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PAK LAW PUBLICATION News Alerts 26 September 2013EMAIL # 222-2013

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Daily News

Thursday, September 26, 2013

PAK LAW

PUBLICATION

2013

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News ContentsTop Stories.............................................................................................................................................4

World Bank identifies major constraints to growth ...............................................................................4

World Bank for simplifying tariff rules, expediting PTAs with India .......................................................6

Decentralisation of budget management suggested..............................................................................8

PKR depreciates further on tight dollar supply.....................................................................................10

Exchange companies asked to help stabilise rupee..............................................................................11

$625 million borrowing adversely impacted exchange rate: top economists argue... ........................13

Rs 100 billion circular debt has resurfaced in power sector: National Assembly informed.................13

Taxation: Pakistan ..............................................................................................................................15

Showcasing first quarter collection: FBR blocks Rs 47 billion tax refunds............................................15

Foreign TV drama/serial: FBR to collect advance tax after broadcast of first episode ........................16

Duty assessment: customs value of sulphur fixed at $172 per ton......................................................17

Token, taxes will be received through BoP's branches.........................................................................18

No significant rise in foreign currencies' smuggling witnessed: FBR....................................................18

Taxation: World...................................................................................................................................20

French 2014 budget sees savings, more tax on households ................................................................20

Business & Economy...........................................................................................................................22

Sindh CM invites joint venture Korean investment in roads, power projects......................................22

Industries & Sectors ...........................................................................................................................23

Shipping activity at Port Qasim.............................................................................................................23

Cotton and Textiles: Pakistan ............................................................................................................24

Dollar's surge causes price flare-up on cotton market .........................................................................24

Amjad Khawja elected PHMEA chairman .............................................................................................25

Agriculture and Allied: Pakistan .......................................................................................................26

Declining fertiliser usage hurting agriculture output............................................................................26

Growers seek export of surplus sugar ahead of crushing season ........................................................27

Livestock development plan for rural Sindh signed with Jica...............................................................28

High prices keep people away from animal markets............................................................................29

Fuel and Energy: Pakistan .................................................................................................................30

Rs 100 billion circular debt has resurfaced in power sector: National Assembly informed.................30

Energy cooperation discussed with Iran...............................................................................................31

Leading shopping stores: SSGC offers free of cost biodegradable bags...............................................31

Neelam-Jhelum hyrdo project: Wapda asked to expedite construction work.....................................32

Fuel and Energy: World......................................................................................................................34



Brent drops, Iran diplomacy in focus....................................................................................................34

Canada keen on boosting energy exports to Japan..............................................................................35

Markets ................................................................................................................................................36

ISE-10 index witnesses bullish trend.....................................................................................................36

LSE downs by 14.09 points....................................................................................................................36

BR Research: All .................................................................................................................................38

Deciphering the rupee fall ....................................................................................................................38

Digital gender gap .................................................................................................................................39

Nishat delivers impressive profits.........................................................................................................40

Are we ready to go back to the basics? ................................................................................................42

Brief Recordings..................................................................................................................................44

Gadoon Textile Mills Limited ................................................................................................................44

Miscellaneous News ............................................................................................................................47

Winter is coming: Gas load management plan under study ................................................................47

Exchange rates: Market speculation main force behind depreciation, say analysts............................48

Electricity generation: Power minister inspects Neelum Jhelum project.............................................49

Fiscal easing: Investors look to banking sector as spreads widen ........................................................50

With real estate boom, developers now focus on Raiwind Road.........................................................52

Corporate results: Nishat to bid for 590MW hydropower project.......................................................53

Maple Leaf Cement records highest profit in half a decade.................................................................55

Intel tablets see some early success in Pakistan...................................................................................56

IBA to adopt IFC’s training solution ......................................................................................................57

OPEN MARKET FOREX RATES................................................................................................................58

INTER BANK RATES................................................................................................................................59

Bullion Rates (Gold Prices) in Pakistan Rupee (PKR).............................................................................60

Gold Rates & Silver Rate from major cities of Pakistan ........................................................................61



Top Stories

World Bank identifies major constraints togrowthSeptember 26, 2013

TAHIR AMIN

The World Bank has identified macroeconomic instability, massive cuts in electricity access,leading to high country risk and a sudden stop in external, domestic financing andgovernment failures as some of the major constraints of growth in Pakistan.

A WB report titled "Pakistan, finding the path to job-enhancing growth" says that the bindingconstraints to Pakistan's growth are numerous including structural, and emerging. Emergingconstraints include massive cuts in electricity access and macroeconomic instability, it added,leading to high country risk and a sudden stop in external and domestic financing.

The structural constraints included low access to domestic finance and government andmarket failures (micro risks) that impede investment, entrepreneurial activity, andcompetitiveness, blocking the transition from low-productivity to high-productivity jobs, itadded. According to report, the main government failures are ineffective taxation, large anti-export bias, cumbersome business regulations, and poor civil service. It further says that thecontributing market failures are bad governance, excess business regulations, and anineffective civil service. By holding down productivity, emerging failures prevent growthfrom taking off, while structural failures limit the sustainability of growth accelerations, itadded.

Recent developments showed the failure, fragility, and high risks of a "wait and see"approach, it said, adding preliminary growth estimates for fiscal 2013 were feeble at around3.5 percent, while inflation might rise to double digits again in the next fiscal year.

"With large fiscal deficits, Pakistan has little space to implement counter cyclical fiscalpolicy. It also faces a steep decline in domestic and foreign direct investment, a severe drainon international reserves, and an uncertain international environment that reduces theprospects for growth. But if a transformational agenda is implemented well, the incomingadministration can break with the past", says the report.

According to the report, Pakistan's rebound from the global financial crisis has been slow andfragile, and unless the economy changes course swiftly, it could face its second balance ofpayments crisis in five years. It's recovery from the 2008-09 global financial crisis has beenthe weakest in South Asia, with a double-dip pattern. Despite some recovery of exports andstrong remittances, borderline stagflation continues-modest growth with (until recently)double-digit inflation, compounded by unsustainable macroeconomic policies and domesticand international armed conflicts, maintained in the report.

Solving the power crisis is the top priority for growth, but the task is far from simple, andaction is required on several fronts. An emergency plan of short-term policy measures couldfocus on improving governance, reducing subsidies, and ensuring gas supplies.



A single-point lead authority could manage power sector reform and appoint professional andcompetent CEOs in distribution companies (Discos) and generation companies (Gencos).Along with visible reductions in power outages, a clear schedule of power tariff increasescould gradually bring notified tariffs to the average minimum determined tariff. And linelosses and theft could be reduced with the support of a new electricity bill, it maintained inthe report.

It further states that Pakistan demographic transition is an opportunity to swiftly accelerategrowth. With its high fertility, its already young population will double by 2025. The labourforce has risen faster (3.7 percent a year) than the regional average (3.1 percent), a result of alarger working-age share of the population and a higher labour force participation (especiallyby women). The youth workforce has grown even faster at 4.3 percent a year, well above theregional average of 2.7 percent and expected to continue at that rate for at least 10 years. Thelabour force is expected to expand 3.5 percent a year, as about 1.5 million young workersstart seeking jobs each year. If female labour force participation rises, the pressure for newjobs will be even stronger, with net migration at less than one percent of the labour force.Pakistan's growth and jobs record is less than stellar, but that its huge potential is not fullyexploited.

Pakistan's current growth rates are below potential (with a cyclical "output gap") andsignificantly diverging from its most competitive neighbours- India and China. And thevolatility of its GDP growth was average by international standards, but it had increased sincethe last decade, which accounted for the perceived slowdown and increased fragility of itspoverty gains during the last five years, the report maintained.

The most important reason for declining long-term growth is that structural reforms havebeen growth-reducing rather than growth-enhancing. The declines in labour productivity andtotal factor productivity over the last two decades are puzzling. Structural reforms werefragmented, badly sequenced, or truncated-preventing major labour reallocations. Politicaland security uncertainty; poor implementation of structural reforms, and macroeconomicinstability (and its associated fiscal stress and volatile external financing) have also held backmost of Pakistan's reforms.

Pakistan's growth and job prospects will have to rely not only on filling gaps, especially theone on infrastructure that has fallen to alarmingly low levels, but on creating new job-drivers.The weak external environment is affecting manufacturing and agricultural export growth.

Domestic macro-imbalances impaired domestic credit expansion and the overall environmentfor private investment, it added, the potential for more productive private sector jobs lied inmodern urban services and more competitive (and green) manufacturing, and in moreproductive farm and non-farm activities.

The benchmark scenario sees the economy returning in fiscal 2022 to its average historicalgrowth rate (4.3 percent), private consumption rising four percent a year, unemploymentfalling about 3.1 percentage points, government debt increasing 0.3 percentage points ofGDP, poverty declining 6.4 percentage points, and mild Millennium Development Goalprogress. In contrast, swiftly raising annual GDP growth to seven percent assumes that broadand sustained structural reforms would improve the investment climate, economicgovernance, and private investment in physical and human capital. It also assumes aminimum rise in total investment from 14 percent of GDP to 18 percent (with a 70-30 splitbetween private and public investment) supported by higher private and government savings



and a rise in annual total factor productivity growth from 1-2 percent to 3-4 percent per year.

Pakistan's policymakers believe that faster growth alone will cover its job needs, but thisreport argues that it is not only the number of growth-generated jobs that matters, but alsotheir quality. Pakistan has to create around 1.5 million jobs a year until 2020 just to keepunemployment constant (and underemployment constant) assuming labour force participationby women remains constant. Labour force growth of about 3.5 percent a year requires GDPgrowth of about seven percent a year. However, Pakistan also needs good jobs.

Copyright Business Recorder, 2013

World Bank for simplifying tariff rules,expediting PTAs with IndiaSeptember 26, 2013

ZAHEER ABBASI

The World Bank has suggested Pakistan to fully normalise trade relations with India, simplifytariff and trade regulations and accelerate preferential trade agreements as policy actions tostimulate export diversification and expansion. The WB in a report titled: "Pakistan, thetransformative path" identified reversion to protectionism, poor trade facilitation and logisticstrade policy complexity impediments in the way of improving Pakistan trade competitivenessand suggestion policy actions.

The domestic market protection through tariff protection generates an anti-export bias. AsPakistan cannot influence world market prices, exporting firms gain no benefit from domestictariff policies whereas the producers for the domestic market enjoy a price advantage overforeign competitors which leads to market distortions.

Simplifying the complex import tariff and tax regime would also foster certainty, increasetransparency, and promote firm dynamism. The remaining regulatory duties also need to beeliminated - and the import tax regime liberalised. While many regulatory duties wereremoved in 2011, selective protection and concessions on inputs remain a source of economicinefficiency because valuable resources are being diverted - to less productive sectors that areprotected from otherwise low international prices and away from the industries that havecomparative advantage.

In the short-term, a road map should be outlined for gradually simplifying the tariff regimewhich might include an immediate reduction of the top rate to 25 percent and a move to atransparent, three-band structure (25 percent, 10 percent, and 0 percent).

In the medium-term (three to five years), the government should consider phasing outregulators duties and eliminating exemptions outside trade agreements and free zones. Thesesteps would have important positive effects in the long run, with transitory adjustment effectson output and employment limited to some sectors and a relatively small impact on tariffrevenues. Higher value-added export-oriented sectors, such as chemicals and chemicalproducts and machinery and equipment, are likely to benefit even in the short run. Manylower value-added, import-competing sectors, such as processed foods, rubber and plasticgoods, and other manufacturing, would adjust production downward in the short run, as



would many services sectors that temporarily lose out as consumption adjusts to takeadvantage of lower prices, particularly in traded goods.

The medium-term should also see a move toward an eventual uniform 10 percent tariff.Estimates calculated for this note found that eliminating all exemptions and moving toward auniform 10 percent tariff would raise tariff revenues 79 percent and total import tax revenue36 percent while increasing import prices 1.4 percent. The full effects of reform would startto emerge over the medium term, as economic agents respond to the new incentiveenvironment, shifting resources from less productive to more productive economic activities.

Accelerating implementation of deep preferential trade agreements and signing other agreemerits in that vein are key initiatives in expanding market access. Pakistan has to scale upefforts to benefit from the geographic advantage of being in a high growth region of theworld. Significant trade-creation effects are likely to originate from the relatively recent tradeagreements with China and Malaysia, due to the deep nature of these agreements and theircoverage beyond market access issues. By contract, regional preferential trade agreementslimited to market access are unlikely to bring benefits because of Asia's deep, fast-pacedintegration agreements.

Fully normalising trade relations with India, including opening the border, will facilitate deepforms of trade integration. The measures are necessary to benefit from India's first growthand to promote complementarities, including value-chain activities and invest merit potential.Our calculations using a gravity equation suggest that exports to India are 40 percent belowtheir predicted potential. Similarly, Pakistan is the key missing market for India, underliningthat both countries would gain greatly by normalising their trade relations. These movesshould aim at deep forms of trade integration and not be limited to market access. Given thattrade is only now starting to be normalised, the focus should be on expediting measures tofacilitate trade, building on the recently signed agreements on mutual recognition and visas,and improving infrastructure, institutions, services, policies, procedures, and market-orientedregulatory systems.

Specific measures for further assessment, potentially, on a joint basis with India, include,removing impediments at the border, especially Wagha-Attari, and along trade routes. A one-stop border post at Wagha-Attari would have a large demonstration effect, as would inlandcontainer depots on either side of the border. There is also potential for transit agreements tolink Pakistan to Bangladesh and to Nepal, and India to Afghanistan (similar to the onenegotiated between Pakistan and Afghanistan); for associated infrastructure supporting newtrade routes; and for online payment systems.

Further integrate border communities as the populations along the border regions are amongthe poorest in both Pakistan and India, and so integrating their communities presentsparticular challenges. More localised initiatives to target them including border bazaars andother measures to encourage cross-border trade, are yet to be fully explored. Some initiativesalong these lines arc already in place between Bangladesh and India.

According to the report it is critical to improve the regulation of trucking and of the clearingand forwarding industries. A wide gap in the legal framework is a liability for goods as theymove along the chain-truck operators, for instance, carry only third-party liability. (A draftlaw on logistical service providers, currently in Parliament, should help improve the qualityof other logistical services.) Given the presence of numerous small players in this market, asolid legal framework for responsibilities and liabilities, including those of truckers, isparamount. Freight forwarders, most of whom are also clearing agents, are the most



important intermediaries in trade logistics in any country, and in Pakistan they urgentlyrequire capacity building.

Improving customs and border management is crucial for lowering logistical Costs,particularly port operations and customs procedures. It is important to reduce the current highdwell time for cargo, especially in ports. A unified and comprehensive customs system wouldbenefit trade logistics, allowing the private sector to develop and invest in appropriateinterfaces. Also critical is the introduction of an effective risk management system, a formalAuthorised Economic Operators regime, and an expedited regime for transit shipments.These measures will allow more cargo to be cleared inland, reducing bottlenecks at seaportsand land borders, making clearance procedures more effective, and allowing for greater co-operation between shippers and customs officials. As Pakistan is developing trade links to theCentral Asian republics in the north, these systems would be strategic.

The WB stated that the trade to GDP ratio is one of the most basic indicators of openness toforeign trade and economic integration. It weighs the combined importance of exports andimports of goods and services in an economy. The ratio gives an indication of the dependenceof domestic producers on foreign demand and of domestic consumers and producers onforeign supply. There is a concave relationship between trade openness and per capitaincome: countries tend to trade more as incomes rise, but at a decreasing rate.

An ordinary least squares regression (using cross-country data from the World DevelopmentIndicators database) of trade/GDP on the log of per capita income (purchasing power paritydollars), its squared value, the cost of exporting (using a sub-indicator from Doing Business2008 to 2010), and population predicts a trade share of 65 percent. The actual trade share ofless than 32 percent is therefore extremely low.

Export growth is said to take place at the intensive margin when it occurs by selling more ofthe same products to the same markets, while growth at the extensive margin includes newproduct discovery, existing products sold to new markets, and new firms entering exportmarkets.


Decentralisation of budget managementsuggestedSeptember 26, 2013

The Finance Ministry's dominant role in budgeting and expenditure control should be limitedto broad policy guidelines and the country needs to decentralise the budget management. Thiswas pointed out by World Bank in report on "Pakistan the Transformative Path," whichidentified challenges in the Public Financial Management (PFM).

The report termed the PFM fragmented with Finance Ministry in dominant role in budgetingand expenditure control whereas Controller General of Accounts (CGA) makes payments andmaintains accounts. The ministries, departments and agencies execute the budget within theresidual space permitted by the Ministry of Finance and the CGA even though the secretaryof each line department is the designated Principal Accounting Officer (PAO) accountable for



ministries, department and agencies performance.

The internal controls are excessive, but weak. Extensively documented rules are issued by theMinistry of Finance, while the CGA applies controls on payments and accounts. Theministries and divisions have yet to develop the capacity for professional financialmanagement because they have not been given full responsibility and authority to managetheir budgets.

These problems stem weaknesses in public financial management, as in the accountabilityframework. With fragmented controls, no single authority can be held accountable for failingto deliver. Similarly, because the Ministry of Finance controls budgets and cash, theministries, department and agencies cannot always deliver services on time andeconomically, which is why a stronger public procurement function is essential for enhancedpublic financial management.

The WB suggested that Pakistan needs to decentralise budget management. Good budgetmanagement enables a government to be effective in planning, executing, and monitoringresource management as well as ensuring targeted outcomes and strengtheningaccountability. The roles of the Ministry of Finance and the CGA need to be redefined forgreater delegation. Over the years, the ministry has taken some steps in this direction, forexample; (i) it oversees more transparent and fair processes for re-appropriation of funds andsupplementary grants; (ii) it has delegated more financial powers to PAOs in several steps(the latest in 2006; ( iii) it has decentralised accounting and payment functions for someministries, department and agencies like the military, railways, foreign affairs, food, forests,and public works and (iv) it has improved information on fund releases to ministries,department and agencies.

Despite these steps, some shortcomings still hold. The PAOs, for example, still have limitedflexibility in executing budgets, and they must revert to the Ministry of Finance at severalstages. Independence of the PAOs is further infringed by a centralised system of paymentsand accounts.

Account offices under the CGA process payments, maintain accounts, and prepare annualfinancial statements. Although, the PAOs sign off the final appropriation accounts, they donot assume ownership of them. The performance of the system in terms of budgetaryoutcomes is poor, as seen in the expenditure outturns for federal and Punjab governments inthe June 2012.

Similarly, the ministries, department and agencies need approval from the Ministry ofFinance for; (i) allocating savings from one grant to another or even from one budget line toanother within the same grant; (ii)transferring funds from current to developmentexpenditure, or vice versa; (iii) and using approved lump sum grants. Although in 2006 thefederal government created 22 posts of chief finance and accounts officers in the ministries,department and agencies, their role is still secondary to the Ministry of Finance, whichmaintains the primary role for stewardship of funds.

The financial advisors assigned to the ministries, department and agencies by the ministryexercise considerable influence over frequent in-year re-appropriations. The federal, Sindh,and Khyber-Pakhtunkhawa governments prepare cash forecasts quarterly while the Punjabgovernment prepares them every month. However, there are significant gaps on cashforecasts and actual cash positions. The accuracy of the cash forecasts is undermined bymissing information on the stock of arrears, commitments, and unresolved reconciliation



differences. While the State Bank of Pakistan provides daily data on monetary balances, theNational Bank of Pakistan submits data with varying lags. Weak cash management affects theMinistry of Finance's ability to prepare monthly cash-flow forecasts, in turn influencing theMDAs' capacity to implement the budget effectively.

Procurement is a devolved subject under the constitution and federal government, as well asPunjab and Sindh have procurement regulatory authorities (PRAs), but Balochistan andKhyber-Pakhtunkhawa have yet to establish them. The major challenge is to improve theimplementation of the procurement framework. The PRAs are responsible for initiatives tobetter implement and further develop the framework, but they face many challenges, such asa lack of resources, undermining their capacity. Broader challenges include a general lack ofprocurement capacity at every level of public administration and an Auditor General's Officehistorically focused on compliance rather than outcomes.

More urgent issues include the PRAs do not have a monitoring and evaluating system tocollect and analyse data on procurement actions or evaluate the procurement performance ofthe MDAs. A capacity-building strategy for procurement by the MDAs is lacking. There is noclear capacity-building program for vendors, especially small and medium-size enterprises.Any healthy procurement system relies on its vendors, who are fundamental for competitionand thus in overall procurement, including its transparency. The PRAs have no mechanism(formal or otherwise) for knowledge and experience sharing, co-ordination, or co-operation.The regulatory framework considers independent dispute resolution mechanisms for vendors'complaints, but they have yet to be set up.


PKR depreciates further on tight dollarsupplySeptember 26, 2013

Pakistani rupee (PKR) continues to depreciate in a big way on a daily basis. And, officialsappear helpless as the International Monetary Fund's Extended Fund Facility (EFF) has thehands of State Bank of Pakistan tied with the Ministry of Finance sending their `troubleshooter' to Karachi to ascertain the causes behind unhinging of economy, while peoplescramble to convert their savings into dollars.

Exchanged companies and money exchangers on Wednesday claimed shortage of the UScurrency as open market rate soared to Rs 110 after the interbank parity touched Rs 107.30 toa dollar. SBP, few days back, did provide cash to exchange companies; but the demand fordollars was much higher. SBP had reportedly indicated the pitfalls and dangers involved inraising dollars from the banks by the government directly. However, it appears Ministry ofFinance officials either failed to comprehend SBP's warning that it could lead tocannibalizing of dollars from the interbank market and repricing of loans against FE25deposits as well, creating a negative sentiment that the government is desperate for dollars.

With three days left in the first quarter and an IMF technical team already in Karachi tocollect data to ascertain whether Pakistan has met the performance criteria or not; SBP nowappears helpless as its failure to intervene in the interbank market (on account of commitment



to the Fund) is causing rupee depreciation on a daily basis. Money changers say they cannotsell dollars below the interbank parity.

On Thursday, some banks who have been awarded the mandate to provide 625 milliondollars were reportedly undertaking buy- and-sell transactions for their NOSTRO limits.Some banks that do not have overseas balance sheets were using their rupee liquidity to buydollars for the government. SBP was asked by MoF to put in place a mechanism that ensuresthat the consortium of banks with MoF mandate should bring in dollars from abroad.

A former finance minister who requested anonymity told Business Recorder that PrimeMinister Nawaz Sharif shifted Ishaq Dar from Commerce to Finance in 1998 after hesucceeded in bringing the rupee parity from Rs 69 to Rs 50 to a dollar. But then the size ofthe economy was much smaller and much water has flown under the bridge since. It is now adifferent world. Unless the Nawaz Sharif's government can place four to five billion dollars atthe disposal of SBP, the situation will not stabilise. Further, he said, the EFF Programme withthe Fund does not strike the right balance between growth and fiscal consolidation. And, theunintended consequence of this have manifested now. The automatic fiscal-phobic approachand ignoring the economic consequences of taxing more from those who pay and not tappingthe shadow economy have negative consequences. SBP is in a wait-and-see mode on inflationestimates; and an anaemic response to its policy rate has not helped either.

Imposing cash margins on non-essential imports is not possible under a Fund programme.But imposing a regulatory duty to discourage imports is doable, he added. Allowing Afghanimporters to import goods against cash contracts instead of Letter of Credit under the AfghanTransit Trade Agreement (ATTA) is another window being used for hundi-hawala, which isnegatively impacting official inflows.

The overnight differential between dollar and rupee reduced from eight percent to zero as aleading foreign bank flooded the system with buy now - sell forward deals. SBP is expectedto examine the books of some of the mandated banks on Thursday (today). And, if it canshow to the Ministry of Finance that dollars are being purchased locally for supply to thegovernment under the September 23rd mandate it could lead to cancellation of the deal.

SBP officials also met the representatives of exchange companies to ascertain on how tostabilise the current turmoil. They were told that SBP needs to give cash dollars under a one-month swap arrangement at the rate of Rs 108.50 to a dollar, ie, one rupee above theWednesday's interbank rate. The exchange companies promised to keep the open market ratewithin one rupee of the interbank parity.


Exchange companies asked to help stabiliserupeeSeptember 26, 2013

The State Bank of Pakistan (SBP) has asked exchange companies to help reduce the growinggap between interbank and open market dollar-rupee rates. A severe battering of Pak rupeeagainst dollar has forced the central bank to convene a meeting with exchange companies.



Sources said the State Bank of Pakistan on Wednesday took a serious notice of continuingPak rupee slide against greenback. It told the representatives of exchange companies to takesome urgent measures towards stabilisation of rupee.

The meeting was conducted by executive director exchange policy department MansoorAhmed and attended, among others, by Muhammad Ali of SBP Treasury, Haji Haroon, MalikBostan, Zafar Paracha, Naeem ud Din and Muhammad Saleem of Exchange CompaniesAssociation of Pakistan (ECAP).

During the course of meeting, SBP officials directed exchange companies for strictlycompliance of guidelines issued by the central bank. They stated that a statement on dollarrate issued by some representatives of ECAP had created panic in the market and resulted incontinued depreciation of Pak rupee against dollar in open currency market.

"We have information that although branches of exchange companies are working as perrules and regulations, however several franchises are not following the SBP rules," they said.During the meeting, exchange companies were also warned of strict action in case of noncompliance of guidelines.

The SBP showed concern over the rising gap between interbank and open market rates andasked companies to reduce this gap. "The difference between interbank and open currencymarket rates should not be of more than Rupee one," SBP instructed. However, therepresentatives of ECAP rejected all allegations and argued that dollar rate was increasingdue to Hajj demand, higher interbank rate and hasty buying by importers.

"It's not possible to reduce the gap in open market and interbank dollar rate immediately,however it will be shrunk in the first week of October as massive inflows are expected beforeEid," they said. "Recent dollar demand for Hajj is likely to end within a week after whichdollar rate may reduce by Rs 2 to Rs 3 in the open currency market," they added. Theysuggested several measures aimed at stabilising the exchange rate in interbank and opencurrency market.

ECAP representatives also demanded the imposition of a 15 percent duty on gold imports as,according to them, major dollar buying would be carried out for gold imports after Hajj. "Theministry of finance has itself witnessed that over 500 million dollar worth of gold wasimported during July this year, which forced the federal government to impose a ban on goldimports. However the ban was lifted without any consultation and it led to a huge buying ofdollars for gold imports; it also caused panic in currency market," they added.

They urged SBP for the imposition of a 15 percent import duty on gold imports, a stern actionagainst currency smugglers, an end to zero margin regime and permission for newagreements with foreign companies. According to ECAP representatives, imported gold isbeing smuggled to India, which has already enforced a 15 percent duty on gold to curb itsimport. They also asked SBP to end zero margin regime for import to reduce the demand ininterbank and open currency market. Zero-margin should only be allowed on oil and fooditems, they suggested.




$625 million borrowing adversely impactedexchange rate: top economists argue...September 26, 2013

The government borrowing of $625 million from commercial banks at relatively higherinterest rate of 5.3 per cent above (Libor) has failed to change the market sentiment largelybecause the effort was viewed by the market as a desperate attempt to build foreign exchangereserves and consequently impacted negatively on exchange rate, according to Dr SalmanShah, Former Finance Minister and Principal Economic Advisor of Finance Ministry.

Salman Shah said the arrangements of borrowing from banks has not strengthened marketconfidence largely because it is a short-term stopgap measure and indicates that inflows arenot coming from other channels. Shah added that pressure on exchange rate could be easedwith foreign direct investment and increase in remittances.

He maintained that markets are aware of the government's need to show foreign exchangereserves and are taking full advantage of the situation. He advised the government to supportlong-term borrowing by issuing bonds instead of short-term borrowing. Shah said thegovernment requirement would be $4 to $5 billion, other than International Monetary Fund(IMF) inflows, for the current fiscal year, which would heavily depend on FDI andprivatisation. Shah added that the government appears to be totally unprepared forprivatisation.

Former Principal Economic Advisor to Finance Ministry Sakib Sherani attributed thedepreciation of rupee to the power given to the Federal Board of Revenue to accessinformation of accountholders, which, he argued, has led to increase in investment in realestate and deals are being stuck either in dollars or pounds. He agreed with the formerFinance Minister Salman Shah that government borrowing of $625 million from commercialbanks to build the foreign exchange reserves has not changed market sentiment. In fact, hesaid the effort by the Finance Ministry was viewed as a desperate move by the governmentwith limited options. Sherani said that Coalition Support Fund (CSF), sale of 3G licenses andprivatisation could help ease the pressure on balance of payment in the current fiscal year.


Rs 100 billion circular debt has resurfacedin power sector: National AssemblyinformedSeptember 26, 2013

WAQAR LILLAH

A circular debt of Rs 100 billion has resurfaced in the power sector despite clearance of theprevious circular debt of Rs 503 billion by the newly formed government of Pakistan Muslim



League-Nawaz, the National Assembly was informed on Wednesday.

Ministers of State for Education, Trainings and Standards in Higher Education, MuhammadBaligh-ur-Rehman, while responding to a question, said that circular debt resurfaced due totariff differential subsidies, adding the Ministry of Finance had not provided any separateallocation for clearance of circular debt under normal budgetary process, and presently therewas no such proposal under consideration.

However, the Ministry of Finance provided tariff differential subsidy to the Discos to bridgethe gap between the tariff determined by Nepra and the tariff notified by Ministry of Waterand Power for which Rs 220 billion had been allocated for the current financial year, headded.

Baligh-ur-Rehman said the government was expecting that combination of measures liketariff rationalisation, recovery maximisation, reduction in losses/theft, revenues of powersector companies would significantly increase and re-emergence of circular debt would begreatly contained. To another question, the Minister told the House that the PML-N hadborrowed US $544 million from IMF after coming into power, while it had paid off US $700million to IMF. He added that the government had to pay off more than US $2.15 billion toIMF in the current financial year.

About depreciation of Pakistani rupees against international currencies, the Minister said thePak rupee depreciated in the interbank market against Euro, Great Britain Pound (GBP),Japanese Yen (JPY) and US dollar by 6.9 percent, 4.7 percent and 5.5 percent respectively inFY14 (from July 1 to September 10) in FY14.

The House was also informed that there was no proposal under consideration of thegovernment for any incentive to the small companies. However, as part of drive to encouragecorporate business, the rates of income tax for all companies have been reduced from 35percent to 34 percent in the Budget-2013. Meanwhile, Interior Minister Chaudhry Nisar AliKhan, while replying to a question, told the House that the government was going to utilisemodern technology like CCTV cameras for the security of federal capital. He said that policecheck-post in the city would be removed, if government succeeded in establishing effectivecontrol and command system.

While providing details of drugs seized by the Anti Narcotics Force (ANF) during 2013,Chaudhry Nisar Ali Khan told the House that confiscated drugs were burnt by the ANF onAnti Narcotics Day, adding that a ban had been imposed on the foreign trips of ANF officials.




Taxation: Pakistan

Showcasing first quarter collection: FBRblocks Rs 47 billion tax refundsSeptember 26, 2013

MUHAMMAD ALI

The Federal Board of Revenue has reportedly blocked tax refunds amounting to Rs 47 billionto show revenue collection during first quarter of current fiscal year, it is learnt on Tuesday.According to sources, Member Inland Revenue (Policy) Shahid Hussain Asad andMuhammad Ashraf Khan Inland Revenue (Operations) had convened a meeting withbusiness community at Large Taxpayers Unit (LTU), Karachi to pacify agitations against theblockage of tax refunds to the tune of Rs 47 billion.

They said the FBR''s biggest revenue generation arm ''LTU Karachi'' had collected Rs 67billion till September 23, 2013 against its revenue target of Rs 84 billion during first quarterof current fiscal year. The sources said Karachi LTU was facing serious revenue shortfall ofRs 17 billion, which had to be made up till September 30 to meet its revenue target.

They said the FBR in order to meet its revenue target and show its progress to theInternational Monetary Fund (IMF) during first quarter had reportedly blocked tax refundsamounting to Rs 47 billion through Expeditious Refund System (ERS) that raiseddisenchantment among the business community.

Therefore, Member Inland Revenue (Policy) Shahid Hussain Asad and Muhammad AshrafKhan Inland Revenue (Operations) had been given a task to convince business community tofacilitate the FBR in meeting its first quarter revenue target, sources maintained. Replying toa question, the sources said that all three Regional Tax Offices (RTOs) had also been directedto initiate more revenue generation measures to overcome revenue shortfall of Karachi LTU.

They said that Member Inland Revenue (Policy) Shahid Hussain Asad and MuhammadAshraf Khan Inland Revenue (Operations) had emphasised strict monitoring of withholdingtax. Moreover, the sources said that they had given guidelines to RTOs for monitoring ofwithholding tax, which were as follows:

--- Update of separate lists of withholding agents of each category under each provision ofIncome Tax Ordinance.

--- Potential sector for monitoring and audit of withholding taxes.

--- Listing filers and non-filers of the withholding statements.

--- Action against non-filers.

--- Enforcement of withholding statement by the FTN holders.

--- Recovery of withholding arrears.




Foreign TV drama/serial: FBR to collectadvance tax after broadcast of first episodeSeptember 26, 2013

SOHAIL SARFRAZ

The Federal Board of Revenue will collect advance tax after the broadcast of single episodedrama/serial of any foreign TV, play dubbed in Urdu or any other regional language toenforce section 236E of the Income Tax Ordinance, 2001. The FBR on Wednesday issued aprocedure to the Regional Tax Offices (RTOs) for collection of advance tax on foreignproduced drama.

According to the FBR, the Finance Act, 2013 has inserted a new Section 236E of the IncomeTax Ordinance, 2001 whereby, an licensing authority certifying any foreign TV drama serialor a play dubbed in Urdu or any other regional language, for screening and viewing on anylanding rights channel has to collect advance tax at the rate of Rs 100,000 for single episodeof foreign produced drama or for each episode of a serial.

Field formations have apprised the Board that certain confusions exist regarding licensingand certifying authority mentioned in the said section. It is also brought to the notice of theBoard that procedure to be adopted for the implementation of the said section be explained,the FBR said. It is therefore clarified that the licensing and certifying authority for thepurpose of section 236E is Pakistan Electronic Media Regulatory Authority (Pemra).

The FBR said the tax is to be collected after the broadcast of the single episode drama/serial,since it is only after the programme/episode is broadcasted that Pemra under section 27 of thePakistan Electronic Media Regulatory Authority Ordinance, 2002 prohibits or allows it tocontinue the broadcast of drama/serial.

If the broadcast is not prohibited for any of the conditions mentioned in aforesaid section 27,it tantamount to certifying the broadcast, the FBR said. The FBR further said that the word"certifying" appearing in section 236E does not necessarily mean to certify in writing. It onlymeans to guarantee as meeting specified standards as contained in section 27(a) and (b) ofElectronic Media Regulatory Authority Ordinance, 2002, which is manifested if Pemra doesnot prohibit, under the said section, the broadcast of drama/serial episodes by landing rightschannels.

It clarified that even if Pemra prohibits the broadcast of any serial/drama, tax is still to becollected, since collection of tax is not linked with the contents of the serial/drama. After thecollection of tax and its deposit in the exchequer, withholding statement under section 165 ofthe Income Tax Ordinance, 2001, is to be filed as prescribed, the FBR added.




Duty assessment: customs value of sulphurfixed at $172 per tonSeptember 26, 2013

The customs value of sulphur has been fixed at $172 per ton on its imports from UAE/Iran. Itis learnt that the Directorate General of Customs Valuation Karachi has issued new customsvalues of sulphur in exercise of the powers conferred under section 25-A of the Customs Act,1969.

According to the ruling, the customs values of sulphur were determined through ValuationRuling No 487, dated 07-11-2012. FPCCI and importers requested the directorate to lowerthese values in line with declining price trend in international market. Re-determination ofcustoms values of these goods was undertaken to reflect the current price trend in theinternational markets.

The valuation methods provided in section 25 of the Customs Act, 1969, were followed.Transaction value method as laid down vide sub-section (1) of section 25 was foundinapplicable due to non-availability of sufficient information required for determining theCustoms value under the law. Identical/similar goods valuation methods as provided insection 25(5) & (6) of the Customs Act were found to be applicable and were followed todetermine customs values of sulphur in this case, it said.

Meetings were held with the members of stakeholders. Feedback of the stakeholders wasconsidered to determine the Customs value in the instant case. Resultantly, customs value forsulphur of UAE & Iran origins shall be assessed to duty/taxes at the new customs values.

Ruling said that the goods other than specified origins may be assessed provisionally undersection 81 of the Customs Act, 1969. Exercise to determine customs value will then beundertaken by the Directorate General. In cases where declared values are higher than thecustoms value determined in the ruling, the assessing officers shall apply those values interms of sub-section (1) of Section 25 of the Customs Act, 1969. In case of consignmentsimported by air, the assessing officer shall take into account the differential between airfreight and sea freight while applying the customs values determined in the ruling.

The values determined vide the ruling shall be the applicable customs value for assessment ofsubject imported goods until and unless it is rescinded or revised by the competent authorityin terms of sub-section (1) or (3) of section 25 of the Customs Act, 1969, the ruling added.




Token, taxes will be received through BoP'sbranchesSeptember 26, 2013

Punjab Finance, Excise and Taxation Minister Mian Mujtaba Shujaur Rehman has said thatcomputerisation and latest technology is being introduced in excise and taxation departmentto collect the various taxes. He expressed these views on Wednesday while presiding over ameeting with excise and taxation department; Secretary E&T and officers were also present.

The minister said PEPRA rules will be followed while giving contracts to the number plate ofmotor vehicles supply firms and the firms should have the certificate of ISO qualities. Hefurther said token and other taxes will be received through Bank of Punjab's branches in theprovince to facilitate tax-payers. "E&T department has collected Rs 16,536,860 and Rs36,114,307 in the months of July and August, respectively, in the head of excise revenue andadditional Rs 9,755,484 has been collected in the two months as compare to last year," headded.

According to him, tax in the current budget has been levied only on affluent segments.Property tax, motor vehicle tax and tax on services are the major sources of provincialincome and the government is taking solid steps to simplify the tax collecting system.


No significant rise in foreign currencies'smuggling witnessed: FBRSeptember 26, 2013

Customs intelligence department of the Federal Board of Revenue (FBR) has not witnessedany abnormal increase in smuggling of foreign currencies particularly US dollar during lastfew weeks. Sources told Business Recorder here on Wednesday that it is very difficult tosmuggle foreign currencies in big quantity through airports due to simultaneous checking andmonitoring by different agencies at airports including customs staff.

The intelligence arm of the FBR work on information-based action against smugglers, but thecollective information on national level revealed that no such major increase in smuggling ofcurrencies has been observed during the last few weeks. The FBR has already established'Special Bulk Cash Anti-Smuggling Counters' at all the airports with the mandate to check thesuspected passengers. These special counters have been specifically instructed to monitor theoutgoing international passengers. In case of any suspected movement, the customs staff canintercept and check the baggage of the outgoing passengers.

The 'Special Bulk Cash Anti-Smuggling Counters' are effectively working at the airports andintercepting outgoing passengers involved in smuggling of dollars. In the presence of existingchecking mechanism at the airports, it is very difficult to smuggle huge quantity of dollarsfrom the country through ports including airports.



Sources said that the customs intelligence network has not received any reports of suddenincrease in the smuggling of foreign currencies. The screening of passengers as well as strictmonitoring by the Anti-Smuggling Counters at airports has made it difficult for smugglers tophysically take huge quantity of foreign currencies out of the country. Sources said thatongoing increase in price of dollar against the rupee cannot be solely linked with thesmuggling of foreign currency.

It is important to mention that the FBR and State Bank of Pakistan (SBP) are jointly workingon strategy to block smuggling of foreign currencies. The FBR and other stakeholders havealready taken some decisions to check smuggling of dollars etc. For example, the FBR willcheck the database regarding the persons visiting the money changers frequently for businessso as to establish the database of the persons engaged in suspicious activities. Moreover, theaccess of Personal Identification Secure Comparison and Evaluation System (PISCES) maybe made available by Federal Investigation Agency (FIA) to Customs for pre-screeningfrequent travellers. Model Collectorates of Customs should provide the information to FBR,DG (I&I-FBR) and all MCCs, in relation to seizure of foreign currency while highlightingunique features (if any) including assortment of currency, method used for concealment,destination, first statement of the accused, divulging initial information including reasons forsuch an activity.




Taxation: World

French 2014 budget sees savings, more taxon householdsSeptember 26, 2013

France sought on Wednesday to appease anger over tax hikes and EU concerns over itsfinances with a 2014 budget bill that focuses efforts largely on savings. But while businesseswill face a smaller tax burden to help boost competitiveness, households will be hit by highertaxes to help cut the deficit, a move that will hurt purchasing power.

The Socialist government unveiled its draft 2014 bill under close scrutiny from the EuropeanCommission in Brussels and EU powerhouse Germany, which have given Paris two extrayears to bring the deficit in line with EU rules but want to see more reforms and a credibleplan to cut spending in return. The budget "has two objectives: stimulate growth and boostjobs," Finance Minister Pierre Moscovici told lawmakers as he announced a public deficittarget of 3.6 percent of economic output in 2014, better than this year's 4.1 percent but worsethan initially forecast.

France's new fiscal watchdog said next year's growth forecast of 0.9 percent was plausible butwarned the structural deficit target was optimistic, with a risk its revenue estimates were toohigh and spending forecasts quite "fragile." Rating agencies and analysts have cast doubt onFrance's ability to switch its fiscal tightening effort from a focus on tax hikes to reining inspending, pointing out the euro zone's second-largest economy has a much better track recordon the former.

The government has planned 15 billion euros in savings next year and 3 billion extrarevenues from extra taxes and fighting tax evasion. It had previously announced a sales taxincrease targeted to raise another 6 billion euros. The government has been faced with afierce political debate and growing backlash from businesses and voters who have been hit by70 billion euros in tax hikes over the past three years.

Moscovici himself has talked of "tax saturation" among the general public. The government,worried about an impact on next year's local and EU elections, insists the 2014 tax rises aremuch smaller than in previous years. But households, unlike businesses, will not be spared agrowing tax burden next year. The government said it expects to collect 75.3 billion euros inincome tax compared to 71.9 billion this year.

"They're putting into practice a strategy to preserve or improve businesses competitiveness atthe expense of consumers' purchasing power," BNP Paribas economist Dominique Barbetsaid, adding that although the government insists the wealthiest are most hit, others also are.Moscovici will travel to Brussels on Thursday to discuss the budget with EU MonetaryAffairs Commissioner Olli Rehn, who said earlier this week the pace of reform was movingin the right direction but not quickly enough.

The 0.9 percent growth forecast for 2014 is below a previous estimate of 1.2 percent. Thegovernment expects feeble growth of 0.1 percent this year. The government announced a



change in corporate tax policy by scrapping an annual flat tax on top of other levies andintroducing a new one based on operating profits.

It will, as planned, slap a 75-percent tax on salaries exceeding 1 million euros per year, a ratethat includes social contributions and will be levied on firms. Overall, businesses will see astable tax level next year, but the burden will end up being smaller thanks to 10 billion eurosin tax breaks meant to boost competitiveness. A new carbon tax will bring 340 million eurosin 2014, an amount due to rise gradually to 4 billion euros in 2016.

Copyright Reuters, 2013



Business & Economy

Sindh CM invites joint venture Koreaninvestment in roads, power projectsWednesday, 25 September 2013 20:33

Posted by Imaduddin

KARACHI: Sindh Chief Minister Syed Qaim Ali Shah has invited Korean investors for investment in

roads and power projects as joint venture in the province and assured all required assistance to

them by the provincial Government.

This he said while talking to Korean Consul General Cheng Hee Lee, who called on him at the Chief

Minister House here on Wednesday.

Syed Qaim Ali Shah said that we have strong relations with the Republic of Korea and various Korean

companies have completed their projects in the province by maintaining the standard and quality of

work. Hyderabad- Mirpurkhas dual carriage-way road project is one of them, he mentioned.

He said that the Sindh Government is ready to work with Korean investors on different projects

including construction of roads, hydro and coal- based power projects.

He also stressed the need for enhancing the bilateral ties between both the countries.

The Korean Consul General expressed gratitude to the Chief Minister for cooperation.

Copyright APP (Associated Press of Pakistan), 2013



Industries & Sectors

Shipping activity at Port QasimWednesday, 25 September 2013 12:51

Posted by Shoaib-ur-Rehman Siddiqui

KARACHI: Two ships carrying container were berthed at Qasim International ContainerTerminal on Tuesday.

Meanwhile two more ships carrying container and chemical also arrived at outer anchorageof Port Qasim during last 24 hours.

Berth occupancy was 65% at the Port on Wednesday where total seven ships namely HanjinIrene, Maersk Kjingston, Nysted Maersk, Capital, Tamil Nadu, M.T Lahore and MaritimeLira are currently occupying berths to load/offload containers, urea, fertilizer, furnace oil andedible oil respectively during last 24 hours.

A cargo volume of 89680 tonnes comprising 58948 tonnes import and 30723 tonnes exportsinclusive of containerized cargo carried in 1996 containers (TEUs) was handled at the Portduring last 24 hours.




Cotton and Textiles: Pakistan

Dollar's surge causes price flare-up oncotton marketSeptember 26, 2013

Dollar, which is heading towards Rs 110 level and growing gap between demand and supply,caused price flared-up on the local cotton market on Tuesday, dealers said. The official spotrate went up by Rs 100 to Rs 7000, they said. Prices of low type of seed cotton low variety inSindh per 40 kg was unchanged at Rs 3100, while the best type picked up Rs 50 to Rs 3350.In Punjab prices showed no change at Rs 3100-3300, dealers said.

In the ready session, a deal of 1,000 bales of cotton from Punjab was made at Rs 7,300 inlate-evening, while around 14,000 bales of cotton changed hands between Rs 6950-7200,they said. Dollar's surge and tight supply of cotton, besides Cotton Crop AssessmentCommittee (CCAC) report in which it lowered the crop size to 11.95 million bales for thecurrent season, caused high uncertainties among buyers, analysts said.

Other experts were of the opinion that as a result, prices were on higher side on sustaineddemand by mills and spinners, on the other hand, local buyers were importing cotton fromIndia at the rates, which were cheaper as compare to the local prices. Cotton analyst, NaseemUsman said that prices might increase due to decline in cotton production for season 2013-14.

According to the Reuters, ICE cotton edged up on Tuesday, as a US weekly crop reportreinforced concern over a late crop in the world's top exporter, even as relatively high pricesdeterred mill demand and uncertainty over US monetary policy kept investors wary. Themost-active December cotton contract on ICE Futures US finished up 0.11 cent, or 0.1percent, at 84.38 cents a lb, eking out its first gain in four sessions.

The following deals were reported as 1,200 bales of cotton from Shahdad Pur at Rs 7000, 600bales from Tando Adam at Rs 7000, 600 bales from Sanghar at Rs 7000, 800 bales from MirPur Khas at Rs 6950-7000, 800 bales from Nawab Shah at Rs 7100, 400 bales from Sakrandat Rs 7100, 1,200 bales from Khair Pur at Rs 7100, 1,200 bales from Upper Sindh at Rs 7100,200 bales from Bakhar at Rs 7100, 1,200 bales from Burewala at Rs 7100-7150, 600 balesfrom Hasil Pur at Rs 7100, 600 bales from Ahmed Pur at Rs 7100, 2,000 bales fromHaroonabad at Rs 7150/7200, 200 bales from Chistian at Rs 7100, 400 bales from Samundriat Rs 7100, 400 bales from Bahawal Pur at Rs 7100, 200 bales from Chichawatni at Rs 7140,1000 bales from Fort Abbas at Rs 7150, 200 bales from Khichi wala at Rs 7150, 400 balesfrom Khanewal at Rs 7150 and 200 bales from Vehari at Rs 7200, they added.

===========================================================================The KCA Official Spot Rate for Local Dealings in Pak Rupees---------------------------------------------------------------------------FOR BASE GRADE 3 STAPLE LENGTH 1-1/32"---------------------------------------------------------------------------

MICRONAIRE VALUE BETWEEN 3.8 TO 4.9 NCL===========================================================================Rate Ex-Gin Upcountry Spot Rate Spot Rate Difference



For Price Ex-Karachi Ex. KHI. As Ex-Karachion 24.09.2013

===========================================================================37.324 Kgs 7,000 155 7,155 7,055 +100---------------------------------------------------------------------------Equivalent---------------------------------------------------------------------------40 Kgs 7,502 155 7,657 7,550 +107===========================================================================

Amjad Khawja elected PHMEA chairmanSeptember 26, 2013

Mohammad Amjad Khawja has been elected Chairman of Pakistan Hosiery Manufacturers &Exporters Association (PHMEA) along with Zia-ur-Rehman as Senior Vice Chairman andShahid Rafi as Vice Chairman. The election results were announced in the Annual GeneralMeeting (AGM) on Wednesday. The newly elected members of Central ExecutiveCommittee are Raheel Anjum, Hassan Raza, Sh Zafar Mehmood, Akmal Raza and TariqMehmood Bhatti.

Members elected on Zonal Committee included Afzal Awan, Usman Jawaad, Sajid HussainBhatti, Moazzam Javaid and Sh Sarwat Kapoor. The newly elected office-bearers wouldresume their responsibilities from October 01, 2013. Speaking on the occasion, the newlyelected chairman said the knitwear export industry is the largest employment providing sectorof the economy besides being the leading export earning sector. He said the industry wasfacing various setbacks due to emergency situation in the country.




Agriculture and Allied: Pakistan

Declining fertiliser usage hurtingagriculture outputSeptember 26, 2013

IQBAL MIRZA

The reduced application of urea for the important food crops could badly hurt the output ofthese crops that could lead to food security in the country. Due to rising input cost forplanting the most important crops from agriculture economy and food security point of view,country's wheat production in 2013 stood at around 24 million tons, equivalent to the wheatproduction level of 2009.

According to industry analysts country achieved highest ever record of 25 million tons inyear 2011 when cost of important inputs was not beyond farmers' reach. As against 25million tons of 2011, country could hardly achieve the target of 23.4 million tons in 2013indicating a declining trend in the output. This decline in production resulted in import ofaround one million tons of wheat in 2013 after several years.

Urea usage during Rabi season of this year was just 2.85 million tons, lowest in the last fiveyears except Rabi 2012. Country's urea off-take during wheat cultivation season in the lastfive years has seen achieving highest level of 3.25 million tons in 2009-10. The lowest ureaoff-take during this period has been 2.71 million tons in 2010-11.

Pakistan's wheat production has seen significant decline in the last two years. Analystsbelieve that downward trend in wheat production could be partly blamed on less use of ureafertiliser as its shortage and price escalation discouraged its application.

According to stakeholders' fertiliser usage in the country phenomenally decreased to 5.3million tons in 2012-13 from 6.5 million tons achieved in 2009, portraying lower off-take dueto unavailability and higher urea prices. The main contributing factors in price escalation ofurea has been imposition of the general sales tax (GST) and gas infrastructure cess (GIDC)and unprecedented gas curtailment that badly hit several fertiliser plants with an aggregatedproduction capacity of nearly 2.3 million tons. The urea application on soil contributes toaround 25 percent in crop yield and if urea application is declining it means we are hurtingour output.

Industry sources confirmed that the value of 40kg yield per acre of wheat sown at 23 millionacres in Pakistan is equal to Rs 24 billion. Hence, unavailability of urea at proper time forPakistani farmers could result in at least five to 10 maunds less wheat production per acre.

This has a potential cost to the country from Rs 120 billion to Rs 240 billion that could notonly result in increasing food insecurity but also contributing significantly in increasingwheat flour price and its products that is a major portion of daily food of almost 80 percentpopulation of Pakistan.

The resultant squeezing supply of wheat has already started hitting urban population hard, he



said. Referring to the cost of production of farmers, he said, the total per acre fertiliser cost in2008-09 was Rs 4, 450 which increased by 83 percent in 2012-13 to Rs 8, 125 per acre forthe average farmer. Hence, sources said, Pakistani farmers are paying heavily for ensuringfood security in the country. Being an agriculture economy, he said, the Pakistan governmentshould seriously address the genuine problems of the farmers who grow important crops tofeed the countrymen, as well as prevent the government from expensive imports.

Farmers are continuously on the receiving end as far as high cost of production is concerned.Fertiliser is an important input for increasing per acre yield. This factor also significantlycontributes in the ability of a farmer to earn more, while comparatively improving his profit,he said.

"Due to less production, we will be forced to import huge quantities of costly wheat after agap of about five years," they said, adding: "It is unfortunate that our policies always end upserving farmers of other countries. Had we managed our affairs prudently and increase ureaproduction domestically, our farmers would have been in a position due to relatively goodlevels of production."


Growers seek export of surplus sugar aheadof crushing seasonSeptember 26, 2013

FAZAL SHER

The government must allow export of surplus sugar before the commencement of nextcrushing season to enable the mill owners to clear the dues of farmers as well as purchasesugarcane at a reasonable price, said officials and growers' representative. The mills wouldnot need to purchase sugarcane from the growers in the next season if the export of additionalsugar was not allowed by the government, Chairman Agri Forum Pakistan Ibrahim Mughaltold Business Recorder.

Mughal said currently the country had sufficient stock of sugar while per month domesticconsumption of the commodity was 0.3 million tons. The government needed to allow exportof surplus sweetener to enable the industry to purchase sugarcane from growers during thenext season, he added. He said timely export of sugar would not only benefit millers but alsohelp the growers in the next season.

A senior official of Ministry of National Food Security and Research also said if thegovernment failed to allow export of surplus sugar, the decision would not only harm millowners but also badly affect the sugarcane growers. "The unnecessary delay in export ofsugar would also lower the price of sugarcane and any decline in prices will result in loss tofarmers," he said.

He said around 1.2 million tons of sugar would be carried forward from 2012-13 to 2013-14and an estimated 5.4 million tons of sugar production was expected in 2013-14; annualdomestic consumption was estimated at 4.4 million tons. As many as 1.8 million tons ofsugar would be surplus in 2013-14, which should be exported, he added. The official said that



presently Punjab had sugar stocks of 1.1 million tons, Sindh 0.4 million tons and KP 0.1 tons.In 2012-13, the total production of sugar in Punjab stood at 3.2 million tons, Sindh 1.531million tons and KP 0.342 million tons, he concluded.


Livestock development plan for rural Sindhsigned with JicaSeptember 26, 2013

The Government of Sindh has signed an agreement here on Wednesday with JapanInternational Co-operation Agency (Jica) for the implementation of a sustainable livestockdevelopment plan in rural Sindh. The five-year project is a part of a master plan for livestockdevelopment in interior Sindh and the pilot districts are Badin, Hyderabad, Matiari, TandoAllayar and Tando Muhammad Khan.

According to an official, the Sindh Government in collaboration with Jica experts prepared amaster plan with a strategy till 2020. It is based on the two years study and scrutiny carriedout from 2011. The project will be commenced with five pilot farmers to be selected for thedevelopment of low-cost, effective and sustainable livestock technologies in each district, ie25 farmers in five districts, and then the number of the farmers who will be disseminatedsuch technologies will be gradually increased.

At the completion of the project, the number of the farmers who will be benefited from theproject is estimated about 7,500. The proposed project aims at increasing the productionvolumes of milk and meat through the improvement of per animal production capacity, theincrease of the number of the animals per household, and the improvement of the marketingof those products. As a result, the project will lead to the increase of the income and assets ofthe livestock farmers in the target districts, particularly small farmers including tenant andnon-farm households, who occupy 80 percent of the total households in rural Sindh.

The grand objective of the project is to promote agricultural growth with high employmentelasticity, reducing inter-regional as well as intra-regional disparities, and to alleviatepoverty. As population of Pakistan is expected to rise by around 40 percent between 2010 and2030 and the per capita is projected to double during these periods, the demand for meat andmilk is expected to increase as well.

The project is the start of implementation of the action plan proposed in the master plan. Theprovince of Sindh has 6.92 million cattle, 7.34 million buffaloes, 3.96 million sheep, 1.26million goats and 278,000 camels, while the accumulated livestock holdings of the provincestand at 21 percent of the entire country. These huge numbers of livestock are one of thesignificant potentials for livestock development in terms of high production capability,various genetic resources, large amount of food resources, huge value of liquid asset, etc.Further, Sindh is having an outlet of livestock not only to foreign countries, but also toneighbouring provinces. These potentials should be fully exploited for the development of thelivestock sector in Sindh.




High prices keep people away from animalmarketsSeptember 26, 2013

N H ZUBERI

As Eid-ul-Azha is fast approaching, most of the people are considering fulfilling the religiousobligation this year by going for collective sacrifice instead of performing it on individualbasis owing to high prices of sacrificial animals. The increase in prices has particularlyaffected the salaried class, who find it extremely difficult to save money and buy animals forsacrifice. The purchasing power of people with limited income is continually shrinking due tothe increasing cost of living.

With the rise in prices, the trend of collective sacrifice is gaining popularity as it allowspeople to share the cost of sacrificial animals. Several religious organisations and NGOs, whoare engaged in arranging collective sacrifice, have reported booking by people in largenumber. The organisations have also advertised their services on billboards in the city. Theseorganisations offer a share raging from Rs 5,500 to Rs 8,200 depending on the kind and costof sacrificial animal.

Although, less than a month has left for Eid-ul-Azha and security has also been tightened,very few people are seen visiting the markets set up in the city for sacrificial animals. Thisyear the average price of a healthy goat is available at Rs 18,000, while a medium weightcow costs around Rs 50,000 to 100,000.




Fuel and Energy: Pakistan

Rs 100 billion circular debt has resurfacedin power sector: National AssemblyinformedSeptember 26, 2013

WAQAR LILLAH

A circular debt of Rs 100 billion has resurfaced in the power sector despite clearance of theprevious circular debt of Rs 503 billion by the newly formed government of Pakistan MuslimLeague-Nawaz, the National Assembly was informed on Wednesday.

Ministers of State for Education, Trainings and Standards in Higher Education, MuhammadBaligh-ur-Rehman, while responding to a question, said that circular debt resurfaced due totariff differential subsidies, adding the Ministry of Finance had not provided any separateallocation for clearance of circular debt under normal budgetary process, and presently therewas no such proposal under consideration.

However, the Ministry of Finance provided tariff differential subsidy to the Discos to bridgethe gap between the tariff determined by Nepra and the tariff notified by Ministry of Waterand Power for which Rs 220 billion had been allocated for the current financial year, headded.

Baligh-ur-Rehman said the government was expecting that combination of measures liketariff rationalisation, recovery maximisation, reduction in losses/theft, revenues of powersector companies would significantly increase and re-emergence of circular debt would begreatly contained. To another question, the Minister told the House that the PML-N hadborrowed US $544 million from IMF after coming into power, while it had paid off US $700million to IMF. He added that the government had to pay off more than US $2.15 billion toIMF in the current financial year.

About depreciation of Pakistani rupees against international currencies, the Minister said thePak rupee depreciated in the interbank market against Euro, Great Britain Pound (GBP),Japanese Yen (JPY) and US dollar by 6.9 percent, 4.7 percent and 5.5 percent respectively inFY14 (from July 1 to September 10) in FY14.

The House was also informed that there was no proposal under consideration of thegovernment for any incentive to the small companies. However, as part of drive to encouragecorporate business, the rates of income tax for all companies have been reduced from 35percent to 34 percent in the Budget-2013. Meanwhile, Interior Minister Chaudhry Nisar AliKhan, while replying to a question, told the House that the government was going to utilisemodern technology like CCTV cameras for the security of federal capital. He said that policecheck-post in the city would be removed, if government succeeded in establishing effectivecontrol and command system.

While providing details of drugs seized by the Anti Narcotics Force (ANF) during 2013,



Chaudhry Nisar Ali Khan told the House that confiscated drugs were burnt by the ANF onAnti Narcotics Day, adding that a ban had been imposed on the foreign trips of ANF officials.


Energy cooperation discussed with IranSeptember 26, 2013

Prime Minister Nawaz Sharif and Iranian President Hasan Rouhani discussed bilateral tiesincluding energy co-operation and neighbouring countries support for Afghan peace as thePakistani leader congratulated the new Iranian leader on his recent election success. Themeeting, their first since their respective election victories, took place on the sidelines of theUN General Assembly, where they are representing their countries at the 68th session of the193-member forum.

Pakistan and Iran enjoy relations that are deeply rooted in historical, cultural and religiouscommonalities. The Prime Minister congratulated President Hassan Rouhani on his victory inthe June 14 elections. The two leaders reviewed status of bilateral co-operation andexchanged views on regional and international issues particularly the challenges being facedby the Islamic Ummah. Nawaz Sharif stated that co-operation in the energy sector would"serve the interest of both the countries." The two countries agreed that Afghanistan''sneighbours needed to work closely with the Afghan government and support an Afghan-owned and Afghan-led political process.

Copyright Associated Press of Pakistan, 2013

Leading shopping stores: SSGC offers freeof cost biodegradable bagsSeptember 26, 2013

As a responsible citizen, Sui Southern Gas Company (SSGC) takes regular initiatives in itsfranchise areas of Sindh and Balochistan that benefit the communities at large, by supportingprojects related to education, health and environment. In its endeavour to educate the masseson the dangerous consequences of plastic bags, SSGC stepped up by launching paper bagsthat are not only environment friendly but also food grade and are highly safe for domesticconsumption especially for the groceries.

In a survey conducted in Karachi, Lahore and Islamabad by a renowned research company180 million plastic bags are used every month for groceries meaning 250,000 plastic bagsevery hour that end up littering our streets, choking our drains, polluting our seas andenvironment as they reduce the oxygen level when burnt in the garbage. The burning ofplastic bags alongside streets releases dioxins and furans, which upon inhaling cause severedamages to lungs, kidneys, nervous system and liver, besides leading to chronic diseases likebronchitis, emphysema and cancer. Children and elderly are the most susceptive to thechemicals released from burning of these bags.



Material used in the paper bags introduced by SSGC is biodegradable that is globallyrecognised as the most viable and practical substitute to the plastic bags. In its CSRprogramme, SSGC searched for a reliable partner that can help the utility in meeting itsendeavours and found Thal Limited as the most appropriate entity that can be trusted for theneedful. Thal being the pioneers in producing industrial paper sacks in Pakistan were asked toproduce these food grade paper bags that are presently being consumed at leading megastores of Karachi including Aghas, Mottas, Naheed, Time Medicos, Royal Medico, Mercato,Farid's etc.

Taking additional advantage SSGC has printed various public service messages in Urdu andEnglish, one on each side of these bags. These messages include the necessary measures to beadopted to ensure safe use of gas appliances, judicious use of gas to conserve this preciouscommodity and severe consequences of meter tampering and gas theft that can lead to heavyfines and imprisonment.

The company understands that this activity will contribute in bringing positive change andwill help a great deal for a clean environment. The company also believes that with thesuccess of this effort the corporate sector will also join in to amplify the thrust that will helpin concluding the chapter of plastic bags and will also maximise the benefits of thebiodegradable paper bags.-PR


Neelam-Jhelum hyrdo project: Wapdaasked to expedite construction workSeptember 26, 2013

M RAFIQUE GORAYA

Minister of State for Water and Power Chaudhry Abid Sher Ali has directed Wapda to ensurethat the Neelum Jhelum hydropower project starts generating electricity by the end of 2015 inline with the directions of Prime Minister Nawaz Sharif. He asked Wapda to expediteconstruction work on the project, adding that meeting of timelines by the concernedorganisations was a key to overcoming the challenge of power outages in the country.

The Minister of State for Water and Power expressed these views during his two-day visit tothe Neelum-Jhelum hydropower project located in Azad Jammu and Kashmir. He wasaccompanied by a delegation of Saudi Development Fund and Islamic Development Bankduring the visit. Chairman Wapda Syed Raghib Abbas Shah, Chief Executive Officer ofNeelum Jhelum hydropower Project Lieutenant General Muhammad Zubair (Retd),representatives of the consultants and the contractors and other senior officers of Wapda werealso present on the occasion.

During the visit, the Minister of State had a detailed round of the various sites includingpowerhouse, transformers hall and the weir (dam) to witness the progress on the project. Healso observed the operation of Tunnel Boring Machines deployed at the project.

Speaking on the occasion, the Minister of State for Water and Power said that energy securityfigured at the top of the federal government's agenda, saying that the country's economic and



industrial development suffered a great deal due to energy deficits. He, however, added thePML-N's government was determined to rid the country of the menace of loadshedding by2018. He said National Power Policy 2013 had all the answers to the raging energy problemas it incorporated short, medium and long-term measures to revamp and bolster the country'spower system.

He said Pakistan's future lied in low-cost hydel power generation as the country possessed anidentified potential of about 60,000 MW. He said that phased increase of hydropower into thenational grid to the tune of 12,850MW over a period of 5-7 years would not only make low-cost energy available but also reduce dependence on the costly thermal source of powergeneration.

He said the federal government was exploring all available options including hydel, coal,solar and biomass to produce low-cost energy to meet the country's development needs.Referring to the generous support by Saudi Arabia to Pakistan, he thanked the SaudiDevelopment Fund for providing additional 100 million dollars for Neelum Jhelumhydropower project.

Earlier, Chairman Wapda during a briefing apprised the Minister of State for Water andPower about the progress on the project. He said that in line with the Prime Minister'sdirections Wapda was making all out efforts to complete the project. He said that work on allsites was progressing satisfactorily and overall progress on the project stood at 51 percent.Out of total 67-km tunnels, about 40-km long tunnels (about 59 percent) had so far beenexcavated, while excavation of underground powerhouse stood at 90.6 percent andtransformers hall at 100 percent, he added.

The Chairman said that on completion, NJHPP would contribute 5.15 billion units ofelectricity to the national grid every year, adding that annual benefits to be accrued from theproject had been estimated at about Rs 45 billion. He apprised the Minister of the financialissues of the project and sought his support for the resolution. He also requested the Ministerto get the laying of transmission line expedited by the NTDC.

The consultants and the contractor also apprised the Minister of State for Water and Power ofvarious issues relating to the project. The Minister directed Chairman Wapda to resolve allissues in a week, and said that he himself would review progress on the project on monthlybasis.




Fuel and Energy: World

Brent drops, Iran diplomacy in focusSeptember 26, 2013

Crude oil prices edged lower in choppy trading on Wednesday as comments from the Iranianforeign minister revived hopes that talks over Tehran's nuclear program could see progress,and as US crude oil inventories posted a large build. A report that Iran's foreign ministerwanted a "jump-start" to negotiations sent Brent tumbling.

Earlier, Brent climbed as market participants expressed disappointment that US and Iranianleaders failed to meet or shake hands at the United Nations on Tuesday. "We're in this cyclewhere the market keys off of positive or negative developments on solving the Iranianproblem," said John Kilduff, partner at Again Capital LLC in New York.

US crude, also known as West Texas Intermediate (WTI), fell in choppy trading. Pricesseesawed back and forth after the US Energy Information Administration released its weeklyinventory data showing a 2.6 million barrel build in domestic crude inventories.

Brent crude oil futures fell 32 cents to $108.32 a barrel. Earlier, Brent rose more than $1 toreach a session high of $110.09. US crude fell 47 cents to $102.66 a barrel in a fifth day oflosses. On Tuesday, US crude hit a seven-week low. Brent's premium over US crude stood at$5.66 at the close, after widening out to $6.31, a move of more than $3 since the spreaddipped below $3 on September 20. "I think it's down to the Brent-WTI spread getting a littleahead of itself. I expect there's some profit-taking here as we head into the close," saidAddison Armstrong, senior director of market research at Tradition Energy in Stamford,Connecticut.

A rebound in supplies from Iraq and Libya and an assurance by Saudi Arabia's oil ministerthat the market has enough supply pressured prices, investors said. "There is more oil comingfrom Iraq and Libya and a high level of Saudi output," said Christopher Bellew, oil trader atJefferies Bache.

Iran has agreed to talks on its nuclear program with top diplomats from six world powers onThursday, including US Secretary of State John Kerry, strengthening expectations thatTehran's relations with the United States could thaw. Distrust between the two sides wasevident when a simple handshake could not be arranged between US President BarackObama and Iran's President Hassan Rouhani on the sidelines of the UN General Assembly.Rouhani told CNN he did not meet Obama at the General Assembly because the two sides"didn't have sufficient time to really coordinate the meeting".

Oil supply has improved as Iraq boosted output from its southern oilfields after repairing aleaking pipeline, although planned work continued to affect exports from Opec's No 2producer. Saudi Arabian Oil Minister Ali al-Naimi further allayed supply fears when he saidthe market had enough supply and prices were at a favourable level, affirming the willingnessof the world's top crude exporter to meet shortages. Libya also ramped up oil exports thisweek, with several tankers loading or fixed to load, after the country's western oil fields



reopened following strikes by a combination of armed groups, oil workers, federalists andlocal activists.

Copyright Reuters, 2013

Canada keen on boosting energy exports toJapanSeptember 26, 2013

Canada should boost energy exports to Japan as the resource-poor Asian country looks todiversify its fuel sources, their prime ministers said Tuesday. They spoke after meeting withCanadian business leaders. There are lots of areas for growth in Canadian-Japanese trade andinvestment ties but "one that came up most frequently is obviously energy," Canadian PrimeMinister Stephen Harper said.

"Canada has considerable natural gas and it is the only country in the world that is a stablemarket-oriented producer of energy whose energy industry is also growing," he said. "AndJapan is the largest importer of energy in the world." Harper spoke at a joint press conferencewith his Japanese counterpart Shinzo Abe, who was in Ottawa at the start of a five-day trip toNorth America. Japan's national broadcaster earlier said Tokyo would consider givingassistance in the construction of pipelines and infrastructure to encourage the early export ofliquefied natural gas (LNG) to Japan.

Those exports are likely to start around 2020, according to Kyodo News, while the Nikkeinewspaper said they might begin in late 2018. Japan, the world's third largest economy, is theworld's biggest LNG consumer. But it pays a higher price for LNG than that charged inEurope and North America because Asian contracts are often long-term and linked to oilprices.

The trend has remained despite increasing global production of LNG, particularly in light ofthe US shale gas revolution, Japanese officials have said. Hefty prices for LNG have hitJapanese utilities, which are now entirely without working atomic reactors because of apublic backlash in the aftermath of the 2011 disaster at the Fukushima nuclear plant. LNG-powered thermal plants used to provide about a third of Japan's electricity before the tsunami-sparked crisis. They now account for about a half.

Copyright Agence France-Presse, 2013



Markets

ISE-10 index witnesses bullish trendWednesday, 25 September 2013 20:02

Posted by Imaduddin

ISLAMABAD: The Islamabad Stock Exchange witnessed a bullish trend on Wednesday asthe ISE-10 index was up by 3.41 points to close at 4138.24.

A total of 17000 shares were traded, which were down by 44,500 shares as compared toprevious day's trading of 61,500 shares.

Out of 143 companies, share prices of 66 companies recorded increase and those of 77registered decrease. No company remained stable.

The share price of National Foods increased by Rs. 2.94, while that of Sapphire Fibresdecreased by Rs. 9.63.

Fauji Fertilizer Bin Qasim, Akzo Noble Pakistan, P.T.C and Silk Bank remained the toptrading companies with 10,000, 5000, 1000 and 1000 shares respectively.


LSE downs by 14.09 pointsWednesday, 25 September 2013 19:58

Posted by Imaduddin

LAHORE: Bearish trend prevailed in Lahore Stock Exchange on Wednesday as it shed 14.09 points,

following the LSE-25 index opened with 4617.46 and closed at 4603.37 points.

The market's overall situation also did not correspond to an upward trend as it remained at 2.544

million shares to close against previous turnover of 3.880 million shares, showing a downward move

of 1.335 million shares. While, out of the total 88 active scrips 20 moved up, 40 remined equal with

28 shed values.

Shifa International Hospital Limited, National Bank of Pakistan and Engro Polymer and Chemical

Limited were Major Gainer of the day by recording increase in their per share value by Rs 3.96, Rs

1.05 and Re 1.00 respectively.

Muslim Commercial Bank Limited, Pakistan Petroleum Limited and Allied Bank Limited lost their per

share value by Rs 7.00, Rs 1.48 and Rs 1.15 respectively.



The Volume Leader of the day included NIB Bank Limited with 532,500 shares, Fauji Cement

Company Limited with 420,500 shares and Maple Leaf Cement Factory with 378,000 shares.




BR Research: All

Deciphering the rupee fallSeptember 26, 2013

BR Research

Its a self-fulfilling prophecy. The sentiments are driving rupee lower even when thefundamentals are intact and there are not many reasons to explain any further fall in thecurrency market. Plus, the absolute drop in rupee terms is more than it is defined in terms ofpercentage-and that very basic arithmetic has triggered the panic button.

Nonetheless, the southward movement in rupee dollar parity is partially explained by thegovernments poor negotiation with the IMF since the quantum of inflows in the EFF are lessthan the debt servicing to the IMF in this fiscal year. Then there is a historic relationship ofsharp rupee depreciation at the time of negotiation of a new facility with the IMF. Ithappened in 1998, 2008 and 2009 and the same is happening now.

This historic relationship can be explained by a few conditions imposed by the Fund aimed toharmonise real effective exchange rates with nominal rates. One classic way of doing so is tostop the central bank from intervening in the market to keep the currency market stable. Thatis exactly what is happening nowadays; SBPs hands are tied from pumping liquidity at a timewhen the dollar is in short supply in the market.

Lately, the exporters have been delaying their payments to reap fruits from rupees fall.Exports proceeds in the past month or so have not been much. However, there is littleevidence of forward booking on the importers front. That is a good omen, but considering thevolatility in the market, this process can gain momentum anytime.

In such a scenario, the governments move to buy $625 million from the banks, whichaccording to media reports, was done at a rate of LIBOR + 5.3 percent is not done inconsultation with the central bank. Although this news is not confirmed, it allowedspeculators to sneak in. This explains the yet again widening gap in rupee dollar parity in theinterbank and kerb market.

But that phenomenon is not likely to persist. Initial bashing of currency was partiallyexplained by higher oil prices expectation owing to Syrian crises. With a political solutionemerging on that front, oil prices are expected to remain relatively tamed. The SBP issticking to its initial projection of rupee to average around Rs105 against the greenback forthis year. By virtue of this there is some room of rupee appreciation. But that is wishfulthinking.

Anyhow, there is need to have some policy adjustment by the SBP to counter this currencymarket battering. Some analysts argue that monetary policy was indeed accommodating inthe last review as just a 50 bps hike is not sufficient to counter the expected inflation andbalance of payment vulnerability. The SBP ought to tighten the screws to bring sanity back inthe currency market.

A combination of tight monetary policy, contracting fiscal policy and some kind of curb on



non-essential imports are imperative to bring the mismatch between the rupee and dollarliquidity in the market.

Digital gender gapSeptember 26, 2013

BR Research

Technology itself doesn discriminate across gender, but its accessibility and human contextcan. As it turns out there are more women than men among the two-third of global populationthat does not have regular internet access to date.

A recent report by International Telecommunication Union (ITU) and UNESCO estimatesthat there are about 200 million fewer women online compared with men. Globally, about 41percent of all men and 37 percent of all women are connected to the internet. The internetgender gap is said to be more severe in developing countries compared to developedcountries.

The ITU has stated that women are late and slow entrants to the internet society in developingcountries. That is why, in some countries, male online population is more than double thenumber of female internet users. Various reasons can explain this gap, including socialbarriers, cultural norms, income and literacy levels, irrelevant online content, onlineharassment, etc.

The implications are succinctly put in the report:

"...if women fail to go online, they may never master technology, and miss out on acquiringvital ICT skills which are helpful in everyday life, and increasingly essential in the moderndigital economy... More women online will result in greater economic growth due to:increased efficiency/productivity in their daily work and businesses; improved access tomarkets both to buy and sell goods; improved education; wider networks; new innovations;and faster access to relevant information," says the report titled "Doubling DigitalOpportunities".

An Intel study this year found that bringing 600 million additional females online can boostglobal GDP by a figure up to $18 billion. But the report shows that out of 119 countriesstudied in 2012, only 30 countries focused on gender as an issue in their national broadbandplans. India, Bangladesh and Turkey were amongst those who did, while Pakistan didn .

Broadband penetration in Pakistan is currently very low, so gender gap may not seem like apolicy priority. But the policymakers at home will do well to look at gender dimensions ofbroadband uptake, because Pakistans population is evenly divided between the two genders.There is cause to hope that gender equality online may lead to some progress towards genderequality on the ground.

One hopes that when the broadband policy framework is revisited by the policymakers,special focus will be given to female populations access, usage and affordability of theinternet. In addition, mobile broadband can be deployed as the primary technology to bringmore females online quickly and easily, thanks to a significant cellular coverage acrossPakistan and its usage among females.



Nishat delivers impressive profitsSeptember 26, 2013

BR Research

For Nishat Textile Mills (NML), the pain was manageable even during the toughest timeswhen the rest of the textile sector was hung out to bleed. But now that the swelling demandfor yarn and value-added made-ups from international markets has acted like the proverbialsalve for the sectors wounds, the textile giant is back with quite a resounding bang.

FY13 on the whole saw a sharp hike in profitability for the entire sector-primarily attributableto recuperating core operations led by improved cotton-yarn spreads. For Nishat, Pakistanslargest composite textile business, this resulted in significant improvement in volumetricsales and higher exports.

The depreciation of the rupee against the greenback also helped unwind the revenue,consequently the firms weaving and spinning segments did bumper business, shipping outrecord amounts of Greige, fine count yarn, and processed cloth to China, Europe and HongKong. While the complete numbers are not out yet, analysts report that there are pertinentindications that export related orders made up for almost 75 percent of the entire top line forNishat textiles this year.

Moreover, gross margins for the company during FY13 also expanded handsomely- going upby 2 ppt during the year. One reason being cited for healthier spreads is Nishats ongoingdrive to achieve improved cost efficiencies.

But, easier availability of cotton in the domestic market during the glut season in FY13 wasan even bigger factor. Not only did it allow a majority of the millers to stock up on the finerquality at highly competitive prices, but also a subsequent uptick in yarn prices in theinternational market helped boost the spreads quite generously, allowing the larger playerslike Nishat to play on the economies of scale.

Additionally, the financial charges of the Company also saw a decline-going down by 8percent year on year mainly due to a favourable interest rate scenario. This, coupled withsignificant growth in corporate earnings flowing in from Nishats subsidiaries helped the firmsbottom line immensely.

Going forward, however, Nishat-like other composite players-might not be able to enjoysome of the perks that they did last year.

Prices of cotton in the domestic markets are expected to remain tight during the crucialupcoming procurement period (November) and while demand for yarn from China willremain steady, higher competition from India and lower international cotton prices mayreduce some of the cotton-yarn spreads for domestic spinners.

But the firm is reportedly engaged in significant capacity expansion projects which will allowit to tap into the upcoming wave of demand within the higher value-added segment: namelyfor processed cloth and textiles which are expected to see a surge in the upcoming months.With the entire industry-including Nishat-firmly pinning their hopes on the GSP+ status, theupcoming year is going to be interesting to say the least!



==========================================================NISHAT MILLS LIMITED==========================================================(Rs mn) FY12 FY13 chg==========================================================Net sales 44,924 52,426 17%Gross profit 6,789 9,044 33%Gross margins 15% 17% 2 pptProfit from operations 5,842 7,974 36%Finance cost 1,760 1,618 -8%NPAT 3,529 5,847 66%EPS (Rs0 10.04 16.63 66%----------------------------------------------------------Source: KSE notice====================================================================================================================KARAM CERAMICS LIMITED==========================================================Rs (mn) FY13 FY12 Chg==========================================================Sales - net 1156 1187 -3%Cost of sales 1042 1081 -4%Gross profit 114 107 6%Other operating income 0.2 0.3 -26%Profit before tax 17 3 407%Profit after tax 4.4 0.7 554%EPS (Rs) - basic 0.30 0.05----------------------------------------------------------Source: KSE notice====================================================================================================================SHEZAN INTERNATIONAL LIMITED==========================================================Rs (mn) FY13 FY12 Chg==========================================================Sales 5675 5061 12%Cost of sales 3964 3603 10%Gross profit 1711 1458 17%Other operating income -37 -38 -1%Operating profit 440 371 19%Profit before tax 394 318 24%Profit after tax 249 207 20%EPS (Rs) - basic 37.78 31.42----------------------------------------------------------Source: KSE notice====================================================================================================================ORIX LEASING PAKISTAN LIMITED==========================================================Rs (mn) FY13 FY12 Chg==========================================================Finance lease and installment loans 1900 2013 -6%Operating leases 850 717 19%



Mark-up on term / factoring finance 396 234 69%Other income 414 385 8%Profit before tax 414 275 51%Profit after tax 337 202 67%EPS (Rs) - basic 4.11 2.46----------------------------------------------------------Source: KSE notice====================================================================================================================MAPLE LEAF CEMENT FACTORY LIMITED==========================================================Rs (mn) FY13 FY12 Chg==========================================================Sales - net 17357 15461 12%Cost of sales 11312 11447 -1%Gross profit 6045 4015 51%Other operating income 41 34 21%Operating profit 4857 2795 74%Profit before tax 3163 444 612%Profit after tax 3225 496 549.89%EPS (Rs) - basic 6.11 0.83----------------------------------------------------------Source: KSE notice====================================================================================================================PREMIUM TEXTILE MILLS LIMITED==========================================================Rs (mn) FY13 FY12 Chg==========================================================Sales net 4932 4136 19%Cost of sales 4124 3678 12%Gross profit 808 458 76%Operating profit / (loss) 690 374 84%Profit before tax 508 240 112%Profit after tax 493 194 154%EPS (Rs) - basic 80.03 31.50----------------------------------------------------------Source: KSE notice==========================================================

Are we ready to go back to the basics?September 26, 2013

BR Research

A food revolution that started as a jumble of buzzwords countering industrially producedfood has slowly taken the world by storm.

Estimates by FAO suggest that the world market for organic food is forecast to exceed $88billion by 2015-a nearly 50 percent increase from base numbers calculated in 2010. Withinthe organic food label, fruits and vegetables represent the biggest segment, making up over



30 percent of the overall global demand for organic foods.

Today, organic products have shifted from being just a lifestyle choice for a small share ofconsumers to being consumed at least occasionally by a majority of Americans andEuropeans. And it seems like the phenomenon is soon going to be washing up on our shoresas well.

For the less versed amongst us, first a little lesson in horticulture. The term conventionalfarming system, when used in the context of organic farming is referred to a productionsystem which employs a full range of pre- and post-plant tillage practices (e.g. disk plowing,cultivation), synthetic fertilizers and pesticides; and it is characterized by a high degree ofcrop specialization. By contrast, organic farming is characterized by a diversity of crops withno chemical and pesticides used.

When looked at this way, there is nothing radically new about the concept of organicfarming: it is merely the traditional method of farming with cow-dung as manure and the useof natural pesticides to keep insects away-traditions that our farmers have employed forcenturies.

And in the last year or so the organic food drive has picked up pace, spearheaded byenvironmentalist and industry chambers who pitch it as a sustainable way to earn revenue byexporting organic agro-commodities that can fetch a premium over produce grown throughthe conventional farming system.

But, there is a catch-and a very large one at that. While the term organically produced" isindeed gaining traction amongst the less economically challenged in the country, the factremains that the prospects of large scale organic food production for the explicit purpose ofexporting remains a dream in the context of Pakistan.

This is because one of the essential elements distinguishing organic farming from other formsof sustainable agriculture is the existence of production standards and certificationprocedures. Hence, for a country to be able to sell their organically grown produce beyondtheir borders, there are detailed regulations governing the production, marketing and labellingstandards that need to be met.

Not only are these standards set forth by the importing country concerned, currently, forcountries like Pakistan even the certification for export is carried out by the certificationbodies of the importing countries, and their cost can run very high.

Add to this the fact that primary agro-inputs including irrigation water and seeds for organicfarming need to fit stringent quality parameters. Also, the post-harvest operations of grading,washing, packing, labelling, bar-coding, and the end price point of the organically producedagro-commodities will make Pakistani produce highly uncompetitive in the global markets.

Yet another factor limiting Pakistans export potential of organic produce is the lack ofestablished market systems and differential pricing mechanisms. In a country where afteryears of lobbying, there are no free market grading and pricing mechanisms forconventionally produced horticultural commodities, expecting a sudden seismic shift fororganically grown produce is akin to expecting elephants to fly before their time.



Brief Recordings

Gadoon Textile Mills LimitedSeptember 26, 2013

RECORDER REPORT

Gadoon Textile Mills Ltd (GTML) was established in 1988 and started commercialproduction in 1990. Located in the Gadoon Amazai Industrial Area, at a two-hour drive fromthe city of Islamabad, Gadoon Textile Mills operates under the umbrella of well renownedYunus Brothers group and is engaged in the manufacture of high quality cotton yarn withsteady demand from Europe, India and the Far East.

GTML started production by producing Poly/Cotton yarn with 14,400 Spindles but over theyears the firm has expanded its production capacity by making huge investments. Over thelast 12 years alone the GTML capacity has increased to 185,000 Spindles which areproducing various types of yarns. Their specialty is the Compact core spun yarn and besidesGTML, there is only one other mill situated in Italy which produces the same variety of themuch sought-after high-end yarn. Currently, the firm has a balanced sales mix with almost 50percent share in both local and export markets.

Highlights 3rd quarter One of the least covered of the textile mills, Gadoon, along withKohinoor Textiles and Reliance mills has been pinpointed by many analysts as the textilemanufacturers to watch out for during FY14. During the period under review the Companyreported almost three-fold robust earnings growth. Sales during the period amounted to Rs13.5 billion as compared to Rs 9 billion during the same period of last year-taking up theturnover by a whopping 37 percent.

The firm's margins also remained intact with the gross profit making up 11.26 percent of thesales during the period. The substantial rise in GP was largely attributable to sustainabledemand of yarn and the easy supply of lint in the domestic market at competitive prices. TheNPAT for the firm swelled to Rs 745 million during this period, which compares very wellwith the last year's numbers of Rs 265 million.

Driven mainly by healthy yarn prices and better volumetric sales, Gadoon has remainedamongst the top textile performers during a year which has been kind to the industry as awhole. But, there are some things which going forward will play out to GTML's benefits.

For starters, the location of the Company's manufacturing facilities in KPK province providesa strong edge to the Company in terms of stable gas supply versus its local peers which aremostly located in Punjab province and are hence subject to persistent gas outages. Moreover,the capacity expansion undertaken in FY12 has started to bear fruits-already evident from thewhopping top line accretions witnessed this year-which will further strengthen coreoperations for the firm.

Group Synergies In addition to revival in Company's core business, backing of YunusBrothers-lucky group also add a lot of charm to Gadoon's prospects. Established in 1962, YBis one of the biggest conglomerates in Pakistan with proven track record in textile, cements,construction and trading.



Recently, the Group has been on a diversification spree and has dabbled into the chemicalsbusiness by acquiring ICI Pakistan Limited. Not only that, but also Yunus brothers are eyingrapid expansion into the energy market and there has already been an investment by the firmin a 50MW wind farm. With GADT having investment stakes in group diversification, it islikely to add to Company's charms in coming years.

Stock Performance Improved sector dynamics have already kept the Textile sector in thelimelight at local bourse this year. And for Gadoon, the best times are yet to come. Talking toBR Research, a number of analysts pointed out the attractiveness of Gadoon's stock,especially to investors who are eager to diversify their investments into stocks that are yet tooutperform.

Analysts estimate a FY13 Earning per share of Rs 48.2/share for the firm, and Gadoon's stockis currently available at an attractive PE multiple of 2.7 compared to BMA Universe FY13price earning ratio of 8.5 and Nishat Mill and Nishat Chuniaan core PE of 3.5 and 3.4,respectively. At an estimated PE of 3.5, the stock should trade at Rs 169/share offeringhandsome capital gains of 31 percent according to a research note sent out by BMA Capital.

Outlook Higher regional demand culminating into rising exports and firm cotton pricesstands out as the chief contributors to the multifold increase in the profitability of thecountry's textile sector. Going forward, the current earnings momentum for textile mills likeGadoon-that have remained on the fringe of investor attention-is all set to gain some seriousbuyer envy. The fourth quarter results are hence widely being expected to out tally theprevious year's numbers-owing to steady cotton-yarn spreads coupled with higher volumetricyarn exports to China.

==========================================================GTML@ 9MFY13==========================================================Rs (mn) 3QFY12 3QFY13 Chg==========================================================Sales 9,835 13,515 37.42%Gross profit 598 1,521 154.35%Gross profit margin 6% 11% 5 pptOperating profit 492 1104 124.39%NPAT 265 745 181.13%Earning per share (Rs) 11.33 31.78 180.49%----------------------------------------------------------Source: Company Records====================================================================================================================GADOON TEXTILE MILLS LIMITED==========================================================2009 2010 2011 2012==========================================================Turnover 7,141 10,029 15,638 13,523Gross Profit 757 1,585 2,810 1,104Operating Profit 528 1,257 2,554 1,035P/L before taxation -297 875 2,170 654NPAT -339 858 2,156 648Cash dividend - 164 234 176Profit/loss carried fwd 636 1,465 3,457 3,871



EPS -14.45 35.34 92 27.68Break up value per share 84.22 119.56 204.56 222.24----------------------------------------------------------Source: Company Records==========================================================



Miscellaneous News

Winter is coming: Gas load managementplan under studyBy Zafar Bhutta / Creative: Talha Ahmed Khan

Published: September 26, 2013

ISLAMABAD:

As winter is approaching when demand for gas rises significantly, the government isstudying a plan to slash gas supply to compressed natural gas (CNG) filling stations,industrial units, fertiliser and power plants in an attempt to ensure uninterruptedsupply to residential consumers.

This gas management plan was discussed in a high-level meeting at the Ministry ofPetroleum and Natural Resources here on Tuesday, attended by heads of gas distributors –Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company (SSGC), togive finishing touches to it, say sources.

The plan will be discussed with Petroleum Minister Shahid Khaqan Abbasi after his returnfrom the United States and will be sent to the prime minister and the Economic CoordinationCommittee (ECC) for approval.

According to the proposals the meeting weighed up, CNG stations in Punjab will have no gasfor four days a week and industrial units will experience disruption for three days. Gas supplyto fertiliser manufacturers will also be curtailed and only those power plants, which haveentered into agreements with SNGPL, will receive gas.

Independent power plants such as Orient and Saif will get no gas as their agreements with thegas distributor have expired.

Some officials of the petroleum ministry were of the view that the government would have tocompletely stop providing gas to CNG stations, fertiliser plants and industrial units for twomonths keeping in view the high shortfall projected for upcoming months in the SNGPLsystem which covers Punjab and Khyber-Pakhtunkhwa.

According to the plan, SSGC, which caters to the needs of consumers in Sindh andBalochistan, will stop gas supply to CNG stations for three days a week and the industry fortwo days. There will be no gas for fertiliser plants for two months from January to February2014.



According to SNGPL estimates, total demand for gas in Punjab and Khyber-Pakhtunkhwawill be 2.1 billion cubic feet per day (bcfd) in October, 2.21 bcfd in November, 2.46 bcfd inDecember, 2.7 bcfd in January, 2.55 bcfd in February and 2.29 bcfd in March.

Against this backdrop, SNGPL will be able to provide 1.23 to 1.24 bcfd in these months. Gastheft in the SNGPL network has been projected at 205 to 207 mmcfd during this period.

In Punjab, demand for gas will be in the range of 1.85 to 1.978 bcfd during these monthswhereas in Khyber-Pakhtunkhwa the demand will be 260 to 315 mmcfd.

In Punjab, the domestic sector consumes 288 to 409 mmcfd, commercial sector 77 mmcfd,strategic defence industry 70 mmcfd, general industry 358 mmcfd, CNG stations 300 mmcfd,fertiliser plants 240 mmcfd, power plants (with supply agreements) 110 mmcfd and plants(with no agreements) 207 mmcfd.

On the SSGC network, total gas available is estimated at 1.009 bcfd in October to 999 mmcfdin March 2014. Total demand in Sindh and Balochistan will range from 1.28 to 1.361 bcfdand the shortfall has been projected at 276 to 362 mmcfd.

In Sindh, the demand will be 1.22 to 1.279 bcfd and in Balochistan it will be 59 to 93 mmcfdfrom October to March.

Domestic consumers in Sindh use 224 to 277 mmcfd, commercial sector 27 mmcfd, generalindustry 268 mmcfd, captive power plants 204 mmcfd, CNG stations 100 mmcfd, fertiliserplants 85 mmcfd and power plants 318 mmcfd.

Published in The Express Tribune, September 26th, 2013.

Exchange rates: Market speculation mainforce behind depreciation, say analystsBy Farhan Zaheer


KARACHI:

Currency dealers and analysts say that one of the reasons for the rapid depreciation ofthe rupee against the US dollar in recent days is speculation by the bankers, which isresulting in a faster depreciation of the rupee in the interbank market.

On Wednesday, the rupee showed a decline of over Re1 against the US dollar in theinterbank market against the Tuesday’s closing interbank rates, closing at Rs107.30 againstthe Tuesday’s close of Rs106.10/106.20.

Speculations are rife that the interbank rupee rate is going to touch Rs108 or Rs109 againstthe dollar in a few days, currency dealers said.

“There is talk of rupee depreciation in the interbank market. And since there has been agradual decline in rupee value for the last four to five days in the interbank market, this



speculative news is gaining credibility in all circles,” said a leading money exchanger oncondition of anonymity.

Dealers also say that the rupee has sharply depreciated because there is a strong demand forUS dollars from people who are going on Hajj. But, they say that this dollar demand for Hajjseason is going to reduce in the next one week.

Blaming everything on commercial banks, dealers say that the rupee is sharply losing 50 to60 paisa’s against the dollar in the interbank market in the first two hours between every day.“And, this is happens even before the opening of the currency dealers in morning hours,” adealer said.

Emerging Economics Research Managing Director, Muzammil Aslam, told The ExpressTribune that the biggest reason for the rapid depreciation of the rupee is speculation in themarket. Bankers and speculators know that the central bank is buying dollars to meetconditions set by the International Monetary Fund (IMF), he added.

“I do not see any genuine reason of this depreciation of the rupee against the green back.Pakistan is not paying any payment for oil and any other major imports. This is why I saybanks and other speculators are indulging in speculation,” he said.

JS Global Capital Analyst Atif Zafar said that the central bank bought $125 million from theopen market last month which had put pressure on the rupee in the market. Furthermore, it isvery clear that the central bank is not intervening in the market to support the rupee againstUS dollar, which is helping the dollar appreciate in value, he added.

However, like currency dealers, Zafar also pointed towards the Hajj season for the unusuallyhigh dollar demand in the market.


Electricity generation: Power ministerinspects Neelum Jhelum projectBy Our Correspondent


LAHORE: Minister of State for Water and Power, Chaudhry Abid Sher Ali, hasdirected the Water and Power Regulatory Authority (Wapda) to ensure that theNeelum Jhelum Hydropower Project starts generating electricity by the end of 2015 inline with the directions of Prime Minister Mian Muhammad Nawaz Sharif.



He asked Wapda to expedite construction work on the project, adding that meeting setdeadlines by the concerned organisations is a key to overcoming the challenge of poweroutages in the country.

The minister expressed these views during his two-day visit to the Neelum JhelumHydropower Project located in Azad Jammu and Kashmir. He was accompanied bydelegations from the Saudi Development Fund and the Islamic Development Bank during thevisit.

Speaking on the occasion, the minister said that energy security figured at the top of thefederal government’s agenda, saying that the country’s economic and industrial developmentsuffered a great deal due to the energy deficit.

The minister said that a phased increase of hydropower into the national grid to the tune of12,850 megawatts (MW) over a period of 5-7 years will not only make low cost energyavailable but also reduce dependence on the costly thermal source of power generation.

The minister also thanked the Saudi Development Fund for providing an additional $100million for the Neelum Jhelum Hydropower Project.

Earlier, Chairman Wapda Syed Raghib Abbas Shah, during a briefing apprised the ministerabout the progress on the project. He said that work on all sites is progressing and overallprogress on the project stands at 51%. Out of the total 67 kilometres of tunnels, about 40kilometres has so far been excavated, while excavation of the underground power housestands at 90.6%, while the transformers hall has been completed, he added.

The chairman said that on completion, the power project will contribute 5.15 billion units ofelectricity to the national grid every year, adding that annual benefits to be accrued from theproject have been estimated at about Rs45 billion.


Fiscal easing: Investors look to bankingsector as spreads widenBy Our Correspondent


KARACHI:

With the central bank likely to increase the discount rate in the next couple of years,banking spreads are gradually picking up and are expected to improve theirprofitability. Improved spreads, difference between the cost of deposits and lendinginterest rates, will mean higher profits for banks, will improve their bottom lines.

According to Arif Habib Limited analyst Numair Ahmed, the banking sector’s weightedaverage spreads in August remained 6.28% after declining by a mere three basis pointsmonth-on-month, as opposed to 6.31% in July and 6.35% in June.



This takes the average eight-month spreads for calendar year 2013 to 6.26%, a decline ofapproximately 92 basis points year-on-year. “However, spreads have been picking up fromtheir recent low in April of 6.19%. With a recent uptick in the policy rate, we expect bankingspreads to improve further ahead,” he added.

Topline Securities, a brokerage house based in Karachi, now estimates that earnings of banksunder its coverage is expected to rise by one-fifth in the current fiscal year.

“With the assumption of another 100bps increase in 2014 along with the improvement inbalance sheets, the earnings of our banking universe are expected to rise 21% during fiscal2014 compared to a 4% decline in fiscal 2013,” Topline Securities analyst Zeeshan Afzalwrote in a research note last week.

The likelihood of a hike in policy rate is strong given that the State Bank has alreadypredicted inflation to hover around 12% in fiscal 2014. According to Taurus Securitiesanalyst Hasan Raza, his brokerage house has further raised the discount rate assumption by100bps and 50bps for calendar years 2014 and 2015 respectively, mainly because of amaterial jump in inflation driven by power tariff rationalisation and removal of subsidies.

“Also, the risk-free rate has also been revised from the previous 10.5% to 11% to reflect thecurrent change in secondary market yields,” he said while referring to the upward trend inPakistan Invest Bonds yields.

Top picks

According to Taurus Securities, valuations of most banks, especially larger ones, havealready priced in the expected rise in the discount rate. Therefore, it believes that even afterincorporating the increase in the discount rate in coming years, valuations of these large capbanks will stay unappealing.

However, it holds that owing to its pristine asset quality, growing current and savings account(CASA) ratio, and unmatched return on equity (ROE) with December target price of Rs48.2 ashare, Bank Al Habib (BAHL) is a favourite stock.

Besides this, Taurus Securities also considers Bank Alfalah (BAFL) a top pick due to thecessation of provisioning on investment in Warid and improving asset quality ratios with theDecember target price of Rs27 per share.

Arif Habib Limited’s preferred banking stocks are National Bank of Pakistan, with the targetprice of Rs55 per share, and BAFL with the target price of Rs21.5 per share.




With real estate boom, developers nowfocus on Raiwind RoadBy Shahram Haq


LAHORE: For people planning to buy a piece of land in Lahore either as a low-costinvestment or to meet their housing needs, some southern parts of the city are offeringwhat they really want.

This opportunity comes at a time when it is becoming nearly impossible for middle-incomepeople to think of buying a small chunk of land in eastern parts of the city.

By low cost, it doesn’t mean that people will be able to purchase residential land at the priceof farmland and enjoy facilities that residents of other societies are receiving. It means that anaverage family can dream of a house in the south in the hope of further infrastructuraldevelopment in the near future.

The southern part of the city has some excellent housing schemes such as Johar Town,Valencia, Wapda Town, Izmir Town, EME Society, Bahria Town and others.

Most of the societies along the Canal Bank adjacent to Multan Road have almost deliveredwhat they offered and the only artery left in this part with a potential to provide qualitylifestyle is Raiwind Road, starting from Thokar Niaz Baig, which was once considered thelast point of Lahore, up to Raiwind City.

The road stretches over 23 kilometres and is a dual carriageway, but it is not in goodcondition despite the residence of Sharif brothers there. More than a dozen housing societieshave already established their infrastructure, of which few are for the elite, offering high-quality luxury lifestyle including the Lake City. Among others, Bahria Town is offeringBahria Orchard and upcoming project, Green Valley.

Along all these societies, some developers have come up with small housing schemesoffering plots of five marla in the range of Rs1 to Rs1.5 million. In Bahria Orchard, five-marla plots are being sold for Rs1 to Rs2 million. In contrast, the average price of a five-marla plot in the Defence Housing Authority (eastern part of Lahore) has crossed Rs5million.

“This is the only artery left along Ferozepur Road to some extent, where further developmentcan take place and allow the Lahore city to expand,” said Mian Talat, Chief ExecutiveOfficer of Talat Enterprises, a real estate firm.

All other parts of the city have already been developed and there is hardly any capacity leftfor growth, he added.



There are several reasons why real estate gurus think of Raiwind Road as the next potentialreal estate and business hub. The main reason is that the palatial house of the Sharif brothersis situated in Raiwind. Second, industrial estates and clusters, universities and colleges areclose to this road.

Apart from these, nearly all the land adjacent to Raiwind Road has been purchased bydevelopers – many have already launched their schemes and others will follow soon.

Another important factor is that the Lahore Ring Road will cross this thoroughfare near AddaPlot (near Raiwind palace), and once connected the distance to the eastern part of the city willcome down to a few minutes compared to more than one hour that it now takes. And lastly,there is a plan to make Raiwind Road at least a six-lane dual carriageway.

Experts believe all this development should take place in this area in two to three years,following which the area will become one of the most expensive ones in the city for livingand doing business.

Prices have already started increasing in a few societies, in which Bahria Orchard is on top.This could affect prices in other societies as well. Experts hope that low-cost investment canstill benefit people for a couple of years, but for this they have to take investment decisionsswiftly.


Corporate results: Nishat to bid for 590MWhydropower projectBy Saad Hasan


KARACHI:

The Nishat group on Wednesday said it will participate in the bidding for constructionof a 590-megawatt hydroelectric power project as one of Pakistan’s biggestconglomerates consolidates its position in the most challenging and rewarding energysector.

The announcement came along with fiscal year 2013 financial results of Nishat MillsLimited, which declared a consolidated profit of Rs9.875 billion.

Nishat Mills, which is backed by investments in MCB Bank, has decided to invest Rs400million in a wholly-owned subsidiary, Nishat Hospitality Private Limited, the announcementsaid.



Hospitality is a new diversification for the group in Pakistan. Initially, it plans to open a four-star hotel in Lahore, analysts said with many wondering about the reasons behind theinvestment when existing hotels are complaining about falling room occupancy.

“I am not amazed by Nishat’s decision. It already runs power plants of substantial capacity,”said Javed Mehmood, former CEO of Hub Power Company, which runs an 80MWhydropower project, the first-of-its-kind in the country.

“This will require an investment of at least $1.5 billion and most of it will be coming frombanks. The capital cost of a hydropower plant is high but the ultimate benefit to investors andthe country is huge,” he said.

The Mahal Hydropower Project will be located on the border of Punjab and Azad Jammu andKashmir on Jhelum River. It will be the largest non-petroleum power project to beundertaken in the private sector.

But progress has been slow as the project was initially conceived in 2008. Industry officialssay Nishat’s involvement will add credibility to the project.

Mehmood said hydropower was not affected by the crippling inter-corporate debt, which hurtinvestment in power plants run on oil and gas.

“Despite all that is happening in Pakistan, we offer some of the best returns,” he said, addinginternal rate of return on hydropower projects is between 16-17%, one of the highest in theregion.

Hubco’s 80MW hydroelectric power complex started commercial production earlier thisyear.

Summit Capital Head of Research Shahid Ali said Nishat wouldn’t face problems in wooinginvestors into the project. “Itself the group is sitting on a lot of cash. It has companies likeMCB Bank and Adamjee Insurance to back its initiatives.”

Ali said Nishat Group Chairman Mian Mansha takes a long-term view on investments. “Thatis one reason he doesn’t pay dividends.”

Nishat results

The consolidated profit of Nishat Mills Limited (NML), which includes earnings fromassociated companies, surged 101% to Rs9.875 billion.

As a standalone textile business, NML posted a 39% increase in profit to Rs5.8 billion thatwas helped by rupee depreciation and better sales.

“Nishat earns the most from export of finished textile to European and US markets,” said Aliof Summit Capital. “It was also able to buy cotton at better prices as the management isefficient in this area.”

An expanding demand for yarn from China has also helped earnings of NML, analysts say.The impact of EU’s Autonomous Trade Preference system, which was granted to Pakistanitextile manufacturers in November 2012, is also obvious.



Importantly, NML’s earnings are expected to go up further in 2014 after implementation ofGSP Plus status, which allows duty-free textile exports to the EU.


Maple Leaf Cement records highest profitin half a decadeBy Our Correspondent


KARACHI:

Maple Leaf Cement, the cement producer with the most debt in the sector, has recordedan abnormal growth in profits, which was driven by higher cement prices, lower coalprices, dipping interest rates and tax reversal.

According to a notice sent to the Karachi Stock Exchange, the building-material maker’sprofits multiplied six and a half times or 550% in terms of growth in percentages to Rs3.23billion for the fiscal year 2012-13 against Rs496 million in fiscal 2012. The company did notannounce any cash dividend probably due to high leverage, believes Taurus Securities analystHassaan Ghafoor.

Rising cement prices in the country are helping substantial growth across the whole sectorand absorbing the effect of sluggish demand. Average cement prices of a 50-kilogramme bagrecorded for the year clocked in at Rs450, according to Investcap analyst Abdul Azeem.

Sales grew 12.3% to Rs17.36 billion for the year owing to lucrative cement prices on thelocal front and better export volumes. But more importantly, the company managed to boostits gross profits by Rs2 billion to Rs6.05 billion for the year as lower international coal pricesresulted in cost-savings for the company. Resultantly, gross margins clocked in 880 basispoints higher – one percentage point is equal to 100 basis points – at 34.8% for the year,signalling to an exceptional year for the highly-leverage building-material maker.

State Bank of Pakistan’s policy of slashing interest rates has also helped the cement sectorimmensely as whole, but mostly Maple Leaf Cement, as financial costs have declined makingroom for better growth in earnings. Financial charges for the company decreased 27.5% toRs1.7 billion for the year supporting the company’s bottom-line to post the highest profit infive years.

Tax-reversal of Rs125 million in the fourth quarter of the year provided further augmentationagainst a tax charge of Rs63 million in the first nine months of fiscal 2013.




Intel tablets see some early success inPakistanBy Our Correspondent


KARACHI: Despite a delayed shipment and a price range that exceeded initialestimates, Intel Corporation seems to have some early success with its Android-based,mid-range, tablets introduced in the Pakistani market for the first time early thismonth.

“Pakistan is exceeding in the sales of Intel tablets when compared to the regional markets,”Intel Pakistan’s Country Manager Naveed Siraj said on Wednesday, while briefing a group ofjournalists about the company’s Android- and Windows-based tablets launched recently.

“The September stock is already sold out while the next month’s shipment has been bookedas well,” Siraj said – though he did not disclose the sales figures. The market response hasexceeded our expectations,” he said.

The Santa Clara, California-based chip-maker had announced in May that it would introduceIntel-powered seven-inch tablets in the Pakistani market by the end of June or early July.However, the devices hit the market in mid-September.

Although the chip-making giant seems to be targeting a different market segment byintroducing mid-range tablets, it has crossed the $150 price tag – the starting price for thesedevices is about Rs16,500, according to Siraj.

With a price range higher than most Chinese tablets, the company – which has also changedits famous branding campaign of the 90s from ‘Intel Inside’ to ‘Look Inside’ – seems to bebetting on its brand name.

The return rate for the cheaper products is 30% that means 30 out of 100 products are sentback for warranty support, Hasan told Tribune in a past interview. The return rate of IntelCPUs is 0.01%, he said. “It, therefore, makes sense to spend a little more on quality.”

Both the seven-inch and 10.1-inch Android-based tablets that were introduced by thecompany are powered by Intel Atom single core processors; have 16 gigabytes (GB) ofinternal storage; run Jelly Bean and have a two-megapixel rear camera. The seven-inch tablethas a 4100 milliampere-hour (mAh) battery and support external memory of up to 32GB. The10.1-inch tablet has a 6600mAh battery and is rated to provide seven-hour video play backand supports an external memory of up to 48GB. The devices are manufactured by ECS, aTaiwanese firm that manufactures hardware for some of the world’s leading IT companies.




IBA to adopt IFC’s training solutionBy Our Correspondent


KARACHI: The International Finance Corporation will partner with the Centre forEntrepreneurial Development (CED), which is part of the Institute of BusinessAdministration (IBA), for the development of business management training inPakistan for students, small and medium enterprises (SMEs) and women entrepreneurs.

IBA Dean and Director Dr Ishrat Husain and IFC Advisory Services in the Middle East andNorth Africa (MENA) Manager Luke Haggarty signed an agreement during the latter’s visitto the IBA CED on Wednesday. Haggarty was leading a delegation comprising Elvira VanDaele, Javed Iqbal and Asim AF Chishti.

The partnership will allow IBA Karachi and IFC to work together in developing sustainablebusiness advisory training in the areas of corporate governance, taxation, access to financeand building SME portfolios. IBA Karachi will provide training using Business Edge, aninnovation of IFC that is known as a world-class proprietary training solution designed toimprove management capacity and business performance.

Speaking on the occasion, Husain said the partnership will enable IBA to learn from theexperiences of IFC that has been actively working in many countries of the world as amember of the World Bank Group. IFC is the largest global development institution focusedexclusively on the private sector.




OPEN MARKET FOREX RATESUpdated at: 26/9/2013 7:26 AM (PST)

Currency Buying Selling

Australian Dollar 101 101.25

Bahrain Dinar 278 278.25

Canadian Dollar 104 104.25

China Yuan 16.5 16.75

Danish Krone 19.3 19.55

Euro 145.5 145.75

Hong Kong Dollar 13.4 13.65

Indian Rupee 1.52 1.57

Japanese Yen 1.085 1.1

Kuwaiti Dinar 371.25 371.5

Malaysian Ringgit 32 32.25

NewZealand $ 84 84.25

Norwegians Krone 18 18.25

Omani Riyal 275 275.25

Qatari Riyal 28.75 29

Saudi Riyal 28.9 29.15

Singapore Dollar 85.75 86

Swedish Korona 16 16.25

Swiss Franc 113 113.25

Thai Bhat 3.2 3.45

U.A.E Dirham 29.55 29.8

UK Pound Sterling 172.5 172.75

US Dollar 108.9 109.15



INTER BANK RATESUpdated at: 26/9/2013 7:26 AM (PST)

CurrencyBank Buying

TT CleanBank Selling

TT & OD

Australian Dollar 99.03 99.22

Canadian Dollar 102.55 102.75

Danish Krone 19.09 19.12

Euro 142.33 142.6

Hong Kong Dollar 13.63 13.66

Japanese Yen 1.0702 1.0722

Saudi Riyal 28.18 28.24

Singapore Dollar 84.12 84.28

Swedish Korona 16.5 16.53

Swiss Franc 115.7 115.92

U.A.E Dirham 28.78 28.83

UK Pound Sterling 168.91 169.23

US Dollar 105.7 105.9



Bullion Rates (Gold Prices) in PakistanRupee (PKR)As on Thu, Sep 26 2013, 04:00 GMT

Metal SymbolPKR

for 10 GmPKR

for 1 TolaPKR

for 1 Ounce

Gold 24K XAU 45,543 53,065 141,658

Palladium XPD 24,775 28,867 77,061

Platinum XPT 48,760 56,813 151,662

Silver XAG 742 865 2,309

Gold Rates in other Major Currencies

Currency Symbol 10 Gm 1 Tola1

Ounce

AustralianDollar

AUD 457 533 1,422

CanadianDollar

CAD 442 515 1,374

Euro EUR 317 369 985

JapaneseYen

JPY 42,360 49,356 131,756

U.A.EDirham

AED 1,571 1,831 4,888

UKPoundSterling

GBP 266 310 828

USDollar

USD 428 498 1,331



Gold Rates & Silver Rate from major citiesof Pakistan

A year by year reference of the daily Silver Price in Pakistan and history of Gold Rates inPakistan

Sep 25, 2013

Following table shows gold rates per Tola in Pakistan in Pakistani Rupess (PKR) in 24 caratper 10 Grams, 22 carat per 10 grams and sliver rates per 10 grams in pakistan.

City 24k per 10 Grams 24 carat per Tola 22k Per 10 Grams Silver 10 Grams

Karachi Rs. 46157 Rs. 53850 Rs. 42310 Rs. 741.42

Lahore Rs. 46157 Rs. 53850 Rs. 42310 Rs. 741.42

Multan Rs. 46157 Rs. 53850 Rs. 42310 Rs. 741.42

Faisalabad Rs. 46157 Rs. 53850 Rs. 42310 Rs. 741.42

Rawalpindi Rs. 46157 Rs. 53850 Rs. 42310 Rs. 741.42

Hyderabad Rs. 46157 Rs. 53850 Rs. 42310 Rs. 741.42

Gujranwala Rs. 46157 Rs. 53850 Rs. 42310 Rs. 741.42

Peshawar Rs. 46157 Rs. 53850 Rs. 42310 Rs. 741.42

Quetta Rs. 46157 Rs. 53850 Rs. 42310 Rs. 741.42

Islamabad Rs. 46157 Rs. 53850 Rs. 42310 Rs. 741.42

Sargodha Rs. 46157 Rs. 53850 Rs. 42310 Rs. 741.42

Source: Karachi Saraf.

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