on January 1, 2012, Ameer Jamaate-Islami Syed Munawwar Hassan called upon the nation to be prepared for bringing the revolution in the country and viewed that elections after that revolution would bear better results. He said that the bearded men and Hijabwearing women would change the fate of the country. President Asif Ali Zardari has reportedly offered PML-Q to have its chief minister in Punjab in case the PML-N legislators resign from the national and provincial assemblies before the Senate elections in March. According to Indian newspaper ‘India Today’ report China is planning a military base in Pakistan. According to the report, China is keen to build military bases in Fata, or the Northern Areas, while Pakistan wants to counterbalance Indian naval forces by having a naval base in Gwadar. According to ISPR, Pakistan Army has strongly reacted to Prime Minister Syed Yousuf Raza Gilani’s interview to a Chinese daily and warned that his remarks against the army chief and DG ISI may have “very serious ramifications with potentially grievous consequences for the country.” Former Defence Secretary Lt. Gen. Khalid Naeem (retired) said on January 13 that he was sacked because he did not sign the government’s affidavit in the memogate case.
Attorney General of Pakistan Maulvi Anwar-ul-Haq on January 11 negated the Prime Minister’s statement that replies submitted by the Army Chief and DG, ISI in the Supreme Court were illegal and unconstitutional. In an article published on the website of International Centre for Peace & Democracy, Mansoor Ijaz, the creator of memogate controversy, reportedly claimed that President Barack Obama had characteised Pakistan as the ‘cancer’ inhibiting US progress in Afghanistan. He also criticized the army, President Zardari, Mian Nawaz Sharif and the Chief Justice of Pakistan to conclude that American intervention was the only way things would change in Pakistan. On January 17, the Supreme Court temporarily suspended practicing licence of Dr. Babar Awan, the President’s counsel in ZAB case, for passing contemptuous remark against the judiciary. Former President Gen. (R) Pervez Mushrraf has written to US leaders seeking their help against his arrest on return to Pakistan. He reportedly conveyed to Washington that Pakistani establishment at the highest level is engaged, behind the scenes, to ensure that their former boss is not humiliated on his return to Pakistan. Parliamentarians from Pakistan and India have expressed their resolve to use the third round of dialogue to enhance trade and economic relations between the two countries. According to International Centre for Asset Recovery of the Basel Institute on Governance in Switzerland, President Asif Ali Zardari and his late spouse Benazir Bhutto were allegedly
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Lt. Gen Ahmed Shuja Pasha, Chief of ISI, reportedly held a secret meeting with former President Gen.(R) Pervez Musharraf in Dubai in a failed attempt to persuade him against returning to Pakistan during the present volatile political atmosphere. In his profile interview with Christian Science Monitor, Mansoor Ijaz, the key character in memogate scandal, has said that when he testifies in the inquiry about the memo he will not spare Pakistan’s ISI or the military being an umbrella for the proliferation of extremism. Talking to reporters in Islamabad on January 29, Prime Minister Yousuf Raza Gilani hinted at holding the general elections any time after the presentation of the federal budget. In a separate statement issued on January 23, the Supreme Court Registrar Dr. Faqir Hussain clarified that the apex court had not stayed the holding of by-election on casual vacancies in the country. Instead, the Court had directed the Election Commission of Pakistan not to hold bye-election on the basis of polluted/un-verified voters list. Central Shoora of Jamaat-i-Islami has called for immediate announcement of general elections under an impartial government and an autonomous Election Commission. Prime Minister Yousuf Raza Gilani told newsmen in Islamabad on January 25 that the decision of the Army Chief and Director General, ISI to file rejoinders in relation to memogate in Supreme Court was not unconstitutional. Punjab Chief Minister Shahbaz Sharif on January 26 said he would take personal responsibility of providing complete security to Mansoor Ijaz if he comes to Punjab to record his statement in the memo case. February 2012
N ational Briefs Pak economy last month According to Ministry of Finance report submitted to National Assembly on January 6, Debt to GDP ratio has declined from 60 percent to 59.3 percent of GDP and would further come down to 58 percent of GDP by end of fiscal year 2011-12. FBR has reportedly informed the Senate Standing Committee on Finance that 28,802 missing commercial containers under Afghan Transit Trade have caused Rs. 55 billion revenues loss on account of duties and taxes. Disbursement worth $ 493 million was made to Pakistan by different international donors during the first six, months of the current fiscal year 201112. This included $ 340 million provided by Asian Development Bank and $ 5.67 million disbursed by the World Bank.
Pakistan’s trade deficit during JulyDecember 2011 swelled to $11.476 billion , up by 38.48 percent, against $ 8.287 billion for the same period of last year. Turkmenistan has agreed to supply gas on the delivery point at Afghanistan – Turkmenistan border at 55 percent of Brent oil parity. Pakistan will start repaying the $ 7.6 billion IMF loan in February , with the first tranche of $ 1.2 billion that has been allocated in the budget 2011-12.
Pakistan’s exports during December 2011 were valued at US $ 1.854 billion which was 11.5 percent lower than US $ 2.094 billion during December 2010. Pakistan’s overall exports during July – December 2011 were US $ 11.241 billion compared to $ 10.815 billion in the corresponding period of the last year showing 3.94 percent growth. Overseas Pakistanis remitted $ 6.325 billiin in the first half ( July-December 2011) of the current fiscal year showing an increase of $ 1.034 billion, or 19.54 percent over remittances in the corresponding period last year. “Waste Buster”, a Lahore based waste management company, has introduced their Refuse Derived Fuel (RDF) based gasification plant in Pakistan market to combat current energy crisis faced by the industry. The gasification units are capable of producing gas starting from 2,000 cft/hr to 26,000 cft/hr using different types of waste materials.
The Asian Development Bank will provide $ 513 million loan to Pakistan for building Khanki Barrage on River Chenab and the country’s power transmission infrastructure. Banks have reportedly agreed to buy/subscribe to Rs. 150 billion of Term Finance Certificates to adjust circular debt. US Consul General in Karachi has indicated US keenness to make investment in the energy sector of Pakistan to help overcome crisis like situation faced by the country. SBP has enhanced the scope of financing facility for establishment of new power projects using renewable energy for promoting the use of renewable energy and meeting the growing electricity demand of the country.
According to Pakistan’s Ambassador to South Korea, a paradigm shift for Korean investment has been observed and now they are prioritizing to invest in Pakistan and other regional countries. Energy and trade managers of India would likely to visit Islamabad in midFebruary to finalize export of estimated 500MW electricity to Pakistan. Meanwhile, Pakistan has signed an agreement with an Iranian private company to import 5000 MW of electricity from Iran.
-Afghan pipeline project inked on January 17 to provide 3.2 billion cubic feet from Turkmenistan.
According to a World Bank report, Pakistan’s GDP growth touched the lowest level amongst all regional states of South Asia in 2010-11, while it is projected to stand at second in the bottom in the ongoing fiscal year 2011-12 French Ambassador Philippe Thiebaud said on January 16 that the European Union will give ‘generalised system of preference plus’ status to Pakistan by 2014 so that it could avail duty concessions on its exports to European Union member countries and strengthen its economy. On January 17, Polish ambassador Dr. Andrzej Ananicz said at Peshawar Press Club that Pakistani textile products will get duty free access to European Union market as it manufacture international quality products. He said that Pakistan has a good potential for export of seafood also but its standard requires to be improved. A consortium of US-based lignite mining giants has offered to invest $ 10 billion in a large energy complex in Thar to produce 6,000 MW of coal-based power and introduce for the first time in Pakistan the concept of gasification and production of liquid fuel from coal. Kabul has assured Pakistan of all necessary support for $ 7.6 billion Trans
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According to Pakistan Bureau of Statistics, CPI inflation swelled by 10.87 percent during July-December 2011 over the same period of last year with persistent double digits inflation for last 42 months. The Economic Coordination Committee of the Cabinet on January 3 gave approval to the purchase of 378,000 tons of sugar @ Rs. 46,250 per ton. It also approved a US $ 200 million sovereign guarantee for Iran-Pakistan gas pipeline. Ministry of Finance is reportedly confident of generating around $ 500 million through floating Euro-Bond in international financial market for which formalities have already been completed. Pakistan has reached currency swap with China and Turkey . Currency swap with China would help Pakistan save $ 1.4 billion worth foreign exchange each coming fiscal year. Currency swap with Turkey would help save around $ 1.5 billion annually. February 2012
E ditorial Dilemmas the sleepy economists now confront
E
freedom to acquire other corporations – conomists the world over confront a need billions from their sovereigns in order dilemma; their axioms and theories are just to survive till things take a turn for the being proved wrong because governance better. Devastation caused by the ‘acquisihas taken a historic dive giving the imprestion’ storm wasn’t foreseen; ‘economies of sion that rationality – basis of their axioms scale’ – a delusive concept–allowed the and theories -has, by and large, become a creation of these ‘too-big-to-fail’ monstrosipart of history. Three cheers for market ties. de-regulation and the self-deluding belief that markets are self-correcting! While economists can defend their muted role by pointing to the fact that they weren’t While a major assumption of the economanaging the affairs of the state, they carry mists – sovereign risk is zero – had already the blame for not sounding the alarm, and been proved wrong by the democracies in loudly, to warn their sovereigns and wake-up the West (led by the great United States of Avijit Banerjee the sleepy masses; the view gaining credence America), now questions are being asked is that economists too were asleep. about the rationality of yet another key concept – the debt to GDP. Even now, the economists haven’t bothered to point out this glaring flaw in the debt to GDP ratio. It took a brilliant exAn unsettling question being asked of the economists is that, banker – Avijit Banerjee (who lives in London) to highlight this in this ratio, while debt refers to ‘sovereign’ debt, GDP is to flaw to those managing the affairs of the state in United Kinginclude resources of not just the sovereign, but of the entire dom. Yet, the issue has not been discussed in the British media economy i.e. including the private sector. If the resources of because it could shock the masses who are still being told to the private sector are not ‘directly’ available for retirement of admire democracy with its lethal flaws. the sovereign debt, shouldn’t this ratio be revised to compare only the sovereign resources with sovereign debt? The fact that the classical economic axioms and theories that hold subject to the pre-condition that ‘other variables remain This argument makes sense; what is tragic though is that it constant’, finally led to the evolution of ‘applied’ economics took the current crisis to highlight the irrationality therein. It implying that ground realities cannot be ignored, and the most was this irrationality (and blind denial thereof) that allowed important thereof is the profile of changes in the values that sovereigns to borrow well beyond rational limits, and now sit societies recklessly begin to accept as the new realities. on levels of debt that, in reality, bear no relationship to their foreseeable capacity for revenue generation and repayment. What we face today is the outcome of the slide in our values that we ungrudgingly agreed to accept. This change not only This is a tragedy since now there are widespread expectations belied more forcefully the assumption about “other variables about defaults by most sovereigns. Consequently, those hard being constant” but also magnified manifold, in fact, worsened pressed sovereigns are struggling to borrow even to pay the the impact changed values have on expected outcomes of salaries of their employees, let alone meeting their repayment adopting the policies envisaged by economic theories. That’s commitments on their maturing short- and long-term debt. not what you expected of economics as the guide to making The worst example thereof is provided by Greece but many rational decisions. others, until now supposedly well-managed states, are getting closer to default. Sounds like the Pakistani scenario? It does. A key aspect that wasn’t emphasized as vigorously as should have been the case was the quality of governance in managing Given this huge distortion in the debt to GDP ratio, the fact national economies. Under-emphasis on the governance aspect that several European economies had debt to GDP ratios of permitted politicians to ignore the role of prudence in policyover 130 percent was undeniably insane; it reflected on how making. Not only the warnings issued (covertly as well as democracies were managing their economies but the political overtly) by national economic planning commissions were parties responsible for such profile of governance were being ignored, but those issuing them were shown the door. This re-elected over and over again, while their economists and occurred very often in the South Asian democracies. the media didn’t highlight this developing distortion that was bound to have far-reaching impact. The committed economists routinely recommended lowering sovereign borrowing limits realizing the fatal flaw embedded in If this ratio is revised to relate the debt of a sovereign debt to the traditional debt-to-GDP ratio, but were warned not to its tax/non-tax revenue economies everywhere could end up challenge the rationality of this ratio, not out of respect for with worse debt-to-GDP ratios compared to those they now traditions but because the flaw permitted the state to borrow have. Pakistan’s current debt-to-GDP ratio of 60.9 percent and pursue politically (not economically) popular goals. could be far higher given the fact that debt servicing in FY11 amounted to 33 percent of the total state revenue. The price of this combined failure is the almost lethal overindebtedness of the state and its consequences for the future. This is a frightening scenario because the ongoing recession This state of affairs reinforces your belief in the proverb that perpetrated by de-regulation of the private sector has caused failure of big corporations – the monstrosities created by the goes something like “common sense isn’t very common”.
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February 2012
E ditorial Increasing prices: is that the route to cutting consumption?
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The gas fields from which increased supply could be injected into the national grid include Sui, Kunar Pasaki, Kandh Kot, Sinjhoro, Rehman, Haseeb and Jhal Magsi. Besides increased supply from these fields, Dewan Petroleum could supply 150 MMCFD, if only it was paid a fair price for its supplies. With this input, gas shortage shouldn’t have been as bad as it is. Benazir Income Support Programme and other such efforts envisage dishing out cash. But if this cash was to be grabbed back via higher prices of essentials, it was a flawed idea from day-one since it manifested the gross lack of basic economic sense. What was required was bolstering the supply side. Assuming that tiny cash handouts (which reached only a few) would remedy the woes of the millions living below poverty line was grossly incorrect, and if the grand trick was to gain popularity courtesy advertisements about these programmes, it only proved that its inventors were, at best, clever-by-half. What the situation called for was plugging the supply gaps. It is questionable whether, to-date, anyone in PPP, MQM or ANP–that form the coalition government–reflected on this harsh reality since, had that been the case, reliance on hiking the prices of essentials won’t have been the chosen route to closing the fiscal gap; the focus would be on increasing their supply to increase GDP growth, and hence tax revenue. The scenario developing in Punjab is worrying because if the textile sector, whose bulk is located in Faisalabad, is forced to cut, production massively it would result in lower export earnings, which could expand the trade and Current Account deficits, force a speedier slide in the Rupee’s exchange rate, and consequently cause inflation to rise further. Gas and energy shortages could impact other sectors as well thereby forcing imports of what the domestic sector has the capacity to produce. But above everything else, this development could crystallize even larger layoffs and unemployment. Put together, these upsetting developments could trigger the sort of chaos that would hasten the process of regime change that, as yet, has not taken a decisive shape. In the short-term, supplying domestic consumers with gas 24 hours a day at the cost of closing down the industry could be disastrous. Laid off workers can live with reduced domestic gas supply but not without jobs. The saner course is to cut domestic gas supply to three shifts of two hours a day. The gas so saved could keep industrial units operative at least 16 hours a day, allowing most units to achieve the economies of operating at break-even levels. That’s the route to keeping the wheel of the industry moving. This requires urgent steps to credibly implement this supply routine, and arrangements to inject the available gas into the system. For the long-term, we need to discover and pump more gas. There is no other option for a debt-ridden country like Pakistan.
efty increases in the prices of petroleum fuels and power tariffs were the new year gifts the government offered to the nation. Not surprisingly, the nation responded by engaging in violent day long street battles with the law enforcers in many cities including the federal capital, of which the scary ones were fought in the Punjab and Khyber Pakhtunkhaw. This was not an unexpected public response; during the past three years, fuel and energy scarcity has escalated consistently while a clever-by-half regime kept promising containment of these shortages (and giving deadlines therefor) while supply gaps, especially in the power sector, were not plugged. This was a manifestly wrong policy, whoever its inventor; it damaged the credibility of the regime beyond repair, which was sheer bad politicking. What made this worse was the fact that while fuel and energy prices kept rising, the supply side went from bad to worse. This trend gave people the feeling that the government was only interested in enriching itself. If the regime assumed that by simply raising energy and fuel prices it can reduce their demand it was dead wrong, as proved by the escalating public dissent. Tragically, the mess this flawed policy created also proved that either the regime does not know or isn’t bothered about knowing the big difference between ‘essentials’ and ‘non-essentials’. To think that demand for essentials can be curbed simply by increasing their prices is, at best, a dumb idea. The route to successfully confronting this scenario is bolstering the supply side for which the regime had a period of over three-and-a-half years during which it did virtually nothing in terms of bolstering the supply side. Escalating global oil prices warranted doubling, in fact tripling efforts to maximize the local production of this essential because sustained shortage thereof implied cutting down on industrial activity, closure of businesses, loss of faith in the economy, and possible flight of capital. All of it is happening because the regime focused its energies solely on defending itself in the name of ‘democracy’, not good governance. A good democracy focuses on sustained and cheap supply of essentials if it wants to fulfil its commitments to its electorate – the low-paid majority in almost every country and far more so in a country like Pakistan. Hiking the prices of essentials is the self-destructive way of going about building popularity. In the context of power supply, even now line losses haven’t been brought down from 15 percent of supply, and gas and oil supply remains where it was four years ago. While natural gas production from various gas fields did rise by an estimated 700 MMCFD, the fresh supply could not be injected into the system because arrangements therefor could not be put in place courtesy the prolonged neglect of this key sector by successive regimes, civil and military.
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February 2012
E ditorial Ron Paul – a voice of sanity in the US, at last
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on the wars that US fought in the last epublican presidential hopeful Ron four decades on the basis of concocted Paul is a ray of hope not just for the but well publicised allegations – hidden Americans but for the world as a whole. anti-America terrorists in Lebanon and After four decades of near insanity (starting Somalia, perpetrators of 9/11 being with Richard Nixon becoming president) Afghanis, WMD in Iraq, and ‘popular’ America has been blessed with a politician dissent against Gaddafi, to justify who is vocally opposed to America pursuinvasion of these states. Ron Paul wants ing a self-destructive image of a world the Americans to accept that their past power gone mad. At present, he is ranked administrations acted recklessly and third in opinion polls but, hopefully, will rashly. Therefore all he asks of the reach the top as his message is heard by Americans is to accept these errors, and Americans all over the US. elect a man who can rid the administraBut what lies ahead is a tough task because tion of such elements to rebuild America the neo-cons are still in key positions in the Ron Paul and its image all over the world. He is also US hierarchy, and would do every thing the first American leader to openly oppose the invasion of (using their marginally reduced clout under Obama) to Iran that Israel is pushing the US to launch, tactlessly in the ensure that Ron Paul’s views are cunningly misinterpreted election year. But far more importantly, Ron Paul wants the by the US media, wherein Zionists–the lot that has successAmericans to focus their huge intellectual and innovative fully turned the US into its proxy–retain the upper hand. energies not on developing technology meant for waging What went on in the US during the past four decades was wars, but which serves mankind – the distinction that used in blatant contravention of the US constitution but the to be America’s pride until leaders like Eisenhower led the Zionist lobby made sure that US actions–the worst of them country but not thereafter. being its “pre-emptive” invasions–were cleverly profiled as There was a time when nations the world over imported a the actions that assured national security and thus gained variety of “made in USA” goods – textiles, medicines, X-ray validity among the ordinary Americans. This was a cleverand cameras, freezing plants, cables, power-generation by-half trick since, in the end, it left America indebted to a units, automobiles, construction and earth-moving machinpoint where it knows not how to pull itself out of that ery, air-crafts, etc. That is now history because the rest of seemingly bottomless pit. the world has left arms manufacturing to America while it is How Western businesses decide what to disclose and what excelling in all other fields making America an insignificant to withhold from the public is guided by their priorities, not exporter because it lost its advantages courtesy its fatal shift the principles they apply to the rest of the world. Respondof focus. ing to the request from the Supreme Court of Pakistan to The aftermath of cyclone ‘Katrina’ (that hit the better part disclose details of the conversation that took place between of the US south coast) had exposed the developing holes in American Mansoor Ijaz and Hussain Haqqani, Research In the physical infrastructure of the US. Those holes reflected Motion (RIM), the makers of BlackBerry, said “we are gross negligence of the repair, expansion and modernizaguided by appropriate legal processes and publicly tion of the infrastructure courtesy diversion of huge disclosed lawful access principles in this regard as we chunks of resources to America’s invasions of foreign balance such requests against our priority of maintaining countries. Pakistanis lived through three wars with India, the privacy rights of our users.” But Western businesses and since 1979 are suffering the side-effects of the Afghan don’t find anything wrong with the US deploying satellites war, courtesy the now extinct Soviet Union, and the US, and globally to secretly watch people (even in toilets) as well as know precisely how this madness (and corruption on top listen to the conversations they are having. thereof) impacts an economy. It is not much different in the Ron Paul very wisely points to this insanity, and its US. Stories about huge bungling in defence expenditures outcome; a truly patriotic initiative. He boldly opposes the occasionally come to the surface, but are quickly hushed up continued presence of American military in foreign counby the media. But not so in Pakistan. tries because it has given people all over the world a Ron Paul faults the roles of CIA, FBI and other intelligence horrible image of the US, even though governments in agencies because he wants these agencies to tamper their many of these countries are still friendly with the US. This role to credibly dispel the negative propaganda about them reality, that the US media tries to cover up, has been in the global media, and stop indulging in acts that contraconfirmed by delegations of Senators and Congressmen vene the parameters laid down by the constitution and the that have been visiting these countries and meeting people guidelines thereon provided by George Washington. there. It is not surprising that he is being portrayed by the media What Ron Paul rightly emphasizes is refocusing on domesas the supporter of an ‘isolationist foreign policy’ and tic issues to contain the miseries of the Americans that are being caused by gross lack of resources, which were wasted radical civil liberties but admit his rising popularity.
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February 2012
E ditorial Exchange reserves, the Rupee, inflation and investment
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he State Bank of Pakistan (SBP) has expressed its worries about the economy’s present profile and likely changes therein in the near future at different forums, the last time in the Senate. The reason for its concern is the near drying up of foreign investment flows that remained a sizeable source for meeting the annual trade deficit throughout the past decade. SBP Annual Report for 2010-11 also contained warnings and emphasized the need for urgent multi-faced remedial actions by the government to contain the trends that pointed to the build-up of pressures on the foreign exchange reserves in the wake of higher oil prices, even though marginal reduction in com- modity prices had helped the CPI to fall fractionally. What the government has not been able to materialize are its promises to make up for the decline in foreign direct invest-ment flows by floating Sukuk bonds for $500 million, Euro-bonds for another $500 million, force UAE’s Etisalat to pay the remaining $800 million of PTCL’s privatisation proceeds, and expedite the payment of nearly $1.4 billion overdue from the US on account of expenses of the coalition forces borne by Pakistan. Another $800 million may be generated through auctioning of 3G telecom licenses. These inflows (if they materialize within 2011-12) would add up to $4 billion. But that won’t be enough because there are two other areas that will create deficits viz. foreign trade and servicing of external debt. Based on current demand trends, and the likely rise in oil prices, SBP expects that imports will be in the region of $41 billion and exports may, at best, reach $25 billion leaving a hefty trade deficit of $16 billion. Inward foreign remittances could plug it to the extent of $13 billion, leaving a net trade deficit of $3 billion. On top thereof, Pakistan’s debt servicing requirement would rise to $7 billion over its 2010-11 level of $5.78 billion due to the addition of $1.2 billion that will become payable to IMF in the second half of 2012. These figures imply that while the overall need will rise to $10 billion ($3 billion of trade deficit and $7 billion on account of servicing of external debt), the projected inflows referred to above would provide $4 billion leaving a net overall deficit of $6 billion to be met by diluting the exchange reserves (not by defaulting on external debt). Currently, foreign exchange reserves are estimated to be in the region of $16.8 billion of which the share of the banking sector is around $3.5 billion, and funds borrowed from IMF amount to $8.9 billion. This implies that official reserves are just about $4.4 billion, but increase to $13.3 billion after the funds borrowed from IMF are added back. These clarifications aside, in the overall scenario, the present reserves of nearly $16.8 billion back the Rupee, and cover just about five months’ imports. If these reserves were to deplete by $6 billion (the overall net deficit) leftover reserves ($10.8 billion) will reflect capacity to pay for just over 3 months’ imports.
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This development, which will weaken Pakistan’s country risk perception abroad, will place the import sector, especially the petroleum sector, at a disadvantage since exporters will then seek confirmation of import Letters of Credit (LCs) issued by banks in Pakistan, by well reputed foreign banks–a tough job in a scenario wherein European banks too are in trouble. To begin with, foreign banks will reduce their lines of credit for confirming LCs of banks domiciled in Pakistan. Besides this hurdle, foreign banks will also charge LC confirmation commission at higher rates; even at present these charges are as high as 5 percent of the LC amount, effectively increasing import price by as much (and adding to inflation). This not very attractive scenario assumes that the fall in our exchange reserves would be limited to $6 billion–a view that pre-supposes that foreign inflows amounting to $4 billion (as referred to earlier) do materialize. This, in itself, is an over-optimistic view since, in the current global economic setting, finding investors who are prepared to take a risk on Pakistan would be a tough proposition, and those who agree to invest, will buy Sukuks and bonds at substantially high discounts–as much as 10 percent or more. If Pakistan succeeds in getting $800 million from Etisalatan effort that hasn’t succeeded for the past four years–and also gets paid by the US for expenses that Pakistan has incurred on behalf of the coalition forces engaged in Afghanistan, all it could assemble would be around $2 billion. In that case, its net external deficit will go up to $8 billion implying thereby that its reserves will fall to $8.8 billion, and equal to just two-and-half months’ imports–an outcome that could worsen the current shaky country risk perception. Aside from the woes of the import sector and banks that will finance it, the most damaging impact would be on the Rupee exchange rate (and on the landed costs of imports), especially petroleum products–a cost that has a snowballing effect, and pushes up the cost of everything either via the cost of energy (i.e. electricity) consumed in its production, or via the cost of its transportation from farms and factories, to markets. This foretells higher inflation–the least desirable of developments in today’s crisis-ridden Pakistan. In the current global economic scenario, Pakistan needed its leadership to be more visionary than ever before in building a positive image of the country to encourage the Pakistanis living abroad to come and invest in economic sectors of their choice. It called for cleansing the tax, regulatory and security administration to promote its image of a transparent system. It is our misfortune that we are led by those who place their personal and political interests above national causes. What we live through day in day out is neglect of issues that should have been the top priority of the government but it remains entangled in country-damaging political battles. February 2012
E ditorial Pir Pagara – a legend in Pak politics
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ith the sad demise of Shah Mardan Shah–II, popularly known as Pir Pagara, the nation has lost a great patriot, a veteran politician, humane and kind-hearted, sympathetic forgiving, a big philanthropist, and a courageous and brave man. He was the son of a father who played leading role in the struggle against the British colonialism and offered sacrifices that remain a glorious chapter of our history. The Head of Pakistan Muslim LeagueFunctional, and spiritual leader of the Hurs, Shah Mardan Shah-II had a great dominating and distinguished personality and played instrumental role in the country’s political controversies and movements. He was considered as Pakistan’s one of the most well informed politicians and was known as a maker and breaker of political alliances. Being close to the establishment, Pir Pagara was known to possess a reservoir of classified information which he shared with others without inhibitions. This had created an aura of a master politician who had the ability to feel the nation’s pulse in politics. Kingri House, his Karachi home, was thus the centre of attraction for the politicians from all over the country for help and advice. The place was also the focus of media attention for news and views on the country’s politics about which he often made witty and humorous predictions. The life account of Pir Pagara offers an interesting reading. He was born on November 22, 1928 in a small village Pir Jo Goth of district Khairpur Mirs . His youth was traumatized by the execution of his father Hazrat Pir Syed Sibghatullah Shah-I by the British for ‘treason’. Therefore, he received his early education under the patronage of Khalifas at Dargah Sharif. Pagaras are known for resisting foreign invaders and helping the Muslim freedom fighters. At a time when people all around the place were kneeling before the British Empire to seek favours and rewards, his father along with a small band of desert fighters valiantly challenged the authority of the colonial rule and was arrested and hanged to death on 20th March 1943 by the British. For three years then on Pir Pagara was kept under house arrest along with his family members. In 1946 he was exiled to Liver Pool (England) where he was admitted to a private school which was situated in a far flung rural area and was no less than a hell. He braved the situation and did his graduation from England. In 1949 the first Prime Minister of Pakistan Liaquat Ali Khan met him in England and assured him of the restoration of the status of Pir Pagara which promise found practical manifestation on 4th February 1952. During the last 30 years of the British rule, the image of his
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spiritual followers, the Hur Jamaat, was greatly tarnished and they were branded as terrorists. They were scattered and forced to live a life of deprivation. On his return from England and restoration of “Gaddi”, Pir Saheb had the challenging task to organize the Hurs, improve their tarnished image and restore their lost confidence. He took special interest in their education and making them law abiding and peaceful citizens. Pir Saheb made relentless efforts and succeeded to rehabilitating them and getting for them the status of a parliamentary force which also became financially sound with mutual help of each other within a short period of time. Pir Pagara attached great value to education and extended help and support for its promotion. It was his love for the cause of education that he set up a huge library in a double storeyed building in Pir Jo Goth. The library has hundreds of thousands of books in English, Urdu, Sindhi, Arabic, Persian and other languages and is open for all those who wish to quench their thirst for knowledge. The facility is available without any discrimination of caste or culture. He supported many students and encouraged them not to discontinue their studies due to financial constraints. He sponsored their expenses for study in several expensive educational institutions in the country and abroad. He also advocated education and equal rights for the women. Pir Saheb actively participated in the country’s politics but not as a power-seeker but as a patron of a kind of politics which is above and beyond ethnic, parochial and sectarian considerations.He brought common people from his party to the assembly. In 1977 he did join the opposition’s PNA (Pakistan National Alliance ) but not for power for himself but to give the Alliance the weight and clout that ultimately succeeded in bringing an end to the PPP government led by Mr. Zulfikar Ali Bhutto. His heart was filled with the spirit of patriotism and contributed immensely to the defence of the motherland. A practical demonstration of his deep attachment to the country’s defence and protection of territorial integrity was seen in the 1965 and again in 1971 wars with India when his spiritual followers , the Hurs, fought with the enemy alongside the Pak Army as the Hur Mujahid Regiment. This great legendary figure passed away on January 10, 2012 in a London hospital at the age of 83 marking to an end the impressive chronicle of a remarkable life . Pir Saheb is no more with us . But he has left behind a legacy that will continue to haunt our memory for years to come. May Allah rest his soul in eternal peace and give the bereaved family the courage to bear this irreparable loss. February 2012
P olitics An Israeli invasion of Iran: what could that lead to?
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he justification being contrived for attacking Iran is manifestly weak because, as with Iraq, IAEA has not given any definite estimate suggesting that Iran now has nuclear weapons ready for launching, as claimed by Israel. Statements of the US top brass about plans for a possible punitive invasion of Iran are therefore being interpreted as signs of its reluctance for the eventual launch of the attack. But Israeli Premier Benyamin Netanyahu and Defence Minister Ehud Barak are convinced that Iran must be attacked. This is in spite of the fact that, back in 2010, former Chief of Mossad Meir Dagan, Chief of Shin Bet Yuval Diskin, as well as Chief of the Israeli Defence Forces Gabi Ashkenazi, had blocked this fatal adventure that was being pursued by both Netanyahu and Barak. In this context, Dagan went on to tell the Hebrew language daily Maariv about his fears “that there was no one who could stop Bi bi (Benyamin Netanyahu and Ehud Barak)” from doing what they were out to do. Dagan regretted the fact that these two didn’t realize that an attack on Iran could endanger the very existence of Meir Dagan the state of Israel. Besides, such an attack could set the Iranian nuclear programme back only temporarily at a high risk to Israel; it meant that Iran’s nuclear capability was beyond destruction. The rational option was to negotiate with Iran a workable security arrangement, which is what Leon Panetta had tried to explain to the Israelis on his October visit to Tal Aviv. During his talks with the Israeli leadership, he had also tried to obtain Israel’s commitment to refrain from launching an attack on Iran without US clearance, but the Israelis refused to give any such assurance. What the Israelis manifested by this refusal was that they couldn’t be bothered about the fact that 2012 was the election year in the US, and hence not the time for a serving US president (also contesting As the result the coming elections) to of war with launch any invasion that could prove far more divisive Iran, sunken and controversial than US battle ships, invasions of Afghanistan, oil tankers Iraq and Libya. and a whole In December 2011, speaking variety of ex- at the Brookings Institution, plosives float- Leon Panetta hinted that, as the result of a war with Iran, ing all over the straits of Hormuz will be the straits blocked not just during the period of hostilities, but well could deter beyond it, and sunken battle movement of ships, oil tankers and a whole any vessel for variety of explosives floating all over the strait could deter years.
by A.B. Shahid
the movement of any vessel for years, not just oil tankers. This is a highly likely scenario, which can be denied only at a phenomenal cost to the whole world, as accepted by Panetta. During his address, Panetta warned that the US would be blamed [for this chaos], and US could become the target of retaliation by Iransinking of its ships and striking US military bases in the Middle East.. This stance was aimed at softening Iranian anger to ensure that in the event of an Israeli invasion, Iran doesn’t target US warships parked in the straits of Hormuz. This is a clever trick because war in the straits of Hormuz will stop oil supplies from Arab States and its worst sufferers will be China, India, Japan and Korea –trading rivals the US wants to subdue–at no cost to the US. Disruption of oil supplies could bring these economies to a standstill and open up markets for expensive US goods. The Israelis know this, and don’t want the US to benefit without paying a price for it–share the cost [and fallout] of invading Iran. The Israelis want to dominate the Middle East but Iran, with its nuclear arms (in future), is the obstacle in that quest. That obstacle must be removed, more so because, along with a Shia dominated Iraq, it could influence the Gulf states. Like the Americans, the Europeans too consider this conflict excessively disruptive because, even though they do not rely on oil from the Persian Gulf, the resultant shift of China, India and Japan to Russia for oil supply could make Russia greedier than it now is. Oil price could rise to levels that could render EU economies non-competitive, and worsen their existing crippling woes, forcing them to become pro-Russia which the US won’t like. How ruthlessly self-centered can the Israelis become is what amazes everyone because they could not wait even to watch the Disruption of impact reduced imports of Iranian oil by China and oil supplies India (courtesy the new could open up sanctions imposed by the US markets for under Israeli pressure, and blackballing of Iran’s Central expensive US Bank, which was opposed by US Secretary of Treasury goods. IsraeTim Geithner) would have lis know this on the global oil price. The and don’t initial market response has want the US been a steady rise in oil prices. This scenario would to benefit worsen radi- cally if even without reduced oil supplies won’t reach China, India and Japan paying a price after the straits of Hormuz for it. is closed.
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February 2012
P olitics planning for facing up to a scenario that may crystallize. Countries, whose oil supply could be cut off, do not have the capacity for storing oil sufficient to meet their requirements beyond few weeks. Pakistan’s oil storage capacity is capable of holding a quantity that meets its normal requirements for just three weeks. But indications are that this war could last well beyond a few weeks because Iran won’t be a ‘walkover’ like Iraq. Also, on- and off-shore damage could be immense and lasting, and not just confined to Iran. US invasion of Iran and the widespread misery it will cause would have a shattering impact on world peace, in fact worse than that caused by WW-II, but its lasting impact will be the bankruptcy of almost a third of the countries that now adorn this planet; others will come under stress due to the systemic effect. This chaos could have unmanageable socioeconomic consequences for regimes of every shade and belief. Poverty, against which (according to the World Bank, Asian Development Bank and International Monetary Fund we are fighting a losing battle, will escalate manifold. It is simply baffling to imagine the level of misery that would hit the billions who will fall below the poverty line, virtually overnight, for no fault of theirs, and it would be beyond the capacity of any government to explain to them the reason for it. In this chaos, demands for destroying those (Israel and its allies) responsible for the misery, will reach frightening levels. How governments (with their hungry and immobile armies) will face up to nation-wide unrest, is simply mind-boggling. Tragically, all this could happen to appease just one country–Israel–that has a massive clout over Western regimes. What may follow the destruction of Iran’s budding peaceful nuclear capability is not hard to imagine. As early as October 2002, in an interview with Larry King on the CNN, a world famous artist Harry Belafonte had made some predictions. His language may seem a bit disjointed but what he said was “at a time when the world is getting ready to go up in flames in a war [with Afghanistan] that's hugely ill-advised, we are going to go [that the US later did] after Iraq. [Do] you know where will we go next? Iran. And after Iran when our present friends [the Musharraf regime] fall out of favor with us, do we go after Pakistan?” Belafonte was certainly no crystal ball gazer. Yet, he was not much off the mark when you consider that, till today, everything he had predicted has happened. It leaves you with huge doubts about the future. What worries the Pakistanis is that all his predictions may also turn into a reality. Let us not forget that the US places its interests above everything else. Friendship, loyalty and sacrifices simply don’t count. According to the US, no one is indispensable, irrespective of how sincere he may have been. Pakistan’s fate as a US ally proves that adequately. It leaves Pakistanis with doubts about the future and the fate they are condemned to.
Drastically reduced oil supply could push its price as high as $200 a barrel. Output of countries like Russia, Venezuela and Nigeria will not compensate for the loss of supply (over 20 percent of the global demand) from the Persian Gulf. Some fifty countries could be crippled by the stoppage of supplies from the Gulf, and default on their external debt re-payment. Consequently, IFIs and commercial banks could face serious liquidity problems, even bankruptcies. The affected countries could suffer power shortages which, besides shutting down large chunks of their industry, may force the closure of vital civic services such as their transport systems. What we may be heading for is sustained global chaos just because Zionists (not all the Jews) want their bewildering dream of world government materialized, no matter what it costs the rest of the world. But the new sanctions thrust on Iran did not fulfil Israeli wishes because, thus far, they have not been truly crippling for Iran. But future oil price hikes would increase for the US the cost of maintaining its 3-year mandatory oil reserves and hurt Obama’s image in an election year. Netanyahu, who has made his dislike for Obama well known, would then use one or more of the several Republican Party presidential hopefuls as the Israeli tools to accuse Obama of being soft on Iran. So far, Iran’s Arab neighbours have responded to the threat of hostilities in the Persian Gulf in an odd manner. They are buying more arms from the US reflecting a resolve to fight rather than ward off the looming war. Is it for the love of the US or due to ignorance about how they would be affected by the war? Amazingly, they do not appear to realize that a war in the Persian Gulf would be destructive for that region, and have prolonged crippling consequences for their economies. Gulf States had forgiven Iran for the losses they suffered in the first Gulf War because responsibility for those losses lay squarely with Iraq since Iraq, and not Iran, was the invader. The fact is that the US and Europe had encouraged Saddam Hussain to invade Iran so as to teach the Iranians a lesson for overthrowing a US stooge–the Shah. But the way a US-sponsored predominantly Shia regime in Iraq was induced to treat Saddam Hussain re-kindled the Shia-Sunni schism, and the US kept painting harrowing pictures of what a nuclear-armed Iran could do to the Gulf. Even if Iran’s neighbours do not end up with big physical damage–collateral damage in US parlance–or the effects of radiation to be released from bombed out Iranian nuclear facilities, Persian Gulf will be nearly crippled by prolonged closure of straits of Hormuz. The poorer, more volatile, and more dependent an economy is on oil from the Persian Gulf, more exacting would be the distress it will confront. It is time regimes in these countries realized what lies in store for them, and started contingency
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February 2012
Cover Story Immunity vs. accountability: the conflict that must end
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n the contempt of court proceedings against Prime Minister Yousuf Raza Gilani, the next hearing on February 2 could be an historic event in the legal history of Pakistan because it is to establish whether accountability of the key officeholders of the state– president, provincial governors, prime minister, federal ministers, ministers of state, chief ministers and the provincial ministers can be postponed, or even condoned. A reading of Article 5 of the constitution leaves none in any doubt that every citizen of Pakistan, irrespective of his or her place or position, must abide by the constitution and the law, which implies that the constitution makes no distinction of any kind between the citizens of Pakistan, but the impression one gets after reading the first paragraph of Article 248 is that immunity is available to the abovereferred officeholders for acts committed in exercise of constitutional powers and performance of the functions of their offices. It makes sense since actions constitutionally sanctioned cannot be faulted. But actions outside the powers conferred on all officeholders by their offices and acts defying mandates of their respective offices will not be immune to scrutiny. Subclause (1) clearly states that the provisions of this article can’t block any entity intending to file a case against federal or provincial governments but sub-clause (2) of this article gives impression that while cases can be filed against federal or provincial governments, the punishment for misconduct cannot be awarded to the ‘officeholders’ named in this article; this explains why it is bureaucrats, not politicians, who face the consequences of such misconduct. Sub-clause (3) also provides protection to the officeholders mentioned in this article from arrest or imprisonment. But sub-clause (4) states that, for any alleged misconduct of these officeholders in their personal capacities, whether before or after assuming their offices, civil cases can be lodged against them. What is required is that such proceedings commence after giving the officeholders 60-day prior legal notice. What these clauses do not dwell upon is that if these office-holders are adjudged guilty of offences, will they be exempted from serving the punishment under the court’s sentence. On the contrary, sub-clause (3) states that convicted office-holders are exempt from being arrested and serving a prison sentence. Besides, it is also not clear whether the tried and convicted officeholders named in this article would be asked to vacate their offices, or will they continue to hold those offices in spite of being convicted. What most Pakistanis find odd is that, courtesy Article 248, the said officeholders will be free despite committing acts of misconduct, and therefore appears partial because it elevates these officeholders to the pedestal of monarchy compared to the ordinary Pakistanis; this is in conflict with the provisions of Article 5 sub-clause (2) because, while Article 248 suggests that no one (whether officeholder or
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Constitutional provisions on accountability
Article 5 of the constitution reads as follows: Loyalty to state and obedience to constitution and the law: (1) Loyalty to the state is the basic duty of every citizen. (2) Obedience to the constitution and the law is the inviolable obligation of every citizen wherever he may be and of every other person for the time being within Pakistan. Article 248 of the constitution reads as follows: Protection to President, Governor, Minister, etc.: The President, Governor, Prime Minister, a Federal Minister, a Minister of State, the Chief Minister and a Provincial Minister shall not be answerable to any court for the exercise of powers and performance of the functions of their respective offices or for any act done or purported to be done in the exercise of those powers and exercise of those functions, provided that: (1) Nothing in this clause shall be construed as restricting the right of any person to bring appropriate proceedings against the Federation or a Province. (2) No criminal proceedings whatsoever shall be instituted or continued against the President or a Governor in any court during his term of office. (3) No process for the arrest or imprisonment of the President or a Governor shall issue from any court dur-ing his term of office. (4) No civil proceedings in which relief is claimed against the President or a Governor shall be instituted during his term of office in respect of anything done or not done by him in his personal capacity whether before or after he enters upon his office unless, at least sixty days before the proceedings are instituted, notice in writing has been delivered to him, or sent to him in the manner prescribed by law, stating nature of the proceedings, the cause of action, the name, description and place of residence of the party by whom the proceedings are to be instituted and the relief which the party claims. an ordinary citizen) is above the law, by exempting these officeholders from legal scrutiny, sub clauses (2) and (3) of Article 248 make a visible distinction between the office-holders cited in this article and the ordinary citizens. At least that is what seems to be the case though it is for the Supreme Court to establish whether there is a plausible conflict in the provisions of these articles. If that be so, it points to the inequity in legislation by the law-makers, if not to doubts about their intentions. Recent record of politics in Pakistan conveys the impression that the officeholders (all parliamentarians) mentioned in Article 248 know about this conflict, but have opted to use Article 248 as a shield for themselves. February 2012
Cover Story This, perhaps, is the reason why the present regime insists that the officeholders mentioned in Article 248 have immunity, and therefore did not heed the advice of the Supreme Court to seek its confirmation of the regime’s assumed immunity granted by the various clauses of Article 248. In this background, it is only appropriate that Supreme Court decides whether the PM’s interpretation of Article 248 is valid. It is not the job of the Supreme Court to change the constitution but it is the sole prerogative of the Supreme Court to interpret the applicability and limits of Article 248. This would not be the first time for the Supreme Court to do so; it did so before and pointed to flaws in legislation and prompted revision of the articles of the constitution. In the instant case too there is confusion about the extent of immunity that these officeholders can presume, and commit acts that could subsequently land them in controversial positions. Globally, democracy is the target of serious allegations – primarily over governance–because democracies face the worst post-WW-II economic crisis, which owes itself to modes of governance that ranged from merely defective to downright reckless. It is time democracy lovers accepted the flaws in governance under democratic dispensations and made amends therefor. Sustaining democracy in its current form has now become an impossible task – a fact that must be accepted in the interest of sustaining this otherwise least bad system of governance. But signs are that this reality has not been accepted by the democrats, which is reflected in the resistance to make the system equitable and truly accountable. Pakistanis strongly believe that the government has failed to deliver good governance. Besides the miseries that Pakistanis suffer on account of energy and power shortages, day in day out, there are disclosures about mis-governance of the state by the in-power regime. The truth is that people have lost count of the frauds, corruption and waste in state offices and public sector enterprises are in their worst-ever state. While the cases that the Supreme Court wants re-opened are over a decade old, the fact is that there are strong rumours of similar crimes–money laundering– again being committed by the powerful in this country. In fact, this crime is cited as one of the causes of the escalating fiscal deficit because the powerful are making billions by awarding state business to contractors by accepting their grossly over-priced tenders. Indirectly, it is state money that the powerful in the regime are pocketing via contractors who are paying them by overcharging the state for the jobs they are doing (at times only partly). Instances of this nature have become routine, though accountability for such crimes is, at best, ceremonial. This is the factor due to which, in spite of record borrowing by the state, there is very little to show in terms of results. A look at the current state of the massive state-owned enter-prises like Pakistan Railways, Pakistan International Airlines, Pakistan Steel Mills Ltd., shows where the taxpayers’ money ends up. The point is should officeholders, who may directly or indirectly be involved in this mess, deserve immunity? If this faulty logic is accepted, where will Pakistan end up?
Accountability
This is hardly the background wherein the PM can justifiably claim immunity from accountability for officeholders of the state. Yet, after he appeared before the Supreme Court on January 19 to answer the contempt allegations against him, several PPP ministers and even Barrister Aitzaz Ahsan were overly appreciative of the fact that the PM had graced the Supreme Court with his presence. The impression they gave was that he had done the Supreme Court a ‘favour’. Nothing could be far from reality but, as always the case, party loyalty overcame a sense of morality. Such conduct amounts to elevating the PM to the level of a monarch. The oddest part of this affair was that responding to the Supreme Court’s call wasn’t a voluntary act of the PM. For the past two years, advised by the likes of Babar Awan, the PM defied the Supreme Court; he went to the court as the last option after Awan was initially served a contempt of court notice and then his license to act as an advocate was suspended. Hiring Aitzaz Ahsan as his advocate was at first seen as a positive sign but not after the January 19 hearing in which, surprisingly, Aitzaz Ahsan adopted Awan’s line. What will make things difficult is the fact that PM’s lawyer–Barrister Aitzaz Ahsan–had, in the past two years, repeatedly admitted publically that the PM should do what the Supreme Court had advised as early as December 15, 2009 after the National Reconciliation Ordinance (NRO) was rejected even by the sitting parliament. But as the PM’s lawyer now, he is adopting an opposite line of argument. Everyone now wonders how Aitzaz Ahsan will justify that, despite court direction, the PM’s refusal to write to the Swiss courts to re-open the closed cases against President Asif Ali Zardai did not constitute a contempt of court. He may argue that the PM did not instruct re-opening of the subject cases because he thought that under provisions of Article 248 the President enjoys immunity from prosecution. What could be the outcome of adopting this legal stand may become clear on February 2, when the court meets again to hear this case. But because, thus far, the Supreme Court has conveyed the impression that immunity provided by Article 248 is not as pervasive as being insisted upon by the PM, the verdict in this case could entail truly historic consequences. It could once and for all define the limits of immunity. The PM’s argument insisting on officeholders’ immunity pre-supposes that Supreme Court is relying on an inapplicable interpretation of Article 248 but if this was the case, the PM should have himself sought the court’s interpretation of this clause to have his point of view accepted by the Supreme Court. Now Supreme Court will interpret this art- icle and it may as well point to what we find odd – apparent conflict between the provisions of Articles 5 and 248 – an aspect that needs scrutiny, and if justified on the basis of a legal review, remedied by requisite constitutional amendment (s). The state must no longer seek protection for those who are visibly involved in bad governance; to do otherwise will give the impression that the state is no longer the institution that the citizens must protect and submit to.
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February 2012
E conomy Growth in the age of deleveraging
Excerpts from the address by Mark Carney Governor of the Bank of Canada at the Empire Club of Canada Toronto, Ontario on 12 December 2011
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hese are trying times. In our largest trading partner, house-holds are undergoing a long process of balancesheet repair. Partly, as a consequence, American demand for Canadian exports is $30 billion lower than normal. In Europe, a renewed crisis is underway. An increasing number of countries are being forced to pay unsustainable rates on their borrowings. With a vicious deleveraging process taking hold in its banking sector, the Euro area is sinking into recession. Given ties of trade, finance and confidence, the rest of the world is beginning to feel the effects. Most fundamentally, current events mark a rupture. Advanced economies have steadily increased leverage for decades. That era is now decisively over. The direction may be clear, but the magnitude and abruptness of the process are not. It could be long and orderly or it could be sharp and chaotic. How we manage it will do much to determine our relative prosperity. How we got here: the debt super cycle First, it is important to get a sense of the scale of the challenge. Accumulating the mountain of debt now weighing on advanced economies has been the work of a generation. Across G-7 countries, total non-financial debt has doubled since 1980 to 300 per cent of GDP. Global public debt to global GDP is almost at 80 per cent, equivalent to levels that have historically been associated with widespread sovereign defaults. The debt super cycle has manifested itself in different ways in different countries. In Japan and Italy, for example, increases in government borrowing have led the way. In the US and UK, increases in household debt have been more significant, at least until recently. For the most part, increases in non-financial corporate debt have been modest to negative over the past thirty years. The cases of Europe and the United States are instructive. Today, American aggregate non-financial debt is at levels similar to those last seen in the midst of the Great Depression. At 250 per cent of the GDP, that debt burden is equivalent to almost US$120,000 for every American. US non-financial debt near levels of Great Depression Several factors drove a massive increase in American household leverage. Demographics have played a role, with the shape of the debt cycle tracking the progression of baby boomers through the workforce. The stagnation of middle class real wages (itself the product of technology and globalisation) meant households had to borrow if they wanted to maintain consumption growth. Financial innovation made it easier to do so. And the ready supply of foreign capital from the global savings glut made it cheaper. Most importantly, complacency among individuals and the institutions fed by a long period of macroeconomic stability and rising asset prices made this remorseless borrowing appear sensible. From an aggregate perspective, the euro area’s debt metrics do not look as daunting. Its aggregate public debt burden is lower than that of the United States and Japan. The euro area’s current account with the rest of the world is roughly balanced, as it has been for some time. But these aggregate measures mask large internal imbalances. Karachi
Euro-area imbalances have widened As so often with debt, in distribution matters European problems are partly a product of the initial success of the single currency. After its launch, cross-border lending exploded. Easy money fed booms, which flattered government fiscal positions and supported bank balance-sheets. Mark Carney Over time, competitiveness Governor of the Bank of Canada eroded. Euro-wide price stability masked large differences in national inflation rates. It’s the balance of payments, stupid! For years, central bankers have talked of surplus and deficit countries, of creditors and debtors. We were usually ignored. Indeed, during a boom, the debtor economy usually feels more vibrant and robust than its creditors. In an era of freely flowing capital, some even thought current account deficits did not matter, particularly if they were the product of private choices rather than public profligacy. When the leverage cycle turns, the meaning and implications of these labels become tangible. Creditors examine more closely how their loans were spent. Foreign financing constraints suddenly bind. And to repay, debtors must quickly restore their competitiveness. Financial globalisation provided even greater scope for external imbalances to build. The global minsky moment has arrived Debt tolerance has decisively turned. Initially well-founded optimism that launched the decades-long credit boom has given way to a belated pessimism that seeks to reverse it. Excesses of leverage are dangerous, in part because debt is a particularly inflexible form of financing. Unlike equity, it is unforgiving of miscalculations or shocks. It must be repaid on time and in full. While debt can fuel asset bubbles, it endures long after they have popped. It has to be rolled over, although markets are not always there. It can be spun into webs within the financial sector, to be unravelled during panics by their thinnest threads. In short, the central relationship between debt and financial stability means that too much of the former can result abruptly in too little of the latter. Backsliding on financial reform is not a solution to current problems. The challenge for the crisis economies is the paucity of credit demand rather than the scarcity of its supply. Relaxing prudential regulations would run the risk of maintaining dangerously high leverage. The implications of deleveraging As a result of deleveraging, the global economy risks entering a prolonged period of deficient demand. If mishandled, it could lead to debt deflation and disorderly defaults, potentially triggering large transfers of wealth and social unrest. History suggests that recessions involving financial crises tend to be deeper and have recoveries that take twice as long.
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February 2012
E conomy The current US recovery is proving no exception. Indeed, it is only with justified comparisons to the Great Depression that the success of US policy response is apparent. Such counterfactuals – it could have been worse – are of cold comfort to American households. Their net worth has fallen from 6 ½ times income pre-crisis to about 5 at present. These losses can be recovered only via a combination of increased savings and, eventually, rising prices for houses and financial assets. Each will clearly take time. In Europe, a tough combination of necessary fiscal austerity and structural adjustment will mean falling wages, high un-employment and tight credit conditions for firms. Europe is unlikely to return to its pre-crisis level of GDP until a full five years after the start of its last recession. Managing the deleveraging process Austerity is a necessary condition for rebalancing, but it is seldom sufficient. There are really only three options to reduce debt: restructuring, inflation and growth. Whether we like it or not, debt restructuring may happen. If it is to be done, it is best done quickly. Policy-makers need to be careful about delaying the inevitable and merely funding the private exit. Historically, as an alternative to restructuring, financial repression has been used to achieve negative real interest rates and gradual sovereign deleveraging. Some have suggested that higher inflation may be a way out from the burden of excessive debt. This is a siren call. Moving opportunistically to a higher inflation target would risk unmooring inflation expectations and destroying the hard-won gains of price stability. Similarly, strategies such as nominal GDP level targeting would fail unless they are well understood by the public and the central bank is highly credible. The most palatable strategy to reduce debt is to increase growth. In today’s reality, the hurdles are significant. Once the leverage is high in one sector or region, it is very hard to reduce it without at least temporarily increasing it elsewhere. In recent years, large fiscal expansions in the crisis economies have helped to sustain aggregate demand in the face of private deleveraging. In most of Europe today, further stimulus is no longer an option, with bond markets demanding the contrary. To repay the creditors in the core, the debtors of the periphery must regain competitiveness; this won’t be easy. Most members of the euro area cannot depreciate against their major trading partners since they are also part of the euro. The route to restoring competitiveness is through fiscal and structural reforms. These real adjustments are the responsibility of citizens, firms and governments in the affected countries, not central banks. A sustained process of relative wage adjustment will be necessary, implying large declines in living standards for a period in up to one-third of the euro area. With deleveraging economies under pressure, global growth will require global rebalancing. Creditor nations, mainly emerging markets that have benefited from the debtfuelled demand boom in advanced economies, must now pick up the baton. This will be hard to accomplish without co-operation. Major advanced economies with deficient demand cannot consoli-
date their fiscal positions and boost household savings without support from increased foreign demand. To summarize thus far The market cannot be solely relied upon to discipline leverage. Heavy reliance on cross-border flows, particularly when they fund consumption, usually proves unsustainable. As a consequence of these errors, advanced economies are entering a prolonged period of deleveraging. Central bank policy should be guided by a symmetric commitment to the inflation target. Central banks can only bridge real adjustments; they can’t make adjustments themselves. Rebalancing global growth is the best option to smooth deleveraging, but its prospects seem distant. What it means for Canada Canada has distinguished itself through the debt super cycle, though there are some recent trends that bear watching. Canada’s relative virtue throughout the debt super cycle affords us a privileged position now that the cycle has turned. Unlike many others, we still have a risk-free rate and a well-functioning financial system to support our economy. It is imperative that we maintain these advantages. Our strong position gives us a window of opportunity to make the adjustments needed to continue to prosper in a deleveraging world. But opportunities are only valuable if seized. That means reducing our economy’s reliance on debt-fuelled household expenditures. Canadian households would need to reduce their net financing needs by about $37bn per year, in aggregate. To compensate for such a reduction over two years could require an additional 3 percentage points of export growth, 4 percentage points of government spending growth or percentage points of business investment growth. In a world where deleveraging holds back demand in our traditional foreign markets, the imperative for Canadian companies is to invest in improving their productivity and to access fast-growing emerging markets. A virtuous circle of increased investment and increased productivity would increase the debtcarrying capacity of all, through higher wages, greater profits and higher government revenues. The Bank of Canada is doing its part by fulfilling its mandate to keep inflation low, stable and predictable so that Canadian households and firms can invest and plan for the future with confidence. It is also assisting the federal government in ensuring that Canada’s world-leading financial system will be there for Canadians in bad times as well as good and in pushing the G-20 Action Plan because it is in Canada’s interests. Conclusion It makes sense to step back and consider current challenges through the longer arc of financial history. Past is not always prologue. In the past, demographics and productivity trends were more favourable than they are today. In the past, we deleveraged during times of strong global growth and our exchange rate acted as a valuable shock absorber, helping to smooth the rebuilding of competitiveness that can only sustainably be attained through productivity growth. Today our demographics have turned and productivity growth has slowed and the world is undergoing a competitive deleveraging. It is better to rebalance now from a position of strength; to build competitiveness and prosperity worthy of our nation.
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February 2012
E conomy High cost of weak law enforcement
by A.B. Shahid
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lmost every day, you now read about horrible crimes being committed in many parts of the country, the most worrying of them being instances wherein gangs fight each other, or a gang attacks a family and kills every member of it, and then sets fire to the house that family lived in. These are worrying signs because they manifest blatant lawlessness, and no fear of the law and its enforcers – the police. But we didn’t reach this pitiable stage overnight; for decades, successive regimes (civil and military) ignored the consistent drop in a key administrative ratio – citizens vs. policemen–that was affordable only at a destructive ultimate cost of total lawlessness. That this has happened, was shown by the fact that, after it was established beyond any doubt that the state wasn’t bothered about this catastrophe imploding in Karachi, the Supreme Court took it upon itself to contain it. Effective law enforcement capacity implies fulfilling a basic need: maintaining a realistic relationship between the number of citizens and the size of the police force (numbers out on the streets and in the police stations) to assure observance of law, and arresting the law-breakers. But meeting this basic condition has not been the state’s concern for decades. Based on statistics provided In May 2011 by Sindh Police, at endcitizen-police 2009, the sanctioned frontratio in Kara- line force (inspector to foot constables) was 33,972; by chi was May 2011, this workforce 570:1. Howhad risen to 35,102 i.e. the ever, in 2009 citizen-police ratio in this city touched 570:1. It in London – a mega is worth mentioning here highly civithat in 2009 in London (a lized city with city with law-abiding population) this ratio was 155:1. law-abiding strength of law enforccitizens – this The ers compared to Karachi’s ratio was population suggests that it has a very law abiding pop155:1. ulation, which isn’t true although, compared to other cities, Karachi has the highest proportion of literate citizens; the ratio is far worse in small towns and villages where crimes like those referred to earlier, are perpetrated almost every day because many are committed at the behest of powerful landlords. Sustained neglect of public security triggered the creation of private security outfits. Tragically, in this context as well, the state failed to assure that these outfits were created by those who had the requisite capacities – could train security guards properly, and equip the agency networks with modern crime detection and prevention gadgetry. In a recent bank robbery, the guard who failed to perform was actually a sacked school teacher, and knew nothing about
using the gun he possessed. This state of affairs manifests a casual attitude of the banking sector, and the same applies to the insurance companies. The assumption that merely hiking up the insurance premium can undo risks (especially those being committed in Pakistan), is self-destructive. Yet, neither SBP nor the SECP felt compelled to specify a guideline for assessing the delivery capabilities of security agencies assigned the task of securing banks, other financial institutions, and corporate offices. Why law enforcement – the key factor that influences lawful behaviour on the part of citizens – grows weaker by the day? Can we casually pass the entire blame therefor on to the law enforcers despite the incapacities in these outfits? Doesn’t it reflect zero concern for strengthening this state institution? Shouldn’t the law allowing citizens to possess and carry arms be revised after Zulfiqar Mirza and the PM admitted issued arms licenses to thousands of citizens and parliamentarians? Wasn’t that admission of the incapacity of the law enforcers? Was issuing more arms licenses the correct option or was it expansion and upgrading the law enforcement agencies? Isn’t the blatant violation of the law on issuing arms licenses and permission to carry arms fuelling crime? Should that be the response of a responsibility conscious regime? The harsh fact is that in the wake of the Afghan war and unchecked smuggling of lethal arms Pakistan failed to upgrade its internal security. This gradually built powerful gangs of criminals that later began posing a big challenge to the law enforcers. Things are now beyond the reach of Pakistan’s police force that is often blamed unfairly. The way security arrangements were neglected over the years reflects poorly on the state. The admission that over 35,000 civilians were killed in terrorist attack reflects how the state failed to beef up internal security in spite of this rising threat. Even today, we lack adequacy in terms of detection facilities, let alone muster the security force needed to effectively meet this challenge. By its conduct the state refuses to accept that, primarily, lawlessness has its roots principally in escalating poverty driven by ever-higher inequities in distribution of wealth, and
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February 2012
E conomy proportion to the visionary ability, professionalism and sense of responsibility of the legislators; the mess we are in owes itself to the selfishness and incompetence of our politicians. Containing poverty is their lowest priority although that’s the key factor in building a mindset that convinces the poor and the jobless to find ways of robbing the seemingly rich (even the law-abiding citizens) instead of earning an honest wage. This factor has been fuelling the demand for arms and making arms smugglers multi-millionaires.Had the past regimes, civilian as well as military, done a fair job of maintaining a balance between the rise in population and strength and capabilities of the law enforcers, the blame could lie squarely with the law enforcers, but facts belie this perception; the state ignored and continues to ignore fulfilling this key obligation. The large number of civilians (most of them without licenses) who possess lethal arms becomes evident on occasions such as parties, marriages and the night of December 31 when shots are fired from hundreds of rifles and AK-47s to mark the advent of the new year shockingly even in areas like Cliftonthe locality that has the honour of having the ‘Bilawal House.’ The other issue is corruption and blatant ruthlessness that is often resorted to by the police. Corruption has its roots in the way police salary structures have been devised. The view now gaining credence is that this is by design–keep the police force financially handicapped to induce it to auction the law to the highest bidder, rather than impose it. This argument carries weight because the frontlines of the police force that interact with the law-breakers, and thus the lot that must not be tempted by bribes and favours, is the lowest paid and the most vulnerable to corruption. As for the ruthlessness of the police, the factor triggering it is the protection the police gets from within its ranks and from the powerful interests it serves by committing those crimes. In recent times, brutality shown by the police has crossed all limits, which only proves that it considers itself more above the law than ever before; it reflects on governance of the state offices and the concern the regime has for its own image as well as that of the police force that acts on its command. The perception that police is purchaseable gives a feeling that crime is not forbidden; it has a price tag on it that goes up in proportion to the gravity of the crimes intended to be committed. This is hardly the profile of a country that any foreigner would like to invest in; only the likes of Raymond Davis would find it attractive for their dubious ventures.
weak, inadequate, or wholly biased enforcement of the law. To the people this seems deliberate to keep the rich lawbreakers out of the reach of the law, in fact ensure their elevation to the top. What is most unfortunate is that neither democracy nor dictatorship could eliminate this evil. National Reconciliation Ordinance–focus of a bitter political controversy–is a reminder of how crimes were committed without any concerns or fear of accountability. What made the scenario far worse is that, instead of a politicised bureaucracy (that visibly corrupted the country police) the police should have been accountable to an independent transnational set up to ensure that it acted transparently. How forcefully did the politicians and media condemn the fact that none of the Police Reform Commission reports was ever implemented in letter and spirit? Isn’t it manifest that experiments with changing the accountability channel for the police failed to deliver because intentions behind each such effort focused at making law enforcers subservient to (rarely responsible civil) administrations, political or non-political? And yet, beginning with the assassination of Pakistan’s first PM to the assassination of Ms. Benazir Bhutto, mystery still surrounds the murders of dozens of top-ranking politicians. Was it due to investigative incompetence of the police or was it because of subservience of the police forces to in-power politicians and politically biased administrations? Overtime, bits of evidence revealed both these un-admitted truths. Do we doubt that subservience of the police force to these elements forced it to digress from its social, moral and legal responsibilities? Have we forgotten about the treatment of JI’s Mian Muhammad Tufail and PPP stalwart J.A. Rahim by the police back in the 1970s? Those tragic episodes opened new dark chapters that continue to-date primarily due to the subservience of police to the political administrations and in-power politicians. The fact that even in the 21st century huge chunks of population continue to seek justice from ‘panchayats’ and ‘jirgas’ (per their convoluted judicial codes) prove peoples’ inaccessibility to courts of law to avail state support in defending their rights. Sadly, it applies to city dwellers as well. Consequently, Pakistan remains divided into widely differing societies, and reflects a massive failure of the state. These inequities are eating away the very roots of our society while our politicians remain entangled in a bitter debate over ways of protecting democracy that, in the eyes of the masses, failed (though not conceptually) to deliver a truly equitable dispensation. Democracy has no magic; it delivers results in
Lawlessness at its peak
On July 7, 2011, Karachi witnessed the bloodiest day in the wave of violence that shook the city. That day, three passenger buses were attacked and many houses were set on fire. Sindh civil administration was virtually invisible, and the police vainly looked for a strategy to meet the challenge that defied the abilities and preventive capacities of Sindh Police. Qasba Colony and Orangi Town witnessed day long bloodshed, though scattered incidents of firing were also witnessed in different parts of the city. By mid-night, 30 people had been killed and more than 50 wounded in firing incidents. It was this failure that forced the Supreme Court to initiate its inquiry into the cause of this administrative failure. But it seems that things are again taking a turn for the worse.
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February 2012
E conomy event wherein a police force (of just 5 fellows), that went to arrest a criminal in a village close to Sukkur, disarmed and then was held host- age (you don’t need to guess on whose orders). The rescue force, that reached the scene after several hours, also had to beg the villagers to help free their colleagues held hostage. So much for the reach of the law enforcers in the villages and their promise of upholding the law! The current security profile won’t improve on a durable basis unless police and lower courts are released from the clutches of administration and in-power politicians. Police should be accountable only to a truly independent national authority comprising retired high-ranking police officers, reputed lawyers, criminologists, forensic experts, social scientists, and a minority of bureaucrats who advise on the administrative advisability of the mandate given to the police force to assure its successful implementation. This authority must have a fixed term (to prevent politicians from threatening its existence), and it should be empowered to decide on and assure the provision of requisite resources to the police as well as timely changes in remuneration of the police to compensate for adverse inflationary trends. There is no other way of ensuring the integrity of the police force, in particular its frontlines, that will remain vulnerable to the effects of adverse movement in the prices of essentials–the factor that will always be un-controllable for the state in a setting wherein the volatility of currencies and the interest rates will constantly keep the commodity prices in a state of flux and impact inflation. It is high time this authority was set up to help the police rid itself of the stigma of incompetence, bias and corruption. Let us not overlook the fact that Pakistan’s current high country risk profile – stumbling block in the way of investment, both domestic and foreign, as well as aid even from “Friends of Democratic Pakistan” – owes itself not just to terrorism but to a poor and undeniably bad profile of its law enforcement agencies. This scenario must be changed at the earliest. But this objective cannot be achieved by politically motivated bureaucracies that are hard-pressed to accept nepotism – the hallmark of all previous governments. All these flaws can be remedied transparently by an inde- pendent police authority that consists of individuals who aren’t just professionals but have had a clean and robust track record of being principled, steadfast and unbending. That this should be our top priority can be denied only at the expense of turning Pakistan into a lawless state like those in Africa or South America, and denying the fact that strong and reliable internal security is a pre-condition for sustained economic stability. If democracy, purportedly a dispensation that promises “a government of the people, by the people, for the people” fails yet again to deliver on this key issue, the people would lose faith in democracy.
The outcome of this tragedy is that Pakistan is now seen as a high-risk country unfit for investing– the input without which it’s natural treasures can’t be unearthed. Copper reserves in Saindak and coal reserves in Thar are just two examples of this wealth besides the huge untapped potential in orchards, agriculture, fisheries and animal farming. Power shortages and energy deficit (that have been worsened by rising oil prices) were already the mounting ‘negatives’ for investment because increasing cost of doing business rendered businesses inefficient and hence un-competitive. Escalating lawlessness is making this scenario worse. Attracting FDI has now become largely impossible, but making things worse is the fact that businesses are shifting to other countries. This trend, if it continues, would seriously dampen prospects for employment. Rather than opening up new job opportunities for the upcoming generation of the country’s youth, closure of existing businesses could lay off the already employed and worsen the already volatile social order. In fact, it will breed more petty criminals and then organized gangs of robbers in most cities. The rise in bank robberies is a clear indication of this trend building-up. This would not be an ordinary challenge to face if the state of the police stays unHigher unemchanged i.e. neither increase ployment could in its strength, nor its capacities for containing a wide breed more variety of petty crimes, let petty criminals alone well organized crime. and, thereafter, Facing this challenge calls for organized and adorganized equately funded effort at gangs of robstrengthening the police. bers. The rise Lawlessness is not just the in bank robber- product of crimes by individuals; it is as much the ies is a clear result of the clout of the indication of landlords in the hinterland. The instances wherein landthis trend’s lords have overruled the law build-up in crushing their poor farmers and their adversaries are astounding, and far exceed those that involved criminals. This reality is proved every day by TV channels that daringly cover these events. If the writ of the state has to be firmly established, Pakistan’s police force must be doubled in the next five years to police every town and village. Unless that happens, Pakistan could not be de-clutched of the power of landlords who rule the roost in the vast hinterland of Pakistan. At present, with no signs of the state in their midst, citizens living there consider their landlords to be the master of everything under the sun. In the small towns, where you see a semblance of the writ of the state (police stations), with their small forces and handicaps of every kind (armour, transport, telecom outreach, forensic labs, quick reinforcements from nearest district police force, etc.), the police survives at the mercy of the landlords and, instead of checking the landlords clout, suffers it because of a lack of choice. An example of the police’s reach in the villages was an
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Interview Poverty & unequal distribution of wealth lead to commission of crimes -A. Sattar Edhi A: My mission is to serve the humanity. For that I do not feel ashamed of moving around myself with a begging bowl for donations for aid to the suffering humanity. All our welfare activities are carried out solely on the basis of donations received from the public, and without any aid from any government or international donor agencies. Every single paisa that is donated is spent on ameliorating the sufferings of the ailing humanity and acts such as welfare insurance for the citizens of Pakistan. I have been getting donations from all over Pakistan. Further, people of Pakistan settled abroad also give me donations. I thank them all. Q: Is Edhi foundation working only in Pakistan? A: No, the work of Edhi Foundation has now extended beyond Pakistan and has spread out on an international scale. Today branches of Abdul Sattar Edhi International Foundation are providing regular services in New York, London and many more countries. Q: Muslim ummah is suffering from the evils of terrorism, economic downfall, political uncertainties, sectarianism and other problems. What could be the reason for this sorry state of affairs? A: These problems are not new. They have their roots in the past. I feel that, the basic reason behind this is the absence of Allah’s fear. People think that they will live in this mortal world for ever. The rich neglect the needs of the poor who in turn feel frustrated and try to get everything, legally or illegally. Then the society begins to disintegrate. If everybody tends to help each other our society could become a heaven. Q: What is your message to the politicians and the youth of Pakistan? A: I am neither a political figure nor do I represent any political party. However, I think that the politicians should care for the masses, and try to solve their problems. In my view, poverty and unequal distribution of wealth is the main factor prompting people to commit sins and crimes. In an economic system where the rich continue to grow richer and the poor poorer, frustration is bound to take its roots. Hence efforts need to be made for economic well-being of masses. System of Zakat should be strengthened. Those who are liable to pay zakat should pay it voluntarily, happily and honestly as as thier part of contribution to eliminate poverty. Politicians represent the people. They should therefore think for the people and keep their well being above self-interests and benefits. The youth are the future of the motherland. My message to them is that they should come forward and take part in the service of humanity and social work. Help those who are less fortunate than you.
“The name of Mr. Abdul Sattar Edhi as a social worker is well known nationally and internationally. ‘Value Chain’ has had an opportunity to talk to him and seek his veiws about the year 2011 and his foresight about the year 2012. Given below is what he said in his interveiw with us” - Editor Q: What were the main problems of 2011. What you lost and what you gained during the year? A: Being a volunteer and a social worker, I think I have nothing to lose and nothing to gain. I am a simple person and servant of the poor and the sick alike. My job is to help those who need it in case of acciddents or natural disasters, or any other affliction. I owe no one and everything that I have is the property of my foundation. Basically I am an optimist, always looking at the brighter side of the picture. Nothing frustrates me more than human afflictions for whatever reason. In my humble view, 2011 was good as it provided me with more opportunities to serve the people. I hope and wish that the year 2012 proves to be peaceful and prosperous for the whole of humanity in general and the people of Pakistan in particular. I am glad and grateful to God that people respect me, love me, and help me with their donations and aids for the needy people. Q: A few months ago, we heard that Edhi ambulances were torched by the miscreants; even the drivers and paramedics were kidnapped for ransom? A: Yes, such things happen sometime. We faced such a situation in the recent past. But this may happen to anyone, any time. Good and bad people are the part of every society but we should not forget the good deeds done by the people for humanity. Good things take place almost every day but something that is painful and you don’t like, happens rarely, twice or thrice in a year. So I should be grateful to Almighty Allah for the good things and for the courage given to me to face the bad incidents with patience. Even the bad people sometimes tend to realize they have done wrong and donate to ease off their sins. Q: In 2011, we faced floods, economic turmoil, and crises like political unrest and worsening law & order situation. What are your expectations for 2012? A: I feel, such crises are the result of God’s wrath upon us and warnings for us. We should give up committing sins, help the poor and the needy, and serve the humanity to make this world a better place to live in. Otherwise this sort of crisis will never let us live peacefully. Every citizen has to perform his duty with honesty and loyalty and help those who need it. Q: Please tell us something about your mission and the sources of donations and aids?
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February 2012
Voice of Industry Indian Parliamentary Delegation Visits Pakistan
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akistan and India have had a chequered history of relationship ever since the two became independent, sovereign nations. Despite reiterations from time to time for establishing friendly, cooperative and good neighborly relations, the two countries could not move forward to give this cherished dream a practical manifestation. Overtime, tensions and aimless hostilities have continued to dominate the Pak-India relationship though with varying degrees of intensity. Tensions and frictions did no good to either; the people of the two countries were the worst sufferers. It is high time, therefore, that these two nuclear states of the region change their mindsets and establish peace and friendliness setting aside past bitterness. If that could be done, both Pakistan and India could herald a new dawn of improvement in their bilateral relations which in turn may contribute immensely to the progress and prosperity of the people of the two countries. Hardly anyone would disagree with the idea of creating an enabling environment that paves the way for a meaningful, constructive, and result-oriented process of engagement for achieving the goal of establishing a peaceful and sustained relationship. Centrality of dialogue and healthy exchange of views are the key to resolving issues. Seen in the above context, the recent visit of the Indian parliamentarians and the positive sentiments expressed by the two sides during and at the end of the visit portend a welcome sign. The Indian delegation consisted of MPs from major political parties. The dialogue was a continuation of the earlier two sessions held in Islamabad and New Delhi in January and August 2011 respectively. The parliamentarians’ delegation was here for a 4-day visit when they had meaningful and fruitful meetings and discussions which included a 2-day Inter-Parliamentary dialogue whereat they agreed that instead of becoming hostage to their past hostilities, the two countries should look forward for a bright future and broader interests of their people. They stressed that the initiatives undertaken to complete the transition from the current positive-list approach to a small negative list should be finalized and ratified by February 2012 while in second stage the negative list may be further phased out by the end of 2012. The delegates agreed that they had a cardinal role to play in influencing their respective governments to rake a joint leap forward to normalize relations. Accordingly they resolved that they would be playing catalytic role in changing the mindsets of their peoples and pressurizing their respective governments to discard past bitterness and
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build the bridges of friendship, trust and understanding. There was unanimity of views for strengthening of mutual relationship especially trade which, as the head of the Indian delegation also maintained, assists in resolving number of long-standing issues. Bilateral trade between India and Pakistan during the last three years has increased from just over US $ 1.8 billion in 2008-09 to US $ 2.6 billion in 2010-11. However, bilateral trade has the potential for much larger volume. The parliamentarians also underlined the need for opening bank branches in each other countries and to give the proposal a practical manifestation the banking authorities must undertake discussions for enabling appropriate banking arrangements. ‘ Discussions between the central banking authorities must be undertaken quickly for enabling appropriate banking arrangements,’ the parliamentarians stressed. The need for fostering linkages between private sector organizations harnessing their entrepreneurial initiatives and intra industry trade including joint ventures was also emphasized upon as channels for enhancing the effectiveness of other initiatives that are currently underway. The delegates felt that only bilateral trade would never be sufficient. While trade constituted an engine of growth, encouraging investments by both countries would deepen economic relations. They felt that as a step forward, the relationship may be diversified to encompass other segments like tourism, sports, youth and cultural exchanges etc. Benefits may also be derived by extending cooperation in the fields of agriculture, education, health, information technology etc. The visiting parliamentarians also met the Prime Minister of Pakistan, Chairman and Deputy Chairman of the Senate, Chief of PML-N and other political leaders and heads of trade bodies and held discussions on subjects of mutual interest. In an informal chat between the two sides, the Indian delegation which included former foreign minister Yashwant Sinha and noted film star Shatroghan Sinha stressed upon the need for dialogue to bridge the divide between Pakistan and India . They said that the process of mutual negotiations must continue for settling issues and establishing lasting peace between the two countries. By doing so, both India and Pakistan would be playing their role in jointly ushering the new Asian renaissance the 21st century offers. February 2012
Interview Pakistan film industry has a bright future--Nadeem Mandviwalla Mr. Nadeem Mandviwala is a giant in cinema industry of Pakistan. He is the Managing Director of Mandviwala Entertainment. ‘Value Chain’ has had an opportunity to talk to him on the problems and prospects of cinema industry in Pakistan. Given below is what he said. Q: Please tell us about yourself. How did you enter the cinema industry? A: Cinema has been our family business; we owned Nishat in Karachi and Sanober cinema in Lahore. In 1983, the family sold out Sanober cinema located in Lahore. Thus we were left with Nishat Cinema only. I have been in the family business since 1980. But my real participation started in 1985. In 1990, we launched ‘Mandviwalla Entertainment’ and thus entered the new business of movie distribution. Q: Pakistani cinema was at its peak in the 60’s and 70’s. What went wrong thereafter? A: The decline in cinema industry was not restricted to Pakistan alone; it was global. The introduction of VCR in 1975 added to the decline of the industry. But due to the ban imposed after 1965 Indo-Pak war, Indian movies could not be shown in cinema houses in Pakistan. VCR helped in fulfilling their cherished desire. In the absence of regulatory requirements, VCR culture flourished rapidly to the detriment of cinema industry. Suggestions of the local cinema owners to regulate VCR were simply ignored. And this was deliberate on the part of government regulating authorities. The arrival of VHS thereafter further added to the misery of the industry as the movies shown in cinema houses were available in cassettes which could be hired and viewed at home. Q: Is there any change in audience expectations about movie content? If so, has any effort been made to meet the expectations? A: The viewers’ expectations from the cinema industry have grown overtime, both in terms of content and quality. The film industry in Pakistan is trying to come up to those expectations through infrastructure development and improvement in quality and content of the film. The focus now is on the story instead of “gandasa culture”. However not much could be done in this regard because of increased expenses and reduced income derived therefrom due to government control on rate of tickets and heavy duties imposed on the components used in film production and projection thereof in the cinema houses. Hundred percent tax on cinema tickets, payment to distributors and staff salaries etc hardly left anything for the cinema owners for sustenance. Thus the urge for investment to upgrade the facilities and improve quality of content was adversely affected. In recent past, quite a number of cinema owners were therefore forced either to close down or convert them into apartments or shopping plazas. The situation is changing now. On the one hand the government has withdrawn the tax and ticket rate control
while on the other permission has been accorded to exhibit Bollywood and Hollywood movies. Since the cinema owners are now in a better position in terms of earnings, they are also investing for facility development. The industry is recovering gradually but it will take long considering the volume of losses the industry suffered in the past. Q: What has been the impact of Indian movies on Pakistani film industry? A: I think this has not affected our industry. In fact this should serve as a healthy competition for Pakistani film industry to survive and grow. Banning the exhibition of Indian movies in Pakistan would not be of any good to our industry. If this has to be done, this should be done in all totality including total ban on videos. Simply banning Indian films in our cinema houses will not serve any useful purpose. Instead of banning the Indian films, we must face the challenge and improve the quality of our product; aversion is not the answer. Hollywood movies are fetching better business than the Indian movies. Should the Hollywood movies be banned? Q: You have set up and introduced the most modern machinery and technique through DHA Cinemas (Lahore) and Atrium Cinemas (Karachi). This is no doubt a milestone. What has been your experience and what are your future plans? A: I think the response has been quite encourageing. The process of improvement in our cinema industry started
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Interview Q: Are you interested in expanding your cinema network in other parts of Pakistan? A: Yes, I will establish cinema wherever the opportunity exists. We are working on pre-investment feasibility reports. We are also collaborating with other companies. Our Karachi based company partner is setting cinema houses in Faisalabad and other cities. Q: What is the approximate cost of building a cinema of Atrium standard? A: Minimum 5 crore rupees per screen. If you have 5 screens, then it is an investment of minimum 25 crore rupees. Q: What future do you see of these multiplexes in case Bollywood movies are banned here again? A: Businesses don’t run on “ifs & buts”. We must be firm in our resolve and have faith in our potentials. In business, the risks are always there. We must be prepared to meet the risks. Pakistan offers ample opportunities for investments. All that you need is the sincerity and hardwork to reap the benefits of investments made. Q: Piracy is yet another important issue of the film industry. How do you think the issue can be dealt with effectively? A: Piracy is not an issue. The solution lies in proper regulation. Nobody can stop it until and unless there are strict regulations to curb the trend. Q: How the MFN status to India will affect Pakistani Film Industry? A: MFN status to India will not affect us. Our focus should be on developing the quality of our product. Q: What steps should be taken by the government to revive the film industry? A: Government should follow what other countries are doing. India is giving 10 years exemption from taxes for building multiplexes. This should serve as an incentive for investments for growth of cinema industry in Pakistan. Q: There was a news that entertainment tax exemption earlier allowed is being withdrawn. What would be your reaction if that is true? A: It was just an opinion, not a decision. I think sanity will prevail. Q: Where do you see the industry in future? A: I see a bright future for our film and cinema industry. The new entrants are our hope. With their hard work and dedication, the industry will be much better than what it is today.
after 2007 when permission was given to show Indian movies in our cinema houses. “Atrium” produced results much beyond our expectations. The response in respect of DHA cinema Lahore was not that high but it was not below our expectations. Looking at the prospects the industry offers we are focusing on re-building the cinema industry and improving the infrastructure. The plan is to raise the standards that meet people’s expectations in terms of infrastructure and quality of content. “Atrium” has now become an icon and model for the Pakistani cinema industry. The newcomers will have to meet that standard. Likewise the films will also have to be upgraded and improved content-wise and quality wise in order to survive and sustain the competitions offered by foreign films – “Hollywood & Bollywood”, these films have provided us the roadmap, and set a standard. Our films will have to follow the roadmap and meet the standard. It is heartening to note that work in this regard has already been initiated. While infrastructure in cinema houses is being improved and upgraded, efforts are being made to upscale the quality and content of our movies. “Bol” and “Khuda K Liye” may be quoted as examples. They have been liked and appreciated worldwide including Indian market. The industry has a big market around the world. To capture the market our movies will have to be of international quality and standard. We have so far been producing films keeping in view the viewers in Pakistan only. This mindset has to be changed if the industry has to grow. The whole world is our market. All that is needed is to make films that meet the expectations internationally. It is said that making films of international standard is very costly. I think the concept of budgetary constraint is of little significance. Where the market is large and the content is good enough to attract them, the financiers would be willing to make the investment required therefor. As regards talent, there is no dearth. We have had versatile actors like Waheed Murad, Muhammad Ali, Nadeem, Shahid and many more who made history. Similar talents may be found out and developed. When I decided to start “Atrium” cinema, my friends in the industry advised me otherwise. But I took it up as a challenge. The results achieved are before you. Anything and everything is possible provided there is a will and determination to achieve the goal. I have set the trend and standard. It is for others to follow for the good of the cinema industry in Pakistan.
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B anking & Finance The high cost of unjustified risk-aversion
Accept Reduce
Avoid
Risk
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redit off-take by the private sector has become almost static; in some banks it is actually drifting downwards. This trend is a big negative because it foretells further economic slowdown – a trend that a country with high population growth like Pakistan cannot afford. Rising unemployment is a dangerous sign and all stakeholders must endeavour to contain it. Banks and other financial sector players that provide credit to the private sector have a key role in arresting this adverse trend. However, the common complaint against banks is their increased risk-aversion is preventing credit extension even to entities that carry reasonable risk; this is a worrying sign. Not many would disagree that the global recession has created a much wider variety of risks, one of the bigger one among them being low confidence even in banks. Importers even in the corporate sector now complain that exporters abroad are not as keen on seeking even confirmed Letters of Credit (LC) as a safe mode that assures them payment if they comply with the terms of the LC. Instead, they now seek advance payment. Loss of faith in the payment commitments the European and American banks make while acting as confirming banks, is very unfortunate but the way some of these banks fared in the recent years is the factor that weakened faith in their commitments. Such developments are very unfortunate but the right way of going about steadily reversing them is through a demonstrated commitment to fulfilling promises, not by shunning accepting risks that involve making such commitments on behalf of the customers. While this profile of a bank may be justified for a while (assuming that it is reorganizing itself for more secure risk-taking), but not for long. Banks must not forget that if they stretch this period beyond reasonable periods, they will lose in terms of market acceptability of their banking capacities.
Transfer
If the sellers shift to advance payment mode, the only bank services the sellers and buyers would need would be remittance of the monetary values of goods and booking forward purchase contracts (for buyers) to cover their exchange risk. This trend will substantially reduces the volume of highly profitable banking services to the disadvantage of the banks and their shareholders. Losing out on the provision of services like guaranteeing, trade, and its financing, could amount to contracting the stature of banking which, in the long-term, would lead to contraction in global trade. Bank credit affords expansion of global trade; its contraction will undeniably reduce global trade which will adversely impact economies all over the world. In a world that suffers from inequitable sharing of wealth more than ever before, reduced global trade is bound to make things worse. What banks need to undertake urgently is a thorough review of their past strategies that put them in the troubled state they find themselves in due to the backlog of unhealthy risk asset portfolios. Besides reviewing the variety of businesses they had begun financing without organizing appropriate risk monitoring systems, banks must very honestly focus on and accept the gaps and flaws in their risk assessing techniques that led to making costly compromises in booking weak risks assets. This exercise must be undertaken not just for finger pointing but for learning from mistakes and plugging the gaps in their risk assessment techniques and systems. Banks in Pakistan can’t deny that by lowering bank lending rates to unrealistic levels (courtesy fudging of inflation figures by the ministry of finance in the early years of the Musharraff regime) they encouraged the borrowers to take risks that were inadvisable. This distortion
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B anking & Finance increased consumer finance to 17 percent of total bank credit, but later on proved lethal although initially there was a mad rush for booking loans; assessing the borrowers’ repayment capacity was a low priority. Consumer finance is wholly justified if results in definite cost saving or adds to the borrower’s income, and these outcomes can be verified credibly. Had this been done, consumer finance would not have proved as bad an experience as it eventually did. In this context, it was equally important to assess the impact of a possible rise in interest rates and borrowers’ maximum capacity for withstanding the resultant increase in repayment installments without defaulting on their loans. In the case of commercial financing, banks recklessly financed cheap imports and in the process virtually killed the key import substitution capacity that was gradually developing in many of the sectors. What we finally ended up with, in 2007-08, was the highest ever ($20.75bn) trade deficit in Pakistan’s history. The side damage was that excessive imports of electrical gadgetry increased domestic power consumption and then led to power load-shedding that will afflict Pakistan for years to come. While financing exports, banks became so aggressive that they began extending a line of credit for funding export receivables backed by discrepant shipping documents – a practice that was highly imprudent. The ease provided by this facility diluted the urge among banks to accept only clean documents for financing and for dispatching to importers abroad. No logic could justify this slide in prudence, which had been the hallmark of banking. In financing industrial projects banks rarely bothered about knowing projects’ energy requirements. Nor did banks consider it mandatory that such projects included standby power generation units as their integral part so that they could operate on at least break-even capacity when power supply from state-backed sources was disrupted (often for 18 hours a day, for months at a stretch). It is therefore no surprise that a lot of such projects failed to repay because they couldn’t operate even at break-even capacity. The cardinal sin, however, was the switchover to floating rates of mark-up without warning the borrowers about its downside.What made this sin more punishable was the fact that floating mark-up rates were imposed without stipulating cap (maximum) and floor (minimum) markup rates that were to be charged no matter how high or low the interbank rates later became during each year using the date of availing a loan as the starting point. This distortion, which was remedied by SBP after considerable delay, caused majority of the loan losses. In this context, an equally odd reality is that while giving its consent to switching over to the new system of floating rates of mark-up, the regulator too did not realize the need for making it imperative that floating mark-up rates were always levied along with cap and floor rates. It was a serious regulatory lapse that led to higher non-performing loans, which are now accounting for nearly 14 percent of the total bank credit. What banks are now busy doing is the re-scheduling and re-structuring of such problem loans; exercises that are eroding their confidence in their own abilities for risk assessment.
The fact that “Know your customer” (KYC) discipline had to be imposed on banks doesn’t reflect very well on the care banks took in verifying the integrity of their customers and the fact that their activities were compliant with domestic and globally practiced laws. Unfortunately, banks in many countries indulged in money laundering, some proudly specializing in this crime. It is equally important for banks to revisit the risk management support systems – credit referencing, asset valuation, loss adjusting, assets custody and road transport service – that banks depended on without realizing the limitations and deficiencies in these services. Banks must now make concerted efforts to point out the weaknesses in these support systems, and insist on institutional checks and balances to ensure that they are removed credibly and visibly. Non-regulation of these services is a continuing threat to the banking system but the worrying part is that banks (including the Pakistan Banks’ Association) have yet to take up this issue. Instead, they are opting for risk-aversion, which defies logic. An example of the extent of concern for regulating these services is that even after the passage of 64 years since the creation of Pakistan, the format of the Truck Receipt (the document that evidences delivery of goods to a stated beneficiary) has not been standardized. This is so because the trucking sector remains un-regulated although it is used for bulk of the domestic trade that accounts for trillions of rupees every year. The point being highlighted is that banks ran into problems because they didn’t use their clout in getting these key services organized along the correct lines to contain manageable risks. It is therefore unfair on the part of banks to – via risk-aversion –penalize businesses that want to undertake reasonable business risks. Excessive risk-aversion without effectively plugging these gaps on the one hand reflects a less than responsible attitude to the obligations of their profession, and on the other bankers’ own loss of faith in their lending skills. Finally, in the context of improving risk management a key missing link has been the importance assigned to (at least niche-specific) economic research to greatly improve banks’ predictive abilities for containing the outcome of crystallization of market risk that often turns loans into problematic assets, by and large, SME borrowers – the vast majority in any economy – have no idea of market risk. Sadly this need has still not been realized. The darkest side of this scenario is that banks are overinvesting in sovereign debt, still believing that sovereign debt carries zero risk. That this traditional thinking lost its validity after the current recession unfolded, is accepted now even by the simple-minded pedestrians. Why then banks fail to see this reality, is a million dollar question. What is even more perplexing is the fact that, despite booking large loan losses, many banks in Pakistan are still declaring huge profits. The only explanation for this contradiction is that banks are earning unfair mark-up rate spreads – borrowers are being over-charged and depositors are being underpaid. Neither of these practices bodes well for the future. Business will go on closing down and savings will keep contracting. A drop in the already very low savings rate could make Pakistan many times more vulnerable than it now is. Where are we headed? Do banks realize that?
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February 2012
B anking & Finance Cyber Crimes
by Syed Sabir Ali Jaffery
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yber crime is the illegitimate child of cyber banking. Hence, to know what exactly cyber crime is, it is first desirable to be familiar with cyber banking. Traditional currency---fibrous and polymer currencies and metallic coins---is easy to use, enjoys wide acceptability, and is anonymous, yet its utility is on a constant decline owing to its diminishing portability in the wake of ever-increasing inflation, and also as its use is restricted to the country of issue. Substitutes of traditional currency, such as, negotiable instruments---promissory notes, bills of exchange, and cheques---, IOUs, financial or commercial papers of varied description, have also given way to paperless electronic, digital, or cyber payment systems that facilitate transfer of financial value, either through internet bank accounts, “smart cards”, or the Electronic Benefits Transfer (EBT) cards. Cyber banking operations possess all the distinct qualities of traditional currency. In addition, these are enriched with features, such as, security, cross-border movement, and what is known as ‘transfer velocity’, that is, transfer of any amount to anywhere in the world, as fast as one can think of. Nonetheless, it poses a critical question, that is, whether cyber banking should be absolutely anonymous so as to be immune to laws, regulations, and established norms of conventional banking. In answer to this very question lies the destiny of cyber banking. As a matter of fact, ‘cyber banks’ are not banks in the true sense of the word. They simply act as financial intermediaries in an environment where identities are concealed. They help move digital currency or e-money from one electronic terminal to another using ‘electronic forward system’ to avoid detection. Further, since most cyber banking systems operate globally and in multiple currencies, therefore traditional physical borders that have determined local (city-wise), state (province-wise), or even federal (country-wise) jurisdiction have been rendered meaningless.. The e-banking technology with all its appurtenances has equipped the banks and financial institutions the world over to offer incessant service round the clock, both within and beyond the country of their origin, and in any currency of the world. In Pakistan, however, the IT operations are comparatively of recent origin. Nevertheless, even in such a short span of time, these have sieged the financial sector to its core. Banks in Pakistan have adopted ATMs, Real Time Online Banking, IVR (Interactive Voice Recognition), Internet, Call Centre, POS (Point of Sale), and Mobile Telephone as alternate delivery channels of e-banking. With this upsurge of technology in the financial sector, simultaneously with some improvement in the quality of services rendered, crimes of varied descriptions have started emerging almost on a regular basis across the globe. Thus, it transpired that with the exponential rise in the legitimate uses of computers increase in their illegitimate use was inevitable.
What is Cybercrime? A simple definition of the term ‘cybercrime’ is that different types of crimes that can be linked to computers are called cybercrimes. To be more specific, one can resort to the findings of the FBI’s National Computer Crime Squad (NCCS), one of the leading United States’ federal agencies combating cyber crimes, according to which the following have been branded computer-related crimes: • Violations of or into the integrity of telephone systems; • Violations of or into the integrity of major computer networks; • Computer-privacy violations; • Industrial espionage; • Pirating of licensed software; and • Any other crime where the computer is a major factor or tool in committing a criminal offence. These include the emerging crimes of cyberporn, cybertheft, and cyberstalking.
Cyber Offences as defined Under Pakistani Laws The following have been categorized as cyber offences under sections 3 through 21 of the Prevention of Electronic Crimes Ordinance, 2009. Criminal access; Criminal data access; Data damage; System damage; Electronic fraud; Electronic forgery; Misuse of electronic system or electronic device; Unauthorized access to code; Misuse of encryption; Malicious code; Cyber stalking; Spamming; Unauthorized interception; Cyber terrorism; Offences involving sensitive electronic systems; Abetting or aiding to commit or to attempt to commit an offence; and Offences by corporate body. The Prevention of Electronic Crimes Ordinance, 2009 is
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February 2012
B anking & Finance Cybercrimes Surfaced in Pakistan The plastic money syndrome (ATM and Credit / Debit Cards) invaded Pakistan’s financial sector hardly two decades ago. Even in such a short span of time it witnessed many a sizeable frauds (through hacking, ATM frauds, smuggling, drug trafficking, illegal inward and outward remittances through hawalas, money laundering etc.) with alarming frequency. However, evidences of large scale organized operations are not surfaced so far. Scattered incidents committed by small groups or individual money changers are reported by media off and on, whose links with international groups cannot be ruled out. Common Characteristics of Organized Crime Groups The Royal Canadian Mounted Police’s Criminal Intelligence Directorate identified 14 characteristics which are common to crime groups all over the world. However, there is nothing innovative about them. They are too well known as basic characteristics of all those who are involved in one or the other type of subversive activity in an organized manner. The only achievement of the Directorate is that it has assembled them at one place which has no doubt added to their utility. These characteristics are: Corruption: the use of illicit influence, exploitation of weaknesses, and the blackmail of public and prominent figures. Discipline: the enforcement of obedience to the organization through fear and violence. Infiltration: continued effort to secure position of advantage in legitimate institutions to further profit or gain a level of protection from detection. Insulation: protecting the organization’s leaders .by separating them from the rest Monopoly: control over certain criminal activities within a geographic area with no tolerance for competition. Motivation: sole motivation is the power and influence resulting from the accumulation of wealth. Subversion: of society’s institutions and legal and moral value systems. History: has allowed refinement of criminal activities and practices. Violence: used without hesitation to further the criminal aims of the organization. Sophistication: in the use of advanced communication systems, financial controls, and operations. Continuity: like a corporation, the organization survives the individuals who created and run it. Diversity: in illicit activities to insulate the organization from dependence on one criminal activity. Bonding: individual to individual, and individual to organization, for solidarity and protection, often through complex unusual rites. Mobility: a disregard for national and jurisdictional boundaries. Techniques Employed to Commit ATM Frauds Instances of hacking ATM system are on an increase day by day throughout the world. Simultaneously, researchers have also augmented their efforts to unearth the ways and means and types of these frauds. Resultantly, awareness of identity theft and fraud
supplemented by The Anti-Money Laundering Act, 2010 and The Anti-Money Laundering Regulations, 2008. Further, section 2 (p)(ii) of the Ordinance defines ‘offences’ to include an offence punishable under the laws mentioned in its First Schedule. These laws are: The Electronic Transactions Ordinance, 2002 (LI of 2002) The Pakistan Telecommunication (Reorganization) Act, 1996 (XVII of 1996) The Telegraph Act, 1885 (XIII of 1885) The Wireless Telegraphy Act, 1933 (XVII of 1933) International Criminal Organizations Lately, cyber crimes and criminal organizations have gone global. In addition to their own operations, they have formed strategic alliances with one another, with ‘rogue’ governments, and with terrorist organizations. As reported by James R. Richards in his illustrious work entitled “Transnational Criminal Organizations, Cybercrime, and Money Laundering”, there are three main types or groups of global or transnational criminal organizations, as under: (i) Big Six --- the Italian Criminal Enterprises (including the Sicilian and American Mafia families), the Russian Mafia, the Japanese Yakuza, the Chinese Triads, the Colombian Cartels, and the five Mexican drug cartels known as the ‘Mexican Federation’. (ii) Groups of criminal organizations of comparatively small in size yet highly organized, with certain criminal specialities that work with and for the Big Six in much the same way as a franchise would work for its parent company. This tier includes groups based in Nigeria, Panama, Jamaica, Puerto Rico, and the Dominican Republic. (iii) Terrorist groups which deal in contraband, narcotics, smuggling etc., simply as a means to finance their political and anti-social objectives.
These groups include, among others, Japan’s Red Army, Peru’s Shining Path, Colombia’s FARC, and the People’s Irish Republican Army.
36
February 2012
B anking & Finance has increased in the general public. Techniques which have been unearthed so far are discussed below. But, this is not the end. Crime being committed to maintain the criminals’ ‘reputation’ of having an edge over the law enforcing agencies should be on the look out of new ways and methods to continue their nefarious activities with success. This is an undying threat to banks and financial institutions. Their salvation rests on utilizing meaningfully the information already collected and on adopting the prescribed protection proposals. Involvement of banks’ staff: In a bank fraud case , the FIA (Federal Investigation Agency) came to the conclusion that such frauds could not be committed without active support of the concerned bank’s staff serving as the administrators of its online money transfer service and ATM sharing facility with other banks. Connivance of the employees of other banks with whom the facility was shared, who were associated with this area of activity, may also not to be overlooked. Messrs. Diebold, Incorporated issued in September 2002 a white paper entitled “ATM Fraud and Security”. This makes a meritorious contribution in identifying the techniques generally used by hackers round the globe. The Paper embodies: Card Theft: Since it is not always possible to get hold of a card directly from the card holder, the hackers have devised a variety of mechanical card-catching devices which ensnare the card in the machine as it is inserted for a transaction, and therefore the card does not come out to the cardholder after the transaction is over. At this stage the owner of the card, perplexed owing to his or her card having been stuck up in the ATM, looks around for help. The hacker who had already managed to place himself near the confused and perturbed card holder would make himself readily available to help him (the card owner). He would advise the card owner to enter the PIN once again. As the card owner acts on the advice of the hacker, the latter views the PIN and remembers it. The card does not come out in any case as it is hooked under the device. The disappointed cardholder leaves the place to take up the issue with the bank. After he has left, the hacker by a fishing device takes out the card from the machine. Now, as he possesses the card and also knows the PIN, who can stop him from playing havoc with the account? Skimming Devices: This is a technique devised by criminals to translocate the data stored in the magnetic stripe of the card. Fake card reader is affixed near the actual card reader input opening. Somewhere near it ‘instructions to the ATM users’ are displayed requiring them to pass their cards through this additional reader in order to ensure either added security, or ‘cleaning up’ of their card from anticipated virus. The fake equipment reads and records the data stored on the magnetic stripe of the card. It is removed after it is done with and the data recorded on it are downloaded. This fake card reader, although very small in size, can read hundreds of cards and record information stored therein including vital information, such as balance in the account, control code etc. A mark of adhesive tape near the card reader slot is sufficient indication of the skimming, which should alert all concerned.
37
Peeping or Shoulder Surfing: This is the art of having a glimpse through a narrow opening. The hacker positions himself in close proximity of the ATM user, and from there tries to watch the number pressed by the latter on the keyboard. Small sensitive cameras are also installed for this purpose somewhere near the PIN Pad. Utilizing a fake pin pad overlay: A fake PIN pad is placed over the original keypad. The overlay captures the PIN data and stores the information into its memory. The fake PIN pad is then removed, and recorded PINs are downloaded. This method used in conjunction with card data theft provides the criminal with the information needed to have an access to the customer’s account. A criminal may also attach a portable monitor and card reader on top of the actual ATMs monitor and card reader to obtain the card and the PIN information. The false monitor and card reader record the account information and present a message to the customer that the transaction can not be completed; after the customer leaves, the criminal will return and remove the portable device. PIN Interception: After the PIN is entered, the information is captured in electronic format through an electronic data recorder. Accessing the Cash: There are a variety of methods used by criminals to intercept, or divert or otherwise illegally receive, dispensed currency. ATM burglary attacks: Physical attacks are sometimes attempted on the safe inside the ATM in order to penetrate the ATM to open the door of the safe or to make an opening in the safe sufficiently large to remove the cash. There have been incidents where criminals have actually physically removed an ATM by tying a chain to it and driving off with the ATM dragging behind a pickup truck. Cybercrimes: Preventive Statutes, Laws and Regulations Most U.S. federal statutes relating to computer crime are set out in Title 18 of the United States Code. They include fraud and related activity in connection with credit cards and access devices and computers. The U.S. Secret Service has been given the task of investigating all violations Laws and Regulations in Pakistan The SBP took the initiative by way of issuing Prudential Regulations for Corporate / Commercial Banking, which included Regulations Nos. M-1 to M-5 pertaining to “Know Your Customer and Money Laundering”. Later, The National Response Centre for Cyber Crimes(NRCCC) was established in the FIA in March 2003. Till then Pakistan mainly relied on the US Central Investigation Agency (CIA) for detecting cyber crimes and militant websites. It was then in 2009 that the Prevention of Electronic Crimes Ordinance, 2009 [Ordinance No. VIII of 2009] was promulgated. NR3C was empowered to enforce this law and deal with major categories of cyber crimes. The 2009 Ordinance was supplemented by The Anti-Money Laundering Act, 2010, Act No. VII of 2010, and AntiMoney Laundering Regulations, 2008. Further, section 2(p)(ii) of the 2009 Ordinance defines ‘offences’ to include an offence punishable under the laws mentioned in its First Schedule.”. February 2012
C ommodity Review January -2012
I
n January 2012, an upward trend was observed across the globe among commodity markets except crude oil and Palm olein. Tension in Iran put pressure on oil prices. During the month, the traded volumes at the Exchange increased to Rs. 51.7 bn from Rs. 44.4 bn in the corresponding month of the previous year, a growth of 75 %.
PMEX Commodity INDEX 2850
Traded Volume(Rs) Traded Lots
2800 2750
30-Jan
27-Jan
24-Jan
21-Jan
18-Jan
15-Jan
12-Jan
3-Jan
6-Jan
9-Jan
2700
Open: 2,750 Close: 2, 810 Change: + 2.17 %
Jan. 2012 Jan. 2011 51.7 billion 42.7 billion 153,917 249,497
Dec. 2011 47.9 billion 232,518
Low: 2, 750 High: 2,8 21
GOLD [USD / t Oz] 1800 1750 1700 1650 1600 30-Jan
27-Jan
24-Jan
21-Jan
18-Jan
15-Jan
12-Jan
9-Jan
6-Jan
3-Jan
1550
Open: 1,603.4 Low: 1,603.4 Close: 1,738.7 High: 1,738.7 Change: + 8.44 % Gold ticked up after the euro rebounded, while bullion prices headed for their biggest monthly rise since August as lingering concerns about growth in the United States prompted buying from investors.Gold jumped nearly 5 percent last week, its fourth consecutive weekly gain, after the U.S. Federal Reserve pledged to keep interest rates near zero until at least late 2014, which could put pressure on the dollar. Gold Prices fluctuated between $ 1,603.4 – 1,738.7 per ounce in the whole month of January, 2011. The traded volumes at the Exchange increased to Rs. 35.3 bn from Rs. 29.4 bn in the corresponding month of the previous year, a growth of 20 %.
SILVER [USD / t Oz] 34 32 30 28
Open: 29.44 Close: 33.26 Change: + 12.96 %
30-Jan
27-Jan
24-Jan
21-Jan
18-Jan
15-Jan
12-Jan
9-Jan
6-Jan
3-Jan
26
Low: 28.66 High: 33.89
Record industrial demand for silver and resurging investor interest had diminishing effect on the supply surplus, driving the metal used in everything from solar panels to batteries into its best start to a year in almost three decades. The metal rallied 24 percent since closing at an 11-month low in December, entering a bull market on mounting confidence that another global recession will be avoided even as the World Bank and International Monetary Fund cut their growth forecasts. Prices plunged by 44 percent in eight months, making it the most volatile of any metal tracked by Bloomberg, as expansion slowed from Europe to China, crimping demand for commodities. Max price was $33.89 an ounce on 27th of Jan and min price was $ 28.66 on 6th of January. A rise of 12.96 % was observed in January, 2012. The traded volumes at the Exchange decreased to Rs. 6.33 bn from Rs. 7.1 bn in the corresponding month of the previous year.
39
February 2012
C ommodity Review CRUDE OIL [USD / barrel] 104 102 100
30-Jan
27-Jan
24-Jan
21-Jan
18-Jan
15-Jan
12-Jan
9-Jan
6-Jan
3-Jan
98
Open: 103.05 Low: 98.39 Close: 98.47 High: 103.24 Change: - 4.44 % Tensions in Iran put pressure on oil prices, although, as officials in Saudi Arabia say, the market has ample supply. Iran is at loggerheads with Western countries over accusations that its nuclear program is a cover for weapons. EU foreign ministers agreed to put a ban on Iranian oil imports starting in July and freeze the assets of the country’s central bank. Crude Oil price fell from $ 103.05 at the start of month and declined further to $ 98.47 during the month, a decline of 4.44 %. During the month, the traded volumes at the Exchange increased to Rs. 10.02 bn from Rs. 6.1 bn in the correspondence month of the previous year, a growth of 63 %.
IRRI 6 [Rs. / 100 kg] Open: 2,975 Close: 3,015 Change: + 1.34 %
3,075 3,050 3,025 3,000 2,975 30-Jan
27-Jan
24-Jan
21-Jan
18-Jan
15-Jan
12-Jan
9-Jan
6-Jan
3-Jan
2,950
Low: 2,975 High: 3,050
In domestic market an upward trend in prices was witnessed in the first half of the month which remained quite stable in 2nd half. Price movement remained in a narrow band. Maximum price was Rs 3,050 per 100 Kg on 17th of January and Minimum price was Rs 2,975 per 100 kg on the opening day of January. A rise of 1.34 % was observed.
PALMOLEIN [Rs. / 37.324 kg] Open: 4,760 Low: 4,600 Close: 4,630 High: 4,760 Change: - 2.73 % In the domestic market, a downward trend in prices was witnessed in the month of January, 2012. Maximum price of Rs 4,760 was on the opening day of the month and Minimum price was Rs. 4,600 per 37.324 kg on 30th of January 2012. A drop of 0.42 % was observed.
4,800 4,725 4,650
30-Jan
27-Jan
24-Jan
21-Jan
18-Jan
15-Jan
12-Jan
9-Jan
6-Jan
3-Jan
4,575
40
February 2012
T raining & Development Training: why is it losing its impact?
E
Besides, experienced supervisors were responsible for train-ing. This lot imparted training in line with requirements of a job, knew how job performance targets were set, and how employee performance was judged and rated. Thus trainees showed high on-the-job results and progressed. The scenario changed; the now visible disconnect between the priorities of the line managers and trainers, is the result of the change in business philosophy (growth priorities) since the late 1970s. Increased workplace complexity and advent of specialization became the sources of two key failures: trainers, not always familiar with constantly changing job performance demands and lacking workplace clout, fell into the trap of over-reliance on overly academic training practices instead of focusing on transferring job-specific knowledge, skills and expertise. Trainers and line managers, Trainers fell the parties on which depends improvement in employees’ into the trap of job performance, have driover-reliance fted apart and that gap is on overly acarising. That is a worrying trend. To ensure that training demic training achieves improved employpractices inees’ on-job performance, this gap has to contract and even- stead of focustually close, but will require a ing on transconcerted effort by trainers ferring jobas well the line managers. Closing this expanding and specific knowlexceedingly harmful gap edge, skills calls for a determined joint effort by trainers as well as and expertise. line managers. Trainers should feel obliged to design training programmes that include application besides learning. Line managers must help trainers by guiding them in designing programmes with a purpose-oriented content on application of learning. What line managers must contribute are real-life cases both good and bad–that highlight the consequences of good and bad organizational response to developing scenarios, and the role therein of the front-liners as well as line managers to emphasize the importance of rational responses and benefits of prudence, and of meeting commitments and deadlines. In these cases, which should be turned into case studies, it is important that identities of the customers and involved staff of the organization, are carefully masked to avoid any chances of violating the law on confidentiality. However, the content must remain purpose-oriented to serve its purpose.
mpirical studies show that what employees learn while they attend training courses is applied only partially in their work-place, and the millions corporations spend on training result in marginal returns; a dilemma faced by most corporations. The question is what leads to this outcome? Have trainers become overly academic in their approach to training, or is it that corporations do not give them a purpose-oriented mandate, or is it due to the fact that corporations don’t allow the application of what trainees learn during these courses? All these confounding issues were addressed by a “Learning Transfer Survey” conducted throughout 2010 to uncover the real- ities that minimize the re- flection of learning in im- proved on-the-job perfor- mance. The respondents –a vast majority of the corporate sector–think just about half of what was taught at the training courses actually got transferred to the trainees. Here, it is important to note that, most organizations neither assess the transfer of learning, nor the impact training has on employees’ post-training job performance, which reflects the importance organizations assign to this exercise in improving their employees’ knowledge and skill bases and prepare them for higher assignments. Not just that, organizations also do not make a serious effort in assessing the extent to which learning was transferred, nor depute the employees, who express confidence about having learnt the skills taught in the training courses, to assignments that can test their improved performing abilities (duly supervised during the initial period to ensure against any failure). The more worrying aspect of the dilemma is that even the in-house trainers (far better equipped for training assuming that they know clearly the policies and procedures practiced in an organization) often feel that they lack the power to influence what line managers do to support employees’ development. This gap has grown over the years, and its impact was felt in the recent crisis; frontliners (especially in financial services sector) supported by their line managers, indulged in practices that were clearly in defiance of their internal procedures and practices and contravened the restrictions levied by domestic regulatory requirements. Until the end of the 19th century, changes in the contents of a job were infrequent, and performance yardsticks remained unchanged. Consequently, the trainers knew what knowledge was to be provided, and how it had to be imparted in theory and practice and therefore used appropriate material–theory, numerical and practical exercises, and case studies.
41
February 2012
T raining & Development Workshop on‘Power of Entrepreneurship’
Talk on ‘Power of Ethics and Morality in Business’
P
N
ublicitas Training and Development with support from GlaxoSmithKline, Pak-Oman Microfinance Bank, National Bank of Pakistan and Burj Bank held a 3-day workshop on “The Power of Entrepreneurship” on January, 16-18, 2012 in Karachi. It was inaugurated by Mr. M. Salman Burney, Managing Director, GSK, Mr. Kazi Abdul Muktadir, Executive Director, SBP, Mr. Ozair A. Hanafi, Lead trainer of the workshop, and Syed Shahjahan Salahuddin, CEO, Publicitas Pvt. Ltd. Mr. Salman Burney shared his thoughts on entrepreneurship and its importance in shaping a better Pakistan for the future. Mr. Kazi Abdul Muktadir shared his thoughts on entrepreneurship as the backbone of a country’s economy. Mr Ozair A Hanafi, emphasized on entrepreneurship as the key to self-reliance in Pakistan. He familiarized the participants on how to start a new enterprise and how to make a business plan. The participants were involved in the workshop Aisha Ahmed, GSK presenting through various team building activi- Ms. mememto to Prof. Shahana Kazmi ties. In the closing ceremony, Professor Shahana Urooj Kazmi, Pro Vice Chancellor of University of Karachi said that this type of workshop is a beneficial way to give the students a sense of direction. She also stated that entrepreneurship is the key to self-employment and encouraged the participants to become successful entrepreneurs. She mentioned businessmen like Adamjee and Naintalwalaas examples of successful entrepreneurs. Syed Shahjahan Salahuddin persented voted of thanks and congratelated the participant for their interest in the workshop.
ational Bank of Pakistan arranged a session on ‘The Power of Ethics and Morality in Business,’ with Mr. Ozair A. Hanafi, Founder President, Ozair Hanafi School of Learning (OHSOL) and Executive Chairman, Publicitas Training and Development on January 26, Dr. Mirza Abrar Baig, SEVP, 2012 for its Management NBP receiving Mr. Ozair Hanafi Trainee Officers. In his lecture, Mr. Ozair Hanafi explained the fundamental shift in the way we look at the very purpose of business and enabled the participants to develop the concept and process of implementation at work. He developed a clear distinction between ethics and morality, explained the principles of trust and truth and showed the participants how these two principles satisfy the customer, which in turn leads to growth, productivity and profitability thus impacting the bottom line of an organization. He also discussed the prevailing ethical and moral issues in business organizations.. The emphasis was also put on the concepts: Know Your Customer and Know Your Banker. In his concluding remarks Dr. Mirza Abrar Baig, Senior Executive Vice President, Training and Organization Development, National Bank of Pakistan discussed integrity and intelligence as qualities that employees of an organization should possess . He emphasized on the application of ethics and moral values in business and further highlighted the importance of finding a work-life balance. Mr. Moizuddin Khan, EVP/Divisional Head, Brig. (R) Muzaffar ul Hasan, Wing Head Training & Director, and other senior executives of Training & Organization Development were also present on the occasion.
From the middle: Mr. Salman Burney, VP & Managing Director, GSK, on his right, Mr. Kazi A. Muktadir, Executive Director, SBP, on his left, Mr. Ozair A. Hanafi, Executive Chairman, PTAD, with the participants.
42
February 2012
S tock Market Monthly Stock Market Review by Zeeshan Ahmed Mirza
The beginning of the New Year (year 2012) failed to give any optimism for investments in the equity market. KSE100 index lost 222 pts during the first week of January 2012 (down 2% to stand at 11,125pts) on account of continued foreign selling and re-emergence of shadows on political front. Meanwhile, US has frozen USD700mn aid to Pakistan which can also be blamed for the surrounding negativity. CPI for the month of Dec-11 clocked at 9.75% YoY which surprised the market, and provided hope for monetary easing, though fiscal challenges and rupee depreciation against the US Dollar is still a cause of concern for the policy makers. Rupee during the week touched historic low of Rs 90.60 in inter-bank market. At the same time, SECP and revenue collection authorities failed to come up with a solution to boost volumes at the stock exchange. During the last day of the week, Engro Corporation once again raised urea prices by Rs 181/bag (ex-GST) due to the imposition of GIDC (Gas infrastructural development surcharge). Average volumes were at 35mn shares (down 27% WoW) during the week. The second week KSE-100 index was also volatile on account of stressful environment on country’s political front. The KSE-100 index lost 110pts to close at 11,014pts (down 1.0%). Political uncertainty prevailing on the local front kept investors at bay from the market, especially when Supreme Court in its judgment referred to the high command in the present political setup as dishonest. The tension between the government and the military added to the decline on the political front. As a result, KSE100 index broke the psychological barrier of 11,000 pts, as investors immediately sidelined themselves fearing a military coup. However, last day of trading showed some positivity where the market gained 105 pts and closed the week back above 11,000 pts level. Overall, average daily volumes fell by 33.4 percent to 28.1 million shares during the week from 42 million traded in the week earlier. The market capitalization fell by Rs27 billion to Rs2, 866 billion. Market movement at the Karachi Stock Exchange (KSE) market in the third week was bullish. KSE – 100 Index reached 11,774.68 points by gaining 760.22 points or 6.9 per cent. The KSE 30-share index rose by 731.21 points, or 7.18 percent, to 10,907.45. This was the highest weekly increment during the last 146 weeks (since April 3, 2009). The core reasons behind such upbeat activities were SECP's proposal to FBR to take certain steps in favor of the corporate sector and the capital markets (easier CGT filing mechanism with reduction in corporate tax rate) and positive revision in Pakistan’s economic growth estimate to 4 percent. Statement issued by White House on US-Pakistan to work together to reset ties played a catalyst role in creating the bullish sentiment at KSE. Government effort to resolve the issue of circular debt through another TFC issue of ~Rs150bn was also taken up positively at the bourse. Meanwhile, the political tensions also put their heads down, which further provided support to the market. During the week, US Consul General
Company Open JSCL 4.03 LOTPTA 9.27 FATIMA 22.92 DGKC 19.03 FFBL 42.43 FFC 149.54 NBP 41.05 BAFL 11.25 ENGRO 92.7 LPCL 1.88
Top 10 Traded Companies(Jan 2012) Close Diff High Low Avg.Rate Turnover* 5.57 1.54 6.95 3.9 4.87 156,317,409 8.34 -0.93 10.9 8.31 9.81 116,674,459 21.94 -0.98 24.19 20.95 22.8 93,583,265 23.19 4.16 23.63 18.74 20.85 87,130,690 46.11 3.68 50.88 41.1 45.43 84,618,554 186.95 37.41 190.95 147.9 167.19 74,598,861 43.37 2.32 46.1 40.54 43.28 68,815,892 12.2 0.95 12.65 11.14 11.73 64,479,764 115.97 23.27 120 90.25 102.99 64,100,212 2.09 0.21 2.45 1.73 2.02 52,766,279 Top 10 Gainers(Jan 2012)
Company RMPL
Open
Close
Diff
High
Low
Avg.Rate
Turnover
2,513.28 2,599.95 86.67 2,650.00 2,405.00
2,518.40
148
REGT
21.4
92.71 71.31
92.71
92.71
92.71
910
MTL
365.21
426.43 61.22
448
350.09
400.44
386,203
COLG
639.11
691.75 52.64
725.33
610
663.23
13,430
MCB
134.6
172.83 38.23
175.45
133
154.12 19,031,668
FFC
149.54
186.95 37.41
190.95
147.9
167.19 74,598,861
PSO
227.21
257.09 29.88
262.99
224.15
241.63 11,182,681
APL
412.5
440.14 27.64
450
405
ENGRO
92.7
115.97 23.27
120
90.25
102.99 64,100,212
INDU
205.03
224.49 19.46
225
201.6
213.81
Company
Open
Close
426.48
1,343,041 41,296
Top 10 Losers (Jan 2012) NESTLE SIEM ULEVER BATA WYETH UPFL SHJS AGTL IDYM GLPL
43
Diff
High
Low
3,597.11 3,177.74 -419.4
3,609.77 2,730.00
1,056.75
1,050.00
865 -191.8
5,565.80 5,394.95 -170.9
Avg.Rate Turnover* 3,144.50
25,804
850
894.64
571
5,600.00 4,965.00
5,364.82
2,306
818.4
670.92 -147.5
800
670
725.62
586
819.95
711.01 -108.9
791.43
698
743.12
845
1,732.00 1,615.00
1,682.18
173
1,710.00 1,629.25 -80.75 89.18
69.25 -19.93
93.4
62.72
79.4
135,786
192.84
175.04
-17.8
199.69
170.25
183.97
47,371
380.32
368.72
-11.6
410
351.94
379.57
4,418
34.64 -11.26
44.44
34.4
39.53
6,879
45.9
February 2012
S tock Market visited KSE and showed eagerness to enhance investment in Pakistan. Average daily volumes increased by 209 percent to 87 million shares during the week from 28 million shares traded in the week earlier. The market capitalization surged by Rs190 billion to Rs 3,056 billion. The daily turnover increased by 456.69 percent to close at 178.42 million shares as against 32.05 million shares of the previous week. Most-awaited desire of the capital market stakeholders in 4th week came true after country’s Finance Minister accepted SECP's proposals with an aim to restore life to country’s ailing equity market. The major suggestion making difference was no inquiry on the source of income to be done till 2014 along with slash of WHT on shares value. The response to such an event was instant, highlighted by the impressive jump of 67% experienced by the average daily volumes in the market turning the number into triple-digits after a long time to 145mn shares against 87mn shares last week. Amid increased price discovery, foreign investors were also seen placing funds this week, where market witnessed net foreign inflows of USD 7.4mn as compared to net outflows of USD 3.7mn in previous week. However, investors also booked profits during the week as a long-due rally took place. On economic front, despite lower inflation, government’s borrowing from central bank and other commercial banks reached Rs 3.7trn by end 2HCY11 (up 24% HoH) raising eyebrows on expected monetary easing. Country’s political front also remained relatively calm during the week as the ‘Memo’ scandal’s hearing was deferred till Feb 9, 2012. As a result of such events, market gained 186pts (up 1.58% WoW) to close at 11,960pts with average traded value shooting up by 50% to USD 75mn. On February 2, 2012, Ahsan Mahenti, leading analyst wrote that the month ended with a bullish sentiments at KSE in stocks across the board led by blue chip Fertilizer Stocks after record payout and earning announcements by Fauji fertilizer and Fauji Bin Qasim. Index moved in narrow range in the last week as investor awaited formal notification on announcements made during the visit of Federal Minister of Finance on Saturday visit at KSE. Oil and cement stocks rallied on higher local commodity prices and OGRA decision for massive to increase in local POL prices from Feb 1. Institutional support in banking
stocks owing to speculations ahead of year end announcements played a catalyst role in bullish close despite concerns for power shortfall for industrial sector, uncertain political and economic outlook and erupted ethnic violence in the city reported in last week of the month.
Money Market T-Bills (3mth) 11.5623% T-Bills (6mth) 11.6264% T-Bills (12mth) 11.6903% Discount Rate 12.00% Kibor (1mth) 12.01% Kibor (3mth) 11.75% Kibor (6mth) 11.80% Kibor (9mth) 12.10% Kibor (12mth) 12.14% P.I.B (3 year) 12.4531% P.I.B (5 year) 12.6993% P.I.B (10 year) 12.6993%
Foreign Portfolio Investment Monthly (Jan 2012) Gross Buy (Rs)
FIPI Local Companies Banks/DFI Mutual Funds NBFC Local Investor Other Organization
5,277,865,870 28,480,440,746 7,775,583,727 5,715,368,995 1,422,799,748 48,401,618,665
Gross Sell (Rs)
(5,318,157,813) (33,033,490,710) (8,776,854,866) (5,844,126,999) (1,363,083,274) (43,515,635,394) (758,707,212)
44
Net buy/Sell (Rs)
(40,291,938) (4,553,049,963) (1,001,271,135) (128,758,002) 59,716,474 4,885,983,264 777,671,300
Net buy/Sell ($)
(447,688) (50,589,444) (11,125,235) (1,430,644) 663,516 54,288,703 8,640,792 February 2012
E vents Independence Day of Australia
26
th January is a very significant day in the history of Australia. The day marks the beginning of settlement in Australia with the landing of the First Fleet in 1788 under Captain Arthur Phillip who became the first Governor after gaining sovereignty over the colony of New South Wales. The day is observed as Australia’s official National Day and is known to be the biggest day when the people in all states and territories across the country celebrate their achievements as a stable , democratic, diverse and multicultural society with a skilled and innovative population representing almost every nation of the world. The Australia Day celebration ceremony is marked by flag hoisting, community awards presentation and citizenship ceremonies along with local events followed by recommitment by every unit to make the country even stronger and beautiful to live in. Australia is the smallest but beautiful island continent that offers everything–sandy beaches, scenic beauty, wildlife safaris, elaborated shopping malls, stunning landscapes, snowpeaked mountains, aquariums, historic sites, passion for sports, quality educational institutions with strong international reputation for excellence, and many more attractions —one may dream of. The continent is located south of Indonesia and Papua New Guinea with its scarce population concentrated mainly on the eastern coastal plain and southeastern coast. This island continent is known for its deserted outposts and enjoys a wide range of climatic variations owing to its size. Geographically, the country covers a total area of 7,686,850 square kilometer spanning over an altitude of 27 degree south to the equator between the Indian Ocean and South Pacific Ocean. Near the eastern coast of Australia lies the Great Diving Range or the Eastern Highlands which separates the eastern coastal plain from the outback. Western Australia constitutes one-third of the country’s land mass and includes landscape variations like Kimberly in the extreme north and the Pilbara in the northwest. Another distinguishing geographic feature of this island continent is its isolation from the other continents sustaining many plants and animals that cannot be found anywhere else on earth. According to reports, there are around 22,000 species of plants of which over 90 percent grow naturally. Edible and non-edible fishes are to be found in plenty in the surround waters of the Great Barrier Reef. There are around 70 species of sharks in these waters. Cultural diversity has become a touchstone of Australia’s national identity. Built by people from many different backgrounds, the country has diverse languages, customs,
communities, cultures and traditions. Despite its diversity,the Australian rich heritage binds the country together and gives it a distinct identity. Constituting 1.71 percent of the overall population of Australia, the Muslims form an increasingly important part of the country’s diverse modern society where Islam is regarded as the fourth largest religious grouping. Australia is also known for its quality education and vibrant environment that suits every individual. In recent years, the country has emerged as a world leader in international education and training recognized by major employers and professional organizations around the world. The cost of studying in Australia compares favourably well with other countries for international students. Therefore, Australia is considered as a preferred option for students in Pakistan. Australia is a country which enjoys one of the fastest growing advanced economies in the world with a GDP of approximately US $ 1.23 trillion and one of the top nations with regard to high per capita income. It is the 13th largest economy in the world according to nominal GDP. In the past two decades, the country has enjoyed a period of uninterrupted economic growth. Australia is rich in natural resources and is a major exporter of agricultural products, particularly wheat and wool, minerals such as iron-ore and gold, and energy in the form of liquefied natural gas and coal. Agricultural and natural resources contribute substantially to export performance although they constitute only 3 percent and 5 percent of GDP respectively. With its enormous wealth and prosperity, Australia is a land of opportunities. In an environment where global economy is vulnerable and things are going tough for most advanced countries of the world, Australia has survived the recession and experienced growth. Australia and Pakistan have strong and growing partrnership in agriculture sector. Being one of the world’s leading agricultural countries, Australia is working with Pakistan to develop its exports potential in agricultural sector . Australia and Pakistan have had long-standing friendship and business relations built on a common heritage, shared interests and growing people to people links which have expanded overtime. Several business opportunities and commonalities exist between Pakistan and Australia which can be exploited for the common good of both the countries. The governments of both the countries are already seized of the need and importance of this mutual cooperation and understanding. Let us hope that this will grow in times to come.
45
February 2012
E vents LDFA 2012 exhibition
Sta Report
T
here is great potential in the livestock sector of Sindh which if properly managed can upgrade the socioeconomic condition of the rural Sindh and provide livelihood to millions of poor inhabitants of rural Sindh. The Sindh government is striving hard to exploit the true potential of livestock and agriculture sector in the province by developing closer interaction of sellers and potential buyers. After the success of first Livestock, Dairy & Fisheries (LDF) exhibition in 2011, the Sindh Board of Investment (BoI) organized another exhibition 'LDFA 2012' in collaboration with provincial livestock and agriculture departments from January 28 to 29 to promote the potential of aforesaid sectors in the province. This year’s edition includes Agriculture along with Livestock, Dairy, Fisheries, Poultry (LDFA-2012). The event was attended by various local and international companies dealing in agriculture, pest control, poultry farming, fisheries, off-season farming and dairy farming. The event also included Horse and Cattle show, Bird Show, Ornamental Fish Exhibition, Dog and Pet show and Flower show for the attraction of common visitors. The main objectives of the event were to bring government and investors on one platform for the development of these sectors and to produce exportable surplus by introducing state-of-the-art facilities for livestock, dairy, fisheries, poultry and agriculture. On this occasion a seminar was also held on the prospects of the LDFA sectors. It was addressed by Sindh Assembly Speaker Mr. Nisar Khoro, Sindh Minister for Fisheries Mr. Zahid Ali Burghuri, Sindh Assembly Deputy Speaker Ms. Shehla Raza, Secretary Investment, Mr. Younus Dagha, Chairman, Sindh Board of Investment, Mr. Zubair Motiwalla, and various other speakers from public and private sectors. The exhibition fetched business deals worth Rs. 1 billion in live stock, dairy, fisheries and agriculture compare to business deals worth Rs. 400 million in first LDFA held last year. Investors from UK, Italy and Czech Republic showed keen interest for investment in agriculture, fisheries and other sectors. The animal population in Pakistan is three times that of Germany but yield is about one-fifth that of Germany and
one-third that of New Zealand representing a significant loss in potential economic and social values. Pakistan has vast potential in these sectors for modern and technology driven practices. Government needs to take initiatives in terms of subsidized financing, technological support, research & development and capacity building of agriculturists and dairy farmers to promote these sectors of the economy such as livestock, dairy, fisheries, poultry and agriculture.
46
February 2012
R esearch & Development Prospects of Sheep Farming in Pakistan Livestock Sub-sector of Pakistan: An Overview
buffalo, sheep, goat and camel were 34.74, 61.79, 0.08, 1.63 and 1.76% respectively. The sum total of 3,094 thousand ton meat was obtained from mutton (19.91%), beef (55.30%) and poultry (24.79%) during 2010-11.
Livestock sub-sector plays an important role in the economy of Pakistan. It contributed 55.1% to the agriculture and 11.5% to national GDP during 2010‐11. During last few years, while the other development sectors experienced stagnation and decline, the livestock sector exhibited significant growth. The livestock wealth has made Pakistan the 5th largest milk and 12th largest wool producer in the world. It is the native land of some renowned breeds viz. Red-Sindhi and Sahiwal cattle; Nili-Ravi and Kundi buffaloes; Beetal and Kamori goats; and Kajli, Kacchi and Balkhi sheep. The population of important livestock species distributed in different provinces of Pakistan is shown in figure 1. Among different livestock species the Punjab ranks highest with maximum number of cattle, buffalo and goats (14.41, 17.75 and 19.83 million heads, respectively), followed by Sindh, Khyber Pakhtunkhuwa and Balochistan. However, the sheep heads are higher in Balochistan (12.8 million), followed by Punjab, Sindh and Khyber Pakhtunkhuwa (6.36, 3.96 and 3.37 million respectively).
Sheep Production: A Global Outlook
Sheep (Ovis aries) are ruminant mammals. Ruminants are a class of mammals that can ferment the fibrous feed prior to digestion. This makes them unique factories that can convert poor quality fibrous feeds to products of high biological value like milk, mutton and wool etc. Sheep is one of the earliest known animals to be domesticated for agricultural purposes and its meat and milk are one of the oldest staple proteins consumed by human civilization after shifting from hunting and settling on agriculture. They are raised for fleece, meat and milk. The sheep meat is known as either ‘mutton’ or ‘lamb’. The word ‘mutton’ is derived from the old French word ‘moton’, meaning sheep. This became the name for sheep meat in English, while the old English word ‘sceap’ was kept for the live animals. The word ‘mutton’ has been restricted to the meat of mature sheep, usually two years of age, whereas, ‘lamb’ is used for immature sheep less than a year. The woolen coat of sheep is known as fleece especially after having been sheared. Wool is defined as the textile fiber obtained from sheep and certain other animals including cashmere and mohair (goats), qiviut (alpaca, camel) and angora (rabbits). The hair part of the fleece is known as Kemp. The proportion of Kemp to wool may vary interbreeds and make some fleeces more desirable for spinning, felting or carding. The most common example is the famous Tweed cloth of Scotland. The scaling and crimp properties of wool make it easier to spin the fleece. The amount of crimp relates to the wool fineness e.g. a fine wool like Merino may have up to 100 crimps per inch, while the coarser wools like karakul may have as few as 1 to 2. The sheep rearing is carried out in most parts of the world. Domestic sheep is a multi-purpose animal with over 200 breeds that exists throughout the world. Sheep are classified as being best suited to furnish certain product(s) viz. wool, meat, milk, hides. Sheep breeds are often categorized by the wool type. Fine wool breeds are those producing wool with great crimp and density, whereas, coarse or carpet wool sheep are those with medium to long length wool of characteristic coarseness. The major fine-wool breeds are derived from Merino sheep and dominate the world sheep industry. Some major medium wool breeds, like Corriedale, are dual-purpose crosses of long and fine-wool breeds. Another class of sheep is fur or hair sheep, which do not grow wool at all and are raised for meat and pelts. This type sheep is cheaper to keep as they do not need shearing and are usually kept by meat and hide producers such as Dorper breed. Milk producing sheep are a minor class and are usually kept for dual-purpose. However, there are a few breeds that are predominantly used for milking. These sheep produce a higher quantity of milk with slightly longer lactation period.
Figure 1. Province-wise Livestock Population (Million No.) Cattle
Buffalo
Sheep
Goat
20 15 10 5 0 Punjab
Sindh
Khyber Pakhtun Khuwa
by Dr. Zia-ul-Hasan and Dr. Ulfat-un-Nabi Khan
Balochistan
The population growth, Figure 2. Milk production (thousand tones) of different lisvestock species increase in per capita (2010-11) income and export revenue is fueling the demand for Cow 759 818 livestock and livestock 36 Buffalo 16,133 products. The major items 28,694 Sheep of interest for export in Goat livestock sector can be live Camel animals, processed beef/ mutton, wool and wool 3. Meat production (thousand based products, processed Figure tones) of different livestock species (2010-11) milk and its byproducts etc. The most important products obtained from live767 Beef stock are milk and meat. 1711 Mutton The contribution of milk 616 and meat from different Poultry Meat sources is shown in figures 2 and 3. The total production of milk in Pakistan during 2010-11 was 46,440 thousand tones. The percent contribution of milk from cattle,
47
February 2012
R esearch & Development The other features used to classify sheep include face color (white or black), tail length, tail type (thin or fat), presence or absence of horns and topography (upland or lowland). Fat-tailed type breeds are characteristic of some African and Asian breeds having large fat deposits within and around its tail. The approximate global sheep population and wool production are one billion heads and 1.3 million tonnes/year, respectively. The largest modern sheep flocks are being Figure 4. Merino sheep reared by China, Australia, India and Iran. New Zealand holds smaller sheep flocks but showing the largest economic impact, due to the export of sheep products. China, Australia and New Zealand are the leading wool producers in the world. FAO statistics for sheep population and total wool, mutton and milk production are shown in table 1.
Sheep and its Products: Economic Importance
Sheep’s wool is the most widely used animal fiber. It has several qualities that distinguish it from hair or fur. Fiber diameter, crimp, yield, color and staple strength are the key factors to determine the wool quality. Among them the fiber diameter is the single most important characteristic determining quality and price. Finest wool of the world is obtained from Merino sheep which is typically 3-5 inches long and very fine (12-24 microns). Wool finer than 25¾ can be used for garments, while coarser grades can be used for outwears and rugs. Milk is minor product obtained from sheep. Sheep milk yield is not comparable to that of cow but its specific composition made it suitable for some byproducts. Sheep milk contains more fat, solids and minerals than bovine milk hence it is ideal for cheesemaking. Sheep milk is also ideal for some forms of strained yogurt. By-products of sheep slaughter like fat, bones, cartilages, intestines are also of economic importance. The sheep fat can be used in candle and soap making; Sheep intestines as sausage casings and formed into surgical sutures and strings for musical instruments and tennis rackets; and, sheep bones and cartilages for the manufacture of dice and buttons as well as rendered glue and gelatin. The most valuable sheep byproduct is lanolin. It is a fatty substance present naturally in sheep wool and used as a base for innumerable cosmetics and other products.
Sheep have economic advantages to other Figure 5. Corriedale sheep livestock species. Sheep do not require expensive housing as in case of poultry. The sheep can efficiently utilize the land as six sheep can be kept on the land sufficient to raise a cow. Sheep have the unique capability to utilize noxious weeds, which other animals can not withstand. The cost of raising sheep is less than most livestock species as the raising sheep is not related with the prices of feed crops such as grains, meals and industrial byproducts. Figure 6. Dorper Ram The sale of meat is the most Population Wool profitable enterprise in the sheep Table 1. industry. The nations with Countries highest consumption of sheep Rank Thousand Rank Million Heads Tones meat are Persian Gulf states, New Zealand, Australia, parts of 1 386.77 1 China European Union, Parts of Africa (Especially Maghreb), Carib73.99 2 43.00 11 India bean, India and parts of China. 68.09 3 382.30 2 These countries utilize 3-18 kg Australia of sheep meat per capita per 54.00 4 60.00 5 Iran annum. The preference of sheep slaughter on Eid-ul-Azha, due to 52.01 5 55.00 7 Sudan the religious background, increases the sheep demand, in 35.52 6 NA Nigeria Muslim world. Saudi Arabia, 32.56 7 165.80 3 New Zealand alone imported 2.5-3.0 million sheep for slaughter purpose 31.00 8 67.00 4 U.K during Hajj season from Australia and Somalia, besides the 27.80 9 42.00 12 Pakistan regular demands. There are some regions like Balochistan, 25.98 10 14.40 27 Ethopia Afghanistan and Iran where the 24.50 11 41.09 13 South Africa sheep meat is a speciality food and have first preference than 21.80 12 53.70 9 Syria beef/goat meat.
48
Meat
Milk
Thousand Rank Thousand Rank Tones Tones 2,070.00
1
1,724.00
1
289.20
6
NA
-
555.62
2
NA
-
360.00
4
479.20
9
349.50
5
452.10
10
148.81
13
NA
-
470.91
3
NA
-
280.86
7
NA
-
158.00
12
36.00
34
86.50
23
48.00
27
139.79
14
NA
-
198.00
9
628.10
5
February 2012
R esearch & Development Sheep: An Unexplored Wealth of Pakistan
subsistence to market oriented and commercial livestock farming in the country to meet the domestic demand and Pakistan is one of the leading nations in the world having surplus for export. However, in this scenario, sheep industry enormous livestock wealth. Pakistan stands 9th in sheep popuis getting least attention by the public as well as private sector. lation (27.80 million), whereas 12th in wool (42.0 thousand The true production potential of local sheep breeds is yet to tonnes) and sheep meat (158.0 thousand tonnes) during 2010 be explored. Despite all the shortcomings, sheep industry of (Table 1). There are 30 local sheep breeds originated in Pakistan earned a prominent position in global wool and Pakistan. The production characteristics of some salient sheep meat production (Table 1). This reflects a very clear picture breeds are shown in Table 2. The economically important that a little but carefully planned policy in the sector can sheep breeds are Kajli, Cholistani and Thalli of Punjab; Dumbi improve the economic status of poor subsistent sheep and Kachhi of Sindh; Balkhi, Tirahi and Waziri of Khyber farmer as well as help to fuel the economic growth. Pakhtunkhuwa and Balochi and Bibrik of Balochistan province. The sheep flocks are distributed well throughout Pakistan but the major portion is concentrated in the Balochistan province The majority of sheep flock owners in Pakistan are small scale (50%). The majority of sheep flocks is distributed in small farmers and usually landless. The sheep are reared in mixed units and consists of 5-10 sheep. Mutton production is a flocks with goats; however separate flocks of sheep can also be secondary farm enterprise and its actual potential has not yet seen. The prevalent sheep production-systems are nomadic, been fully exploited. The promotion of mutton and wool transhumant and sedentary household. The nomads are found farming on commercial scale is the need of the time. The mostly in Sindh and Balochistan with flock strength greater present husbandry practices used in sheep farming, marketthan 100 and moving constantly round the year for grazing. ing, slaughter, processing and meat sale result in poor wool Ewes are usually retained for flock replacement, but rams are quality, low carcass yield, large losses of by-products and sold before they are one year old. supply of poor quality unhygienic meat to consumers. The The transhuman system is practiced in parts of the Khyber slaughtering of lambs at low body weights and in lean condiPakhtunkhuwa, Sindh and Balochistan provinces and throughtions is wiping out huge unexploited potential. The fattening out the Northern Areas. The flock-owners have a fixed base but of these lambs for additional three months can add 8-10 kg move with their families to another grazing-area for a major weight per carcass and ultimately contribute to the well being part of the year. Sedentary household system is characterized of farmers and the nation. by the unchanged locality of flock round the year. The flocks are taken out to graze during the day and brought back in the Sheep feeding system varies in different agro-ecological evening. The flock size is small and ranges from 20 to 40 zones of the country and depends upon the availability of animals. resources in terms of grazing area, fodder availability and provision of feeds. The feeding habits of sheep favors the Sheep Industry: Focal Areas grazing as it can fulfill their 80-90% nutritional requirements. Livestock sector is emerging as a priority sector during last These grazing needs can be satisfied by the provision of two decades. Livestock policy is encouraging the private range grazing. The rangelands of Pakistan, which are sector through policy interventions and capacity building in approximately 50% of the total land, need development. The improved livestock husbandry practices. Policy guideline improvements in the rangeland conditions and limiting them suggests improving animal productivity and moving from for sheep production can help improve the sheep productivAdult Weight Milk Fiber ity and product quality by a factor of 20%. Produce Wool Yield diameter 1 Male Female There is dire need to genetically characterize Breed Type Home Tract Kg/head/ Liter/d micron sheep breeds and to start the model Kg year breeding-programs for candidate breeds. Dumbi Mutton Dadu, Shahdadkot, 36 30 0.50 1.38 38.6 However, these programs need selfJacobabad & Sibi sustenance in the long run. Ran of Katchh, Kachhi Dual 42 32 1.50 2.00 40.0 Tharparkar The current sheep production (meat and Kajli Dual 68 50 1.00 3.00 37.6 Sargodha, Khushab, wool) is far less than that in most developed Mianwali & Gujrat countries hence need to be addressed. ThereCholistan/joining areas Cholistani Dual 38 30 2.00 40.2 fore a cross breeding program, using exotic 2 Lohi Dual Central Punjab 65 45 1.0 1.70 39.8 breeds, should be put into action without 2 affecting the indigenous gene pool to obtain Thali Dual 34 27 0.3 1.80 39.2 Thal area & Multan & economically viable and high output breeds. Salt range
Balkhi Afridi
3
3
Waziri
3
Balochi Bibrik
3
Dual
Salt-range/Joining area
42
32
-
1.50
39.40
Dual
Khyber Pakhtun Khuwa -Tribal areas
70
50
0.40
2.00
43.5
Dual
Tribal areas of Tirah & 37 Kurran valley
33
0.40
1.90
36.2
Dual
Waziristan & Bannu
45
30
0.50
1.50
32.9
Dual
Kalat & suburb of Quetta down to Sibi
38
32
0.40
2.25
-
Dual
Sibi & Loralai
38
30
0.40
1.70
41.5
49
Conclusion
Sheep industry of Pakistan has the enormous capability to flourish. The exploitation of the true potential in terms of wool, mutton and their by-products by adopting modern husbandry practices and exploring new marketing avenues can alleviate poverty and boost the national economy. February 2012
A griculture Prices of food items and common man
by Tariq Iqbal Khan
Agriculture has a definite role to play in the economy of most of the countries but as Pakistan has an agro based economy hence it is the most important component in achieving eco- nomic growth. In Pakistan’s case agriculture provides jobs to the majority of the population both directly and indirectly and provides the necessary raw material to the Industry. The Industry in turn also takes care of unemployment. Although in Industry the major cost component is Energy but still the cost of raw material is also plays an important role so as to achieve the level of competition which is so essential in the current global environment of trade. Similarly, the food availability to the ever growing population of the country is also very important with reference to cost. Erosion in the purchasing power of the population as compared with the ever increasing cost of essential food items is very detrimental to the social fabric of the nation. The following factors, according to the social scientists, are one of the causes of various ills in the society. 1 Unbearable mismatch between the income levels of rich and poor. 2 Lack of openings and consequent unemployment. 3 Lack of proper health and educational facilities 4 Mismatch in income and expenditures of average families 5 Old and aging infrastructure.
the disposable income of such wage earner suffers badly and consequently the rate of savings goes down on national level also. Analysing it further the Social Scientists agree that as the most important component in the daily life expenditure of an ordinary and low income group family in the above list is food and which is based on agricultural produce hence the availability of food and its cost has a material bearing on daily life and on the budget of such family. In Pakistan, if any learned Economist is asked to formulate the budget of a family, consisting of 5 (2 +3) persons, in the minimum wages I have a fear that even the provision of food alone may not be properly covered which leads the nation to under nutrition and excessive cost of national health. In the light of the above discussion one can reach the conclusion that the price of main agricultural commodities would determine the balanced budget of low income groups. To elaborate it further one has to go for analysis of the cost components of Agricultural produce commonly used by the group under discussion. COST COMPONENTS The cost components of agricultural produce may be described as under. This does not include the cost of owner ship or cost of lease of Land. Here we are only discussing the cost of production excluding the above cost to simplify the argument. 1.Seed: Seed may be available to the farmer for the crops from his own harvesting from the previous season which with perpetual usage brings down the yield of that crop. Seed may be obtained from seed supplying agencies which would cost more (but would be instrumental in improved yield). In any case one major component in cost of good seed would be energy. 2. Cost of preparation of soil for the crop i. Wages ii. Natural manure iii. Fertilizer Except for wages paid to the farm laborers all other things are related to energy, whether it is a Tractor, Electric motor or Harvester or / and other machinery the energy would be the principal requirement. 3. Watering of the crops:Water would also need energy except the canal water. The canal water is scarce and due to various reasons the supply of this source is on the decline and uncertain while crop would always need timely and proper water. (Excessive or under watering of crops bring inferior results) Barani areas where watering of the crops depend on tube wells would need and which become a major post due recent hike in the tariff. 4. Protection from pests:Protection from the pests would also consume energy, both for the producer and the user. The
(A lot has been said internationally on this subject as the Economists and Social Scientists conclude that such a defective system is one of the major causes responsible for deterioration in the social fabric of the civil society and is largely responsible for ever deteriorating law and order situation, heists, thefts non delivery of service by the service proving industry and suppliers of goods. Non or not up to the mark – with intermittent break downs - in provision of civic amenities and utilities, consequently brings dissatisfaction in the family and spills out in the society. Karachi may be a city fit for a proper case study on this subject... and needs a full fledged discussion). 6. High inflation Here we world confine our discussion only on the topic of mismatch between income earned and expenditure incurred of an average family and the components leading to such a mismatch. An average family has the following minimum and essential expenditure: Food Others Education Clothing Travel Utilities House rent/maintenance The first two items in the above list are mostly agro based. However in case of clothes the synthetic component cannot be under estimated. If the growth in wages earned do not match or is not greater than the expenditure and the delta (income being greater than the expenditure) does not grow each year
50
February 2012
A griculture machinery of the producer would need the energy while the user may also need the usage of machinery except for small tract of farm land 5. Harvesting and thrashing:This process is also energy based and such machinery whether tractor based or Harvester needs a lot of energy. 6. Farm to market transportation:Once the crop is harvested the farmer would be required to take it to the nearest market. After that this would be purchased by the wholesaler in some nearby town then to a bigger market. From there it has to reach either the Industry or consumer through retailer. All this chain would require suitable transport and that would require the energy. 7. Credit:Although it is one of the cost components and the provider of such service would need energy but we are not discussing the component of energy in this head as it does not form a major cost component. The above discussion leads us to the conclusion that one essential component of agricultural produce and its cost is the energy. When cost of energy would go up then as a consequential effect the cost of Agricultural produce would also go up and price in the market would also be high due to other value addition factors and cost components It is a common belief of the consumers in Pakistan that inflation from 2008 onwards is very high and the price of agricultural commodities has grown beyond the reach of the common man. This belief is true to a large extent. However, here, we would endeavor to look into the reasons of such an exponential increase in the price of Agricultural commodities the price which affects the common man. The price of the Agricultural commodities would depend on various factors. 1 .Cost to the farmer taking 8into account all the cost components discussed above. 2. International cost and market price 3. Demand and supply position locally 4. If such commodity is short locally then whether the policy of the Government allows import of such commodity and what would be the landed cost after payment of all duties and taxes. Volatility in Prices The world food prices, says the UN Food and Agriculture Organization, are expected to remain volatile and high over the next 12 months. That is the bad news for the vulnerable poor and middle-income segments of population struggling hard to survive yet another year of price inflation and falling incomes. As the volatile global food markets push up domestic prices, they will affect the country’s food security; restrict access of many to unaffordable kitchen items, cutting their calorie intake. “The volatility in the global food commodity markets can have serious implications for the country’s food security because of the linkages between the domestic and world markets,” Says noted Economist and former finance minister Salman Shah. The FAO’s new boss, Jose Graziano da Silva says “the world’s food prices are expected to remain high and volatile in 2012. This implies that more people are likely to go hungry across the globe during the next one year”. “Global food prices will remain high compared with the
other years, previous years, and the volatility will also be very high,” da Silva said soon after assuming charge of the FAO. “The drop in December food prices is due to reduction in the weight of food to just over 34 per cent form over 40 per cent in the inflation basket,” he argues. Higher food prices also push more people below the poverty line whose three quarters of population, according to the Economic Survey of Pakistan for 2010/11, surrounds both sides of the poverty line. The 2008 food price spike is estimated by the World Bank to have pushed 88 million people into hunger and poverty worldwide. Another 44 million were estimated to have been pushed in to poverty when food prices again peaked to historic highs in early 2011. The degree to which international prices are transmitted to the domestic markets varies amongst different regions, and depends on the commodity and its global and domestic output. A large Fund Manager in Pakistan says that the impact of the volatility in global food markets on domestic prices will be determined by its extent, as well as the food commodity affected by it. “Of course, Pakistan cannot remain isolated from whatever, is happening in the world’s markets. When international commodity prices go up, our domestics prices also move up. Price transmission from the international markets to our domestic markets is likely to be more substantial in case of wheat, sugar, and (imported) edible oils. In case of domestic shortages, the impact on the economy is always much bigger, and wider,” he says. He adds, higher food prices are surely going to affect the average caloric intake of people in the lower to middle-income groups of population, affecting their food security. A 10 per cent price hike can reduce caloric intake by 8.7 to 18.7 per cent per capita per day in different regions and countries, shows research by the Washington-based International Food Policy Research Institute (IFPRI) . Pakistan’s food imports rose slightly to $2.15 billion in the first five months of the current fiscal to November from $2.11 billion a year earlier. The State Bank of Pakistan reports that food and agriculture imports had contributed over five per cent to growth in overall imports during the last fiscal year, because of flood damages compared to 0.3 per cent a year ago. In 2008 the food an agriculture imports had contributed above nine per cent to overall import growth. International research institutes like IFPRI say, price volatility has significant effects on producers, especially small land holding farmers, and consumers. It says the food price volatility is harmful for the poorest consumers who spent 50-70 per cent of their income on food and have limited capacity to quickly adjust to the rapid price hike. Also, it adds, to the results in losses to farmers, especially small holders, as the increase is transmitted to consumers but not to producers because they do not have market power. Advantage of higher prices is taken by investors (middleman) or speculators. Research shows that the long-term effects of volatility in global food markets can be more detrimental for countries having large vulnerable population like Pakistan. Global Hunger Index (GHI) 2011 ranks Pakistan as one of 23 countries with “alarming hunger situation” out of more than 80 nations. Many believe that the country’s policy-makers need to work out a strategy to buffer the vulnerable against yet another food
51
February 2012
A griculture price shock by scaling up the social protection programme to ensure cash transfers, carry out social assistance reforms and create jobs. Food Prices in the Wholesale Market The Food prices of some commodities experienced a fall in the beginning of January 2012 specially White Sugar, yet overall rise has been experienced during the calendar year. Although the gap in supply and demand position of any food class would have material bearing on its price and it has been discussed thoroughly in the above paragraphs but here we would like to discuss the co-relation between the price hike in the price of agricultural commodities and the price hike in the energy sector. It is an established fact that all energies are inter-convertible except that on each conversion there would be an energy conver- Table I: Rates in PKR/40kg sion loss. Commodity Jan. 2012 Jan 2011 For the benefit of our 1060 2650 readers we are giving Wheat 960 Maize 2100 comparison of Agricul690 2000 tural commodities for Jowar calendar year 2011. 990 Barley 3450 From the above table it Moong 4000 6625 would be quite evident Masoor 3200 4800 the prices of the 2400 Mash 7500 commodities have more 2200 Guwar 7800 than doubled in this 2300 Gram 4600 period. Now we would compare this Table with Gram Dall 2680 5500 the increase in the cost of Irri - 6 1200 3020 Energy and Rupee Basmati 1860 5800 depreciation during this 3500 Basmati Kernal 8500 very period. 2760 5100 The second major cost Sugar White 1750 Rapeseed 2625 component would of Source : Dawn Newspaper 16 Jan 2012 course be the energy. Now we would compare the prices of high speed diesel and Electricity tariff for Agriculture.
According to Pakistan Table III: Comparison of Electricity Economic Survey 2009-10 Tariff to Agriculture Sector out of a total 33,878 GWH, Year Tariff/unit (Rs) agriculture consumed 5,847 3.28 GWH (17.25%) and in 2010 2007 total 7,227 GWH (14.13%) 3.73 were consumed by agricul- 2008 ture out of 54,653 GWH. 2009 4.00 These figure show that quantitatively less amount of 2010 4.75 electric energy was allocated 5.15 to agriculture as compared to 2011 Source: Economic survey of Pakistan other consumers. The comparison of electricity tariff for the last few years is given in Table III. Comparison of Oil prices is given Table IV Table II: Comparison of Rupee depreciation in Calendar Year
US $
Exchange Rate on 13-01-2012 89.70
Australian $
92.50
87.36
5.464
Canadian $
88.02
86.23
2.507
114.99
113.74
1.343
EURO
Exchange Rate on 3-01-2011 85.61
11.55
11.018
5.017
Japanese Y
1.168
1.05
9.862
321.27
304.82
5.864
Kuwaiti Dinar Malaysian R
28.62
27.92
3.346
Qatar Riyal
24.63
23.54
4.844
Saudi Riyal
23.92
22.837
4.965
Singapore $
69.63
UAE Dirham
24.42
UK Pound Swiss Francs
66.61
4.930
137.58
133.01
4.788
94.95
91.5
3.284
Source: Dawn newspaper 16 Jan 2012
35.23
2nd
35.23
3rd
35.23
4th
35.23
1st
44.13
2nd
55.14
3rd
68.14
4th
57.14
1st
57.14
2nd
57.14
3rd
64.79
4th
70.52
May
97.31
2011
August
92.64
December
98.94
Source: Economic survey of Pakistan/website of OGRA
Here we would see that price during the period of comparison rose rapidly and significantly. The price of HSD which is mainly used by the Agricultural sector has multiplied 3 times. Although Electricity tariffs for agriculture have been doubled yet for the comparison purposes the increase in the price of HSD has increased 3 times. The prices of commodities have almost doubled in one year which is evident from Table I whereas cost energy has not increased to that extent. Cost of HSD , a major energy source for Agriculture has shown an increase of 52% in 18 months between 1st July 2009 to 31st December 2011.While we can establish a slight co-relation between the cost of production and the prices of food items yet there is a wide gap which pertains to inefficient market mechanisms, inefficient systems and excessive profitability of market intermediaries. These inefficient systems which lead to excessive profits in the hands of hoarders, whole sellers and retailers become conduit for transfer of wealth from poor to rich section of the society. It is important that we formulate policies where these issues are properly taken care of so that poverty and income inequality issues are addressed adequately.
4.454
23.32
Price per liter Rs.
1st
2009
%age depreciation 4.979
Hong Kong $
Quarter
2007
2008
Table II: Comparison of Rupee depreciation in Calendar Year Currency
Year
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February 2012
A strology Your Horoscope - February 2012 ARIES: Your ruling planet Mars encourages
learning experiences from team mates, friends, colleagues and subordinates this month. Besides professional responsibilities, it is important to pay special attention to health related issues. In money matters, Jupiter is going to open new avenues of opportunities completely enriched with economic stability. On the other hand, presence of Venus may signal uplift in expenditures. VenusMars opposition may cause obstacles in pursuing projects of mutual cooperation, so keep inflamed sentiments in check and make sensible choices with peaceful mind. Mercury-Saturn trine will help in achieving goals from travel endeavors. MercuryMars opposition invites tussle prone arguments with relatives, dear ones and friends, it’s better to avoid frenzy of immediacy and unnecessary rebuke. Sun-Jupiter sextile will increase devotion to work, progress and learning—Enjoy the fruit of time. Best of luck! Posit. Dates: 16,19,25 Feb Neg. Dates: 2,15,23 Feb
TAURUS:This month your ruling planet Venus
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causing possible errors in your work, so be vigilant of your mistakes. Positive Dates: 13-19 Feb Negative dates:23,24 Feb
CANCER:Presence
of Saturn in your chart will support mutual business, creative projects and property affairs. Both the planets namely Jupiter and Moon are going to assist you in the completion of tasks and execution of big plans. Friends will lend a supportive hand. You must be watchful of your expenditures and jealous maniacs who are never tired of plotting against you. Favorable influence of planets definitely ensures success by landing you in the land of opportunities enabling you to earn productive results from business undertakings. Save your income and spend it wisely. In the midst of February, MercurySaturn will inspire you to find plausible solutions to gnawing problems through dialogues. Whereas during Mercury-Jupiter sextile, better understanding of domestic life, social circumstances and professional demands will grow in a positive manner. Posit. Dates: 1,4,5,26,27 Feb Neg. dates:13,14,17,18 Feb
LEO:Being
brings your personality under charismatic charm and your name will shine in family, community and friends. The air of cooperation will develop with your participation in the works of public welfare and development of society. Any private business venture will benefit you. Generous gestures and welcoming attitude will invite happiness, love and respect under Jupiter’s influence. Interest in spiritual matters is rekindled tremendously. Mar’s influence favors romance in your love-life. On the other hand, Taurusians looking for a job and promotions will definitely get positive results. Venus-Mars opposition can put unexpected impediments in your way to progress, therefore, revise your strategies and make wise changes. Venus-Uranus conjunction involves magical rise in creative skills and proper channelization of brilliant expressions in this month. Be careful of those who are envious of your success in the midst of February when Venus will be squaring mysterious Pluto. Meanwhile, stay mindful of extraordinary pull for opposite sex, hot temper and health. Posit. Dates: 9,10,11 Feb Neg. dates: 1,2,15,16
GEMINI:Blissful Mercury will bring academic and travelling issues under spotlight this month—prepare yourself for extracting the best out of it. Strong position of Mercury is also going to favor you by polishing your creative capabilities, analytical skills and better understanding of projects. Ongoing business transactions will be satisfactory. Right from the beginning of February, Mercury-Sun conjunction will strengthen great decisive spirit, evaluation enthusiasm, survival instinct and strategic policies in your character. Mercury-Saturn trine supports you in finding out convincing solutions for your current problems. Mercury-Neptune conjunction realistically enables you to think out of box and dream up your plans. Mercury-Jupiter sextile will fortify your willpower. Positive attitude will instigate profound interest in educational activities. In the end of this month, Mercury-Pluto sextile will bless you with best opportunities, communication expressions and chances of overpowering your enemies. Mercury-Mars opposition will inject punishing sense of immediacy in you, eventually
by Dr. Aameer Mian
your ruling planet Sun will strongly affect your conjugal life and business spheres. Leos who are getting married in the beginning of this month, will enjoy a very successful relationship enriched with romance and respect. Legal issues will be resolved under substantial guidance. Jupiter is really helping you to develop relationships on solid grounds with your family, neighbors and friends. During Mercury-Sun conjunction, opportunities for recreation will come your way so don’t forget to enjoy your life with loved ones. In the midst of February, Sun-Saturn trine will create extraordinary awareness of necessary strategies that will lead you towards achieving your goals within the prescribed limits of provided resources. It is your higher sense of confidence that will enkindle lost relationships. In the last days of February Sun-Neptune conjunction can endanger your health but positivity is the mantra that will provide quick healing. Sun-Jupiter sextile will encourage you to jump in the zone of risky undertakings. You are advised to shun confusions troubling religious consciousness in your soul. The end of this month will attract you towards opposite gender so it’s better to guard your impulse and speak your mind honestly. Posit. Dates:17,16,19,25,27 Feb Neg. dates: 7,23,24
VIRGO:Under the influence of Mercury that
is the ruling planet for your chart; your health will be at risk during this month because of extreme work overload. Be cautious when it comes to dealing with subordinates and team mates. Mid of February is fortunate one, for it is going to increase your reputation in socio-political spheres. Friendly Jupiter will also help you win opportunity for higher education and travel abroad. Presence of Venus in your chart ensures some good news for unmarried people while Sun-Mercury conjunction helps in pursuing creativity, profit out of business and progress in teamwork. Mercury-Saturn trine brings strong sense of compromise and contentment in the air by focusing upon debatable issues with the concerned party. Mercury-Neptune conjunction will earn you appreciation for hard work. Mercury-Jupiter sextile will produce decisiveness in your character and academic career
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February 2012
A strology der fearless attitude in you and let you think out of the box with undaunted determination. Posit. Dates: 1,17,25,27 Feb Neg. dates:1,2,23,24
will progress tremendously. Great communication skills will be empowered by Mercury-Pluto sextile and let you believe in the harmony around you. Be careful in choosing appropriate words for your expressions. The end of this month will witness Mercury-Mars opposition capable of putting you in risks, so don’t take decisions without consulting experts. Stay away from haughty fellows and trouble mongers because they can harm you in many ways. Stay focused. Good Luck! Positive Dates:13-19 Feb Negative dates: 23,24 Feb
CAPRICORN:Worth mentioning presence
of your ruling planet Saturn in its house will bring you good luck and success. The graph of confidence and willpower will increase Jupiter in your chart ensures winning chances in lucky draws and coupon schemes and Venus will create harmonious bonds with siblings and relatives. Under the influence of same planets, you are going to get horizons of opportunities and profitable business contracts but, at the same time, be careful because every coming chance will be wasted if you are going to take it for granted. Mercury-Saturn trine in the mid of this month will instill positive thinking and you will be in a position to resolve long-term problems with goodwill. Besides, serious consideration, show of respect and gestures of love will soften hearts of those who have been against you. Such positive influence will let you get out of complications. Sun-Saturn trine may provide you the chances to play a very constructive in some matters, so take your role maturely by developing goodwill with higher authorities. Besides, Sun-Jupiter sextile will largely focus upon legal and property issues this month. Positive Dates: 1,13,14,15,17,18,19 Feb Negative dates: 2,23,24 Feb
LIBRA:Your ruling planet Venus encourages immediate health stability and backing from friends and family. Relationship with higher authorities will be pleasant and love-life with your loved one will turn out to be romantic enough. Saturn is going to instill creative urge and charge your mind withinspirational thoughts. Jupiter ensures success in legal and family matters particularly those that involve inheritance issues. Venus-Mars opposition will cause sentimental troubles so try to keep calm; otherwise projects of mutual cooperation will suffer due to unwanted delays. Good news is that Venus-Uranus conjunction will enlighten your mind with exuberant creativity and let you find the right medium for expressing your thoughts convincingly. In the end of February, Venus-Pluto square will draw your attention towards opposite sex that will malign your name, so be watchful of your acts. Look before spending your hard-earned money! Posit. Dates: 9,10,11 Feb Neg. dates: 1,15,16
AQUARIUS:In this month Saturn will engender confidence and strong sense of determination in your soul by making you trust farsightedness. Spiritual devotion and strong faith will help you encounter bad phases; whereas any oversees travel opportunity will be delayed. Under the influence of Uranus, it will be hard to curb mounting restlessness in you. Therefore, it is advised that you must visit some parks, entertainment points and relatives or friends for the sake of delight. VenusUranus conjunction will help you in overpowering your enemies in any battlefield. Sharing some happy moments with loved ones will work as therapy on your health. Your artistic skills will surface up frequently and let you be playful with them. Mercury-Saturn trine will produce positivity in your character and exert demand of flexibility upon you so that you can learn adaptation to circumstances in better ways. Sun-Saturn trine is regarded beneficial because it welcomes patience to deal with complicated problems. Best mantra for this month is to stay cool, focused and fair with loved ones. Posit. Dates: 1,13,14,15,16,17,18,19 Feb Neg. dates:2,23,24
SCORPIO:Your ruling planet Mars has turned retrograde making it hard for you to achieve desired results and expectations from friends and family members. But don’t let disappointments overpower you in any case because life has many facets to offer us. Meanwhile, under Pluto’s influence your relationship with your neighbors will come under spotlight. Jupiter will surprise many unmarried scorpions with good news and Venus will pave the way to success in a love relationship. Learn to be patient with family members for the sake of peace at home. Venus-Mars opposition will involve impediments in some ways, so make your plans intelligently and utilize your resources wisely. Venus-Pluto square in the midst of February will encourage unwavering pull towards the opposite sex. Beware of jealous people around you. In the end of this month, Mercury-Pluto sextile will provide psychological peace, mental equilibrium and excellent communication skills. On the other hand Mercury-Mars opposition can cause restlessness in your nature that can result in hot arguments. Sun-Pluto sextile is going to boost self confidence in you by improving your sense of taking decisions. Have faith and work hard for good financial conditions! Posit. Dates: 16.19.25 Feb Neg. dates: 2.15.23 Feb
PISCES:Jupiter is known as your ruling planet and
during this month, it will largely motivate literary and creative endeavors. It will be easier to dump our enemies in the garbage-can. Neptune will support practical approach by building up significant penchant for participating in the welfare of society. Such opportunities will earn you large acclaim and respect from seniors. Meanwhile, it is very important to be careful while dealing with co-businessmen and your spousethey will bring you good luck in certain legal and family matters. Pay special attention to your dietary habits. Do not hesitate appreciating other for their commendable work efforts because it is your sense of appreciation that reflects your true personality. Academically, your interests will develop a great deal. Be careful while spending big amount of money. Sun-Jupiter sextile will unfold new horizons for you and your travelling instinct will bring you happiness. Enjoy cheerful moments! Posit. Dates: 16,17,25,26 Feb Neg. dates: 1,2,23,24 Feb
SAGITTARIUS:Jupiter is your key planet that
will invite extreme cooperation from fellow workers and subordinates. Your health zone will progress in a fine manner. Devotion to hard work is likely to bring promotions. Those Sagittarians who are looking for a reasonable job will get good response. Under the command of Mercury-Jupiter sextile in the mid of February, great willpower, positive bent of mind and farsightedness in your nature and educational career is promised. Some spiritual power in you will guide you in mysterious ways. Pursuits of winning goals will bear fruit in the end of this month with the entry of Sun-Jupiter sextile. It is spirituality enlightenment that will engen-
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February 2012
T ravel & Tourism Sri Lanka – Pearl of the Indian Ocean
T
ourism is considered as a popular pastime which has continued to grow over time. During the past several decades, international tourism has gained phenomenal importance in many economies of the world and transformed itself into one of the world’s largest and fastest growing industries that contribute significantly to the attainment of macroeconomic stability the world over. For many countries, especially the small islands, tourism serves as a good source of foreign exchange earnings and the main growth sector playing a significant role in poverty alleviation, income generation and creation of employment opportunities. Sri Lanka is one of those few countries which are blessed with a unique blend of breath-taking natural beauty, a rich diversity of culture, socio-economic traditions, history and life-style which serve as important sources of tourists attraction. Located off the South Eastern shores of India, approximately 880 kilometer north of the equator, Sri Lanka is known globally for its exciting range of tourists spots and therefore serves as one of the sought after holiday destinations. The country has a long and proud history of around 2500 years and, because of its scintillating and magnificent tourists’ attractions, is well known as ‘Pearl of the Indian Ocean’ or ‘Paradise on the earth’. In Sri Lanka, tourism has emerged as a major driver of the economy. It is one of the main industries and plays a major role in poverty alleviation and the economic development of this beautiful island country.
by Jauhar Ali
Besides these, the country is also home to some of the magnificent places of tourist’s interest that engulf the visitors with ecstasy. For business travellers, the commercial cities offer an array of business opportunities and trade options. The sandy white beaches and attractive underwater life that surrounds the island gives visitors a chance to unwind and relax in a warm and comfortable setting. What is more comforting is that all major tourist attractions are located in a closely knit environment. They are no longer than a few hours drive away from each other. Major tourist attractions in this “Paradise on Earth” are focused around the island’s famous beaches located in the southern and eastern parts of the country, ancient heritage sites located in the interior of the country and lush green resorts located in the mountainous regions. Some of the most popular sites of tourist attraction are Colombo, Kandy, Sigiriya, Anuradhapura, Bentota, Nuwara, etc.
Tea garden, Kandy District, Sri Lanka
Colombo is a picturesque and vibrant city with quite a
few Buddhist temples, one being Gangaramaya Temple which is near the Beira Lake. The city also houses many Hindu temples including the famous New Kathiresan and Old Kathiresan temples. Kandy, situated 465 metres above sea level, is a romantic hill station with green valleys, rivers, lakes and cascading waterfalls and cultural centre of the island which has been declared as a world heritage city. This, one of the most, scenic city holds the living records of the glorious past of Sri Lanka. It offers several tourist attractions including historical heritage and spectacular vistas of nature. Visit to this place is a memorable record of experience to cherish forever. Sigiriya is yet another sight of tourists’ attraction. It is an ancient rock fortress surrounded by the remains of an extensive network of gardens, reservoirs and other structures. Also known for its ancient paintings, Sigiriya is a popular tourist destination, located in northern part of the country, an ancient city famous for its well-preserved ruins of ancient Lankan civilization. The city is home to several monuments of historical importance. It has been
The Golden Temple, Damubulla, Sri Lanka
“Sri Lanka has a lot to offer to the tourists who wish to have the time of their lives during the visit.As one of the most enchanting island countries of the world and a dream tourist destination of South Asia , Sri Lanka has a diverse range of splendid locales and the visitors are often bewildered when confronted with a multiplicity of choice comprising ancient monuments, fascinating palm-fringed beaches of sun and sand with pristine surroundings, alluring scenic natural spots , gorgeous waterfalls in the dense woods on the mountain slopes and valleys, awe-inspiring religious sites, renowned historical museums, art galleries and many more they fill the visitors with unbounded joy.
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February 2012
T ravel & Tourism one of the most stable and durable centres of political power and is surrounded by monasteries spread over a large area. As such it is considered sacred by the Buddhist. Anuradhapura is one of the ancient capitals of Sri Lanka, famous for its well-preserved ruins of ancient Lankan civilization. From the 4th Century BC, it was the capital of Sri Lanka until the beginning of the 11th Century AD. During this period it remained one of the most stable and durable centers of political power and urban life in South Asia. The ancient city, considered sacred to the Buddhist world, is today surrounded by monasteries covering an area of sixteen square miles (40 sq.km). Anuradhapura is also significant in Hindu legend as the fabled capital of the Asura King Ravana in the Ramayana. Nuwara Eliy, also known as “ Little England”, is a town located at an altitude of 1,868 m in the central highlands. It was the most favored hill station of the British who converted it into a typical English village. This town is considered as one of the most important locations for tea production in Sri Lanka. Bentota, a coastal city in Sri Lanka, famous for golden beaches, is situated on the southern coastal tip of the Galle District of the Southern Province. The town is popular tourist attraction. It is especially famous among the foreign tourists. It is the hosting land for the famous Sri Lankan Jeweller Aida. Bentota also delivers an ancient art of healing called Ayurveda For beach lovers, the land has beautiful beaches like Negombo, Beruwela, Bentona (a coastal city famous for golden beaches), Weligama and Mount Lavinia. The events like Kandy Esala Perahera and festivals add color, rituals and celebrations and thus act as major tourist attractions.Wildlife sanctuaries like the Yala National Park, Maduru Oya National Park, Horton Plains National Park and Bundala National Park etc are some of the other places of tourists’ interest and attraction.
Pinnawala Elephant Orphanage, Sri Lanka
In 2010, the country recorded an impressive growth of 8.00 percent while hotels and restaurants grew sharply by about 39.8 percent underpinned by the strong performance in tourism. In an effort to become a “Wonder of Asia”, Sri Lanka has shown a considerable expansion in its economy and is marching towards a rapid economic development with infrastructure improvement in the war hit provinces. Tourism industry has been the forefront in this rapid development process.
Galle Beach, Sri Lanka
Tourism is a vital area in the policy framework of the present government in Sri Lanka which considers this sector as capable of effectively driving the country’s socio economic development. The government vision for the tourism sector is to make Sri Lanka the foremost leisure destination in the South Asian Region. To translate the vision into reality, the tourism industry in Sri Lanka is looking for investment. Of target amount of investment of US $ 5 billion in foreign direct investment by the year 2016, US $ 2 billion have already been attracted during 2005 to 2011.With policy facilitation, spectrum of attractions and the opportunities the country’s biodiversity and landscape offer and above all the direction from the government to be the foremost destination for leisure in the South Asian Region, one hopes that the target of the remaining 3 billion US dollars will be achieved by the year 2016.
Adam’s Peak Sabaragamuwa Province, Sri Lanka
Sri Lanka entered the international tourism market in 1960s. Since then this industry has been growing steadily as a promising sector for the economic development of this beautiful island. Since the end of the conflict in 2009, Sri Lanka has seen an increase in tourism figures.
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February 2012
I nformation Technology Cloud Computing: Efficient, Convenient and Productive
I
Information technology is evolving day-by-day and various new technologies are changing the way we compute. In this modern era; Information technology is turning into a global “cloud” accessible from anywhere. “Cloud Computing” is going to change the way of computing as more entrepreneurs are discovering the benefits of cloud computing as it stores data and runs the software via the Internet. It will also profoundly change the way people work and companies operate. It will allow digital technology to penetrate every nook and cranny of the economy and of society. Theoretically, cloud computing refers to applications and services offered by an online server over the Internet. These services are offered from data centers all over the world, which are collectively referred to as the "cloud." The idea of the "cloud" simplifies the many network connections and computer systems involved in online services. This symbolizes the Internet's broad reach, while simplifying its complexity. Any user with an Internet connection and authentication can access the cloud and the services it provides. Since these services are often connected, users can share information between multiple systems and with other users. In a cloud computing system, there's a significant workload shift. Local computers no longer have to do all the heavy lifting when it comes to running applications. The network of computers that make up the cloud handles them instead. Hardware and software demands on the user's side decrease. The only thing the user's computer needs to be able to run is the cloud computing systems interface software, which can be as simple as a Web browser, and the cloud's network takes care of the rest. Remote machines owned by another company would run everything from e-mail to word processing to complex data analysis programs. As per US based IT giant Oracle estimates, “an enterprise can save its expenses significantly with 35 percent deduction in operation expenses, 44 percent cost reduction in electricity charges and 85 percent saving in physical cost”. Similarly, according to a global study by IBM, more than 60 per cent of organizations plan to "embrace Cloud Computing over the next five years" to boost their "competitive advantage." With the huge potential emerging in Pakistani IT market, these statistics can be mirrored in local market as well. Almost every net user is familiar with some examples of cloud computing. Any user having an e-mail account with a Web-based e-mail service like Hotmail, Yahoo! Mail or Gmail, had some experience with cloud computing. Instead of running an e-mail program on user’s computer, they log in to a Web e-mail account remotely. The software and storage for your account doesn't exist on user’s computer -- it's on the service's computer cloud. Similarly other examples of cloud computing include online backup services like megaupload.com, social networking
by Syed Asif Ali
services like facebook.com & google+, and personal data services such as Nokia’s Ovi suite. Cloud computing also includes online applications, for instance ‘google docs’ and services offered through Microsoft Online Services. Mirrored websites, and Internet-based clusters are also examples of cloud computing.
Cloud Computing purposes The applications of cloud computing are practically limitless. With the right middleware, (middleware: computer software consists of a set of services that allows multiple processes running on one or more machines to interact) (Wikipedia), a cloud computing system could execute all the programs a normal computer could run. Potentially, everything from generic word processing software to customized computer programs designed for a specific company could work on a cloud computing system. Clients would be able to access their applications and data from anywhere at any time. They could access the cloud computing system using any computer linked to the Internet. Data wouldn't be confined to a hard drive on one user's computer or even a corporation's internal network. It could bring hardware costs down. Cloud computing systems would reduce the need for advanced hardware on the client side. Users wouldn't need to buy the fastest computer with the most memory, because the cloud system would take care of those needs for you. Instead, users could buy an inexpensive computer terminal. The terminal could include a monitor, input devices like a keyboard and mouse and just enough processing power to run the middleware necessary to connect to the cloud system. Users wouldn't need a large hard drive because they would store all their information on a remote computer. Cloud computing gives companies the option of storing data on someone else's hardware, removing the need for physical space on the front end. If the cloud computing system's back end is a grid computing system, then the
57
February 2012
I nformation Technology client could take advantage of the entire network's processing power. Often, scientists and researchers work with calculations so complex that it would take years for individual computers to complete them. On a grid computing system, the client could send the calculation to the cloud for processing. The cloud system would tap into the processing power of all available computers on the back end, significantly speeding up the calculation. Concerns regarding Cloud Computing: Perhaps the biggest concerns about cloud computing are security and privacy. The idea of handing over important data to another company worries some people. Corporate executives might hesitate to take advantage of a cloud computing system because they can't keep their company's information under lock and key. The counterargument to this position is that the companies offering cloud computing services live and die by their reputations. It benefits these companies to have reliable security measures in place. Otherwise, the service would lose all its clients. It's in their interest to employ the most advanced techniques to protect their clients' data. Privacy is another matter. If a client can log in from any location to access data and applications, it's possible the client's privacy could be compromised. Cloud computing companies will need to find ways to protect client privacy. One way is to use authentication techniques such as user names and passwords. Another is to employ an authorization format -- each user can access only the data and applications relevant to his or her job. Some questions regarding cloud computing are more philosophical. Does the user or company subscribing to the cloud computing service own the data? Does the cloud computing system, which provides the actual storage space, own it? Is it possible for a cloud computing company to deny a client access to that client's data? Several companies, law firms and universities are debating these and other questions about the nature of cloud computing. How will cloud computing affect other industries? There's a growing concern in the IT industry about how cloud computing could impact the business of computer maintenance and repair. If companies switch to using streamlined computer systems, they'll have fewer IT needs. Some industry experts believe that the need for IT jobs will migrate to the back end of the cloud computing system. Another area of research in the computer science community is autonomic computing. An autonomic computing system is self-managing, which means the system monitors itself and takes measures to prevent or repair problems. Currently, autonomic computing is mostly theoretical. But, if autonomic computing becomes a reality, it could eliminate the need for many IT maintenance jobs. Cloud computing in Pakistan: Cloud computing is now no more an unfamiliar trend globally. However, it has yet to play its role in full swing in Pakistani market because its understanding. Here is relatively low as compared to other countries in Asia. However, cloud computing in its minimum form of web
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applications has long been making inroads into the Pakistani IT market.
There are about 25 industries that are using cloud computing in Pakistan, such as Retail, Public sector and Utilities, Food & Beverages, Automotive, Healthcare, Financial Services and Core Banking. All the sectors are important for cloud computing but most potential sectors are manufacturing, telecommunication, public sector, oil and gas etc. As the overall Pakistani population becomes more Internet-literate, consumers, business entrepreneurs and digital natives in particular, are using technology to manage and integrate their private and business lives. Increasingly, digital devices and services will combine to create the cloud, an integrated resource for organizing, preserving, sharing, and orchestrating information and media. The rapid evolution of the cloud computing on the Pakistani consumer side raises business users’ expectations for immediate, universal access and unlimited scale of technology resources. There are well-known banks, cellular phone companies, government entities and manufacturing units in the country, majority of them including Pakistan Mobile Communications (Pvt.) Ltd. (Ufone), Pakistan Telecom Mobile Ltd. (Mobilink), Pakistan Telecommunications Ltd., Telenor Pakistan (Pvt.) Ltd., Warid Telecom (Pvt.) Ltd., Wateen Telecom (Pvt.) Ltd., Wi-Tribe Pakistan Ltd., are already using Oracle’s cloud infrastructure for database and business applications. Web applications have also been making deep penetrations into the business operations of the Pakistani enterprise. For example, Rozee.pk recruiting web-service, with more than 25000 registered employers and 1.4 million prospective employees, has fundamentally changed the recruiting function of a Pakistani enterprise. Microsoft, SAP, IBM and Oracle are right now some of the most leading cloud computing solutions providers. They are now competing for the loin’s share in the lucrative Pakistani market. They are of the view that Pakistan has a lot of potential in IT sector for establishing a new IT hub in South East Asia. February 2012
L iterature Ali Sikandar Jigar Muradabadi – an Alexander of modern Urdu poetry
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ne of the towering figures of Urdu poetry in the 20th century was Jigar Muradabadi; his poetry gave Ghazal a new profile that differs with traditionalists in a unique and beautiful way. To Dr. Farman Fatehpuri, he composed Ghazals that conveyed intense yet a refined style of expressing a lover’s feelings for his beloved, without sounding less than decent placing him above many of his predecessors who, at times, appeared to cross the limits. This poetic style made him a distinguished poet of this century. In real life too, he symbolized the epitome of golden values–compassion and consideration– an admirable fact that all his contemporaries agree on. Partly, it had to do with his humble but polished family background, and the fact that his father and grandfather were Moulvis and poets, and Dagh Dehlavi was his first guide in writing poetry. Describing the pain of love, which became the distinguishing aspect of his poetry was what he learned very early in his life when his first beloved and wife, Waheedan, died soon after their marriage. Loss of the beloved, which he experienced in reality, gave his poetry the glaze that was rare in Urdu poetry. But it also made him drink excessively. His relationship with Asghar Gondvi, another great poet of the same period, greatly influenced Jigar’s life up to the very end. Jigar’s second wife, Naseem, too was the sister-in-law of Asghar Gondvi, whom Jigar loved immensely since she brought into his life a ray of hope after the saga that was his first marriage, but that too didn’t last long because, in spite of this change, Jigar continued to drink, which eventually led to a divorce. To make-up for his misjudgment in arranging her marriage, Asghar, who by then had become a widower, married Naseem. This was the second big tragedy in Jigar’s life, which lifted his poetry to new levels of perfection in portraying the pain of love, and made him one of the greatest Urdu poets of the last century. The distinguishing aspect of his poetry is that he does not blame the beloved for being uncaring or downright cruel; instead he blames circumstance for this tragedy. For instance, Muddat hui ek hadsa-e-ishq ko leikin Abtak hai tere dil ke dharakney ki sada yad or, Allah, Allah yeh kamal-e-irtebat-husno-ishq Fasley hon lakh dil, dil se juda hotey nahien These couplets, and many more in this style, show that Jigar’s view of the beloved is much different from that traditionally portrayed by Urdu poets. According to Jigar, the beloved too had a heart that was full of passion and
feelings of love. Love was the subject of Jigar’s poetry, to which he did full justicethroughout, but was not oblivious to what went around him–socially disruptive trends of the 1940s, and a prolonged struggle that finally led to the partitioning of the Indian sub-continent at a horrendous cost in terms of loss of life and uprooting of large chunks of population; this moved him to compose poetry that reflects a slide in human values. For instance, Jehl-e-khirad nay din yeh dikhaey Ghat gaey insaan barh gaey saaye or, Hum ko mita sakey, yeh zamaney mein dum nahien Hum se zamana khud hai, zamaney se hum nahien But he did not lose his admirable poetic style, when he went on to compose lines such as: Aaj keya baat hai ke phoolon ko Rang teri hansi se milta hai Mil ke bhi jo kabhi nahien milta Toot kar dil us hi se milta hai Like Maulan Hasrat Moohani, Jigar too opted not to migrate to Pakistan. It was a considered move, as proved by subsequent events. In 1949, Delhi was again engulfed in Hindu-Muslim riots that brought the likes of Premier Jawaharlal Nehru and Maulan Hasrat Moohani on the streets of Delhi to plead for peace with Hindu extremists. At a public meeting in Chandni Chowk, Nehru even went to the extent of saying that if the sin of the Muslims was that they were Muslims, then he too will convert and become a Muslim–a warning only a leader like him could afford to give to the Hindu extremists. Once peace returned to Delhi, in fact whole of India, an All India Mushaira was held in Delhi to dilute the effects of the riots; Nehru, an Urdu and Persian scholar, presided over it. In his much admired way of reciting poems Jigar recited his poem that contained the following historic verses: Dard barh kar fughan na ho jaiey Yeh zamin aasman na ho jaiey Dil ko lay lejiye jo layna ho Phir yeh sauda garan na ho jaiey Nehru not only got the message but admired the convincing manner wherein Jigar told him to gain the confidence of the Muslims. The next morning, he decided to award Jigar a life scholarship of Rs. 500 per month–a huge sum back in 1949. Sardar Wallabhai Patel, then interior minister tried to project Jigar as a Pakistani agent based on contrived evidence. At this Nehru told Patel to distinguish between patriotic Indians and foreign agents, had that evidence burnt, and on that very day, he announced the award of life scholarship for Ali Sikandar Jigar Muradabadi, truly an Alexander (Sikandar) of the modern Urdu poetry.
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H istory “The Republic” by Plato – the republicans buried it
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orn to a distinguished Athenian family in 427 BC, Plato became an ardent disciple of Socrates. In 399 BC the tragic execution of Socrates left Plato shocked and distraught. Plato would always remember his benevolent teacher as “the wisest, the justest, and the best of all the men whom I have ever known.” The incident shattered his faith in democracy, and he left Athens to travel to foreign lands for the next 12 years and saw various shades of governance of the state. On his return, he founded an academy that survived for nine centuries. Until his death in 347 BC, Plato wrote 63 books on politics, ethics and philosophy, and the most remarkable of them was “The Republic”. His concept of the republic was grossly different from what we see in the name of democracy and the republic. What he advocated was “guardianship”. According to Plato, guardianship implied that education and rearing of all children, irrespective of sex, caste, or creed, was the obligation of the state. Children were to receive thorough physical training and the academic curriculum was to include music besides other disciplines that aimed at developing their perceptive, analytical and ideological capacities. The academically less successful were to be helped to engage in economic activities while the successful were to continue to receive further education. This advanced education was to include not just academic subjects, but also study of philosophy. Those who showed mastery over theoretical principles by the time they were 35, were to receive another 15 years of training i.e. practical working experience. Thereafter, only the ones who showed that they could apply their learning to the real world, and clearly showed that public welfare was their prime interest, were to be admitted to the guardian class. Guardians were not to be wealthy, nor owners of properties, nor were they to receive any huge salaries for their services. In short they had to be truly dedicated individuals. What this concept advocated was that only those citizens, who are the most competent and the least self-interested, were to legislate laws that devised commonly applicable codes of conduct for a society, supervised the collection of taxes, and oversaw the provision of all the services that the state must provide to its citizens – the true guardians. It is hard to deny that this is, by far, the most rational route to developing and nurturing a civilized society that assures a common concern and delivery of all that serves the common interests of a society. Above all, it ensures inequalities do not develop–the most socially disrupting of them being injustice and poverty. Ironically, these very socially disrupting trends portray today’s democracies but the system is protected only by demonizing every other system of governance. In Plato’s view, the best form of government is a nonhereditary aristocracy based purely on merit. According to him, this dispensation implies rule by the best and the wisest in a society. These persons–the guardian–should be chosen by a vote of the citizens, but by via the process of co-option. Plato was also the first among philosophers to advocate the basic equality of the sexes and opposed allforms of segrega
tion because it divides societies and causes friction. Although “The Republic” has been widely read for centuries, the political system advocated therein has never been actually used as the model for civil government i.e. the basis for the formation of the legislatures. While in the centuries that followed monarchies continued governing the state, today, even in the democratic era, Plato remains sidelined Countries everywhere partially adopted his concept but only in organizing their bureaucracies, and that too was not done honestly. Nepotism continues to account for the inefficiency and corruption in the governance of the state, and countries falling in the ‘developing states’ category, have had the worst record in this context. What these countries ignored was the fact that, unless their legislatures comprise of competent individuals, the laws their bureaucracies will be expected to impose for achieving nationally conducive outcomes will not deliver their desired (or promised) results–the delivery of justice to assure equality among citizens and consequently curbing poverty. Today we find both these flawed trends unsettling societies everywhere, including the self-proclaimed exemplary democracies. In fact, the failures of these democracies pose a serious threat to the very credibility of democracy. But all attempts at ensuring that individuals who want to be elected legislators have two key attributes – competence for managing the affairs of the state based on their demonstrated experience, integrity, and a record of demonstrated concern and supporting acts credibly portraying their commitment to public welfare. Often, parliamentary hopefuls possess neither of these qualifications. Instead, they rely on the services of a new class–the image promoted in the media–to help delude people into believing that they possess these qualifications. The self-proclaimed democrats use Plato only to justify their make-believe democracy that they use as the vehicle to serve their benefit. Plato’s concept of democracy, and his portrait of the republic has, very cleverly, been reduced to an illusion that we keep pursuing after each election wherein politicians promise to turn the society into a more just and equitable lot without ever delivering on that promise because that’s never intended.
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S ports Bright side of a hazy picture
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ithout doubt, in Pakistan almost everything is unattractive on the landscape of governance but on the other side of this picture there is a bright spot–spirit of Pakistan’s cricket team–and credit therefor goes to the team’s captain, and to the team’s reputed coaches – all Pakistanis. After its disastrous visit to the UK in 2010, there was a feeling that Pakistan had descended into seemingly a bottomless pit of shame and disarray and the media would summarise its fate as: "Shamed and humiliated, with three of its players in prison for spot-fixing, and a combination of politics, intrigue, nepotism and sheer incompetence had taken its toll" but it is highly commendable that it took just a couple of years for Pakistan to rise and rapidly make a recovery – it’s convincing victories against Sri Lanka and Bangladesh. In both these contests it gradually became clear that the team had once again got its act together under Misbahul-haq and Shahid Afridi. While the team missed Salman Butt, Asif and Aamir, the gap created by their sad exit was slowly but surely being filled by newcomers–Azhar Ali, Asad Shafique, Junaid Khan, Aizaz Cheema–and Saeed Ajmal, Muhammad Hafeez and Abdul Rehman were perfecting their skills to confront a tough challenge – a test series against England, which is now rated as the top team in the world. To the delight of the Pakistanis, in the very first of the three test matches, Pakistan defeated England by 10 wickets. Many observers think that England was spared an innings defeat by poor umpiring in the final hour of England’s second innings because to win this match, Pakistan had to score just 15 runs, which it did in 3.4 overs. The salient features of the match were good batting by up-coming Pakistani batsmen (Adnan Akmal’s 61, the best in his career thus far) and a 10-wicket haul for Saeed Ajmal–his second in test cricket. In England’s second innings, Umar Gul took 4 wickets for 63 runs and Abdul Rehman took 3 for 37 runs.
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While England’s captain and coach plainly admitted the fact that Pakistan team played remarkably well, commentators in the UK (including highly revered names such as Bob Willis), shocked at England’s defeat, resorted to questioning Saeed Ajmal’s arm action, faulting him for wearing shirts with full sleeves (wherein he hides dust?) while playing cricket, and so on. But this was quickly rejected by the ICC; according to an ICC spokesman, Ajmal’s arm action was tested and validated by the ICC. But what followed in the second test at Abu Dhabi left none in doubt about the fact that, besides much improved playing skills, the strength of the Pakistani team lies in its cohesion, commitment of each player to back team efforts in attaining perfection and zero conflict between the players. The salient features of this match were once again remarkable bowling by Pakistani bowlers that turned the impossible into a reality i.e. in the second innings, English batsmen being bowled out for just 72 runs– their lowest total against Pakistan in all the test matches they played to-date against Pakistan. In this match, after winning the toss, Pakistan decided to bat first and scored just 257 runs, which was not a satisfactory beginning, but its highlight was good batting by the younger batsmen. In reply England scored 327 which included good batting performances that helped create a surplus of 70 runs over Pakistan’s first inning total of 257. It was a challenge for Pakistan that it didn’t meet; all it could muster were 214 runs, despite good batting by Azhar Ali and Asad Shafique. But the remarkable event of the innings was Monty Panersar’s bowling; he took 6 Pakistani wickets for just 62 runs including the wickets of both Yunus Khan and Misbah-ul-Haq, thus ensuring that Pakistan did not score too many runs. With one and a half day of the test at their disposal, and just 145 runs to score to defeat Pakistan, England was very well placed to win this match. Everyone felt England’s victory an almost done thing. Those who called February 2012
S ports Undoubtedly, England has some of the finest batsmen in its team. Besides, good bowling by Pakistanis, what caused these batsmen to fail had more to do with their unnecessary fear of Ajmal’s “doosra” and “teesra” which forced them to constantly stay on the defensive, and in doing so let the ball come too close to their legs leading to unusually high lbw dismissals. While England has a strong fast bowling line-up, it needs at least one more spinner of the caliber of Swan and Panesar. Not playing Panesar in the first test was also an error. Although England has lost the test series, a strong rebound by England could be truly pleasing for the supporters of the game in both England and Pakistan. Test matches, in fact any match–One-Dayer or T20should be contested by both sides with the totality of energy and skill. That alone brings out the best that spectators look forward to and enjoy. For Pakistan, it is a moment to rejoice because this is their third series win and they have gone up in the global ranking. Three cheers for the cricketers who aren’t cowed down by sad events at home!
Pakistan’s victory in the first test a freak case were overjoyed. But events on January 28– fourth day of the test–proved that that was not the reality. Instead of scoring 145 runs, Eng- land’s team was bowled out after scoring only half that number of runs and that too in less than three hours. In England’s second innings the wrecker was Abdul Rehman, neither Umar Gul nor Saeed Ajmal though Saeed Ajmal again took 3 wickets for 22 runs. Abdul Rehman took 6 wickets for 25 runs–his best bowling performance in test cricket so far. What was unusually good was Pakistan’s fielding–traditionally its weakest area–but its bowling was superb. The proof: just two English batsmen–Andrew Strauss with 32 and Matt Prior with 18–could reach double figures.
Azarenka and Djokovic win Australian Open The women’s game has a brand new world No. 1 after Victoria Azarenka stunned Maria Sharapova 63 60 in the Australian Open final to claim her maiden Grand Slam title. On 29 January, 2012 Novak Djokovic was crowned Australian Open champion for the third time in what will be remembered as one of the greatest finals in Grand Slam history. Djokovic battled past Rafael Nadal 57 64 62 67 75 in five hours 53 minutes in the longest Grand Slam final on record and the longest ever match at the Australian Open. The world No. 1 came from 4-2 down in the fifth set to record his seventh successive victory over Nadal, and all in finals. Djokovic’s triumph handed him his third successive Grand Slam title, making him just the fifth man in Open Era history to win three majors in a row. The match had looked like it was nearing its conclusion in the fourth set as Djokovic went 4-3 0-40 up on Nadal’s service, but the ten-time Grand Slam champion roared back to win five straight points and level the match. An untimely rain shower then caused a short delay and when play resumed with the roof closed, Nadal held his nerve to force the decider. Djokovic’s moment came when Nadal missed an easy backhand pass when he was serving at 4-2 30-15, and he forged ahead with a further break at 5-5. (Mats Wilander's win over Ivan Lendl at the U.S. Open in 1988, which lasted 4 hours, 54 min.) Nadal had only lost one match of his previous 134 in Grand Slams after winning the first set, but he found his service
coming under more and more pressure as the match wore on. After coming back from 5-3 down to win the fourth-set tie-breaker, Nadal was up a break at 4-2 in the fifth set against Djokovic. Djokovic, who was coming off a near five hours semifinal win against Andy Murray, somehow respon-ded. He broke for a 6 - 5 lead and saved a break point before finally taking the win and championship. Azarenka became the latest Grand Slam champion to have benefited from the support of the Grand Slam Development Fund, having been a member of two ITF/Grand Slam Junior Touring Teams in 2004. In stark contrast to men’s match, the Belarusian needed just one hour 22 minutes to dispose of three-time Grand Slam champion Sharapova in a one-sided affair. Sharapova had started the final with a break but despite an initial 2-0 lead, the 24-year old was unable to assert any kind of dominance, winning just one more game as Azarenka raised her level. The newly-crowned world No. 1’s previous best result was reaching the quarterfinals at last year’s Wimbledon, but she has started the 2012 season in imperious form, securing her first Grand Slam title on the back of the title at Sydney.“It’s a dream come true,” said Azarenka. “I have been dreaming and working so hard to win the Grand Slam and being No. 1 is a pretty good bonus.” In the doubles, the unseeded pair of Leander Paes and Radek Stepanek shocked American No. 1 seeds Bob and Mike Bryan 76 62 in the men’s doubles final. It was Paes’ seventh Grand Slam doubles title, but a first major trophy for Stepanek.
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Alamgir Anwar Shaikh, President, Pakistan Billiards & Snooker Association (PBSA)
World Snooker Chamionship Trophy
Snooker Championship in Karachi
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ddressing a press conference Mr. Alamgir Anwar Shaikh, President of Pakistan Billiards and Snooker Association (PBSA) came up with a good news to sports lovers. He announced that the association has succeeded in securing sponsorship for organizing a 6-nation snooker championship in Karachi from March 4 to 9, 2012. Earlier to this, Jubilee Insurance Pakistan fourth national under-21 snooker championship will also be held at Lahore from January 17. The winner and the runner-up in this junior event will qualify for participation in the Asian under-21 championship being held at Goa, India from April 2 to 9 and the International Billiard and Snooker Federation (IBFS) world under-21 in China in July this year. In the ongoing environment of political instability and law and order situation when international players are reluctant to come to Pakistan for security reasons, the news is a welcome move. One hopes that the successful conduct of these events in the country will provide impetus for return of other international games and sports in Pakistan. Also, this will provide an opportunity to tap new talents and produce yet another world and Asian champion in the days ahead. Snooker is a popular game and has a long history. Originating in the later half of the 19th century the game passed through different phases of
history and has moved from a pastime activity into a more professional sphere of national and international importance. The game is highly prized, both in terms of financial rewards as well as ranking points and prestige. Organization of snooker tournaments remained subdued during the decade 1950 to 1960. In fact no international snooker tournament was played during 1958 to 1963. In 1969, however, the game took a new turn with the introduction of color television broadcast. BBC launched the Pot Black tournament which proved to be very successful in helping snooker back into public view. Color television broadcast initiated in 1969 revived interest in the game. 1978 World Championship was the first to be fully televised which helped transforming snooker into a mainstream sport in the United Kingdom, Ireland and much of the Commonwealth countries. The most important event in professional snooker is the World Championship held annually. The first World Snooker Championship was organized in 1927 by Joe Davis who as a professional player continued to win every world championship until 1946 when he retired from the game. Popularity of snooker is no more restricted to the English-speaking and Commonwealth countries with topranking professional players with multi -million pound earnings from the game; it has gained popularity in China and other countries of the world, Pakistan
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included where we have had champions like Mohammad Yousuf who won the 1994 IBSF World Snooker Championship, played in South Africa, and also clinched the 2006 IBSF World Masters Championship, played in Amman. The growth of any sport, snooker included, largely depends on regular participation in competitions, incentives and encouragement and above all regular flow of young and energetic talent. In Pakistan snooker made a humble beginning in 1958. The game gained momentum on its revival in 1979. Since then ,despite paucity of funds, the game has progressed slowly but successfully.
Mohammad Yousuf 1994 IBSF World Snooker Champion February 2012
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Benazir Bhutto Women’s Twenty20 Cricket Tournament FIFA Awards
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omen have excelled and earned name and fame in cricket around the world. Internationally, the history of women’s cricket dates as far back as in 1745 but in Pakistan women’s cricket was first introduced in 1996. From then on, the way they have played, the successes they achieved, and the way they managed themselves on and off the field has been phenomenal and quite commendable. Pakistan women cricket team has taken major strides in international cricket by winning the Asian title, qualifying for ICC Women’s World Cup and shining in bilateral series against better ranked opposition. Given the encouragement that they deserve and the opportunities provided to them for regular participation in tournaments, both at home and abroad, one may hope that they would not be lagging far behind their men folks in this great game of cricket. Seen in the above context, the Shaheed Mohtarma Benazir Bhutto Twenty20 Women’s Cricket Tournament played in Lahore from January 22-24, 2012 was a welcome move and deserves appreciation. Tournaments like this provide our players with an opportunity to their talent and polish their skills and should, therefore, go a long way in further promoting cricket among the women.
The tournament for the coveted trophy named after Shaheed Mohtarma Benazir Bhutto was played with teams drawn from various parts of the country. The opening ceremony of the tournament was performed at the Kinnaird College Ground while the final of the tournament was played on January 24, 2012 at Gaddafi Stadium, Lahore. Zarai Taraqiati Bank Limited and Punjab Women moved into final after beating their rivals in the respective matches. On the second day of the tournament, Governor of the Punjab Sardar Latif Khan Khosa was the chief guest along with Pakistgan Cricket Board women’s wing chairperson Bushra Aitazaz who was also present. The final of the tournament was played on January 24, 2012 between ZTBL and Punjab Women. Batting first, ZTBL hammered 174 runs for 4 wickets in the allotted 20 hours. In reply, Punjab women fought back well but could score only 81 runs for 5 wickets. ZTBL thus won the tournament convincingly. At the end of the tournament, a befitting prize award ceremony was held when winners were given a prize of Rs. 100,000/- while a prize of Rs. 50,000/was given to the runners up. Azad Kashmir President Sardar Mohammad Yaqoob was the chief guest while PCB Chairman Chaudhry Zaka Ashraf and PCB women’s wing chairperson Ms Bushra Aitazaz were also present on the occasion.
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rgentina’s Lionel Messi, one of the greatest players in the history of soccer, won the FIFA Ballon d’Or award given to the best player in the world on January 9, 2012 at a gala event in Zurich, Switzerland. It was the third consecutive time the Barcelona star won the award, which was a combination of the old FIFA World Player of the Year award and the France Football Ballon d’Or since 2010. Messi, who led Barcelona to win the Champions League title and four other titles in 2011, won the prize polling 47.8 % of the votes, ahead of Real Madrid's Cristiano Ronaldo (21.6%) and Barcelona's Xavi (9.23%). Former Washington Freedom star Homare Sawa won the FIFA Women’s World Player of the Year award. Sawa, who led Japan to win the FIFA Women’s World Cup 2011 in Germany, collected 28.5 percent of the votes, ahead of Brazil’s Marta (17.2%) and American Abby Wambach (13.2%). Pep Guardiola was named FIFA World Coach of the Year with 41.9 % of the vote, beating Manchester United’s Alex Ferguson (15.6%) and Jose Mourinho, the Portuguese coach of Real Madrid (12.4%). Guardiola guided Barcelona to win the Champions League, FIFA Club World Cup, the La Liga title, Spanish Super Cup and the UEFA Super Cup. Japan’s women’s national team coach Norio Sasaki won the award for World Coach of the Year for Women’s Football. February 2012
O bituary Arfa Karim, a beacon for the youth
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This extraordinary brilliance received the shock of her life when she suffered an epileptic seizure and cardiac arrest and was hospitalized where the doctors reportedly did their best to save her life. In the struggle between life and death for 26 days in a military hospital Arfa finally gave in , the death prevailed and on January 14 when there were reports of possible recovery this precious talent left for eternal abode triggering an outpouring of nationwide sorrow and grief. In his condolence message to Mr. Amjad Karim, the illustrious father of Arfa Karim, the Microsoft Corporation Chairman, Bill Gates, spoke highly about this very talented wonder girl and said “Arfa was extraordinary brilliant Microsoft expert in such a young age, and the world will remember her achievement for ever.” Information Technology Media City in Karachi, a project of the Sindh I.T. Department being implemented to develop a modern media city in Karachi on 200 acres of land near the Super Highway, has been dedicated to Arfa Karim. The Chief Minister of the Punjab Mian Shahbaz Sharif has also announced that the name of Lahore Technology Park would be changed to Arfa Karim Technology Park. These recognitions are appreciable but what is more important is to ensure that people like Arfa Karim who possess exceptional talent and abilities are kept track of, polished and trained so that they become an asset and a pride for the country.
he loss of a young life is tragic and sorrowful but in losing Arfa Karim Rindhawa the nation has lost one of its rising stars, the pride of Pakistan. With her death, a bright beacon of hope has been extinguished. Arfa Karim, a student with exceptional genius, was the world’s youngest Microsoft Certified Professional, and recipient of the President’s Award for Pride of Performance. Her name will go deep down in history for her unprecedented achievements which will continue to serve as a beacon for the youth of the world in general and those of Pakistan in particular. With her innate capabilities and extraordinary genius in the field of information technology Arfa could have proved an asset for the country had she only been spared by her untimely death at an age when she was only 16. Her brief span of life, however, has the greatest message to the young minds to give meaning to life through hard work and by exploiting their potential for achieving laurels for self, the family and the country as a whole. This computer prodigy was born on February 2, 1995 in Faisalabad and in 2004 when she was only 9 she became the youngest Microsoft Certified Professional in the world. In recognition of her talents the Microsoft founder, Bill Gates, invited her to visit the Microsoft Headquarters in USA . She attended several international forums where her talent and achievements were highly acclaimed. She was invited by Pakistan Information Technology Professionals Forum for a 2-week stay in Dubai . She was also invited to a dinner reception which was attended by the dignitaries of Dubai including the Ambassador of Pakistan. During the same trip she also flew a plane in a flying club and received the first flight certificate when she was only 10. On an invitation from the Microsoft, she attended the Tech-Ed Developers Conference on the subject of “Get ahead of the game” in November 2006 in Barcelona. She was the keynote speaker and enjoyed the distinction of being the only Pakistani to have attended the conference where there were over 5000 developers from different countries. Earlier in 2005, the then Prime Minister of Pakistan awarded this youngest Microsoft certified professional Fatima Jinnah Gold Medal in the field of Science and Technology while the President of Pakistan crowned her with the Salam Pakistan Youth Award set up by Pakistan’s Nobel laureate Dr. Abdul Salam. In recognition of her achievements Arfa was made brand ambassador for Pakistan Telecommunication Company’s 3G Wireless Broadband service named EVO in January 2010.
Aarfa Karim pictured with Microsoft founder Bill Gates (left) in 2006.
Arfa Karim is no more with us but she has left a legacy that will continue to echo down the years. Her life was a fine example of what can be achieved through dedication, hard work, skill and expertise. While praying to Allah to rest the departed soul in eternal peace let us hope that the young minds will follow in her foot steps and try to fill the void created by the untimely and tragic death of this miracle girl.
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Awan Trading Co.
is Pakistan based Coal trading entity which was incorporated in the year 2002. The company started its operation as an importing company and for the last two years it has also started supplying domestic coal (Pakistan coal). So far the company has imported and supplied 5 million tons of coal, from South Africa and Indonesia, to the cement factories. This opportunity of supplying coal to cement factories was created due to their (Cement factories) shift from furnace oil to coal as the main energy fuel. Since then the company company has been sincerely committed in its
mission of supplying coal to factories as a source of energy. What you sell is important! So we source our Coal from best suppliers around the world . Developing longterm relationships has been the hall mark of our company. Our promise that we deliver, no matter what the situation has earned us, the confidence of our buyers. The success of our trading can be gauged from the fact that we are now importing 21 vessels (1 million ton) of coal in a year which as resulted in 30% market-share for Awan Trading Co and hopefully the share will increase in the coming years.