November 2012 issue

AWAN TRADING CO (PVT.) LTD.

Awan Trading Co. is Pakistan based Coal trading entity which was incorporated in the year 2002. The company started its operation as an importing company and for the last two years it has also started supplying domestic coal (Pakistan coal). So far the company has imported and supplied 5 million tons of coal, from South Africa and Indonesia, to the cement factories.

This opportunity of supplying coal to cement factories was created due to their (Cement factories) shift from furnace oil to coal as the main energy fuel. Since then the company has been sincerely committed in its mission of supplying coal to factories as a source of energy. What you sell is important! So we source our Coal from best suppliers around the world. Develop-ing longterm relationships has been the hallmark of our company. Our promise that “we deliver, no matter what the situation” has earned us, the confidence of our buyers.

The success of our trading can be gauged from the fact that we are now importing 21 vessels (1 million ton) of coal in a year which as resulted in 30% market-share for Awan Trading Co and hopefully the share will increase in the coming years.

supplying coal to factories as a source of energy. What you sell is important! So we source our Coal from best suppliers around the world. Develop-ing longterm relationships has been the hallmark of our company. Our promise that “we deliver, no matter what the situation” has earned us, the confidence of our buyers.

The success of our trading can be gauged from the fact that we are now importing 21 vessels (1 million ton) of coal in a year which as resulted in 30% market-share for Awan Trading Co and hopefully the share will increase in the coming years.

Awan Trading Co (Pvt.) Ltd.D-28/11, Block 1, Clifton , Karachi Pakistan

Tel: 0092-21-3581-0966, 3581-967 | Fax: 0092-21-3581-0968 | Cell: 0092-333-2545511Email: [email protected] | [email protected]

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SOCIAL ISSUE - 73-74Facilitating corporate compliance:Potential role of citizen groups

Mr Rauf NizamaniDr Saba ShahidDr Shahid ShamimMr Tahir RaufMr Ferozeali HussainiMs Raeda LatifMs Naila Aman KhanMr Farhan Anwar

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NIT completes 50 years of its successful operationsPharma industry: some shocking revelationsPakistan dairy sector vs. the world’s: need for better regulationTrade associations: their unfulfilled responsibilities

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Naegleria Fowleri: Brain Eating AmoebaHEALTH & ENVIRONMENT - 56-57

Freedom on the Internet 2012: A global assessmentof internet and digital media

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BANKING & FINANCE - 49-53Basel III: New accord strengthening bankingregulatory frameworkConsumer Banking Horizon in PakistanBanking: the capital adequacy debate

Monetary policy: alone it can’t deliverUS elections and the prospects they hold outTax amnesty was never the remedyDo we know where are we headed for?

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Media blues: the ongoing tragedyMalala Yousufzai: A symbol of unprecedented courage‘Bangsamoro’: A new country in Philippine

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OUR TEAM E d i t o r ’ s n o t eEditor’s note

Our cherished dream of developmentIt was perhaps for the first time in many years of Pakistan’s history that the death anniversary of the Quaid-e-Azam on 11th September and that of the Quaid-e- Millat Liaquat Ali Khan on 16th October passed quietly under the clout of terror-ism, extremism and events of the sort. Hopefully the birthday of Allama Iqbal that falls on the 9th of November will be remembered the way it deserves.The emergence of Pakistan is an event of great historical significance and was made possible due to the relentless struggle and sacrifices under the dynamic leadership of the founding fathers. Quaid-e-Azam Muhammad Ali Jinnah was in the forefront but no less important was the role played by other leaders, among them the contributions of Allama Iqbal being of vital importanceAllama Iqbal, a poet, a thinker, a philosopher and a man of great vision and talent, dreamt of Pakistan as a separate, independent entity for the Muslims of the sub-continent to which the Quaid-e-Azam, with his leadership qualities, gave a practical manifestation. Through his poetry, Allama Iqbal awakened the Muslims and motivated them to raise their voice for independence from the colonial rule on the one hand and domination of the Hindus on the other. Allama Iqbal was also a great mystical visionary who could envision the future course of events. Long back in his life time he had prophesized of a hazy picture of what things were likely to look life in times to come when he said:

“Khol kar aankhen mere aaeena-e-guftar meinAaney waaley daur ki dhundli si ek tasveer dekh”

(Open your eyes and look at the mirror of my words; see a hazy picture of the age{time} to come).The environment of gloom we witness today is simply a testament to what Dr. Iqbal said years ago. What we see around is a continuous upsurge in violence, terrorism, extremism, loot and arson, target killing , violence against the women and incidents of the sort which are eating away the very vitals of the roots of Pakistan. The law and order situation seems getting out of hand, the country’s economy is in shambles, and businesses are closing down or moving out to other countries. Unemployment is assuming alarming proportions-around estimated 35 percent. Pakistan has talent; it has potentials too- both of men and material. It is endowed with extensive geological potential–vast reserves of mineral deposits such as coal, copper, gold, limestone etc. to name a few. They are well enough to lift the country from the position with a begging bowl to a place in comity of nations capable to dole out to others who need financial support. Sadly, however, we have not been able to harness our talents and exploit potentials fully and effectively.Pakistan inherited an extremely narrow economic base at the time of the Partition in 1947. We have to make vigorous and rigorous efforts to build up infrastructure and productive potential of the economy through the process of sustained develop-ment planning. Education is seen as a sine qua non for human well being and for the development of conscious, responsible and capable individuals and societies. Emphasis will have to be given to promotion of education-not just theoretical but professional, job-oriented technical education. More importantly, the urgent need today is to check terrorism, counter militancy, improve law and order situation, and create a congenial environment for business and industrial growth. This would require, besides other measures, greater national unity and solidarity and a social consensus for laying the foundation of a better society, to defeat the onslaught of militancy and terrorism and bring about peace and harmony. That alone will help realize the cherished dream of development and a respectable place in the comity of nations around the world.

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Of the Judicial OutreachYour editorial on judicial outreach is interesting and thought-provoking. Revolutions have taken place in the past in different parts of the world; this may happen elsewhere in future also, depending on the nature of performance of the government in power. You have rightly observed that “Only good governance of the state is the guarantee against revolu-tions…”Ahmad MujtabaIslamabadDrone strikes: Will the US listen to reason?The article is quite impressive and revealing. As rightly pointed out, the drone strikes killing innocent civilians in tribal areas are illegal and counter-productive. Hence the policy that ‘drones have secured the US’ needs to be rev- iewed and re-evaluated in the light of its damaging impact on Pakistani civilians and US interests. The big question is: Will the intransigent US administration see reason and listen to the advice? Only US policy makers can provide an answer to this.Sandeela SanjraniKarachiAs the war drums beatThe article is very informative and interesting. The observations of Merlin Miller, an American and the author of the article, about Iran and the personal-ity and conduct of President Ahma-dinejad should serve as an eye opener to America , Israel and their supporters who are not tired of speaking against the country ‘unfairly besieged with sanctions and threats of war.’ The West’s condemnation of Iran is prompted by the possibility that Iran may

develop nuclear weapons and attack Israel, a position Iran has categori-cally denied several times. The author has very rightly observed “we should all work for a world free from nuclear threat, but the sovereignty of nations must also be respected.” One only hopes and wishes that the world out to condemn Iran for its nuclear program will see reason, and behave responsibly, the sooner the better. Beverly D’SouzaKarachiStrategically alias “sacrificial goat”The author has portrayed a true picture of how the US treats its allies. Pakistan has remained a US ally ever since the first Prime Minister Liaquat Ali Khan paid a state visit to the US in 1950 and paid for it throughout these years. Be it the Indo-Pak wars of 1965 and 1971, the breakup of East Pakistan or the global war of terror, Pakistan has been betrayed on all these occasions. Pakistan is rich in natural resources but US never ever assisted in exploration and recovery of “what could transform Pakistan’s current status from a beggar state to a self-sufficient, in fact a donor state…” Seen in this perspective, the article very rightly concludes by saying that instead of supporting any moves that could stop Pakistan’s slide into the category of “failed states,” the US Sena-tors never lose a chance to ask for Pakistan being crushed under more sanctions. Is this how the allies should be treated? The government in power in Pakistan needs to think about it.Sarah AnsariLahoreExtending Afghans stay to cost PakistanI quite agree with the author that the Afghan refugees whom Pakistan offered refuge purely on humanitarian grounds have turned out to be a security risk and pose economic problems. Pakistan, already beset with numerous issues, can hardly afford to play host to the Afghan refugees on its soil beyond the sched-uled date of December 31, 2012. It is time that the Afghan refugees return to their land as per schedule. Further extension beyond that could only be suicidal for Pakistan.Salman Khan PeshawarUS Free Trade AgreementOne cannot afford to disagree with the author Mr. Majyd Aziz that the U.S. must provide Pakistan with a level playing field in market access, in import duties and incentives, and in ensuring that ‘equality and non-discriminatory attitude is ensured for Pakistani goods, products and services.’ Pakistan and the

U.S. are allies and strong trade and investment partners. Despite this, Pakistan has not been provided the support it deserves in terms of liberal market access. This indeed is a matter of serious concern and needs to be addressed in letter and spirit.Shahabauddin KhanFaisalabadSectarian scourgeThe article is thought-provoking and rightly reflects on the moral turpitude, that has permeated the society, and the importance given to security of human life. That targeted killings should be undertaken as a matter of routine in a country where there should be no discrimination on the basis of cast or creed is a matter of serious concern and needs to be addressed.In recent times there has been an increasing trend towards sectarianism and killings of members of the vulnerable segments of the society. Des- pite tall claims, the state seems appall-ingly helpless to control and contain the trend. God knows where we are heading to.Shahid KamranSialkotThe defective performance yardsticksThe author has quite convincingly highlighted negative impact of outsourcing of many banking services. Bankers are not supposed to be risk- averse but risk taker. But outsourcing various services has restricted their risk assessment and monitoring abi- lities. By not taking risk, they may be serving the interests of their share-holders but, as very rightly pointed out, not contributing to the develop-ment of the country’s economy. It is high time the regulators take notice of this trend and take appropriate measures to curb it.Muhammad KamilKarachi

Letters to the EditorE d i t o r ’ s n o t eEditor’s note




BRIEFS

Global PoliticsTurkey-Syria Rift: Turkey’s parliament on October 4 authorized military action against Syria but insisted it was not a mandate for war following deadly cross-border fire that sent tensions soaring. The next day, Turkish Prime Minister Tayyip Erdogan said that his country was ‘not far’ from war with Syria following cross-border attacks. He warned Syria would be making a fatal mistake if it picked a fight with Turkey. On October 11, Turkish Prime Minister Tayyip Erdogan said that a Syrian passenger plane forced to land in Ankara by Turkish F-16 jets was carrying Russian-made munitions destined for Syria’s armed forces, ratcheting up tension with his country’s war-torn neigh-bor. Syria banned Turkish passenger flights from its airspace from October 14 in a retaliatory move.

Jordan’s king dissolves parliament: Jordan’s king has dissolved parliament, paving the way for early elections. The royal decree follows Abdullah II’s pledge to bring in political reforms aimed at avoiding anti-government unrest in the wake of the Arab Spring.

Kuwait’s parliament dissolved: Kuwait’s ruler on October 7 ordered the dissolu-tion of parliament opening the way to a parliamentary election in the major oil- producing Gulf Arab state after months of political deadlock. Parliament was dissolved for the sixth time since mid- 2006. The Kuwaiti cabinet on 20 Oct set December 1 as the date for polls.

Iran warns UAE relations are at risk over Gulf island claims: On October 9, Iran warned the United Arab Emirates it would consider cutting diplomatic relations if the federation pressed its claim to three disputed tiny Gulf islands namely Abu Musa, Greater and Lesser Tunb. Labeling UAE claims to the islands as “illogical” and “unfounded,” Iran said it had raised the issue at “regular meetings of the Persian Gulf.

US-Israel joint military exercise: The largest-ever joint US-Israeli military exercise

commenced on 21 October, designed to test the integrated anti-missile systems of the Israeli state. The three-week war games involve more than 3,500 US military personnel in Israel and Europe, 1,000 members of the Israeli Defence Forces (IDF), and the deployment of Patriot anti-missile batteries and a US warship equipped with the Aegis anti- ballistic missile system.

Hurricane Sandy: Millions of people in both New York and New Jersey were impacted by the Hurricane Sandy on 30th October. State of emergency have been declared by governors from North Carolina to Connecticut. The outages caused millions of people to suffer from absence of eletricity in their homes. Sandy has left at least 100 people dead on USA. Both international airports in New York, John F. Kennedy and La Guardia, faced substantial flooding and remained closed. The economic damage of Hurricane Sandy is estimated to be approximately $20 to 25 billion. Econo-mists believe that this could reduce the annual pace of growth by between 1 percent and 1.5 percent in the US.

US abandoning hopes for Taliban peace deal: The New York Times quoted military and diplomatic officials in Afghanistan and Washington as saying that despite attempts to engage directly with Taliban leaders this year, they now expect that any significant progress will come only after 2014 once the bulk of NATO troops have left.

South Korea, US agree on boosting missile capability: South Korea and the United States have reached an agree-ment on extending the range of Seoul’s ballistic missiles to counter the threat from North Korea. Under an agreement signed in 1979 and then revised in 2001 between the two military allies, the range of South Korean missiles is limited to 300 kilometres (186 miles) and a payload of 500 kilograms (1,102 lbs). But Seoul has long urged Washington to amend the pact enabling the South to produce missiles that could reach anywhere in North Korea to deter the communist state's cross-border provocations.

Israel accused of air strike on Sudan munitions factory: Sudan has complained to the UN security council that 4 Israeli F15

‘Silent Eagle’ warplanes bombed an ammuni-tions plant in Khartoum on 24 October killing 4 people and injuring dozens of workers, an attack that has been widely interpreted as a warning to Iran over its nuclear program. Ahmed Belal Osman, the Sudanese informa-tion minister, said that Sudan has the right to strike back at Israel. The Israeli regime, however, has neither denied nor confirmed involvement in the incident.

Brazil hit by new blackout: A massive blackout left as many as 53 million Brazil-ians in the dark on 25 October, the latest in a string of energy shortages that have raised questions about whether Brazil's infrastruc-ture is keeping pace with economic growth. Officials said a fire in a sub-station in the Amazon knocked out the whole electricity grid of northeastern Brazil in the region's worst blackout since 2001.

Brazil upholds U.S. pilots' convictions in 2006 air disaster: A Brazilian federal court upheld the conviction of two U.S. pilots for their role in Brazil's second-worst airline disaster, a 2006 midair collision over the Amazon in which 154 people died. The federal court said the pilots must serve three years and one month in the United States under an "open" system allowed by Brazil law.

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BRIEFS

Global PoliticsFrance to send drones to Mali in fight against al-Qaida: France is planning to send drones into Mali as part of an interna-tional intervention to free the west African country from al-Qaida-backed insurgents who control large swaths of its territory. On the other side, German Chancellor, Angela Merkel, said that Germany is prepared to train Malian security forces and would consider providing "material and logistical support".

Georgian president concedes defeat in polls: Georgian President Mikheil Saakash-vili conceded a defeat on October 2 to billionaire tycoon, Bidzina Ivanishvili in parliamentary polls, ending nine years of dominance that antagonized Russia and brought Tbilisi closer to the West. Russia welcomed the result, saying ties that had been frozen in the wake of the 2008 Russian-Georgia war could be renewed.

Russian opposition leader Sergei Udalt-sov detained for 'organising unrest': Sergei Udaltsov, a 35-year-old radical left- winger who has helped spearhead anti-Putin protests that have rocked Moscow since late last year, was detained by Russian federal investigators on 17 October. Udaltsov is being investigated for provoking mass unrest and for organising terrorist attacks..

EU tightens financial noose on Iran with new sanctions: European Union foreign ministers on October 15 agreed a slew of tough new financial and trade sanctions against Iran aimed at forcing a breakthrough in stalled talks on Tehran’s contested nuclear program. The new package targets EU dealings with Iran’s banks, shipping, and gas imports. The United States has welcomed the new European Union economic sanctions. British, Scottish leaders sign deal on independence vote: Britain’s prime minis-ter and Scotland’s first minister signed an agreement on October 15 to hold a refer- endum in 2014 on Scottish independence that could lead to the United Kingdom breaking up after 300 years.

Hugo Chavez’s victory: Despite Washin- gton’s strong support for the opposition, in a massive turnout on October 7, Venezue-lans elected Hugo Chavez as president for the fourth consecutive time, showing that they believe in the Bolivarian socialist policies of the Chavez government.

U.S. uses excessive force along Mexican border: The United States has used excessive force against immigrants along the Mexican border and should cooperate in investigating border killings, stated Navi Pillay, the U.N. High Commissioner for Human Rights in a press conference on 18 October.

US lawmakers seek to block China Huawei, ZTE: The US House of Repre-sentatives Intelligence Committee said in a report on October 8 that US telecommunications operators should not do business with China’s top network equipment makers because poten-tial Chinese state influence on the companies poses a security threat. The report follows an 11-month investiga-tion by the committee into Huawei Technologies Co. Ltd and its smaller rival ZTE Corp.

Indian premier shuffles cabinet: India's Prime Minister Manmohan Singh reshuffled his cabinet on 28 October in a bid to overhaul his government's image ahead of state and national elections over the next 18 months. Seven new ministers and 15 junior ministers took the oath of office at a brief ceremony to mark the changes. Former law minister Salman Khurshid was named as external affairs minister, while Ashwini Kumar, a junior minister, was elevated to the cabinet with the law and justice portfolio. The other newcomers include Rahman Khan who was named as minority affairs minister, Ajay Maken who becomes housing minister and Dinsha Patel who is now mines minister. They will be joined by Pallam Raju, who was promoted to human resources development minister. Harish Rawat was placed in charge of water resources and Chandresh Kumari was appointed culture minister.

Greek parliament in chaos over revised bailout plan: Finance minister Yannis Stournaras backtracks after telling MPs he had secured a two-year extension for debt repayments on 24 October. He was forced to drop claims that he had secured a two-year extension for debt repayments and an agreement with creditors over €13.5bn (£10.9bn) of proposed austerity measures.

Maldivian court orders arrest of ex-president: A court in the Maldives on October 7 ordered the arrest of the country’s first democratically elected president Mohamed Nasheed who has challenged the legality of a criminal trial against him. The Hulhumale magistrates court issued the arrest warrant after Nasheed failed for a second time to show up before a special three-judge bench set up to try him for abuse of power when he was in office.

Australia, India take first steps on nuclear deal: Australian Prime Minister Julia Gillard on October 17 agreed to open negotiations to export uranium nuclear fuel to India after meeting her counterpart Manmohan Singh in New Delhi.

China flexes muscles with drills amid island row with Japan: China dispatched naval vessels, aircraft and helicopters to the East China Sea on October 19 in exercises likely to further stoke a bristling territorial dispute with Japan. Meanwhile, Japan decided on to urgently purchase additional hardware, including 1,000-ton patrol vessels and helicopters that can fly in rough weather.

China's Wen Jiabao family rejects New York Times claims: Lawyers for Chinese Premier Wen Jiabao's family have rejected New York Times claims that they have amassed "hidden riches" of billions of dollars. In a statement on 28 October they said that while some of the family were involved in business activities none of it was illegal. The US newspaper reported on 26 October that Mr Wen's family controlled assets worth at least $2.7bn (£1.7bn).

media claiming that Indian missiles were targeted at Sri Lanka's strategic installa-tions. These reports are completelybaseless and fabricated”, the Indian High Commis-sion in Colombo said in a statement.


Global EconomyWorld economic crisis to last for 10 years: The Chief Economist of IMF, Olivier Blanchard, said in an interview published on October 3 that the world economy will take at least 10 years to emerge from the financial crisis that began in 2008. Blanchard also pointed out the global deadweights, saying the United States has a fiscal problem it hasn’t addressed yet, and Japan faces decades to solve its debt problems.

IMF calls for more steps to revive global growth: World finance ministers said on the final day of the annual meetings of IMF and the World Bank on October 13 that global economic growth had slowed and called for more effective measures to restore confidence. The committee also said that further steps, including a banking union, were needed to bring the eurozone banking crisis under control.

Turkmenistan to start building TAPI pipeline in 2017: Turkmenistan, holder of the world’s fourth largest natural gas reserves, expects to start constructing a pipeline to export gas to South Asia nations in 2017. Ex-Soviet Turkmeni-stan agreed in May to supply natural gas to Pakistan and India via Afghanistan by signing gas sales and purchase agree-ments with Pakistan’s Inter State Gas Systems and Indian state-run utility GAIL.

U.S. CEOs call for deficit fix: Chief executives of more than 80 big U.S. corporations, including Goldman Sachs, Cisco Systems and Boeing, joined forces to press Congress to reduce the federal deficit in a rare show of broad corporate unity. The U.S. deficit this year will top $1 trillion for a fourth straight year, pushing the national debt past $16 trillion. The CEOs' statement was organized by a group called "The Campaign to Fix the Debt." This new campaign is now work-ing on adding more CEOs, particularly in sectors that are not well represented like energy and technology.

OPEC forecasts world oil demand: On October 10, Organization of Petro- leum Exporting Countries (OPEC) raised its predictions for world oil demand for 2012 and 2013 on 10 October. This year, demand was expected to reach 88.81 million barrels per day upping its forecast from 88.74 mbpd last month. For 2013, demand was set at 89.60 mbpd, up from the September prediction of 89.55 mbpd. For next year, OPEC warned of a "downside risk, especially in the first half of the year" on world demand, due to economic uncertainty.

Iran vies with Saudi Arabia for top OPEC job: Organization of Petroleum Exporting Countries governors gather in Vienna to select a new secretary- general for the first time in six years, with four countries Iran, Iraq, Saudi Arabia and Ecuador vying for the position. The secretary-general does play an important role, with implications beyond the oil markets.

WB cuts 2012 East Asia-Pacific growth to 7.2 percent: The World Bank on Octo-ber 8 slashed its 2012 growth forecast for developing countries in East Asia and the Pacific to 7.2 percent, dragged down by China’s worst economic performance in 13 years. It said China’s economy would grow just 7.7 percent this year, down from 9.3 percent in 2011 and its slowest rate since 1999, but added that stimulus measures would help push it back above the crucial 8.0 percent mark in 2013.

Madagascar economy to grow as huge nickel project starts-World Bank: According to the World Bank, Madagas-car's crisis-hit economy could grow 2.6 percent next year as inflation slows and it begins work on one of the largest nickel mining projects in the world, the World Bank said. Madagascar's economy has been hobbled since a coup in 2009 that drove away tourists and foreign companies that invested in its oil, gold, chrome and nickel reserves. The political crisis has cost the island $6.3 billion since 2009.

Euro star Slovenia becomes another trouble spot: Slovenia which had the fastest growth in the euro currency area with its inhabitants having one of the highest living standards in eastern Europe, is now in recession, shut out of the bond market and is trying to avoid following much larger euro zone members in asking for an international bailout to stop it going bankrupt next year.

Federal Reserve says US economy is growing moderately: The Federal Reserve said on October 24 that its help is still needed to increase growth and lower unem-ployment. The Fed said inflation has recently risen slightly because of higher energy prices. But it said inflation over the long run should remain mild. The unemployment rate fell in September to 7.8 percent, the first time it’s been below 8 percent since January 2009. But the economy is still growing too slowly to accelerate job growth.

Draghi backs eurozone super-commissioner plan: European Central Bank President Mario Draghi has backed German calls for a European super-commissioner to oversee national government budgets. Plans to impose strict limits on budget deficits have already been agreed by 25 of the 27 European Union members. Only the UK and the Czech Republic have opted out of the new rules.

Bank of England's handling of finan-cial crisis to be scrutinised: The Bank of England's handling of the financial crisis will face fresh scrutiny this week when three reviews commissioned by the central bank are expected to be published.

WB lowers BD's economic growth forecast to 6.0pc: The World Bank (WB) lowered Bangladesh's economic growth forecast to around 6.0 per cent from the government's projection at 7.2 per cent with the sharp fall in the growth rate attributed mainly to the domestic investment constraints and the weak external demand.


BRIEFS

BRIEFS

Global EconomyBudget Office, the federal budget deficit for the 2012 fiscal year shrank by $207 billion from the prior year, but still marked its fourth straight year above $1 trillion. The deficit equaled about 7 percent of US economic output. Economists generally consider any deficit that exceeds 3 percent of US gross domestic product to be unsustainable in the long term.

Eurozone launches bailout fund: Eurozone finance ministers launched on October 8 their permanent 500 billion euro bailout fund but said Spain, the country widely expected to be first to draw on it, was taking steps to overhaul its economy and did not need a bailout for now.

EADS, BAE call off world’s biggest arms merger: EADS and BAE Systems called off the world’s largest defence and aviation merger on October 10 and pinned the blame on Germany for wrecking the $45 billion deal.

Pakistan and Bosnia agree to enhance trade ties: Pakistan and Bosnia on Octo-ber 9 agreed to enhance their bilateral ties in defence, trade, investment and other fields. As part of this consensus, Pakistan, Bosnia and Herzegovina on October 9 signed MoUs in defence and commerce to promote trade and economic activities between the two countries and collabo-rate in defence fields.

China exports jump: The government said on October 13 that the Chinese exports rose 9.9 percent in September year-on-year to a record monthly high, but the analysts warned the performance was unsustainable given the weak global outlook.

Julius Baer to cut 1000 jobs: Swiss private banking group Julius Baer has said it would cut around 1,000 jobs when it buys part of Merrill Lynch’s wealth management business from Bank of America.

Geithner calls for economic action from China, Eu: US Treasury Secretary Timothy Geithner said on October 13 that the global economy was on the mend, but more needed to be done to stoke domestic demand in China and fix Europe’s fiscal woes.

Philippines lost $2.46bn: Government auditors said that the Philippines lost $2.46 billion through misuse of state funds and assets during the latter years of graft-tainted ex-president Gloria Arroyo’s rule. The Con Audit highlighted anomalies that mostly occurred in the 2007-09 period in its investigation of more than 61,000 government agencies last year.

Venezuela’s economy recovering: The Center for Economic and Policy Research (CEPR), a think tank based in Washington D.C., released a report on September 26, 2012 on Venezuela’s economic recovery. The report said: “Venezuela went into recession at the beginning of 2009, during the world economic crisis and recession. Recovery began after five quarters, in the second quarter of 2010. The economy grew by 4.2 percent in 2011, and expanded by 5.6 percent during the first half of 2012.” The report acknowledges that there has been a rise in the standard of living and poverty has been reduced.

Brazil's economic recovery finally arrives: Brazilian policymakers are confident that economy grew more than 5 percent in annualized terms in the third quarter, after a barrage of tax and interest rate cuts sparked a surge in sales of everything from cars to freezers. Officials expect growth of about 4 percent in annualized terms in the fourth quarter and 4 percent growth throughout 2013.

US deficit ends fourth fiscal year above $1 trillion: According to US Congressional

Chidambaram unveils 5-year road map for fiscal consolidation: Indian finance minister P. Chidambaram on 29 October unveiled a five-year road map for fiscal consolidation to promote investments, contain inflation and take India to high growth trajectory. According to the plan, will continue efforts to restrict fiscal deficit in the current financial year to 5.3 per cent of the gross domestic product (GDP) and reduce it to 3 per cent by 2016-17. The fiscal deficit was 5.8 per cent in 2011-12. Kuwait proposes creation of $2bn fund: Amir of Kuwait, Sheikh Sabah Al-Ahmad Al-Jaber A-Saabah on Octo-ber 16 proposed the creation of a fund for financing development projects in non-Arab countries having a total capital of $2 billion. He also announced a contri-bution of $300 million for the fund.

Iran parliament may halt Ahmadine-jad economic policy: Iran’s parliament voted on October 7 to consider suspend-ing plans for further reform of the country’s food and fuel subsidies, with legislators citing economic pain caused by the plunge of the rial currency.

Japan car makers to cut China production by half: Japan’s Toyota Motor Corp, Nissan Motor Co. and Honda Motor Co. Plan to slash produc-tion in China by roughly half, as a territorial row between Asia’s two largest economies cuts sales of Japanese cars in the world’s biggest auto market.

OPEC income seen at all-time high in 2012: OPEC’s crude export earnings reached to an all-time high of more than $ one trillion in 2012. The income will boost the cumulative 15-year oil export earnings of the 12-nation Organization of Petroleum Exporting Countries to $6.7 trillion since 1998. OPEC’s income could break a new record of around $1.154trn this year before slipping to about $1.117trn in 2013.


Judiciary to be next target if govern-ment sacked-PM: Addressing the lawyers’ fraternity on October 18, Prime Minister Raja Pervez Ashraf dispelled the impression that the government had a confrontation with the judiciary and said if a democratically elected govern-ment was sent packing, the next target could be the superior judiciary.

Karzai warns Pakistan over ‘using’ extremism: Afghan President, Hamid Karzai said on October 18 that he hoped the shooting of Malala Yousufzai

would convince Islamabad that using extremism as a tool against others was not in its interest. He called on Islama-bad to join him in an “honest” fight against extremism, which he said was threatening both nations equally.

Resolving Baluchistan issue: Pakistan Muslim League (PML-N) President, Mian Nawaz Sharif on October 2 termed the Balochistan issue as “crucial” and said his party was willing to form a grand alliance to resolve this issue. He said that the problems of the people of Balochistan must be addressed before it is too late.

Army supports political solution of Balochistan: Chief of Army Staff General Ashfaq Parvez Kayani on October 3 said the army fully supports political process in Balochistan within constitutional limits.

Russia supports Pakistan’s stance on drones’ attacks: The visiting Russian Foreign Minister Sergei Lavrov told a news conference on October 4 in Islamabad that

Russia supported Pakistan’s opposition of US drone strikes inside its territory and its instance on peace process in Afghanistan. He said that violation of sovereignty of any state was unaccepta-ble. He agreed to increase cooperation with Pakistan in several areas including political and economic sectors.

Russia supports IP gas pipeline project: Foreign Minister Hina Rabbani Khar told the Senate Standing Committee on Foreign Affairs on October 5 that Russia supports Iran-Pakistan gas pipeline project and Indian lobbying cannot succeed in impeding the rapidly improving Pak- Russia relations.

Karzai’s conditions for partnership decried: In a strongly worded rejoinder, Foreign Office on October 8 decried Afghan President Hamid Karzai’s condi-tions for strategic partnership with Islama-bad and said Pakistan wanted to have a ‘mature dialogue’ with Afghanistan.

Govt. files petition urging SC to review Sept. 18 order: The federal government on October 9 filed a petition in the Supreme Court urging it to review its September 18 order pertaining to the contempt of court case against Prime Minister Raja Pervez Ashraf in NRO implementation case.

SC stamps draft Swiss letter: The Supreme Court on October 10 approved the draft letter to be written to the Swiss authorities for reopening of corruption cases against NRO beneficiaries includ-ing President Asif Ali Zardari.

Monitoring of emails, calls: Reportedly, all emails, telephone calls and other communications with the rest of the world will begin to be monitored within 90 days at a cost of million dollars. Government has reportedly assigned PTCL and other operators to install monitoring equipment by the end of this year. Services of the country’s spy agency will also be used to check and curb blasphemous and obscene websites on the Internet.

SC verdict in Asghar Khan case: Announcing landmark judgment in the 16-year old petition of Air Marshal (Retd) Asghar Khan, the Supreme Court on October 19 directed the government to take action against former army chief Gen (Retd) Mirza Aslam Beg and former chief of the Inter-Services Intelligence (ISI) Lt. Gen (Retd) Asad Durrani for violating the Constitution by manipulat-ing the 1990 general elections.

National Politics

Talal invites political parties to form grand political alliance: Jamhoori Watan Party (JWP) Chief Talal Akbar Bugti has called for forming a grand political alliance for general elections and invited all the political parties to lend a hand to pull the country out of the present crisis.

Country’s image being tarnished – Shahbaz: Talking to intellectuals from all the four provinces attending National Literary and Culture Conference Punjab Chief Minister Muhammad Shahbaz

Sharif said on October 14 that the situation in the country is critical and its image is being tarnished. He said that despite being a nuclear power, Pakistani rulers are running around in the world with a begging bowl.

ECP suspends 154 parliamentar-ians: The Election Commission of Pakistan on October 15 suspended the membership of 39 parliamentar-ians and 115 members of the four provincial assemblies for failing to submit details of their assets with the commission. Subsequently, the ECP restored the membership of those parliamentarians who declared their assets.

PML-N wants probe by UN: Appar-ently showing distrust in national institu-tions to investigate the Asghar Khan case, the Pakistan Muslim League (N) on October 22 suggested the UN or any other international institution to probe the matter.

BRIEFS


IMF worried over Pak economic situation: The International Monetary Fund (IMF) delegation led by the country director Jeff Franks has reportedly shown dissatisfaction over the Finance Ministry’s performance with respect to stabilization of Pakistan’s economy and projected country’s fiscal deficit at 6.1 percent for the current fiscal year against 4.7 percent budgeted by the economic team. The delegation appeared worried on the growing gap between expenditure and revenue. The IMF warned that Islamabad urgently needed to address deep problems in its energy sector, including costly subsidies and poor distri-bution while boosting growth to meet the needs of the rapidly growing population.

ADB enhances Pakistan’s growth projection to 3.7%: In its Asia Develop-ment Outlook 2012 Update, the Asian Development Bank (ADB) has enhanced Pakistan’s growth forecast for the year 2012 to 3.7 percent from 3.6 percent projected earlier.

Chinese financial support for hydro-power project: Pakistan is negotiating with China for securing $1.7 billion financing for six projects, including 969-megawatt Neelum-Jhelum hydro-power project.

Pak-UK trade reaches $2.3bn mark: The Consul/Commercial Secretary of Pakistan in UK, Muhammad Hamid Ali, has said that bilateral trade between Pakistan and United Kingdom is on steady rise and has reached to $2.3 billion this year. He also said that the European Parlia-ment has, in principle, approved GSP Plus status for Pakistani products landing in UK from January 1, 2014.

Interest rate slashed to 10pc: Announc-ing the Monetary Policy on October 5, State Bank slashed another cut in the policy interest rate by 50 basis points to 10 percent.

LCCI terms rate cut meager: The Lahore Chamber of Commerce and Industry has termed the 50-basis point cut in mark-up rate as meager and half-hearted attempt to revive economy. The industry wanted SBP to bring it down to single digit.

Pakistan likely to lose huge foreign investment: Pakistan is likely to be deprived of billions of dollars of foreign investment in power projects run on imported coal after Prime Minister Raja

Pervez Ashraf announced that only Thar coal would be utilized in power plants.

Pak Economy Watch lauds Thar coal use decision: The Pakistan Economy Watch (PEW) on October 7 lauded the government decision to use Thar coal for coal-based power generation and all conversions of existing as well as construction of new power projects to be designed on Thar coal specifications.

ADB report on Pak economy: Accord-ing to Asian Development Bank latest report, Pakistan’s inflation rate is expected to remain at 10 percent, reflecting likely budget spillovers while continued strong growth in remittances is expected to rein in the current account deficit to equal 1.3 percent of GDP.

US waives aid certification require-ments: The United States has waived certification requirements for this year’s assistance for Pakistan, saying flow of economic and security aid to the country is in the US national security interest.

Pakistan seeking Egyptian market for seafood products: Pakistan is strug-gling to find a steady Egyptian market for its seafood products as the country’s export of shrimp and fish has slowed down significantly to the Arab Republic because of continued political crisis.

Pakistan, WB sign 8 new projects worth $2.24bn: Pakistan and World Bank have signed eight new projects worth $2.24 billion while six projects of $69 million have been signed with Multi Donor Trust Fund (MDTF) during the last fiscal year.

Need for enhancing trade between Malysia, Pakistan stressed: High Com- missioner of Malaysia in Pakistan Dr. Hasrul Sni Mujtabar has underlined the need for enhanced bilateral trade between Pakistan and Malaysia as both countries have very potential markets. He urged Pakistani businessmen to be more aggres-sive in term of business activities in Malay-sia to compete with other competitive markets in the era of globalization. Accor- ding to Chairman, Pakistan-Malaysia Busi- ness Council of FPCCI Bashir Jan Moham-mad, Pakistan’s imports in 2011 from Malaysia was US$ 1,021.23 million while export to Malaysia was US$ 113.59 million.

Conversion to coal looks imminent: The Government of Pakistan has report-edly decided to convert all the existing and new power plants to the specifications

National Economyof Thar Coal versus earlier plan of converting these to imported coal. In a historic decision, the government has decided that a coal off-take agreement would be signed between Generation Company (Genco) and Sindh Engro Coal Mining Company (SECMC). The decision is in line with the MoU signed between Pakistan Electric Power Com-pany (Pepco) and SECMC, whereby it was agreed that after the approval of the feasibility report, Pepco would sign Coal Supply Agreement with SECMC.

Ukraine wants to enhance trade ties with Pakistan: The ambassador of Ukraine, Volodumyr Lakomov has rejected the report of western media about Pakistan and termed they are portraying wrong image of Pakistan. He said that Pakistan is peaceful and investment friendly country and Ukraine is eager to enhance bilateral trade ties with Pakistan.

Iran-Pakistan trade to hit $3 billion: Deputy Head of Foreign Trade Develop-ment Housing Rezaie Tamrin said on October 9 that trade between Iran and Pakistan currently stands at less than $1 billion and planning has been made to augment the figure to $3 billion in the light of abundant opportunities in the field of trade and economic cooperation.

China to take trade to new heights: Huang Guojun, Director General of Nanchuan Industrial Park in Xining City of Qinghai province visited the Lahore Chamber of Commerce and Industry and said the Chinese government is making all out efforts to take its economic relations with Pakistan to a new height by aggressively exploring opportunities for investment and joint ventures in various sectors of the economy and the establishment of Nanchuan Industrial Park Business Development Centre will go a long way in achieving the goal.

Overseas Pakistani workers remit $3.599bn: Overseas Pakistani workers remitted an amount of $3.599 billion in July-September 2012 showing a growth of 9.16 percent or $301.91 million when compared with $3.297 billion received during the same period of last fiscal year.

Pakistan received $226.5m in Q1: Pakistan has reportedly received foreign assistance of $226.5 million in the first quarter of the current fiscal year includ-ing $140.8 million from multilateral donors.

BRIEFS


Textile exports to Saudi Arabia, Bosnia: Reportedly, Pakistan’s textile export failed to get a boost in terms of market share (which is presently 1.4 percent) in Saudi Arabia and Bosnia despite low tariff/duties offered by these countries for Pakistani textile products. Saudi Arabia’s total textile imports stand at 3.6 billion dollars per annum whereas Pakistan’s share in it is 51.7 million dollars per annum. Similarly, Bosnia imports 500 million dollars per annum of textiles whereas Pakistani exports to the country are 2.6 million dollars per annum.

Businessmen seek cut in mark-up rate: Founders Group of the Lahore Chamber of Commerce and Industry has demanded of the SBP to bring the mark-up rate down to a single digit by reducing it by 2.5 percent to 3.0 percent.

The Sri Lankan Business Delegation from Sri Lanka, headed by, Mr. D. W. Jinadasa, Consul General of the Democratic

Mr. Muhammad Haroon Agar, President KCCCI is presenting Chamber’s Crest to Mr. D. W. Jinadasa. Mr. Shamim Ahmed Firpo, Mr. Nasir Mehmood, Mr. Majyd Aziz, Mr. Zia Ahmed Khan, Mr. S.M.H. Rizvi and others were also present.

Socialist Republic of Sri Lanka, visited the Karachi Chamber of Commerce & Indus-try and had a meeting with the President, Mr. Muhammad Haroon Agar. KCCI President Muhammad Haroon Agar has urged to effectively apply Pak-Sri Lanka Free Trade Agreement and enhance bilateral trade aligned with existing trading potential.

Businessmen call for effective trade diplomacy with EU: The Lahore Cham-ber of Commerce and Industry President, Farooq Iftikhar on October 3 stressed the need for effective trade diplomacy with European Union to ensure Generalized System of Preference (GSP) Plus status by 2014. He called for a strategy to enhance trade-related technical cooperation with relevant partners on both sides in order to optimize the potential benefits of the post GSP scenario.

Ambassador of Greece to Pakistan H.E. Mr.Petros Mavroidis discussing bilateral trade potential between Pakistan and Greece with Mr.Zafar Bakhtawari, President ICCI.

Ambassador of Greece to Pakistan H.E.Mr.Petros Mavroidis visited Islama-bad Chamber of Commerce & Industry (ICCI) for congratulating Mr. Zafar Bakhtawari on his appointment as Presi-dent of ICCI. Greek Ambassador said that Pakistan and Greece need to improve their commercial and economic relations to promote bilateral trade and investment by taking advantage of new business opportunities.

Further cut in discount rate may affect banks profits: Analysts have expressed the view that banks profits may face negative impact if the central bank further reduces the discount rates by 50 – 100 basis points in the upcoming monetary policy.

Leather sector has potential to cross $3 billion exports: Pakistan Tanners Asso-ciation (PTA) Chairman, Agha Saiddain on October 3 said if leather sector of the country is treated as a model sector in the Strategic Trade Policy Framework (STPF) 2012-15, this sector can cross $3 billion exports in the next three years.

Import of used cars causing loss to exchequer: According to report quoting industry experts, growing import of used cars has given impetus to money transac-tion through Hundi with apparently no check by banking regulator on the rampant illegal activities causing loss of millions of dollars to national exchequer.

SCCI calls for mechanism for POL products’ prices: President, Sarhad Chamber of Commerce and Industry, Dr. Mohammad Yousuf Sarwar has demanded to devise a mechanism for changing prices of petroleum products on monthly basis as the weekly increase in POL prices is causing inflation and would bring detrimental effects on economy of the country.

Voice of IndustryLack of accredited facilities may hinder exports to India: According to reports, Pakistani products may not be able to enter Indian market despite liberalization of trade by December this year, as Pakistan Standard and Quality Control Authority (PSQCA) lacks internationally accredited facilities to meet the required quality/standards for testing the export items.

KCCI proposes establishing new industrial zones: Karachi Chamber of Commerce and Industry (KCCI) have proposed that new industrial zones should be established with proper roads, power and water supply and security facilities.

LCCI lauds govt’s decision to import LNG: President, Lahore Chamber of Commerce and Industry (LCCI) has applauded the government’s decision to import liquefied natural gas and use Thar coal for power generation to overcome electricity and gas shortages in the country.

KISMA delegation visits KCCI: A delegation from Karachi Iron & Steel Merchants Association (KISMA), headed by its Chairman, Haji Ghulam Muhammed, visited the KCCI and had a meeting with the President, Mr. Muhammad Haroon

In the picture, Mr. Muhammad Haroon Agar, President, KCCI is seen presenting Chamber’s Crest to Haji Ghulam Muhammed.

Agar. President KCCI assured the delegation of Karachi Chamber’s best coop-eration and support for resolving their genuine and lawful issues.

KCCI urges foreign business people to invest generously: Addressing foreign delegations at Expo Pakistan 2012 in Karachi on October 5, Presi-dent, Karachi Chamber of Commerce and Industry (KCCI) Muhammad Haroon Agar urged foreign business persons and investors from friendly countries to invest in Pakistan gener-ously.

BRIEFS



H.E. Mr. Bharat Raj Paudyal, Nepalese Ambassador to Pakistan with Mr. Zafar Bakhtawari, President ICCI at ICCI office.

Ambassador Nepal visits ICCI: H.E. Mr. Bharat Raj Paudyal, Nepalese Ambassador to Pakistan met with Mr. Zafar Bakhtawari, President ICCI, during his visit to ICCI office on Octo-ber 17. The Ambassador said that exchange of business delegations, single country exhibitions and a proactive involvement of business community of both the countries could enhance bilateral trade relations between Nepal and Pakistan.

PIAF urges government to promote trade: Pakistan Industrial and Traders Associations Front (PI-AF) Chairman Engineer Sohail Lashari on October 5 urged the government to strengthen and promote trade and industry for bringing down the graph of unemploy-ment, enhancing Tax-to- GDP ratio and for the resultant economic revival of the country. He said that heavy govern-ment borrowing has badly affected the process of industrialization in the coun-try as neither any new business venture came up nor Foreign Direct Investment situation improved.

SCCI rejects LNG import decision: President, Sarhad Chamber of Com-merce and Industry, Dr. Mohammad Yousaf Sarwar has rejected the govern-ment move of LNG import saying that the step was totally unwise and against the CNG industry and business community. He demanded immediate withdrawal of the move.

APTMA not happy with discount rate cut: Central Chairman, All Pakistan Textile Mills Association (APTMA), Ahsan Bashir has expressed his dismay over the negligible cut in the discount rate by State Bank of Pakistan. He apprehended that the threat of disin-vestment would be looming large to hit badly the GDP growth in the country.

FPCCI and CACCI agree to boost cooperation: The Federation of Pakistan Chamber of Commerce and Industry (FPCCI) and Confederation of Asia Pacific Chamber of Commerce and Industry (CACCI) on October 9 agreed to expand mutual cooperation and bilateral trade ties.

PAJCCI trade delegation visits Kabul: The first trade delegation of PAJCCI reached Kabul from Pakistan on October 7, 2012. The high level 31-member trade delegation led by President PAJCCI, Mr. M. Zubair Moti-wala comprised of various business segments from Pakistan. The prime objective of this visit was to provide an opportunity to the business community across the border to interact with each other for mutually beneficial bilateral economic deals.

His Excellency Mohammad Sadiq, Ambassa-dor of Pakistan in Kabul hosted a dinner in honor of Pakistani trade delegation of PAJCCI.

FCCI asks govt. to devise new trade policy: Mian Zahid Aslam, President, Faisalabad Chamber of Commerce and Industry (FCCI) has urged the govern-ment to devise new trade policy incor-porating measures to impart impetus to trade and businesses in the country.

CACCI to help expedite visa process for Pakistani businessmen: Speaking at Lahore Chamber of Commerce and Industry on October 11, the President, Confederation of Asia-Pacific Chambers of Commerce and Industry (CACCI) Ambassador Benedicto Yujuico said that the Confederation will help expedite visa process for Pakistani businessmen in all 27 member countries. He also invited the Pakistani businessmen to participate in the international exhibition being arranged by the Confederation in Cebu, Philippines in March 2013 to have first-hand knowledge about available business opportunities.

Mr. Muhammad Zubair Motiwala, President PAJCCI meeting with Ms. Amy N. Dove, Economic Officer, U.S. Embassy Kabul and Mr. Scott Cameron, Project Manager, USAID-Afghanistan in Kabul.

Govt. urged to bail out textile industry from crisis: Pakistan Textile Exporters Association (PTEA) has demanded of the government to bail out textile indus-try and exports from current crisis by removing hurdles and provision of necessary incentives to expand economy, create new jobs and to generate forex for the country.

LCCI’s concern on decline in FDI: Noting the sharp decline in foreign investment by 67 percent to 87 million dollars during July-September 2012 against 263 million dollars during the same period last year, the Lahore Chamber of Commerce and Industry (LCCI) has appealed to the government to take note of constant decline in foreign direct investment (FDI). He said that energy crisis, lack of transparency, law and order situa-tion were the major factors keeping foreign investors away.

US asked to enhance economic cooperation: Talking to James Fluker, Senior Commercial Counsellor, US Embassy in Islamabad, President, Karachi Chamber of Commerce and Industry Muhammad Haroon Agar said that Pakistan’s role in combating terrorism has not been materialized in terms of increased economic coop-eration between Pakistan and USA. He said that US can reciprocate the contributions of Pakistan as frontline state in war against terror by helping Pakistan to address the economic challenges through shifting its support from conventional aid to market access, investment, technology trans-fer, health, education and training, scientific research, power generation and infrastructural development.

Voice of IndustryBRIEFS


n October 6, the State Bank of Pakistan (SBP) announced its monetary policy (MPS) for October-November 2012 and, as before, remin- ded the government that unless it behaves in a

responsible manner–contain its current expenditures, fiscal deficit, borrowing, and restructure electric power generation and distribution systems–SBP’s monetary policies will fail to deliver. Surprisingly, however, the MPS did not mention the “biggest-of-all” risks–deteriorating law and order scenario-that is sapping investor confidence.Any business, no matter what its size, will vouch for the fact that the unending public protests that bring every economic activity to a halt, and the well organized extortionist outfits, are drastically eroding business confidence and all economic activities. By pointing to this “killer” factor, SBP could have conveyed an unbiased view on the issue because all critics of the government pointing to this risk are portrayed as doing it purely for embarrassing the government, not because of the business sentiment-killing effect of this risk.The MPS included what the more realistic market observers had been predicting; a cut in the discount rate by 0.5 percent, though the grounds cited for this move–fall in the CPI and reviving the incentive for investment–are questionable. The claim (based on doubtful PBS statistics) that deceleration in inflation to 8.8 percent in September since May 2012 is more than expected, was diluted by acceptance of the fact that fall in trimmed core inflation at 10.4 is lower than the fall in CPI, indicating persistence of inflation due to its ‘inertial’ effect.Besides, lowering interest rates is not the main incentive that businesses need; they need security, first and foremost. Thus, the “logic” of lowering interest rates works only if you ignore the “biggest” risk referred to above. Would it be realistic not to acknowledge the risk that is forcing even profitable enterprises to close, and inducing the flight of capital? While the export sector–employer of millions–is contracting, courtesy power shortages and public unrest, volume-wise imports too are declining. These clear undeni-able of a slide in economic growth–a trend that Pakistan with its constantly increasing population cannot afford.SBP is making efforts to boost business confidence to assure real economic growth about which serious doubts have been expressed by the IMF, WB and ADB. But, these efforts can’t succeed unless the government’s fiscal policies support SBP efforts. Given the government’s total disregard for improved fiscal management, whatever target it may set for growth in GDP, growth therein could not exceed 3 percent in 2012-13. SBP is rightly concerned at the steady decline in investment as a percentage of GDP because it is lowering the prospects of sustainable medium term economic growth, and believes that inflation’s investment- slowing impact is becoming more pronounced than the influence of high fiscal borrowing. It is this factor that propelled SBP into cutting its discount rate to induce higher credit absorption by the private sector after its cost became

further low. SBP has been doing that during the past three quarters, and has brought lending rates down by as much as 350 basis points. The current MPS included more in terms of relaxation of yardsticks for liquidity management in banks on a daily basis, and helping banks increase their loanable funds. This is a well-intentioned move that banks must utilize but without increasing the “systemic” risk that comes with maintaining lower ready liquidity. Henceforth, SBP will provide greater flexibility to banks by cutting the daily Cash Reserve Requirement (CRR) to 3% of demand and time liabilities from the present 4%, and require average CRR of 5% to be maintained over two-week periods instead of one-week, as required at present. This, as per MPS estimates, would leave over Rs 100bn in the banks to lend to the private sector. This is a clear indication for the banks that they are expected to step up efforts to go back to their basic intermediary role i.e. offer higher credit to the private sector.Discount rate cut and consequent cheaper returns from lending to the state should force a rethink of the ‘safe’ strategy of lending to the state, and induce banks into offer-ing credit at a higher level to the private sector because that would yield much better returns. SBP has also ensured the sustainability of the banking sector’s deposit base by its refusal (at least for now) to accede to the Pakistan Banks Association’s demand to lower the minimum 6% per year profit rate on savings. But while SBP took several prudent initiatives, it created few problems too. The MPS was right in pointing out that banks are lending to the (supposedly zero-risk) state, and doing so, avoiding lending to the private sector. The result is that year- on-year growth in credit to private sector fell from 22.4% in FY08 to 0.7% by mid-2012. However, limiting access to its discount window for overnight borrowing and placements to 7-times in a quarter and charging 0.5% over the upper limit of SBP’s corridor rates will surely hurt the banks. SBP view is that this facility was misused but, surely, it also notes how state offices suddenly borrow billions, and repay them as unexpectedly (often late in the day); the manner wherein power sector’s ‘circular debt’ is managed proves it. The fact that banks’ mark-up spread has gone down implies that they now have less room for absorbing costs. Unless the government has assured SBP that this debt manage-ment conduct will be checked, banks could suddenly need billions in instant liquidity, or sit over billions earning zero returns at least for a day, if not the two-day weekend. This move also overlooks the fact that banks’ liquidity needs to remain volatile. After repaying SBP to the tune of Rs 412bn in Q1-FY13, government borrowered Rs 437bn from the banking sector, forcing SBP to inject liquidity to the tune of Rs 611.5bn. Limiting the use of SBP’s discount window implies deposit creation by banks but in an environment where inflation is perceived to be much higher than 8.8%, real returns to the savers negative, and savings on a decline, will banks be able to mobilize fresh liquidity?

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EDITORIAL

Monetary policy: alone it can’t deliver

Editor’s note




n November 6, the US electorate will decide who should be their President for the next four years. The three debates between the presiden-tial hopefuls–sitting President Obama, and the

aspirant Romney–turned unpleasant when it came to the conduct of Obama regime on the domestic front and the future plans to revive the US economy. Neither offered hope of bridging the ballooning rich-poor gap via higher taxation of the rich–the class financing their huge election campaigns. Romney went as far as saying that the miseries of the poor are the problem of the state, but had no clear- cut policy on how the state should pull them above the poverty line. More importantly, neither Obama nor Romney promised a change for the better in America’s treatment of the rest of the world.President Obama–the first-ever Black American to become the US president–was elevated to this office because it was believed that the US economy was headed for its worst-ever recession since the ‘Great Depression’ of the 1930s, since no white leader wanted to be the president in such testing times. These predictions did crystallize but, for better or for worse, with his controversial bailouts of America’s financial giants, Obama did manage to contain the fallout from the recession, and prevented a total collapse of the US economy; he had no other option except preventing the collapse of the “too-big- to-fail” monstrosities that were created during previous eight years of Republican rule. But the US economy is still not out of the pit and Romney knows much less about pulling it out of the pit than does Obama. What, however, was common between the two was blind-ness about US foreign policy. While Obama was able to force the US parliament to agree to withdraw US troops from Iraq and Afghanistan, he remains as blunt about following as reckless a foreign policy as before. In articulat-ing their foreign policy, both showed that it was driven by the pressure of an election campaign that triggers an irresistible temptation to proclaim simplistic remedies for complicated foreign challenges. This was reflected in the ultimatums repeatedly given to Iran, and references to use of US military power, with zero consideration for its poten-tial regional and global consequences. That such a visionless policy has been inducing Israel to lose out on the opportunity to become an accepted and enduring part of the Middle East does not bother either presidential hopeful. Neither sees that a genuine Israeli partnership with the Palestinians could develop in the war-torn Middle East a centre of technological and finan-cial innovation. That assuring Israel’s future by imposing a new order in the Middle East via forceful ‘export’ of democracy has failed didn’t seem to bother either Romney or Obama. Nor does the reality that the unending rise in oil price, even with the Strait of Hormuz still open, is eroding Europe’s competitiveness and economies, and may eventually make Europe subservient to the resource rich Russia, nor the fact that the post-WW I Anglo-French dictates that ended the Ottoman Empire, have become shaky

because of internal dissent in the bigger countries like Egypt and Iran. Romney pledged that, on his first day in office, he will initiate punitive steps against ‘currency manipulation’ by China without any prior negotiation with China on the issue; it reflects more of his campaign-driven emotions, much less his vision about the fallout of China’s likely retaliation. There was no discussion about a joint US- Russia-China endeavour to end the civil war in Syria, and holding thereafter free and fair elections, or telling Iran that it isn’t under threat and doesn’t need nuclear weapons, or that US retaliation will be a response only to Iran’s attacking Israel, or convincing OPEC states to reduce oil price in exchange for credible trade concessions to pull Europe out of its financial muddle. The treatment of Pakistan was another issue on which both agreed. Obama and Romney promised even higher use of drones against targets in Pakistan with Romney insisting that it was the “right” thing to do although the policy is violative of Pakistan's sovereignty, yielded proven counter-productive results, and is now being challenged in courts in the US and the UK. Both found nothing wrong with the CIA raid on the Osama bin Laden compound in Abbot-tabad. Obama insists that “had we asked Pakistan's permis-sion we would not have gotten it”. Romney says “Pakistan isn’t like others and does not have a civilian leadership that is calling the shots…... but it's not the time to divorce a nation on earth that has 100 nuclear weapons and is on the way to double it".In his Pakistan-bashing, Romney didn’t stop there; he went on to add that "if it (Pakistan) falls apart, or becomes a failed state, there are nuclear weapons there and you've got terrorists there who could grab” those weapons. That is where his concern ended for a country that the US still keeps calling a ‘strategic ally’. Both US presidential hopefuls are oblivious of the immense sufferings of Pakistanis as a direct consequence of their government's blind acquies-cence to a role in the US ‘war on terror’. In fact, Pakistan’s treatment by the US over the years sets the worst example of the price a Muslim state must pay for being a ‘US ally’. Lesson: the US now believes only in expediency and self-interest, nothing else.Muslim voters residing in Ohio, Virginia and Florida add up to 2.5 million, and hold the key in the coming election. They are unhappy over the post-9/11 US actions–the invasion of Afghanistan and Iraq, homeland security and rendition policy and the Guantanamo Bay prison, trials of the detain-ees held there, the drone attacks, and FBI agents’ provoca-tive interaction in mosques to induce more violence. In the presidential election of 2008, 93% of Muslims voted for Obama; now they are divided–some 68% still favour him, 7% favour Romney, and 25% are undecided. However, there has been a major success for Obama; Gen. (r) Collin Powell, another Black American like Obama but a Republican, will again vote for Obama because “he is a Republican of a moderate mould–the dying breed.” In this setting, it is hard to predict who will be the next US President.

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US elections and the prospects they hold out

EDITORIAL


Of the Judicial OutreachYour editorial on judicial outreach is interesting and thought-provoking. Revolutions have taken place in the past in different parts of the world; this may happen elsewhere in future also, depending on the nature of performance of the government in power. You have rightly observed that “Only good governance of the state is the guarantee against revolu-tions…”Ahmad MujtabaIslamabadDrone strikes: Will the US listen to reason?The article is quite impressive and revealing. As rightly pointed out, the drone strikes killing innocent civilians in tribal areas are illegal and counter-productive. Hence the policy that ‘drones have secured the US’ needs to be rev- iewed and re-evaluated in the light of its damaging impact on Pakistani civilians and US interests. The big question is: Will the intransigent US administration see reason and listen to the advice? Only US policy makers can provide an answer to this.Sandeela SanjraniKarachiAs the war drums beatThe article is very informative and interesting. The observations of Merlin Miller, an American and the author of the article, about Iran and the personal-ity and conduct of President Ahma-dinejad should serve as an eye opener to America , Israel and their supporters who are not tired of speaking against the country ‘unfairly besieged with sanctions and threats of war.’ The West’s condemnation of Iran is prompted by the possibility that Iran may

develop nuclear weapons and attack Israel, a position Iran has categori-cally denied several times. The author has very rightly observed “we should all work for a world free from nuclear threat, but the sovereignty of nations must also be respected.” One only hopes and wishes that the world out to condemn Iran for its nuclear program will see reason, and behave responsibly, the sooner the better. Beverly D’SouzaKarachiStrategically alias “sacrificial goat”The author has portrayed a true picture of how the US treats its allies. Pakistan has remained a US ally ever since the first Prime Minister Liaquat Ali Khan paid a state visit to the US in 1950 and paid for it throughout these years. Be it the Indo-Pak wars of 1965 and 1971, the breakup of East Pakistan or the global war of terror, Pakistan has been betrayed on all these occasions. Pakistan is rich in natural resources but US never ever assisted in exploration and recovery of “what could transform Pakistan’s current status from a beggar state to a self-sufficient, in fact a donor state…” Seen in this perspective, the article very rightly concludes by saying that instead of supporting any moves that could stop Pakistan’s slide into the category of “failed states,” the US Sena-tors never lose a chance to ask for Pakistan being crushed under more sanctions. Is this how the allies should be treated? The government in power in Pakistan needs to think about it.Sarah AnsariLahoreExtending Afghans stay to cost PakistanI quite agree with the author that the Afghan refugees whom Pakistan offered refuge purely on humanitarian grounds have turned out to be a security risk and pose economic problems. Pakistan, already beset with numerous issues, can hardly afford to play host to the Afghan refugees on its soil beyond the sched-uled date of December 31, 2012. It is time that the Afghan refugees return to their land as per schedule. Further extension beyond that could only be suicidal for Pakistan.Salman Khan PeshawarUS Free Trade AgreementOne cannot afford to disagree with the author Mr. Majyd Aziz that the U.S. must provide Pakistan with a level playing field in market access, in import duties and incentives, and in ensuring that ‘equality and non-discriminatory attitude is ensured for Pakistani goods, products and services.’ Pakistan and the

Editor’s note




EDITORIAL

he Federal Board of Revenue (FBR) is once again keen on launching a tax amnesty scheme. But, since there were loud rumours about a visiting International Monetary Fund (IMF) team ques-

tioning the move to push for granting tax amnesty (instead of proceeding against the 3.8 million entities the FBR had identified as non-filers of tax returns) Finance Minister Dr Hafeez Sheikh said that FBR’s latest tax amnesty scheme is still only a ‘proposal'.His stand implies that the government is not bothered about how such initiatives were faulted in the past as ‘government- backed’ routes to whitening black wealth; what is preventing the government from going ahead is the resistance from IMF though the Finance Minister thinks that the amnesty scheme can help avoid a ‘complicated’ exercise of ‘issuing notices’ to the non-filers. What he is not concerned about is that the legality of an action cannot be compromised purely for the sake of administrative ‘convenience’. Doing so, he exposed a tendency for expediency in the FBR, with zero concern for its implications on the morale of the honest tax filers, checking the generation of black wealth, and it’s being stashed away abroad. This is shocking since all the changes in FBR–IMF inspired, and on govern-ment’s own initiative–failed to induce a sense of moral responsibility in FBR’s top-brass. That all previous amnesty schemes failed to contain generation of black wealth proves that all these attempts were defective in one way or another, necessitating that any future effort in this context be structured keeping in view the past failures.The amnesty schemes launched in the past never focused on containing tax evasion. All of them were triggered by severe financial crises, which Pakistan faces periodically, courtesy the sustained bad governance of its economy. These tax amnesty schemes focused on generating resources that were enough to survive for the time being, not at eliminating generation of black wealth; that tendency has been exposed once again by FBR’s proposed tax amnesty scheme. Amnesty schemes manifest FBR’s repeated failures–a fact it must admit, and the reason therefor has been sustained side-lining of developing far stronger, fool-proof, credibly verifiable and, above all, taxpayer-friendly tax collection, reporting and surrender mechanisms. FBR’s 6o-year long failure in designing such mechanisms, is inexcusable. More so, because there was no dearth of proposals from experts, taxpayers placed in various categories, and ordinary citizens, enough documentary evidence of which must be available with the FBR. In this backdrop, the only explanations for FBR’s continued failures in this context are its focus on serving the interests of the in-power regimes, powerful lobbies in Pakistan’s business and industry, and the black sheep within FBR’s own ranks.FBR informed the IMF team that the amnesty scheme being devised could benefit from the expected inflow of the assets held by Pakistanis abroad as some governments were now looking at the option of disallowing resident Pakistanis to

have bank accounts in their countries. But that’s not true in case of many governments; this wealth could go to their banks. Besides, all the black wealth holders sent their wealth abroad on ‘expert advice’; these experts will now advise them on what to do in the future. It is no secret that these experts operate openly, and advertise the services they offer in well reputed financial newspapers and magazines with global circulation. For some of the black wealth holders, the amnesty scheme is practically of little use because they accumulated wealth from dealing in arms and drugs. One of the businessmen consulted by the IMF said, apparently, IMF’s main concern over the amnesty scheme isn’t so much over the return of the funds accumulated abroad through under-invoicing of exports and over-invoicing of imports; it is about the return of the wealth earned out of trading in drugs and arms, of which Pakistanis are accused due to Pakistan’s role in the US-backed Afghan Jihad–a role that majority of the Pakistanis resent. So much for the prospects of success of the amnesty scheme! All along, FBR’s focus should have been on discovering why and how black wealth is generated, and on devising ways of plugging the sources of black wealth generation by inducing the corrupt to legalize their business and enjoy the benefits of being in that secure and respectable category. The fact that it has virtually failed to net the bulk of the wholesale and retail sectors explains why black wealth continues to be generated. This huge gap implies that, even if its currently proposed tax amnesty scheme is imple-mented, black money will continue to accumulate necessi-tating yet another amnesty scheme in a matter of, say, five to seven years.Until credible systems and competent monitoring chains of FBR personnel to verify sales tax collection and its surren-der are in place, this crucially important tax on consump-tion will not be collected and the tax-to-GDP ratio won’t rise to fund subsidies that are crucial for gradually reducing the rich-poor gap. Funding of these subsidies out of already insufficient tax receipts is escalating the fiscal deficit which exceeded 7.8% in 2011-12, and may cross 9% in 2012-13. It is this prospect the IMF, WB and ADB find most worrying. A key condition of the Stand-by Arrangement (SBA) offered by the IMF in 2008, was to quickly withdraw the exemptions in sales tax. This condition wasn’t complied with resulting, at first in stalling of the SBA, and later, its termination. What led to this end was FBR’s inability to devise a system to monitor collection of sales tax by the businesses operating country-wide. It is high time the FBR set up a nationwide tax co-ordination outfit that would share data on the taxes collected, and those declared as per tax returns, and collate data on all the taxes collected by the provincial authorities, all on real-time basis, so as to check tax evasion, and to plug leaks therein. This is the way to go about increasing tax collection, but it may fail yet again due to the way taxes are spent by the government.

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Tax amnesty wasnever the remedy


Turkey-Syria Rift: Turkey’s parliament on October 4 authorized military action against Syria but insisted it was not a mandate for war following deadly cross-border fire that sent tensions soaring. The next day, Turkish Prime Minister Tayyip Erdogan said that his country was ‘not far’ from war with Syria following cross-border attacks. He warned Syria would be making a fatal mistake if it picked a fight with Turkey. On October 11, Turkish Prime Minister Tayyip Erdogan said that a Syrian passenger plane forced to land in Ankara by Turkish F-16 jets was carrying Russian-made munitions destined for Syria’s armed forces, ratcheting up tension with his country’s war-torn neigh-bor. Syria banned Turkish passenger flights from its airspace from October 14 in a retaliatory move.

Jordan’s king dissolves parliament: Jordan’s king has dissolved parliament, paving the way for early elections. The royal decree follows Abdullah II’s pledge to bring in political reforms aimed at avoiding anti-government unrest in the wake of the Arab Spring.

Kuwait’s parliament dissolved: Kuwait’s ruler on October 7 ordered the dissolu-tion of parliament opening the way to a parliamentary election in the major oil- producing Gulf Arab state after months of political deadlock. Parliament was dissolved for the sixth time since mid- 2006. The Kuwaiti cabinet on 20 Oct set December 1 as the date for polls.

Iran warns UAE relations are at risk over Gulf island claims: On October 9, Iran warned the United Arab Emirates it would consider cutting diplomatic relations if the federation pressed its claim to three disputed tiny Gulf islands namely Abu Musa, Greater and Lesser Tunb. Labeling UAE claims to the islands as “illogical” and “unfounded,” Iran said it had raised the issue at “regular meetings of the Persian Gulf.

US-Israel joint military exercise: The largest-ever joint US-Israeli military exercise

commenced on 21 October, designed to test the integrated anti-missile systems of the Israeli state. The three-week war games involve more than 3,500 US military personnel in Israel and Europe, 1,000 members of the Israeli Defence Forces (IDF), and the deployment of Patriot anti-missile batteries and a US warship equipped with the Aegis anti- ballistic missile system.

Hurricane Sandy: Millions of people in both New York and New Jersey were impacted by the Hurricane Sandy on 30th October. State of emergency have been declared by governors from North Carolina to Connecticut. The outages caused millions of people to suffer from absence of eletricity in their homes. Sandy has left at least 100 people dead on USA. Both international airports in New York, John F. Kennedy and La Guardia, faced substantial flooding and remained closed. The economic damage of Hurricane Sandy is estimated to be approximately $20 to 25 billion. Econo-mists believe that this could reduce the annual pace of growth by between 1 percent and 1.5 percent in the US.

US abandoning hopes for Taliban peace deal: The New York Times quoted military and diplomatic officials in Afghanistan and Washington as saying that despite attempts to engage directly with Taliban leaders this year, they now expect that any significant progress will come only after 2014 once the bulk of NATO troops have left.

South Korea, US agree on boosting missile capability: South Korea and the United States have reached an agree-ment on extending the range of Seoul’s ballistic missiles to counter the threat from North Korea. Under an agreement signed in 1979 and then revised in 2001 between the two military allies, the range of South Korean missiles is limited to 300 kilometres (186 miles) and a payload of 500 kilograms (1,102 lbs). But Seoul has long urged Washington to amend the pact enabling the South to produce missiles that could reach anywhere in North Korea to deter the communist state's cross-border provocations.

Israel accused of air strike on Sudan munitions factory: Sudan has complained to the UN security council that 4 Israeli F15

‘Silent Eagle’ warplanes bombed an ammuni-tions plant in Khartoum on 24 October killing 4 people and injuring dozens of workers, an attack that has been widely interpreted as a warning to Iran over its nuclear program. Ahmed Belal Osman, the Sudanese informa-tion minister, said that Sudan has the right to strike back at Israel. The Israeli regime, however, has neither denied nor confirmed involvement in the incident.

Brazil hit by new blackout: A massive blackout left as many as 53 million Brazil-ians in the dark on 25 October, the latest in a string of energy shortages that have raised questions about whether Brazil's infrastruc-ture is keeping pace with economic growth. Officials said a fire in a sub-station in the Amazon knocked out the whole electricity grid of northeastern Brazil in the region's worst blackout since 2001.

Brazil upholds U.S. pilots' convictions in 2006 air disaster: A Brazilian federal court upheld the conviction of two U.S. pilots for their role in Brazil's second-worst airline disaster, a 2006 midair collision over the Amazon in which 154 people died. The federal court said the pilots must serve three years and one month in the United States under an "open" system allowed by Brazil law.

he Supreme Court (SC) judgment on former Chief of Air Staff Asghar Khan's petition over the corruption in the 1990 elections is monumen-tal in one respect; for the first time, the Army

Chief and former head of ISI at that time may be court marshalled–accountability which didn't take place even after Pakistan's embarrassing defeat in the 1971 war. But, it has another worrisome dimension; the timing of the verdict on this 16-year old case has afforded the otherwise troubled PPP a big image boost; to muzzle those faulting their current performance, PPP leaders can now add yet another chapter to the long-running saga of ‘injustices’ done to the PPP.Elections in Pakistan have never been a clean affair includ-ing the 1970 elections, that we are made to believe as ‘fair’. It was known at that time, that the erstwhile Awami League’s leadership had rigged the elections in many constituencies in the then East Pakistan. The 1977 elections under PPP were rigged (admitted by the then PM Z.A. Bhutto), but the PPP regime was not punished for its crime. The same allegations marred the 2002 and 2008 elections for which, neither PML-Q nor PPP were held accountable, although the fact is that scores of members of the sitting parliaments are blamed for either holding fake educational certificates or degrees, or dual nationalities–all big crimes according to the current electoral regulations.Hopefully, this verdict will become a landmark precedent for dealing with those who help corrupt the electoral process, no matter what the colour of their clothes. By doing so, the SC also undid the view that the judiciary was soft on the military establishment. But, while the SC verdict has directly instructed the FIA to begin probing the politi-cians cited by Lt. Gen. (r) Asad Durrani as the recipients of financial benefits in the 1990 elections, it requires the government to try Gen. (r) Beg and Lt. Gen. (r) Durrani. Hopefully, SC has good reasons to believe, that under even the current setup, FIA is capable of fairly probing the crimes of ‘all’ the politicians accused by Lt. Gen. (r) Durrani of having benefited from the illegal funding provided to finance their election campaigns.Both the generals pleaded that they acted on the order of the then President & Supreme Commander of Pakistan Ghulam Ishaq Khan. Besides, Gen. Beg retired as Army Chief in 1991 and Lt. Gen. Durrani in 1993, and thus couldn't have earned any personal benefits from their actions. Besides, Gen. Beg became the Army Chief upon the mysterious death (or whatever it was) of Gen. Zia, but very responsibly opted to revive democracy rather than impose another Martial Law. It will be ironic that he may be court-marshalled on the instructions of a democratic regime itself accused of massive corruption.Not surprisingly, the outbursts of PPP leaders coolly ignore the verdict's command whereby the President (symbol of the federation) must not indulge in politics, which has been the hallmark of the current PPP regime; the President and the provincial governors loyal to PPP openly indulge in politics.

The pressures that began to mount on the armed forces after the operation in Waziristan will be compounded if Gen. Beg and Lt. Gen. Durrani are tried, and help boost the claim that the Army is anti-democracy. What will be the consequences of this development remains to be seen, but not very difficult to visualise. Presently the armed forces, Rangers, FC, and the police are challenged every day by the terrorists and often suffer human and equipment losses; trials of former generals won't boost the confidence of the soldiers and officers. That's what worries the people. The track record of federal and provincial governments' law enforcement reflects a failure. The SC verdict in the 'missing persons' case induced many observers (including Speaker of the Balochistan Assembly) to wonder whether Balochistan's government still has a constitutional right to govern. Rumour has it that an interim regime may be installed in Balochistan. Last year, SC reached the same conclusion about the regime in Sindh, but its warnings filed to induce any corrective steps and since then, things have worsened as reflected in the rise in daily incidents of pick-pocketing, bank robbery, extortion and targeted killing, though the cases of kidnapping declined marginally. The SC is again reprimanding the Sindh regime for its horrible performance in this context.This harrowing mix–governments' incapacity and depressed law enforcers–is darkening Pakistan's country-risk percep-tion that already suffers from rating downgrades courtesy falling exchange reserves, rising debt servicing burden, energy and power shortages and the deteriorating state of security. Based on a strategy prepared by the US National Intelligence Council and the CIA in 2005, in a research paper–The destabilisation of Pakistan–Prof. Michel Chos-sudovsky, of the University of Ottawa, and Director, Centre for Research on Globalisation, had made some predictions in December 2007. According to him, the Bush-Cheney regime and its allies had manoeuvred to strengthen their grip over Pakistan to expand and deepen their 'war on terror' across the region. Various US plans proposed the toppling of Pakistan's military. The question requiring an answer is “do we–the govern-ment, politicians, bureaucrats–see where we are headed?” In-power politicians insist that things can't be better than they are. To them, price hike is ‘the’ solution for meeting shortage of just about anything be it food, fuel, electricity, etc. It is like saying that "if you can't afford two meals a day, live on just one". Is that how one should be expected to go on “living”? No. The impoverished will react via violence and insane conduct that suits the ends of those bent upon de-stabilising Pakistan, and Pakistan could be sacrificed at the altar of flawed democracy. The defenders of democracy must realize that.The way the politicians can slow this drift towards destabili-sation is to allow a regime with zero biases (especially cronyism), that puts the very best in every field in the state administration; politicians aren’t the 'guardians' of the state, as desired by Plato in ‘The Republic’.

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Do we know whereare we headed for?

EDITORIAL


France to send drones to Mali in fight against al-Qaida: France is planning to send drones into Mali as part of an interna-tional intervention to free the west African country from al-Qaida-backed insurgents who control large swaths of its territory. On the other side, German Chancellor, Angela Merkel, said that Germany is prepared to train Malian security forces and would consider providing "material and logistical support".

Georgian president concedes defeat in polls: Georgian President Mikheil Saakash-vili conceded a defeat on October 2 to billionaire tycoon, Bidzina Ivanishvili in parliamentary polls, ending nine years of dominance that antagonized Russia and brought Tbilisi closer to the West. Russia welcomed the result, saying ties that had been frozen in the wake of the 2008 Russian-Georgia war could be renewed.

Russian opposition leader Sergei Udalt-sov detained for 'organising unrest': Sergei Udaltsov, a 35-year-old radical left- winger who has helped spearhead anti-Putin protests that have rocked Moscow since late last year, was detained by Russian federal investigators on 17 October. Udaltsov is being investigated for provoking mass unrest and for organising terrorist attacks..

EU tightens financial noose on Iran with new sanctions: European Union foreign ministers on October 15 agreed a slew of tough new financial and trade sanctions against Iran aimed at forcing a breakthrough in stalled talks on Tehran’s contested nuclear program. The new package targets EU dealings with Iran’s banks, shipping, and gas imports. The United States has welcomed the new European Union economic sanctions. British, Scottish leaders sign deal on independence vote: Britain’s prime minis-ter and Scotland’s first minister signed an agreement on October 15 to hold a refer- endum in 2014 on Scottish independence that could lead to the United Kingdom breaking up after 300 years.

Hugo Chavez’s victory: Despite Washin- gton’s strong support for the opposition, in a massive turnout on October 7, Venezue-lans elected Hugo Chavez as president for the fourth consecutive time, showing that they believe in the Bolivarian socialist policies of the Chavez government.

U.S. uses excessive force along Mexican border: The United States has used excessive force against immigrants along the Mexican border and should cooperate in investigating border killings, stated Navi Pillay, the U.N. High Commissioner for Human Rights in a press conference on 18 October.

US lawmakers seek to block China Huawei, ZTE: The US House of Repre-sentatives Intelligence Committee said in a report on October 8 that US telecommunications operators should not do business with China’s top network equipment makers because poten-tial Chinese state influence on the companies poses a security threat. The report follows an 11-month investiga-tion by the committee into Huawei Technologies Co. Ltd and its smaller rival ZTE Corp.

Indian premier shuffles cabinet: India's Prime Minister Manmohan Singh reshuffled his cabinet on 28 October in a bid to overhaul his government's image ahead of state and national elections over the next 18 months. Seven new ministers and 15 junior ministers took the oath of office at a brief ceremony to mark the changes. Former law minister Salman Khurshid was named as external affairs minister, while Ashwini Kumar, a junior minister, was elevated to the cabinet with the law and justice portfolio. The other newcomers include Rahman Khan who was named as minority affairs minister, Ajay Maken who becomes housing minister and Dinsha Patel who is now mines minister. They will be joined by Pallam Raju, who was promoted to human resources development minister. Harish Rawat was placed in charge of water resources and Chandresh Kumari was appointed culture minister.

Greek parliament in chaos over revised bailout plan: Finance minister Yannis Stournaras backtracks after telling MPs he had secured a two-year extension for debt repayments on 24 October. He was forced to drop claims that he had secured a two-year extension for debt repayments and an agreement with creditors over €13.5bn (£10.9bn) of proposed austerity measures.

Maldivian court orders arrest of ex-president: A court in the Maldives on October 7 ordered the arrest of the country’s first democratically elected president Mohamed Nasheed who has challenged the legality of a criminal trial against him. The Hulhumale magistrates court issued the arrest warrant after Nasheed failed for a second time to show up before a special three-judge bench set up to try him for abuse of power when he was in office.

Australia, India take first steps on nuclear deal: Australian Prime Minister Julia Gillard on October 17 agreed to open negotiations to export uranium nuclear fuel to India after meeting her counterpart Manmohan Singh in New Delhi.

China flexes muscles with drills amid island row with Japan: China dispatched naval vessels, aircraft and helicopters to the East China Sea on October 19 in exercises likely to further stoke a bristling territorial dispute with Japan. Meanwhile, Japan decided on to urgently purchase additional hardware, including 1,000-ton patrol vessels and helicopters that can fly in rough weather.

China's Wen Jiabao family rejects New York Times claims: Lawyers for Chinese Premier Wen Jiabao's family have rejected New York Times claims that they have amassed "hidden riches" of billions of dollars. In a statement on 28 October they said that while some of the family were involved in business activities none of it was illegal. The US newspaper reported on 26 October that Mr Wen's family controlled assets worth at least $2.7bn (£1.7bn).

by A.B. Shahid

POLITICS

ow the media changed over the years from an honest news provider to a tool of political strate-gists became clear from a series of recent events. Rupert Murdoch, who beat everyone in this race,

was till recently, the key stakeholder in a media empire made up of The Sky Corp., News of the World, The Times, and the Daily Sun. How his empire remained busy pursuing a Zionist strategy by telling lies and half truths, injecting bias in report-ing of events, and hacking of telephones to deprive its

targets of the privacy that the law guarantees, was shocking. However, what gradually exposed the filth in the media were the many concocted stories that projected Afghanistan as the country from where came the perpetrators of 9/11, and for a decade, the projection of Iraq as a

nuclear threat to justify its invasion.

But as do all lies, these too were exposed. Yet, the media gurus didn’t realize that by becoming the proxy of evil strate-gists, they lost credibility. A Pakistani reporter working for a foreign news agency quit his job because he was being pressurised into distorting his reports to fulfil the wishes of those who want to disintegrate Pakistan by 2015.In June 2012, exposure of the activities of Rupert Murdoch’s media empire forced the British government to set up an inquiry–The Leveson Inquiry–to look into the accusations about hidden connections between 10 Downing Street, and Murdoch’s empire. Prime Minister David Cameron had to appear as a witness before the inquiry commission, where he made some shocking revelations: that British politicians had become too close to newspapers, that there must “be greater transparency, and better regulation” and that media and politicians should have “little more distance” between them.He found it impossible to explain his relations with the now arrested Ms. Rebekah Brooks, Chief Executive of Murdoch’s British wing of News International, or to explain his decision to hire the ex-Editor of News of the World, Andy Coulson, as his media advisor. Coulson too was charged with perjury. In this shady affair, the other individual under clouds is Jeremy Hunt, a member

H

Media blues:the ongoing tragedy

One of Blair’s former press advisors

recently revealed in a book that Blair joined

the WMD campaign against Iraq when

coerced into doing so by Rupert Murdoch


World economic crisis to last for 10 years: The Chief Economist of IMF, Olivier Blanchard, said in an interview published on October 3 that the world economy will take at least 10 years to emerge from the financial crisis that began in 2008. Blanchard also pointed out the global deadweights, saying the United States has a fiscal problem it hasn’t addressed yet, and Japan faces decades to solve its debt problems.

IMF calls for more steps to revive global growth: World finance ministers said on the final day of the annual meetings of IMF and the World Bank on October 13 that global economic growth had slowed and called for more effective measures to restore confidence. The committee also said that further steps, including a banking union, were needed to bring the eurozone banking crisis under control.

Turkmenistan to start building TAPI pipeline in 2017: Turkmenistan, holder of the world’s fourth largest natural gas reserves, expects to start constructing a pipeline to export gas to South Asia nations in 2017. Ex-Soviet Turkmeni-stan agreed in May to supply natural gas to Pakistan and India via Afghanistan by signing gas sales and purchase agree-ments with Pakistan’s Inter State Gas Systems and Indian state-run utility GAIL.

U.S. CEOs call for deficit fix: Chief executives of more than 80 big U.S. corporations, including Goldman Sachs, Cisco Systems and Boeing, joined forces to press Congress to reduce the federal deficit in a rare show of broad corporate unity. The U.S. deficit this year will top $1 trillion for a fourth straight year, pushing the national debt past $16 trillion. The CEOs' statement was organized by a group called "The Campaign to Fix the Debt." This new campaign is now work-ing on adding more CEOs, particularly in sectors that are not well represented like energy and technology.

OPEC forecasts world oil demand: On October 10, Organization of Petro- leum Exporting Countries (OPEC) raised its predictions for world oil demand for 2012 and 2013 on 10 October. This year, demand was expected to reach 88.81 million barrels per day upping its forecast from 88.74 mbpd last month. For 2013, demand was set at 89.60 mbpd, up from the September prediction of 89.55 mbpd. For next year, OPEC warned of a "downside risk, especially in the first half of the year" on world demand, due to economic uncertainty.

Iran vies with Saudi Arabia for top OPEC job: Organization of Petroleum Exporting Countries governors gather in Vienna to select a new secretary- general for the first time in six years, with four countries Iran, Iraq, Saudi Arabia and Ecuador vying for the position. The secretary-general does play an important role, with implications beyond the oil markets.

WB cuts 2012 East Asia-Pacific growth to 7.2 percent: The World Bank on Octo-ber 8 slashed its 2012 growth forecast for developing countries in East Asia and the Pacific to 7.2 percent, dragged down by China’s worst economic performance in 13 years. It said China’s economy would grow just 7.7 percent this year, down from 9.3 percent in 2011 and its slowest rate since 1999, but added that stimulus measures would help push it back above the crucial 8.0 percent mark in 2013.

Madagascar economy to grow as huge nickel project starts-World Bank: According to the World Bank, Madagas-car's crisis-hit economy could grow 2.6 percent next year as inflation slows and it begins work on one of the largest nickel mining projects in the world, the World Bank said. Madagascar's economy has been hobbled since a coup in 2009 that drove away tourists and foreign companies that invested in its oil, gold, chrome and nickel reserves. The political crisis has cost the island $6.3 billion since 2009.

Euro star Slovenia becomes another trouble spot: Slovenia which had the fastest growth in the euro currency area with its inhabitants having one of the highest living standards in eastern Europe, is now in recession, shut out of the bond market and is trying to avoid following much larger euro zone members in asking for an international bailout to stop it going bankrupt next year.

Federal Reserve says US economy is growing moderately: The Federal Reserve said on October 24 that its help is still needed to increase growth and lower unem-ployment. The Fed said inflation has recently risen slightly because of higher energy prices. But it said inflation over the long run should remain mild. The unemployment rate fell in September to 7.8 percent, the first time it’s been below 8 percent since January 2009. But the economy is still growing too slowly to accelerate job growth.

Draghi backs eurozone super-commissioner plan: European Central Bank President Mario Draghi has backed German calls for a European super-commissioner to oversee national government budgets. Plans to impose strict limits on budget deficits have already been agreed by 25 of the 27 European Union members. Only the UK and the Czech Republic have opted out of the new rules.

Bank of England's handling of finan-cial crisis to be scrutinised: The Bank of England's handling of the financial crisis will face fresh scrutiny this week when three reviews commissioned by the central bank are expected to be published.

WB lowers BD's economic growth forecast to 6.0pc: The World Bank (WB) lowered Bangladesh's economic growth forecast to around 6.0 per cent from the government's projection at 7.2 per cent with the sharp fall in the growth rate attributed mainly to the domestic investment constraints and the weak external demand.

of David Cameron’s Cabinet. That is not all; former PMs Gordon Brown and Tony Blair too appeared before the inquiry commission to record their statements. It is worth remembering that one of Tony Blair’s former press advisors recently authored a book wherein he disclosed that Tony Blair joined the WMD

campaign against Iraq only after he was coerced into doing so by Rupert Murdoch.Western media was also used to infuriate the Muslim world into hurting itself via self-destructive protests. Beginning with the sacreligious book by UK-based Salman Rushdie, the Danish cartoons, the controversial film made in the US and the cartoons published in the French magazine Charlie Hebdo, all efforts were aimed at achieving that nefarious end. Fogh Rasmussen (Danish Premier when the sacreligious Danish cartoons were published) was rewarded well; he was made the Secretary General of Nato. Simultaneously, West-ern media backed a US-EU-inspired Nato-led ‘Arab spring’ –a campaign aimed at disrupting all resource- rich Muslim states. Arab Spring aims to create chaos in these countries that will justify Western intervention in the guise of UN peace-keeping, as done in Libya and now Syria. The latest event involving media in Pakistan was the rumour about several Pakistani TV anchors being on the payrolls of some powerful political magicians. While this issue remains a bone of contention in the Supreme Court, the fact that some TV anchors continue very visibly to pursue specific political agendas, strengthens the view that all isn’t as “white” as the media gurus want you to believe. In TV talk shows, some anchors specialize in ‘putting’ words in respondents’ mouths and the fact that directors/producers of these programmes neither note these aggressive postures, nor punish the anchors for these clearly visible indiscretions, conveys the impres-sion that the TV channels too are a part of this whole scenario. Given the supremacy of TV channels in the overall media mix, such biased, in fact doctored shows try to (and, seemingly) succeed in misguiding the majority of the viewers. Repeated opportunities given by some channels to the likes of PPP’s Faisal Raza Abedi in the highly sensitive Arslan Iftikhar case left no doubt that the channels doing so were pursuing a specific political agenda.The print media, however, can’t be blamed as much for the pursuit of similar strategies. In this media segment, while the columnists have the right to pursue specific political agendas, their scripts don’t amount to putting words into the mouths of those they praise or criticise. That said, the owners of the newspapers display shocking tendencies; they do not appear bothered over the morality of the messages conveyed by the advertisements they publish in their newspapers – a tendency that shows that this media segment is overly consumed by a desire to earn profits.For the past four-and-a-half years, almost every government- sponsored advertisement carried (often large) photos of the

President of Pakistan, Prime Minister, Provincial Gover-nors, and federal and provincial ministers. The message this portrayal of the politicians conveyed was that the people should thank them, not their country and its government. As if that wasn’t enough of a continuing distortion that portrays use of state funds for personal glorification, recently, several newspapers carried a full page containing four advertisements that were sponsored by the US Aid, but contained the photos of the Pakistani President, Prime Minister, Governor Sindh, some federal ministers, and the leader of a coalition party, which displayed media concerns for its own integrity as well as of the regime in Pakistan. These instances force you to think seriously about where media is headed for in its pursuit of material gains.The fact that the government seems unwilling to confirm the amount of ‘discretionary’ funds (Rs 40 million or Rs 4 billion) of Federal Ministry of Information and other state offices is eroding the credibility of the stance that the government didn’t ‘buy’ favourable coverage by the media. If anything, it is strengthening the view that the govern-ment is buying such a profile in the media. The regimes viewed as responsible don’t have to resort to such tactics – the logic that doesn’t apply to the regime in power.The reality is that none other than the superior judiciary has repeatedly blamed the government of misconduct and waste. On top thereof, the regime’s defiance of court orders renders its reputation doubtful and it is only logical that, given its refusal to act responsibly, it is trying to build its image using deceptive mechanisms. Unfortunately, the media is one of them. The tragedy that no politician seems worried about is Pakistan’s loss of image that devious administration in every sector has caused; corruption of its media could be the last nail in its coffin.

An ad sponsored by US Aid contained

snaps of Pakistan’s President, Prime

Minister, SindhGovernor, some

federal ministers, and MQM’s Altaf Bhai

Riaz Malik


Budget Office, the federal budget deficit for the 2012 fiscal year shrank by $207 billion from the prior year, but still marked its fourth straight year above $1 trillion. The deficit equaled about 7 percent of US economic output. Economists generally consider any deficit that exceeds 3 percent of US gross domestic product to be unsustainable in the long term.

Eurozone launches bailout fund: Eurozone finance ministers launched on October 8 their permanent 500 billion euro bailout fund but said Spain, the country widely expected to be first to draw on it, was taking steps to overhaul its economy and did not need a bailout for now.

EADS, BAE call off world’s biggest arms merger: EADS and BAE Systems called off the world’s largest defence and aviation merger on October 10 and pinned the blame on Germany for wrecking the $45 billion deal.

Pakistan and Bosnia agree to enhance trade ties: Pakistan and Bosnia on Octo-ber 9 agreed to enhance their bilateral ties in defence, trade, investment and other fields. As part of this consensus, Pakistan, Bosnia and Herzegovina on October 9 signed MoUs in defence and commerce to promote trade and economic activities between the two countries and collabo-rate in defence fields.

China exports jump: The government said on October 13 that the Chinese exports rose 9.9 percent in September year-on-year to a record monthly high, but the analysts warned the performance was unsustainable given the weak global outlook.

Julius Baer to cut 1000 jobs: Swiss private banking group Julius Baer has said it would cut around 1,000 jobs when it buys part of Merrill Lynch’s wealth management business from Bank of America.

Geithner calls for economic action from China, Eu: US Treasury Secretary Timothy Geithner said on October 13 that the global economy was on the mend, but more needed to be done to stoke domestic demand in China and fix Europe’s fiscal woes.

Philippines lost $2.46bn: Government auditors said that the Philippines lost $2.46 billion through misuse of state funds and assets during the latter years of graft-tainted ex-president Gloria Arroyo’s rule. The Con Audit highlighted anomalies that mostly occurred in the 2007-09 period in its investigation of more than 61,000 government agencies last year.

Venezuela’s economy recovering: The Center for Economic and Policy Research (CEPR), a think tank based in Washington D.C., released a report on September 26, 2012 on Venezuela’s economic recovery. The report said: “Venezuela went into recession at the beginning of 2009, during the world economic crisis and recession. Recovery began after five quarters, in the second quarter of 2010. The economy grew by 4.2 percent in 2011, and expanded by 5.6 percent during the first half of 2012.” The report acknowledges that there has been a rise in the standard of living and poverty has been reduced.

Brazil's economic recovery finally arrives: Brazilian policymakers are confident that economy grew more than 5 percent in annualized terms in the third quarter, after a barrage of tax and interest rate cuts sparked a surge in sales of everything from cars to freezers. Officials expect growth of about 4 percent in annualized terms in the fourth quarter and 4 percent growth throughout 2013.

US deficit ends fourth fiscal year above $1 trillion: According to US Congressional

Chidambaram unveils 5-year road map for fiscal consolidation: Indian finance minister P. Chidambaram on 29 October unveiled a five-year road map for fiscal consolidation to promote investments, contain inflation and take India to high growth trajectory. According to the plan, will continue efforts to restrict fiscal deficit in the current financial year to 5.3 per cent of the gross domestic product (GDP) and reduce it to 3 per cent by 2016-17. The fiscal deficit was 5.8 per cent in 2011-12. Kuwait proposes creation of $2bn fund: Amir of Kuwait, Sheikh Sabah Al-Ahmad Al-Jaber A-Saabah on Octo-ber 16 proposed the creation of a fund for financing development projects in non-Arab countries having a total capital of $2 billion. He also announced a contri-bution of $300 million for the fund.

Iran parliament may halt Ahmadine-jad economic policy: Iran’s parliament voted on October 7 to consider suspend-ing plans for further reform of the country’s food and fuel subsidies, with legislators citing economic pain caused by the plunge of the rial currency.

Japan car makers to cut China production by half: Japan’s Toyota Motor Corp, Nissan Motor Co. and Honda Motor Co. Plan to slash produc-tion in China by roughly half, as a territorial row between Asia’s two largest economies cuts sales of Japanese cars in the world’s biggest auto market.

OPEC income seen at all-time high in 2012: OPEC’s crude export earnings reached to an all-time high of more than $ one trillion in 2012. The income will boost the cumulative 15-year oil export earnings of the 12-nation Organization of Petroleum Exporting Countries to $6.7 trillion since 1998. OPEC’s income could break a new record of around $1.154trn this year before slipping to about $1.117trn in 2013.

Murdoch has played a key role in shaping British politics for the last four decades, and testimony at The Leveson Inquiry into media ethics has highlighted how British prime ministers have both courted and feared Rupert Murdoch, the 81-year- old media mogul. His influence remained strong despite the phone hacking scandal involving his newspapers and leading to an ethics inquiry, and Rupert Murdoch has retained his reputation as a potential kingmaker. Below is a brief of his four-decade long dealings with Britain’s prime ministers.Harold Wilson Murdoch entered the British media scene in 1969, buying the Sunday tabloids News of the World and The Sun. In January ’76, according to a recently discovered file in National Archives, Murdoch approached Prime Minister Harold Wilson seeking relief from wage controls. Murdoch wanted to buy new high-speed presses to support the growing circulation of the two newspapers but the wage controls prevented him from meet-ing union demands for higher pay. Wilson rebuffed him.James Callaghan “We had very good relations with him and with Mr Wilson,” Murdoch told the inquiry, led by Justice Brian Leveson. But, the fact is that, in the 1979 election, which James Callaghan lost, Murdoch newspapers had switched their support to the Conser-vatives led by Margaret Thatcher. As a payback, Callaghan later tried for a staff buyout of both The Times and The Sunday Times but the failed bid helped Murdoch acquire full control of these newspapers, adding to his British media holdings.Margaret Thatcher Her government waived a regulatory review of the monopoly issues and allowed Murdoch’s British News Inter-national, to purchase The Times and The Sunday Times. Wood-row Wyatt, a confidant of Thatcher and a columnist for News of the World, recorded in his diaries that “I had all the rules bent for him (Murdoch).” Murdoch denies that he asked anyone to alter the rules in his favor. He says he can’t remem-ber a lunch hosted by Thatcher before the decision was made. “I didn’t expect any help from her, nor did I ask for any,” Murdoch told the Leveson Inquiry. John Major (1990-1997) The Sun supported Major in the 1992 election and boasted of its impact on the vote in a famous headline: “It’s the Sun who won it.” However, Major told the Leveson Inquiry that three months before the 1997 election, Murdoch had expressed his disap-proval of the government’s European policies, and said he won’t support Major unless he changed his policy stands. Murdoch says he has no memory of the meeting. “I wasn’t an admirer of many of the things Mr Murdoch did but .......... saving those newspapers and setting up alternative television channel made a very substantial contribution to our national life,” Major testified.Tony Blair (1997-2007) Blair flew to Australia before the 1997 elections, seeking and winning Murdoch’s support, which was crucial in helping the Labour Party break the Conservatives’ long run of electoral successes. “The minimum objective was to stop them tearing us to pieces and the maximum objective was, that if possible, to open the way to support,” Blair told the inquiry. And yet, Blair also testified that “there was no deal on the issues to do with the media, with Rupert Murdoch, or with anybody else, either express or implied, and to be fair, he never sought such a thing.” What, however, the inquiry commission didn’t ask him was why he spoke to Rupert Murdoch three times in the days leading up

to the Iraq war and whether it had anything to do with the fact that all Murdoch’s papers supported the unpopular invasion.Gordon Brown (2007-2010) After The Sun declared it would not support Gordon Brown for re-election, ending its support for the Labour Party in the post-Blair era, Murdoch said Brown telephoned him to say: “your Company has declared war on my government and we have no alternative but to make war on your company.” But Brown told the Inquiry: “this call did not happen, this threat was not made” and bitterly accused Murdoch’s newspapers of undermining the British war effort in Afghanistan.David CameronRelations with Murdoch’s empire have been problematic for Cameron; his government has been criticized for its handling of the Murdoch bid to acquire the full control of British Sky Broadcasting, and Cameron’s judgment has been questioned because of his hiring of the former News of the World editor Andy Coulson as his media chief. Coulson had to resign after the ‘phone hacking’ scandal exploded, and he has since been charged. Cameron set up the Leveson Inquiry after this issue became threatening. This issue has been rested till September 2013; the commission needs time to report its final findings.

Media influence on British Politics


Judiciary to be next target if govern-ment sacked-PM: Addressing the lawyers’ fraternity on October 18, Prime Minister Raja Pervez Ashraf dispelled the impression that the government had a confrontation with the judiciary and said if a democratically elected govern-ment was sent packing, the next target could be the superior judiciary.

Karzai warns Pakistan over ‘using’ extremism: Afghan President, Hamid Karzai said on October 18 that he hoped the shooting of Malala Yousufzai

would convince Islamabad that using extremism as a tool against others was not in its interest. He called on Islama-bad to join him in an “honest” fight against extremism, which he said was threatening both nations equally.

Resolving Baluchistan issue: Pakistan Muslim League (PML-N) President, Mian Nawaz Sharif on October 2 termed the Balochistan issue as “crucial” and said his party was willing to form a grand alliance to resolve this issue. He said that the problems of the people of Balochistan must be addressed before it is too late.

Army supports political solution of Balochistan: Chief of Army Staff General Ashfaq Parvez Kayani on October 3 said the army fully supports political process in Balochistan within constitutional limits.

Russia supports Pakistan’s stance on drones’ attacks: The visiting Russian Foreign Minister Sergei Lavrov told a news conference on October 4 in Islamabad that

Russia supported Pakistan’s opposition of US drone strikes inside its territory and its instance on peace process in Afghanistan. He said that violation of sovereignty of any state was unaccepta-ble. He agreed to increase cooperation with Pakistan in several areas including political and economic sectors.

Russia supports IP gas pipeline project: Foreign Minister Hina Rabbani Khar told the Senate Standing Committee on Foreign Affairs on October 5 that Russia supports Iran-Pakistan gas pipeline project and Indian lobbying cannot succeed in impeding the rapidly improving Pak- Russia relations.

Karzai’s conditions for partnership decried: In a strongly worded rejoinder, Foreign Office on October 8 decried Afghan President Hamid Karzai’s condi-tions for strategic partnership with Islama-bad and said Pakistan wanted to have a ‘mature dialogue’ with Afghanistan.

Govt. files petition urging SC to review Sept. 18 order: The federal government on October 9 filed a petition in the Supreme Court urging it to review its September 18 order pertaining to the contempt of court case against Prime Minister Raja Pervez Ashraf in NRO implementation case.

SC stamps draft Swiss letter: The Supreme Court on October 10 approved the draft letter to be written to the Swiss authorities for reopening of corruption cases against NRO beneficiaries includ-ing President Asif Ali Zardari.

Monitoring of emails, calls: Reportedly, all emails, telephone calls and other communications with the rest of the world will begin to be monitored within 90 days at a cost of million dollars. Government has reportedly assigned PTCL and other operators to install monitoring equipment by the end of this year. Services of the country’s spy agency will also be used to check and curb blasphemous and obscene websites on the Internet.

SC verdict in Asghar Khan case: Announcing landmark judgment in the 16-year old petition of Air Marshal (Retd) Asghar Khan, the Supreme Court on October 19 directed the government to take action against former army chief Gen (Retd) Mirza Aslam Beg and former chief of the Inter-Services Intelligence (ISI) Lt. Gen (Retd) Asad Durrani for violating the Constitution by manipulat-ing the 1990 general elections.

Talal invites political parties to form grand political alliance: Jamhoori Watan Party (JWP) Chief Talal Akbar Bugti has called for forming a grand political alliance for general elections and invited all the political parties to lend a hand to pull the country out of the present crisis.

Country’s image being tarnished – Shahbaz: Talking to intellectuals from all the four provinces attending National Literary and Culture Conference Punjab Chief Minister Muhammad Shahbaz

Sharif said on October 14 that the situation in the country is critical and its image is being tarnished. He said that despite being a nuclear power, Pakistani rulers are running around in the world with a begging bowl.

ECP suspends 154 parliamentar-ians: The Election Commission of Pakistan on October 15 suspended the membership of 39 parliamentar-ians and 115 members of the four provincial assemblies for failing to submit details of their assets with the commission. Subsequently, the ECP restored the membership of those parliamentarians who declared their assets.

PML-N wants probe by UN: Appar-ently showing distrust in national institu-tions to investigate the Asghar Khan case, the Pakistan Muslim League (N) on October 22 suggested the UN or any other international institution to probe the matter.

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IMF worried over Pak economic situation: The International Monetary Fund (IMF) delegation led by the country director Jeff Franks has reportedly shown dissatisfaction over the Finance Ministry’s performance with respect to stabilization of Pakistan’s economy and projected country’s fiscal deficit at 6.1 percent for the current fiscal year against 4.7 percent budgeted by the economic team. The delegation appeared worried on the growing gap between expenditure and revenue. The IMF warned that Islamabad urgently needed to address deep problems in its energy sector, including costly subsidies and poor distri-bution while boosting growth to meet the needs of the rapidly growing population.

ADB enhances Pakistan’s growth projection to 3.7%: In its Asia Develop-ment Outlook 2012 Update, the Asian Development Bank (ADB) has enhanced Pakistan’s growth forecast for the year 2012 to 3.7 percent from 3.6 percent projected earlier.

Chinese financial support for hydro-power project: Pakistan is negotiating with China for securing $1.7 billion financing for six projects, including 969-megawatt Neelum-Jhelum hydro-power project.

Pak-UK trade reaches $2.3bn mark: The Consul/Commercial Secretary of Pakistan in UK, Muhammad Hamid Ali, has said that bilateral trade between Pakistan and United Kingdom is on steady rise and has reached to $2.3 billion this year. He also said that the European Parlia-ment has, in principle, approved GSP Plus status for Pakistani products landing in UK from January 1, 2014.

Interest rate slashed to 10pc: Announc-ing the Monetary Policy on October 5, State Bank slashed another cut in the policy interest rate by 50 basis points to 10 percent.

LCCI terms rate cut meager: The Lahore Chamber of Commerce and Industry has termed the 50-basis point cut in mark-up rate as meager and half-hearted attempt to revive economy. The industry wanted SBP to bring it down to single digit.

Pakistan likely to lose huge foreign investment: Pakistan is likely to be deprived of billions of dollars of foreign investment in power projects run on imported coal after Prime Minister Raja

Pervez Ashraf announced that only Thar coal would be utilized in power plants.

Pak Economy Watch lauds Thar coal use decision: The Pakistan Economy Watch (PEW) on October 7 lauded the government decision to use Thar coal for coal-based power generation and all conversions of existing as well as construction of new power projects to be designed on Thar coal specifications.

ADB report on Pak economy: Accord-ing to Asian Development Bank latest report, Pakistan’s inflation rate is expected to remain at 10 percent, reflecting likely budget spillovers while continued strong growth in remittances is expected to rein in the current account deficit to equal 1.3 percent of GDP.

US waives aid certification require-ments: The United States has waived certification requirements for this year’s assistance for Pakistan, saying flow of economic and security aid to the country is in the US national security interest.

Pakistan seeking Egyptian market for seafood products: Pakistan is strug-gling to find a steady Egyptian market for its seafood products as the country’s export of shrimp and fish has slowed down significantly to the Arab Republic because of continued political crisis.

Pakistan, WB sign 8 new projects worth $2.24bn: Pakistan and World Bank have signed eight new projects worth $2.24 billion while six projects of $69 million have been signed with Multi Donor Trust Fund (MDTF) during the last fiscal year.

Need for enhancing trade between Malysia, Pakistan stressed: High Com- missioner of Malaysia in Pakistan Dr. Hasrul Sni Mujtabar has underlined the need for enhanced bilateral trade between Pakistan and Malaysia as both countries have very potential markets. He urged Pakistani businessmen to be more aggres-sive in term of business activities in Malay-sia to compete with other competitive markets in the era of globalization. Accor- ding to Chairman, Pakistan-Malaysia Busi- ness Council of FPCCI Bashir Jan Moham-mad, Pakistan’s imports in 2011 from Malaysia was US$ 1,021.23 million while export to Malaysia was US$ 113.59 million.

Conversion to coal looks imminent: The Government of Pakistan has report-edly decided to convert all the existing and new power plants to the specifications

of Thar Coal versus earlier plan of converting these to imported coal. In a historic decision, the government has decided that a coal off-take agreement would be signed between Generation Company (Genco) and Sindh Engro Coal Mining Company (SECMC). The decision is in line with the MoU signed between Pakistan Electric Power Com-pany (Pepco) and SECMC, whereby it was agreed that after the approval of the feasibility report, Pepco would sign Coal Supply Agreement with SECMC.

Ukraine wants to enhance trade ties with Pakistan: The ambassador of Ukraine, Volodumyr Lakomov has rejected the report of western media about Pakistan and termed they are portraying wrong image of Pakistan. He said that Pakistan is peaceful and investment friendly country and Ukraine is eager to enhance bilateral trade ties with Pakistan.

Iran-Pakistan trade to hit $3 billion: Deputy Head of Foreign Trade Develop-ment Housing Rezaie Tamrin said on October 9 that trade between Iran and Pakistan currently stands at less than $1 billion and planning has been made to augment the figure to $3 billion in the light of abundant opportunities in the field of trade and economic cooperation.

China to take trade to new heights: Huang Guojun, Director General of Nanchuan Industrial Park in Xining City of Qinghai province visited the Lahore Chamber of Commerce and Industry and said the Chinese government is making all out efforts to take its economic relations with Pakistan to a new height by aggressively exploring opportunities for investment and joint ventures in various sectors of the economy and the establishment of Nanchuan Industrial Park Business Development Centre will go a long way in achieving the goal.

Overseas Pakistani workers remit $3.599bn: Overseas Pakistani workers remitted an amount of $3.599 billion in July-September 2012 showing a growth of 9.16 percent or $301.91 million when compared with $3.297 billion received during the same period of last fiscal year.

Pakistan received $226.5m in Q1: Pakistan has reportedly received foreign assistance of $226.5 million in the first quarter of the current fiscal year includ-ing $140.8 million from multilateral donors.

by Jauher Ali

The prayers of the millions in Pakistan, and those around the world, have seemingly been responded to as, according to the doctors in Queen Elizabeth’s Hospital in Birmingham, which has decades’ experience of

treating British casualties “Malala Youssufzai is now stable and recovering from her ordeal. She had had comfortable nights after arrival in the city on board an air ambulance”, said the hospital’s medical director Dave Rosser, adding “we are very pleased with the progress she’s made so far.” By October 19, Malala Yousafzai, who was shot in the head and the neck on October 9 for her championing the cause of the girls’ right to acquire education, was able to stand with help, though she still showed signs of infection. Doctors treating her at the British hospi-tal said. “She is also communicating ,” adding that the girl is “well enough; that she has agreed that she’s happy, in fact keen, for us to share more clinical detail.” Rosser said the infection is probably related to the track of a bullet which grazed her brain and caim within centemetres of killing her, travelling through her head and kneck before lodging in her left shoulder. But “she has every chance of making a good recovery,” said the doctors at the special hospital unit expert in dealing with complex trauma cases. The good news is that Malala is improving with encouraging speed. By October 26, she had recovered enough to meet her family members who had flown in just a day earlier to see her brave daughter. Talking to media, her father Ziauddin Yousufzai said, his daughter was strong. “She fell temporarily but she will rise again” said her father who looked happy and satisfied with her daughter speed of recovery.The incidents of extremism, terrorism and target killings in Pakistan are not new. The menace has grown over time and refused to die down posing a daunting challenge that requires being met incisively by hammering out a programme that is effective, feasible and actionable. Sadly, the lingering curse has not received the quality attention it deserved. As a result, it has spread all over the

length and breadth of the country, costing the nation not only thousands of precious lives but also impacting adversely on the national economy which has almost collapsed due to increasing trend of closing down or moving out of the industries and businesses to other countries. Of all the tragic attacks of target killings that the innocent people in different parts of the country have so far suffered from, the one that befell young Malala Yousuf-zai, the 14-year- old Pakistani rights activist, because of her bold and courageous campaign for the right of the girls to acquire education, was perhaps the most awful and horrendous in nature that gave way to an ‘enough is enough’ state of mind for action against the militants once for all. So enormous was the magnitude of the crime against this rights activist that, unlike several other instances of targeted killings that are generally over-looked as a matter of daily routine, it did not go unnoticed; it sparked an outrage not only inside Pakistan but all over the world transforming Malala – the young blogger – into an international symbol of defiance against the radical Islamist group that continues to wield influence in parts of Pakistan.The Taliban’s attempted assassination of Malala Yousufzai because of her identity as a symbol of knowledge or of girls’ aspiration to receive education, pricked and stirred the collective conscience of mankind the world over and aroused world-wide condemnation, in the strongest possible words. The incessant outpouring of public anger over the assault and expression of revulsion against the terrorists on the one hand and demonstration of solidarity and heart-rending prayers for survival of this ‘pride of the nation’ on the other, have been unprecedented which, perhaps, forced the Taliban to try to justify their action by saying “we did not attack her for raising her voice for education; we targeted her for opposing the mujahedeen and their war,” although they had closed down girls’ schools in Swat as part of their rule. Malala met with the attack on her life when she was returning home along with her other colleagues in a school van in the former

POLITICS

Malala Yousufzai:A symbol of unprecedented courage


Textile exports to Saudi Arabia, Bosnia: Reportedly, Pakistan’s textile export failed to get a boost in terms of market share (which is presently 1.4 percent) in Saudi Arabia and Bosnia despite low tariff/duties offered by these countries for Pakistani textile products. Saudi Arabia’s total textile imports stand at 3.6 billion dollars per annum whereas Pakistan’s share in it is 51.7 million dollars per annum. Similarly, Bosnia imports 500 million dollars per annum of textiles whereas Pakistani exports to the country are 2.6 million dollars per annum.

Businessmen seek cut in mark-up rate: Founders Group of the Lahore Chamber of Commerce and Industry has demanded of the SBP to bring the mark-up rate down to a single digit by reducing it by 2.5 percent to 3.0 percent.

The Sri Lankan Business Delegation from Sri Lanka, headed by, Mr. D. W. Jinadasa, Consul General of the Democratic

Mr. Muhammad Haroon Agar, President KCCCI is presenting Chamber’s Crest to Mr. D. W. Jinadasa. Mr. Shamim Ahmed Firpo, Mr. Nasir Mehmood, Mr. Majyd Aziz, Mr. Zia Ahmed Khan, Mr. S.M.H. Rizvi and others were also present.

Socialist Republic of Sri Lanka, visited the Karachi Chamber of Commerce & Indus-try and had a meeting with the President, Mr. Muhammad Haroon Agar. KCCI President Muhammad Haroon Agar has urged to effectively apply Pak-Sri Lanka Free Trade Agreement and enhance bilateral trade aligned with existing trading potential.

Businessmen call for effective trade diplomacy with EU: The Lahore Cham-ber of Commerce and Industry President, Farooq Iftikhar on October 3 stressed the need for effective trade diplomacy with European Union to ensure Generalized System of Preference (GSP) Plus status by 2014. He called for a strategy to enhance trade-related technical cooperation with relevant partners on both sides in order to optimize the potential benefits of the post GSP scenario.

Ambassador of Greece to Pakistan H.E. Mr.Petros Mavroidis discussing bilateral trade potential between Pakistan and Greece with Mr.Zafar Bakhtawari, President ICCI.

Ambassador of Greece to Pakistan H.E.Mr.Petros Mavroidis visited Islama-bad Chamber of Commerce & Industry (ICCI) for congratulating Mr. Zafar Bakhtawari on his appointment as Presi-dent of ICCI. Greek Ambassador said that Pakistan and Greece need to improve their commercial and economic relations to promote bilateral trade and investment by taking advantage of new business opportunities.

Further cut in discount rate may affect banks profits: Analysts have expressed the view that banks profits may face negative impact if the central bank further reduces the discount rates by 50 – 100 basis points in the upcoming monetary policy.

Leather sector has potential to cross $3 billion exports: Pakistan Tanners Asso-ciation (PTA) Chairman, Agha Saiddain on October 3 said if leather sector of the country is treated as a model sector in the Strategic Trade Policy Framework (STPF) 2012-15, this sector can cross $3 billion exports in the next three years.

Import of used cars causing loss to exchequer: According to report quoting industry experts, growing import of used cars has given impetus to money transac-tion through Hundi with apparently no check by banking regulator on the rampant illegal activities causing loss of millions of dollars to national exchequer.

SCCI calls for mechanism for POL products’ prices: President, Sarhad Chamber of Commerce and Industry, Dr. Mohammad Yousuf Sarwar has demanded to devise a mechanism for changing prices of petroleum products on monthly basis as the weekly increase in POL prices is causing inflation and would bring detrimental effects on economy of the country.

Lack of accredited facilities may hinder exports to India: According to reports, Pakistani products may not be able to enter Indian market despite liberalization of trade by December this year, as Pakistan Standard and Quality Control Authority (PSQCA) lacks internationally accredited facilities to meet the required quality/standards for testing the export items.

KCCI proposes establishing new industrial zones: Karachi Chamber of Commerce and Industry (KCCI) have proposed that new industrial zones should be established with proper roads, power and water supply and security facilities.

LCCI lauds govt’s decision to import LNG: President, Lahore Chamber of Commerce and Industry (LCCI) has applauded the government’s decision to import liquefied natural gas and use Thar coal for power generation to overcome electricity and gas shortages in the country.

KISMA delegation visits KCCI: A delegation from Karachi Iron & Steel Merchants Association (KISMA), headed by its Chairman, Haji Ghulam Muhammed, visited the KCCI and had a meeting with the President, Mr. Muhammad Haroon

In the picture, Mr. Muhammad Haroon Agar, President, KCCI is seen presenting Chamber’s Crest to Haji Ghulam Muhammed.

Agar. President KCCI assured the delegation of Karachi Chamber’s best coop-eration and support for resolving their genuine and lawful issues.

KCCI urges foreign business people to invest generously: Addressing foreign delegations at Expo Pakistan 2012 in Karachi on October 5, Presi-dent, Karachi Chamber of Commerce and Industry (KCCI) Muhammad Haroon Agar urged foreign business persons and investors from friendly countries to invest in Pakistan gener-ously.

Taliban stronghold of the picturesque Swat valley. She was spotted, identified and shot in the head and the neck. That wasn’t all; as she struggled for life with the help of a ventilator in a Peshawar hospital, the Taliban not only trumpeted their responsibility for shooting her but also vowed that if some-how she survived, they would come after her again and finish her. They claimed that “Yousafzai is the symbol of the infidels and obscenity," adding that “if she survives, we would target her again.”. Would it be an act in accordance with Islam and its teachings, the Taliban claim to be professing, or sheer barbarism? It is difficult to reconcile with the idea that a human, not to speak of a Muslim, could be that barbaric, brutal, irrational and insane.Malala, who has been brought up in an environment chocked with roaring guns, began gaining international attention in 2009 when she was only 11 years old. This was the time when Swat, a valley in northwest Pakistan near the border with Afghanistan, was practically under the siege of the Taliban who were against girls’ education. They demanded veils for women, beards for men and a ban on music and television. They allowed boys' schools to operate but closed those for girls. Led by Maulana Faz-lul-lah, they burned girls’ schools and terrorized the valley. Malala came to prominence as she started writing a blog for the BBC wherein she detailed life under Taliban rule, their attempts to take control of the valley, and her own views on promoting education for girls under the constant threat of death by Islamist extremists. She also featured in two New York Times documentaries. Her touching diary earned her praise and fame – both national and international. "I had a terrible dream yesterday with military helicopters and the Taliban," she wrote. "I have had such dreams since the launch of the military opera-tion in Swat. My mother made me breakfast and I went off to school. I was afraid of going to school because the Taliban had issued an edict banning all girls from attending schools."In that environment of terror, Malala showed exemplary display of courage as she continued attending her school, and encouraged other girls as well to follow suit. The courage was symbolic as her life was at stake. She is a firm believer in educa-tion for all, girls included, and expressed it quite vociferously as she talked to CNN a year ago. She said, "I have the right to education, I have the right to play, I have the right to sing, I have the right to talk, I have the right to go to market, (and) I have the right to speak up." Her struggle resonated with tens of thousands of girls whom the Taliban had deprived of their right to get education. Though a teenager, she is strong from within and stronger in her belief and conviction. An example of the strength of her conviction and belief in the cause of education she stood for was seen in her brave and bold resistance against the edict of the Taliban depriving girls of the blessings of education. Even at a time when she is fighting against the onslaught of the seemingly sure death in the hospital in Birmingham, she has shown resilience and strength which, the doctors attending her said, was a good sign. “We are pleased with the progress she’s made so far, she’s shown signs of being just as strong, as we have been led to believe, she is” said David Rosser with the hope of an encouraging result. The first picture that the hospi-tal released on October 19 also showed her plastered around her face but looking “confident, thoughtful and brave as ever—the display of the same courage that gave her worldwide fame as she took on the most vicious of militants in Pakistan.” Malala’s ordeal has helped concentrate minds the way it rarely does. There is vociferous outcry of public anger and condem

nation of the heinous, cowardly act calling for decisive, effective deterrence. The National Assembly and the Senate adopted unanimous resolutions condemning the dastardly act to silence the voice of sanity. The religious leaders have expressed their abhorrence against this reprehensible, disgusting and tragic event. Such unanimity of thought, hardly ever seen before, provides an ideal opportunity for the government to act and uproot the menace so as to restore people’s sense of security and peace of mind. The mindset of the Taliban, the interpretation of Islam they profess and the ideas they propagate, for which they did not hesitate targeting even a teenage school girl, are seen as contrary to the teachings of Islam and the ideals of Pakistan articulated by its founding fathers. According to religious scholars, Islam has made it obligatory on both men and women to acquire knowledge i.e. education. But the Taliban, who reportedly claim to be true adherents of Islam and its traditions interpret the Islamic injunction otherwise. To them, for girls to try to seek education is un-Islamic and those who dare do so deserve punishment (impliedly no less than the punishment of death). This is what they attempted to do in case of Malala who defied their diktat. The need for action is much more imperative now than ever before. But from the words and actions so far made public, it seems that our leadership is not yet clear on what to do. It has not been able to convince the population of a course of action either; rumours and conspiracy theories seem to be eating away at their very ability to act. Politicians, on the other hand, are apparently afraid that if they supported military action, the Taliban would perhaps unleash a wave of terror, and the elections scheduled for April 2013, may be postponed. Interestingly, the authorities responsible for taking action against such heinous, cowardly acts say, they are moving forward with their investigation into the attack although, according to reports, they are nowhere closer to identifying and arresting those responsible for the crime of shooting Malala Yousufzai, despite offering high profile rewards. Interior minister, Rehman Malik, offered a $1 million bounty for giving information that leads to the arrest of the attackers. Malala has been given several awards for her act of unprec-edented bravery. The government has announced to honour her with Tamgha-e-Shujaat, Pakistan's third highest civilian bravery award. This is all very well and quite appreciable. But the greatest award for all that she did would be the creation of conditions congenial for what she stands, and has fought for. It is high time that we cleared the cobwebs in our minds, and acted decisively, once for all. A planned act, was it?The response to the Malala Yousufzai tragedy from the top brass of the regimes in the US, Britain, UAE and several European countries has made some observers interpret the tragedy an act planned to revive anti-Taliban feelings in Pakistan so that after the US and allied forces exit Afghani-stan, Pakistan, which helped create the Taliban beginning 2005 on the advice of the US government, does not agree to the Taliban taking over control of Afghanistan. The logic backing this argument is that, how come similar, in fact much worse acts of killing of thousands of innocent in Pakistan did not ignite such a passionate and supportive response from the West? They also point to the close relations Malala’s father had with the US diplomats, and have posted photos of meetings wherein Malala and her father shared the confer-ence table with top US diplomats and military commanders.


H.E. Mr. Bharat Raj Paudyal, Nepalese Ambassador to Pakistan with Mr. Zafar Bakhtawari, President ICCI at ICCI office.

Ambassador Nepal visits ICCI: H.E. Mr. Bharat Raj Paudyal, Nepalese Ambassador to Pakistan met with Mr. Zafar Bakhtawari, President ICCI, during his visit to ICCI office on Octo-ber 17. The Ambassador said that exchange of business delegations, single country exhibitions and a proactive involvement of business community of both the countries could enhance bilateral trade relations between Nepal and Pakistan.

PIAF urges government to promote trade: Pakistan Industrial and Traders Associations Front (PI-AF) Chairman Engineer Sohail Lashari on October 5 urged the government to strengthen and promote trade and industry for bringing down the graph of unemploy-ment, enhancing Tax-to- GDP ratio and for the resultant economic revival of the country. He said that heavy govern-ment borrowing has badly affected the process of industrialization in the coun-try as neither any new business venture came up nor Foreign Direct Investment situation improved.

SCCI rejects LNG import decision: President, Sarhad Chamber of Com-merce and Industry, Dr. Mohammad Yousaf Sarwar has rejected the govern-ment move of LNG import saying that the step was totally unwise and against the CNG industry and business community. He demanded immediate withdrawal of the move.

APTMA not happy with discount rate cut: Central Chairman, All Pakistan Textile Mills Association (APTMA), Ahsan Bashir has expressed his dismay over the negligible cut in the discount rate by State Bank of Pakistan. He apprehended that the threat of disin-vestment would be looming large to hit badly the GDP growth in the country.

FPCCI and CACCI agree to boost cooperation: The Federation of Pakistan Chamber of Commerce and Industry (FPCCI) and Confederation of Asia Pacific Chamber of Commerce and Industry (CACCI) on October 9 agreed to expand mutual cooperation and bilateral trade ties.

PAJCCI trade delegation visits Kabul: The first trade delegation of PAJCCI reached Kabul from Pakistan on October 7, 2012. The high level 31-member trade delegation led by President PAJCCI, Mr. M. Zubair Moti-wala comprised of various business segments from Pakistan. The prime objective of this visit was to provide an opportunity to the business community across the border to interact with each other for mutually beneficial bilateral economic deals.

His Excellency Mohammad Sadiq, Ambassa-dor of Pakistan in Kabul hosted a dinner in honor of Pakistani trade delegation of PAJCCI.

FCCI asks govt. to devise new trade policy: Mian Zahid Aslam, President, Faisalabad Chamber of Commerce and Industry (FCCI) has urged the govern-ment to devise new trade policy incor-porating measures to impart impetus to trade and businesses in the country.

CACCI to help expedite visa process for Pakistani businessmen: Speaking at Lahore Chamber of Commerce and Industry on October 11, the President, Confederation of Asia-Pacific Chambers of Commerce and Industry (CACCI) Ambassador Benedicto Yujuico said that the Confederation will help expedite visa process for Pakistani businessmen in all 27 member countries. He also invited the Pakistani businessmen to participate in the international exhibition being arranged by the Confederation in Cebu, Philippines in March 2013 to have first-hand knowledge about available business opportunities.

Mr. Muhammad Zubair Motiwala, President PAJCCI meeting with Ms. Amy N. Dove, Economic Officer, U.S. Embassy Kabul and Mr. Scott Cameron, Project Manager, USAID-Afghanistan in Kabul.

Govt. urged to bail out textile industry from crisis: Pakistan Textile Exporters Association (PTEA) has demanded of the government to bail out textile indus-try and exports from current crisis by removing hurdles and provision of necessary incentives to expand economy, create new jobs and to generate forex for the country.

LCCI’s concern on decline in FDI: Noting the sharp decline in foreign investment by 67 percent to 87 million dollars during July-September 2012 against 263 million dollars during the same period last year, the Lahore Chamber of Commerce and Industry (LCCI) has appealed to the government to take note of constant decline in foreign direct investment (FDI). He said that energy crisis, lack of transparency, law and order situa-tion were the major factors keeping foreign investors away.

US asked to enhance economic cooperation: Talking to James Fluker, Senior Commercial Counsellor, US Embassy in Islamabad, President, Karachi Chamber of Commerce and Industry Muhammad Haroon Agar said that Pakistan’s role in combating terrorism has not been materialized in terms of increased economic coop-eration between Pakistan and USA. He said that US can reciprocate the contributions of Pakistan as frontline state in war against terror by helping Pakistan to address the economic challenges through shifting its support from conventional aid to market access, investment, technology trans-fer, health, education and training, scientific research, power generation and infrastructural development.

he urge to seek independence is not new; it has been taking place from time to time and in different parts of the world. In recent years, it was the Republic of South Sudan which

appeared on the world map as an independent nation on 9th July 2011. Yet another significant change in the world map is in the offing. This time it is going to be ‘Bangsamoro’ (Moro Nation) seeking independence from Philippine after a 40 years long political and militant struggle by Moro Islamic Liberation Front (MILF). Through a peace deal signed on October 15 between the Government of Philippines and The Moro Islamic Liberation Front (MILF), it was agreed to estab-lish Bangsamoro as a new autonomous political entity replacing the Autonomous Region in Muslim Mindanao. The deal is seen as a major breakthrough in ending a decades-long separatist movement in Mindanao.The agreement would create the Bangsamoro, replacing the autonomous region in Muslim Mindanao as a new region run by a ministerial government.Minority Muslim groups in the southern Philippines - known collectively as the Moros - have been fighting for self-determination for over four decades. The struggle culminating into several conflicts in Mindanao led to the displacement of over 2 million people since 1970. An estimated 600,000 people were displaced in 2008 alone, making the Philippines a country with the highest number of the persons displaced in that one year. Together, the Moro and communist insurgencies have resulted into killing of at least 160,000 people.Various peace talks held on and off during the process of the struggle for freedom failed to produce any tangible results until the govern-ment of President Benigno Aquino III, elected in May 2010, said in August 2010 that it was optimistic of secur-ing lasting peace.The current armed conflict started in late 1960s, when a Muslim armed group (Moro National Liberation Front or MNLF) started advocating the need and demand for a “Moro homeland.” The Philippine government tried to quell the uprising through military. This led to numer-ous deaths and displacement of the civilian population (Muslims as well as Christians). In 1970s, the Philippine government initiated peace talks and concluded a peace agreement with the then main Muslim armed opposition group, MNLF, to stop the conflict and address the prob-lems. But armed conflicts and confrontations continued to take place intermittently, between the Philippine military and the MNLF and also with another Muslim armed opposition group (Moro Islamic Liberation Front or MILF). Every time an armed conflict broke out, thousands of non-combatants were caught in the crossfire, and suffered displacement and human rights violations.The declaration of martial law on 21 Septem-ber 1972 by the then President, Ferdinand E. Marcos, was a triggering event of the contemporary Moro armed struggle.

In December 1976, the Philippine government signed an agreement with the MNLF through the intercession of the Organization of Islamic Conference (OIC). This agree-ment, known as the “1976 Tripoli Agreement”, provided for the creation of an autonomous region in Mindanao and Palawan (covering thirteen provinces), and the estab-lishment of an autonomous government, judicial system (for Sharia law), and special security forces.The peace agreement proved elusive and formal peace talks between the government and MNLF had to be held again in 1993 through the mediation of OIC and the Indonesian government. The Philippine government and the MNLF signed the 1996 Final Peace Agreement (FPA) to formal-ize the implementation of the "1976 Tripoli Agreement.”By winning in the 1996 elections for the ARMM posts, the MNLF virtually gained control since 1996 over six prov-inces and one city with predominant Muslim population. But the formula for an autonomous region did not offer a complete solution for total peace in Mindanao. Hence, the Muslim armed opposition group, the MILF, demanded an independent Islamic state and the Philippine government had to deal with MILF separately for a negotiated settle-ment of its demands.The impact of the Mindanao conflict on society has been quite severe in several areas including health, education, and economic development. According to the United Nations Development Program’s Human Development Report for 2008/2009, the quality of life in the conflict-affected provinces of Mindanao is the worst in the Philip-pines, and the World Food Program Reports that over 50 percent of the population lives below the poverty line.Situated outside the typhoon belt, Mindanao enjoys a generally fair tropical climate, evenly distributed through-out the year. Its rich soil accounts for bountiful harvests of a variety of farm products. It grows most of the Philippines' major crops such as rubber (100% of national production), pineapple (91%), cacao (90%) as well as banana, coffee, corn and coconut (over 50%).

T

‘Bangsamoro’:A new country in Philippine

POLITICS


by Mustafa Ali Sheikh

further low. SBP has been doing that during the past three quarters, and has brought lending rates down by as much as 350 basis points. The current MPS included more in terms of relaxation of yardsticks for liquidity management in banks on a daily basis, and helping banks increase their loanable funds. This is a well-intentioned move that banks must utilize but without increasing the “systemic” risk that comes with maintaining lower ready liquidity. Henceforth, SBP will provide greater flexibility to banks by cutting the daily Cash Reserve Requirement (CRR) to 3% of demand and time liabilities from the present 4%, and require average CRR of 5% to be maintained over two-week periods instead of one-week, as required at present. This, as per MPS estimates, would leave over Rs 100bn in the banks to lend to the private sector. This is a clear indication for the banks that they are expected to step up efforts to go back to their basic intermediary role i.e. offer higher credit to the private sector.Discount rate cut and consequent cheaper returns from lending to the state should force a rethink of the ‘safe’ strategy of lending to the state, and induce banks into offer-ing credit at a higher level to the private sector because that would yield much better returns. SBP has also ensured the sustainability of the banking sector’s deposit base by its refusal (at least for now) to accede to the Pakistan Banks Association’s demand to lower the minimum 6% per year profit rate on savings. But while SBP took several prudent initiatives, it created few problems too. The MPS was right in pointing out that banks are lending to the (supposedly zero-risk) state, and doing so, avoiding lending to the private sector. The result is that year- on-year growth in credit to private sector fell from 22.4% in FY08 to 0.7% by mid-2012. However, limiting access to its discount window for overnight borrowing and placements to 7-times in a quarter and charging 0.5% over the upper limit of SBP’s corridor rates will surely hurt the banks. SBP view is that this facility was misused but, surely, it also notes how state offices suddenly borrow billions, and repay them as unexpectedly (often late in the day); the manner wherein power sector’s ‘circular debt’ is managed proves it. The fact that banks’ mark-up spread has gone down implies that they now have less room for absorbing costs. Unless the government has assured SBP that this debt manage-ment conduct will be checked, banks could suddenly need billions in instant liquidity, or sit over billions earning zero returns at least for a day, if not the two-day weekend. This move also overlooks the fact that banks’ liquidity needs to remain volatile. After repaying SBP to the tune of Rs 412bn in Q1-FY13, government borrowered Rs 437bn from the banking sector, forcing SBP to inject liquidity to the tune of Rs 611.5bn. Limiting the use of SBP’s discount window implies deposit creation by banks but in an environment where inflation is perceived to be much higher than 8.8%, real returns to the savers negative, and savings on a decline, will banks be able to mobilize fresh liquidity?

Mindanao is reportedly endowed with rich mineral resources. It has been estimated by the government geologists that the Philippines may be having untapped minerals worth between US$840 billion to US$1 trillion in Mindanao.Its metallic deposits include lead, zinc, ore, iron, copper, chromites, magnetite and gold. Gold mines in Mindanao account for nearly half of the national gold reserves. Its non-metallic mineral resources include marble, salt, sand, gravel, silica clay, and limestone.The international community hopes that the new initiatives between the Philippine government and the MILF would finally end the secessionist war in the region and pave the way for lasting peace and development in Mindanao.

Key points of the accord:Autonomy: The MILF will drop its bid to set up a separate state in the southern Philippine region of Mind-anao and settle for parliamentary-style self-rule in an autonomous region.Disarmament: The 12,000-member MILF will disarm in stages, while the local police force gradually assumes law enforcement functions from the Philippine military. Powers: The Philippine government will retain exclusive powers on defence, foreign policy, monetary policy and citizenship matters.Taxes: The autonomous government will be able to levy its own taxes, charges and fees. Both sides will have a “just and equitable share” of revenues from the region’s natural resources, although no specifics have been outlined.Islamic Law: Sharia law will apply only to Muslims and only for civil cases, not for criminal offences. All residents are guaranteed basic rights to life and freedom of religion and speech.Territory: Five provinces plus two cities, six towns and several nearby villages in the south, comprising about 10 percent of the Philippines’ total land area. Each of these areas may choose to opt out in a plebiscite.Constitutional Amendment: A provision calling for amendments to the Philippine constitution is a potential stumbling block to a final peace treaty because the rebels are insisting on changes while the national government prefers it untouched. The framework agreement leaves the question unresolved.Timetable: Comprehensive peace agreement to be signed at the end of this year. “Basic law” for the autono-mous region to be drafted and passed by the Philippine parliament in 2015, then ratified in a regional plebiscite. A regional parliament would be elected in 2016.

Support from the International Com-munity for the 2012 Framework Agree-ment:Hillary Clinton, Secretary of State, USA:“The United States welcomes the announcement of the framework agreement between the Government of the Philippines and the Moro Islamic Liberation Front. This agreement is a testament to the commit-ment of all sides for a peaceful resolution to the conflict in the southern Philippines.We encourage all parties to work together to build peace, prosperity and greater opportunities for all the people of the Philippines”.

Ministry of Foreign Affairs of Japan:“Japan heartily welcomes that the Framework Agree-ment concerning the Mindanao Peace Process has reached after many years of negotiation between the Government of the Republic of the Philippines and the Moro Islamic Liberation Front.”

Bob Carr, Foreign Minister, Australia:“Australia welcomes this agreement and hopes that the conflict in Mindanao is drawing to a close.I particularly acknowledge the leadership of Philip-pines President Benigno Aquino, who has been a strong advocate for peace.”William Hague, Foreign Secretary, UK:“I wholeheartedly welcome the announcement of the framework agreement. The UK's role as a member of the International Contact Group has allowed us to see the leadership shown by President Aquino and the Government Panel and the Leadership of the Moro Islamic Liberation Front. The UK is pleased to have supported the parties and Tengku Dato' Abdul Ghafar the Malaysian facilitator during the process. We stand ready to provide further assistance if such a role would be valuable to the parties."Catherine Ashton, High Representative of the European Union for Foreign Affairs, EU:I wish to express my congratulations to the Govern-ment of the Philippines and the Moro Islamic Liberation Front on the successful conclusion of the negotiations on the Framework Peace Agreement. The EU, as a member of the International Monitor-ing Team and major development partner in poverty alleviation in Mindanao since 1990, will continue to lend its full support.Ban Ki-moon, Secretary General, UN:“I welcome the announcement that the Government of the Republic of the Philippines and the Moro Islamic Liberation Front (MILF) reached a framework peace agreement aimed at ending decades of fighting in Mindanao, South Philippines. I am grateful to all national and international actors, in particular the Government of Malaysia, for their contributions to the success of the peace negotiations. The United Nations stands ready to provide assistance to the parties, as needed, in implementing the framework peace agreement.”


n November 6, the US electorate will decide who should be their President for the next four years. The three debates between the presiden-tial hopefuls–sitting President Obama, and the

aspirant Romney–turned unpleasant when it came to the conduct of Obama regime on the domestic front and the future plans to revive the US economy. Neither offered hope of bridging the ballooning rich-poor gap via higher taxation of the rich–the class financing their huge election campaigns. Romney went as far as saying that the miseries of the poor are the problem of the state, but had no clear- cut policy on how the state should pull them above the poverty line. More importantly, neither Obama nor Romney promised a change for the better in America’s treatment of the rest of the world.President Obama–the first-ever Black American to become the US president–was elevated to this office because it was believed that the US economy was headed for its worst-ever recession since the ‘Great Depression’ of the 1930s, since no white leader wanted to be the president in such testing times. These predictions did crystallize but, for better or for worse, with his controversial bailouts of America’s financial giants, Obama did manage to contain the fallout from the recession, and prevented a total collapse of the US economy; he had no other option except preventing the collapse of the “too-big- to-fail” monstrosities that were created during previous eight years of Republican rule. But the US economy is still not out of the pit and Romney knows much less about pulling it out of the pit than does Obama. What, however, was common between the two was blind-ness about US foreign policy. While Obama was able to force the US parliament to agree to withdraw US troops from Iraq and Afghanistan, he remains as blunt about following as reckless a foreign policy as before. In articulat-ing their foreign policy, both showed that it was driven by the pressure of an election campaign that triggers an irresistible temptation to proclaim simplistic remedies for complicated foreign challenges. This was reflected in the ultimatums repeatedly given to Iran, and references to use of US military power, with zero consideration for its poten-tial regional and global consequences. That such a visionless policy has been inducing Israel to lose out on the opportunity to become an accepted and enduring part of the Middle East does not bother either presidential hopeful. Neither sees that a genuine Israeli partnership with the Palestinians could develop in the war-torn Middle East a centre of technological and finan-cial innovation. That assuring Israel’s future by imposing a new order in the Middle East via forceful ‘export’ of democracy has failed didn’t seem to bother either Romney or Obama. Nor does the reality that the unending rise in oil price, even with the Strait of Hormuz still open, is eroding Europe’s competitiveness and economies, and may eventually make Europe subservient to the resource rich Russia, nor the fact that the post-WW I Anglo-French dictates that ended the Ottoman Empire, have become shaky

because of internal dissent in the bigger countries like Egypt and Iran. Romney pledged that, on his first day in office, he will initiate punitive steps against ‘currency manipulation’ by China without any prior negotiation with China on the issue; it reflects more of his campaign-driven emotions, much less his vision about the fallout of China’s likely retaliation. There was no discussion about a joint US- Russia-China endeavour to end the civil war in Syria, and holding thereafter free and fair elections, or telling Iran that it isn’t under threat and doesn’t need nuclear weapons, or that US retaliation will be a response only to Iran’s attacking Israel, or convincing OPEC states to reduce oil price in exchange for credible trade concessions to pull Europe out of its financial muddle. The treatment of Pakistan was another issue on which both agreed. Obama and Romney promised even higher use of drones against targets in Pakistan with Romney insisting that it was the “right” thing to do although the policy is violative of Pakistan's sovereignty, yielded proven counter-productive results, and is now being challenged in courts in the US and the UK. Both found nothing wrong with the CIA raid on the Osama bin Laden compound in Abbot-tabad. Obama insists that “had we asked Pakistan's permis-sion we would not have gotten it”. Romney says “Pakistan isn’t like others and does not have a civilian leadership that is calling the shots…... but it's not the time to divorce a nation on earth that has 100 nuclear weapons and is on the way to double it".In his Pakistan-bashing, Romney didn’t stop there; he went on to add that "if it (Pakistan) falls apart, or becomes a failed state, there are nuclear weapons there and you've got terrorists there who could grab” those weapons. That is where his concern ended for a country that the US still keeps calling a ‘strategic ally’. Both US presidential hopefuls are oblivious of the immense sufferings of Pakistanis as a direct consequence of their government's blind acquies-cence to a role in the US ‘war on terror’. In fact, Pakistan’s treatment by the US over the years sets the worst example of the price a Muslim state must pay for being a ‘US ally’. Lesson: the US now believes only in expediency and self-interest, nothing else.Muslim voters residing in Ohio, Virginia and Florida add up to 2.5 million, and hold the key in the coming election. They are unhappy over the post-9/11 US actions–the invasion of Afghanistan and Iraq, homeland security and rendition policy and the Guantanamo Bay prison, trials of the detain-ees held there, the drone attacks, and FBI agents’ provoca-tive interaction in mosques to induce more violence. In the presidential election of 2008, 93% of Muslims voted for Obama; now they are divided–some 68% still favour him, 7% favour Romney, and 25% are undecided. However, there has been a major success for Obama; Gen. (r) Collin Powell, another Black American like Obama but a Republican, will again vote for Obama because “he is a Republican of a moderate mould–the dying breed.” In this setting, it is hard to predict who will be the next US President.

ECONOMY

by Kamran Khan

ords of wisdom that “today’s foes are tomorrow’s friends” and “don’t put all your eggs in one basket”, hold as good today as ever before. The advice seems to have been

well taken by Pakistan, though belatedly; for decades Pakistan had been excessively reliant on, and tagged to the US. A perceptible change is visible in Pakistan’s foreign policy which is now gravitating towards Central Asia, and seeks close and cordial relations with Russia, which in the past had played a significant role in Pakistan’s development, the gift of the Pakistan Steel Mills being the great landmark in the history of Russo-Pakistan relationship. The paradigm shift in Pakistan’s foreign policy with an urge to balance out and diversify its relations by constructively engaging with other major powers, has been prompted by the ongoing geopolitical scenario, which is undergoing profound change in the wake of mistrust and misunder-standings among the partners in the war on terror in the region where Russia enjoys a place of strategic importance in view of its strong linkages with Europe and Asia, and Pakistan has always had great strategic value for major powers, given its geographical location at the crossroads of the subcontinent. Revival of the warmth and strong bonds of relationship between Pakistan and Russia is of crucial importance in the light of the current regional and global situation. Things in Afghanistan are changing where both Pakistan and Russia have convergence of interests. Russia and China are two important forces that have great interest in the geopolitical and strategic developments in the region, and have major roles to play, while Pakistan views it as a source of stability and peace both at regional and global levels. After a decade of crisis beginning 1989 and dismember-ment of the USSR, Russia has bounced back and regained its lost strength. It is now one of the fastest growing econo-mies in the G-8 group, and is well on its way to redefine its strategies in the region. Therefore, it may not seem surpris-ing to see it playing a significant role in shaping things that take place in the region, especially in the context of the scenario likely to emerge in Afghanistan in the aftermath of US curtailing its presence there. Russia is a key player in the regional politics where Pakistan needs to play its proper role and share its burden to achieve its own strategic and economic objectives. Pakistan already has cordial relations with China, which has proved to be its all weather friend. Closer relations between Pakistan and Russia at this critical moment of the Afghan war could help in offsetting the pressures that USA has put on Pakistan by its confused policy on engaging in a dialogue with the Taliban. Historically, Pakistan’s relations with Russia have experi-enced a series of ebbs and flows ever since independence in 1947. During the initial years of Pakistan’s emergence on the world map as a sovereign, independent nation, relations between the two countries were strong and healthy under the civilian control, but began cooling off after Prime Minister

Liaquat Ali Khan chose to visit America instead of Russia. The relations became colder after the martial law of 1958, but much worse after the U-2 affair – the US spy plane that took off from a US airbase in Badabair (NWFP) and was shot down by the Russian air force. Pakistan’s joining CENTO and SEATO made things worse.From 1973 to 1979, Soviet Union and Pakistan developed strong relations with each other. But they too proved short-lived and went down with the popular unrest follow-ing the heavily rigged 1977 elections in Pakistan and the subsequent execution of the then Prime Minister Zulfikar Ali Bhutto on April 4, 1979, disregarding the repeated calls for clemency by Leonid Brezhnev, Alexei Kosygin, and other members of Politburo. During the decade of the Soviet invasion of Afghanistan the relations often became antagonistic. However, the disintegration of the Soviet Union provided an opportunity for a new beginning in Pak-Russia relations based on mutual understanding of each other. Since then, the relations have slowly but steadily improved. Russia is a former superpower, is industrially developed, technologi-cally advanced, rich in mineral resources, and has now emerged as the world’s leading oil and natural gas exporter. Russia also has a history of providing assistance for strengthening the industrial infrastructure of Pakistan. In the ongoing geopolitical environment, Russia considers Pakistan crucial for fighting out the threats to its security and sovereignty due to militancy and extremism. Russia’s increased interest in forging close relations with Islamabad, which has now acquired a greater strategic significance in the calculus for the region, is motivated primarily by the political situation in Pakistan and around. In the wake of US preparations to leave Afghanistan by the year 2014, Russia apprehends failure of the state in Afghanistan which could cause spill over of Islamic fundamentalism, initially into Central Asia, and then into Southern regions of Russia. Any successful attempt to avoid and avert the problems spilling out of Afghanistan would not be successful without the involvement and active support of Pakistan. Russia has already dealt with Islamic secessionist movements in Chech-nya and the South Caucasus, and would naturally not like to

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Russo-Pakistan relations: beginningof a new geostrategic partnership

Russian Foriegn Minister Sergie Lavrov meeting with Pakistani Foriegn Minister Hina Rabbani Khar


he Federal Board of Revenue (FBR) is once again keen on launching a tax amnesty scheme. But, since there were loud rumours about a visiting International Monetary Fund (IMF) team ques-

tioning the move to push for granting tax amnesty (instead of proceeding against the 3.8 million entities the FBR had identified as non-filers of tax returns) Finance Minister Dr Hafeez Sheikh said that FBR’s latest tax amnesty scheme is still only a ‘proposal'.His stand implies that the government is not bothered about how such initiatives were faulted in the past as ‘government- backed’ routes to whitening black wealth; what is preventing the government from going ahead is the resistance from IMF though the Finance Minister thinks that the amnesty scheme can help avoid a ‘complicated’ exercise of ‘issuing notices’ to the non-filers. What he is not concerned about is that the legality of an action cannot be compromised purely for the sake of administrative ‘convenience’. Doing so, he exposed a tendency for expediency in the FBR, with zero concern for its implications on the morale of the honest tax filers, checking the generation of black wealth, and it’s being stashed away abroad. This is shocking since all the changes in FBR–IMF inspired, and on govern-ment’s own initiative–failed to induce a sense of moral responsibility in FBR’s top-brass. That all previous amnesty schemes failed to contain generation of black wealth proves that all these attempts were defective in one way or another, necessitating that any future effort in this context be structured keeping in view the past failures.The amnesty schemes launched in the past never focused on containing tax evasion. All of them were triggered by severe financial crises, which Pakistan faces periodically, courtesy the sustained bad governance of its economy. These tax amnesty schemes focused on generating resources that were enough to survive for the time being, not at eliminating generation of black wealth; that tendency has been exposed once again by FBR’s proposed tax amnesty scheme. Amnesty schemes manifest FBR’s repeated failures–a fact it must admit, and the reason therefor has been sustained side-lining of developing far stronger, fool-proof, credibly verifiable and, above all, taxpayer-friendly tax collection, reporting and surrender mechanisms. FBR’s 6o-year long failure in designing such mechanisms, is inexcusable. More so, because there was no dearth of proposals from experts, taxpayers placed in various categories, and ordinary citizens, enough documentary evidence of which must be available with the FBR. In this backdrop, the only explanations for FBR’s continued failures in this context are its focus on serving the interests of the in-power regimes, powerful lobbies in Pakistan’s business and industry, and the black sheep within FBR’s own ranks.FBR informed the IMF team that the amnesty scheme being devised could benefit from the expected inflow of the assets held by Pakistanis abroad as some governments were now looking at the option of disallowing resident Pakistanis to

have bank accounts in their countries. But that’s not true in case of many governments; this wealth could go to their banks. Besides, all the black wealth holders sent their wealth abroad on ‘expert advice’; these experts will now advise them on what to do in the future. It is no secret that these experts operate openly, and advertise the services they offer in well reputed financial newspapers and magazines with global circulation. For some of the black wealth holders, the amnesty scheme is practically of little use because they accumulated wealth from dealing in arms and drugs. One of the businessmen consulted by the IMF said, apparently, IMF’s main concern over the amnesty scheme isn’t so much over the return of the funds accumulated abroad through under-invoicing of exports and over-invoicing of imports; it is about the return of the wealth earned out of trading in drugs and arms, of which Pakistanis are accused due to Pakistan’s role in the US-backed Afghan Jihad–a role that majority of the Pakistanis resent. So much for the prospects of success of the amnesty scheme! All along, FBR’s focus should have been on discovering why and how black wealth is generated, and on devising ways of plugging the sources of black wealth generation by inducing the corrupt to legalize their business and enjoy the benefits of being in that secure and respectable category. The fact that it has virtually failed to net the bulk of the wholesale and retail sectors explains why black wealth continues to be generated. This huge gap implies that, even if its currently proposed tax amnesty scheme is imple-mented, black money will continue to accumulate necessi-tating yet another amnesty scheme in a matter of, say, five to seven years.Until credible systems and competent monitoring chains of FBR personnel to verify sales tax collection and its surren-der are in place, this crucially important tax on consump-tion will not be collected and the tax-to-GDP ratio won’t rise to fund subsidies that are crucial for gradually reducing the rich-poor gap. Funding of these subsidies out of already insufficient tax receipts is escalating the fiscal deficit which exceeded 7.8% in 2011-12, and may cross 9% in 2012-13. It is this prospect the IMF, WB and ADB find most worrying. A key condition of the Stand-by Arrangement (SBA) offered by the IMF in 2008, was to quickly withdraw the exemptions in sales tax. This condition wasn’t complied with resulting, at first in stalling of the SBA, and later, its termination. What led to this end was FBR’s inability to devise a system to monitor collection of sales tax by the businesses operating country-wide. It is high time the FBR set up a nationwide tax co-ordination outfit that would share data on the taxes collected, and those declared as per tax returns, and collate data on all the taxes collected by the provincial authorities, all on real-time basis, so as to check tax evasion, and to plug leaks therein. This is the way to go about increasing tax collection, but it may fail yet again due to the way taxes are spent by the government.

be involved in dealing with a similar situation again. There-fore, Pakistan has an important place in Russia’s foreign policy regime. For Pakistan, it is important not to look at this as expediency, but as a move to secure mutual interests.Seen in this perspective, the recent developments pointing to a change of heart between Pakistan and Russia are not Russian expediency. The initiatives that have so far been taken to strengthen bilateral relationships in several areas, including in political and economic sectors, should be seen as moves in the right direction. In the changing geopolitical scenario, Pakistan has a great strategic value for major powers, and in view of its strategic location such initiatives were important and essential, if not altogether inevitable. A beginning towards a new era of bilateral relations with Russia was made through exchange of high-level visits to Moscow and Pakistan in the recent past. President Asif Ali Zardari’s visit to Moscow lent strength to these efforts. The planned visit to Islamabad by President Viladimir Putin could have greatly helped in bridging the void that was created by the Moscow’s South Asia policy of keeping Pakistan at arm’s length while cultivating a special relation-ship with India, and could be instrumental in further enhancing cooperation between both the countries.An obvious and, perhaps ominous, shift towards improved relationships was evidenced by the Russian Foreign Minis-ter, Sergei Lavrov’s hastily-planned visit to Islamabad following the last minute postponement of President Vladimir Putin’s visit to Pakistan. President Putin had only recently called for greater pragmatism in Russian foreign policy. Though the primary purpose of Putin’s visit was to join a quadrilateral meeting of the Tajik, Afghan and Pakistan, he was also scheduled to hold bilateral talks with his Pakistani counterpart. Had President Putin’s visit materialized, he would have created history by being the first Russian head of state to visit Pakistan. However, the frustration and dismay the abrupt postponement of his scheduled visit caused in Pakistan was somewhat allayed by Lavrov’s arrival, and the simultaneous visit of the Pakistan Army Chief Gen-eral Ashfaq Pervez Kayani to Moscow for consolidating defence cooperation in the years to come – a signal about cooperating in the post-US withdrawal scenario begin-ning 2014.

No less important was the fact that Lavrov’s visit was preceded by the visit of a high-powered Russian delegation that came to Islamabad and signed memorandums of under-standing about three important sectors of our economy – expansion and modernization of Pakistan Steel Mills, coop-eration in the revamping of the Pakistan Railways, and in the energy sector to assist Pakistan in exploration and recovery of natural resources to help reduce reliance on energy imports.In the current political environment, Russia is interested in Pakistan more than ever before and has demonstrated it quite perceptibly. Lavrov’s open condemnation of drone attacks as infringement of Pakistan’s territorial integrity was significant. The wide range of discussions that took place during his hastily-arranged two-day visit to Islamabad, and the issues that were put forth for finding solutions thereof, suggest positive developments marking a departure from the decades-old cold relationship and Moscow’s revived strategic interest in this region after the withdrawal of Soviet troops from Afghanistan back in 1989. In 2010, President Putin was against Russia developing strategic and military ties with Pakistan; in 2011 Russia changed its policy and publicly endorsed Pakistan’s bid to join Shanghai Cooperation Organisation (SCO), and declared Pakistan as a “very important partner in South Asia and the Muslim World.” This is a definite change of the Russian mind and heart towards Pakistan and a pointer towards Moscow’s readiness to establish new strategic relationship that has been eluding Pakistan and Russia for decades. Good and cordial relations between Islamabad and Moscow could pay rich dividends. The changed scenario is a good opportunity for both to move in that direction. Despite coldness in political relationship for decades, avenues for economic cooperation between Pakistan and Russia were always there. In areas like energy and steel the relationships were especially productive in terms of the valuable help Russia provided to Pakistan. In the ongoing improved environment of bilateral relationships Russia can be of greater help in these vital sectors of our economy. It is only advisable that sincere efforts are made to establish strong economic links with Russia. This calls for developing a mechanism to focus on economic cooperation through increased market access to Pakistani products in Russia, and building connectivity in trade and energy sectors. If done, this could pay rich dividends to both.

Pakistan Army Chief Ashfaq Pervez Kiyani saluting the monument of Russian soldiers during his visit of Russia


he Supreme Court (SC) judgment on former Chief of Air Staff Asghar Khan's petition over the corruption in the 1990 elections is monumen-tal in one respect; for the first time, the Army

Chief and former head of ISI at that time may be court marshalled–accountability which didn't take place even after Pakistan's embarrassing defeat in the 1971 war. But, it has another worrisome dimension; the timing of the verdict on this 16-year old case has afforded the otherwise troubled PPP a big image boost; to muzzle those faulting their current performance, PPP leaders can now add yet another chapter to the long-running saga of ‘injustices’ done to the PPP.Elections in Pakistan have never been a clean affair includ-ing the 1970 elections, that we are made to believe as ‘fair’. It was known at that time, that the erstwhile Awami League’s leadership had rigged the elections in many constituencies in the then East Pakistan. The 1977 elections under PPP were rigged (admitted by the then PM Z.A. Bhutto), but the PPP regime was not punished for its crime. The same allegations marred the 2002 and 2008 elections for which, neither PML-Q nor PPP were held accountable, although the fact is that scores of members of the sitting parliaments are blamed for either holding fake educational certificates or degrees, or dual nationalities–all big crimes according to the current electoral regulations.Hopefully, this verdict will become a landmark precedent for dealing with those who help corrupt the electoral process, no matter what the colour of their clothes. By doing so, the SC also undid the view that the judiciary was soft on the military establishment. But, while the SC verdict has directly instructed the FIA to begin probing the politi-cians cited by Lt. Gen. (r) Asad Durrani as the recipients of financial benefits in the 1990 elections, it requires the government to try Gen. (r) Beg and Lt. Gen. (r) Durrani. Hopefully, SC has good reasons to believe, that under even the current setup, FIA is capable of fairly probing the crimes of ‘all’ the politicians accused by Lt. Gen. (r) Durrani of having benefited from the illegal funding provided to finance their election campaigns.Both the generals pleaded that they acted on the order of the then President & Supreme Commander of Pakistan Ghulam Ishaq Khan. Besides, Gen. Beg retired as Army Chief in 1991 and Lt. Gen. Durrani in 1993, and thus couldn't have earned any personal benefits from their actions. Besides, Gen. Beg became the Army Chief upon the mysterious death (or whatever it was) of Gen. Zia, but very responsibly opted to revive democracy rather than impose another Martial Law. It will be ironic that he may be court-marshalled on the instructions of a democratic regime itself accused of massive corruption.Not surprisingly, the outbursts of PPP leaders coolly ignore the verdict's command whereby the President (symbol of the federation) must not indulge in politics, which has been the hallmark of the current PPP regime; the President and the provincial governors loyal to PPP openly indulge in politics.

The pressures that began to mount on the armed forces after the operation in Waziristan will be compounded if Gen. Beg and Lt. Gen. Durrani are tried, and help boost the claim that the Army is anti-democracy. What will be the consequences of this development remains to be seen, but not very difficult to visualise. Presently the armed forces, Rangers, FC, and the police are challenged every day by the terrorists and often suffer human and equipment losses; trials of former generals won't boost the confidence of the soldiers and officers. That's what worries the people. The track record of federal and provincial governments' law enforcement reflects a failure. The SC verdict in the 'missing persons' case induced many observers (including Speaker of the Balochistan Assembly) to wonder whether Balochistan's government still has a constitutional right to govern. Rumour has it that an interim regime may be installed in Balochistan. Last year, SC reached the same conclusion about the regime in Sindh, but its warnings filed to induce any corrective steps and since then, things have worsened as reflected in the rise in daily incidents of pick-pocketing, bank robbery, extortion and targeted killing, though the cases of kidnapping declined marginally. The SC is again reprimanding the Sindh regime for its horrible performance in this context.This harrowing mix–governments' incapacity and depressed law enforcers–is darkening Pakistan's country-risk percep-tion that already suffers from rating downgrades courtesy falling exchange reserves, rising debt servicing burden, energy and power shortages and the deteriorating state of security. Based on a strategy prepared by the US National Intelligence Council and the CIA in 2005, in a research paper–The destabilisation of Pakistan–Prof. Michel Chos-sudovsky, of the University of Ottawa, and Director, Centre for Research on Globalisation, had made some predictions in December 2007. According to him, the Bush-Cheney regime and its allies had manoeuvred to strengthen their grip over Pakistan to expand and deepen their 'war on terror' across the region. Various US plans proposed the toppling of Pakistan's military. The question requiring an answer is “do we–the govern-ment, politicians, bureaucrats–see where we are headed?” In-power politicians insist that things can't be better than they are. To them, price hike is ‘the’ solution for meeting shortage of just about anything be it food, fuel, electricity, etc. It is like saying that "if you can't afford two meals a day, live on just one". Is that how one should be expected to go on “living”? No. The impoverished will react via violence and insane conduct that suits the ends of those bent upon de-stabilising Pakistan, and Pakistan could be sacrificed at the altar of flawed democracy. The defenders of democracy must realize that.The way the politicians can slow this drift towards destabili-sation is to allow a regime with zero biases (especially cronyism), that puts the very best in every field in the state administration; politicians aren’t the 'guardians' of the state, as desired by Plato in ‘The Republic’.

by Rauf Nizamani

icro Finance is considered to be the main vehicle for tar-

geting poverty, according to ‘Pakistan Poverty Red- uction Paper’ and ‘2007 World Bank Study on Poverty Reduction and Rural Growth.’ Access to financial services, includ-ing savings, can certainly play a role in alleviating poverty. Pakistan’s National Strategy for Micro Finance was approved at the highest level during 2007. A look at the strategy shows that policy-makers recognize the industry’s lack of focus on saving services in the past and accept its importance in pushing the sector forward. Savings are thus expected to be a vital component of private domes-tic capital needed to achieve the target set in this regard. The SBP recommends product development and capacity build-ing of MFBs in this area, along with looking into credit unions as an effective mode of mobilizing small savings. Micro Finance is an important part of the strategy for reducing poverty in the country. Keeping in view its importance in providing the financing facilities to the majority of unbanked poor in the country the concerned authorities are constantly trying to improve and expand its scope. Although traditional banking also needs support from the government and regula-tory authorities, the survival of micro finance institutions, especially at the present stage, is not possible without such support. It is said that micro finance has prospered in countries like Bangladesh because of interest- free loans and grants to the lenders. Grameen bank has survived because of government support and it will collapse if grants and funding are stopped. Thus the micro finance sector in the country is also justified in demanding assistance and facilities. Realizing these facts the central bank has recently taken certain steps to further strengthen and facilitate the sector. Micro Finance Institution Ordinance of 2001 has been instrumental in catalyzing growth, creating investors confidence, and protecting depositors. The State Bank has recently amended the prudential regulations for microfinance banks removing regulatory bottlenecks pointed out by the industry. Moreover, SBP has also set up a microfinance exclusive credit information bureau (CIB) to reduce risks associated with micro finance operations and their clients. Several initiatives have been taken by SBP to support low- income financial development. These together form a strategy which includes measures to address most common causes of banking exclusion. Efforts have been made to facilitate and create an enabling environment for banks to address needs of underserved and unbanked segments through dedicated prudential regulations and through guidelines for microfinance, SME finance, agricultural finance and other areas.

SBP’s Credit Guarantee Scheme is an important initiative to channel liquid-ity into the cash strapped micro-finance lenders. The facility covers risk for commercial banks which lend to their microfinance counterparts as the SBP guarantees up to 40% of loss in case of default. The facility dictates that the commercial banks can not charge more than 2% plus the discount rate from the borrowing microfinance banks. The interest over

the discount rate reflects the risk premium in lending to the microfinance banks. According to the CEO of one of the major micro finance banks of the country, “it took time to make commercial banks understand our business but soon a substantial amount will be available with us.” However, he was of the view that “we need some sort of concessional financing like export finance and the loan at the interest rate being offered under Credit Guarantee Scheme is not just viable for us. We also need soft loans.”In addition to above steps, the central bank, in order to facilitate the micro-finance banks and institutions, has also decided to allow them to raise foreign currency loans from international financial institutions or donor agencies or specialized banks and institutions. Purpose of the loan must be only to finance the loan portfolio of MFBs and institutions. The borrowing may be raised in four major currencies i.e. Euro, Dollar, Pound and Japanese Yen. Minimum tenor of FCY borrowing should not be less than 2 years. The loan pricing will be based on a reference rate such as LIBOR. Interest rate may be decided on best possible terms and must be competitive to other options available locally. The disbursed FCY funds would immedi-ately be converted into Pakistani Rupee credited to borrowing MFB and institution’s Pakistan rupee account maintained with the concerned authorized dealer. Under no circumstances MFB and institution will be allowed to retain such funds in foreign currency. The borrowing MFB and institution will be allowed to make payment of the principal amount in bullet on maturity or may start repay-ment of principal amount in installments after six-months through the authorized dealer receiving disbursement of loan. Frequency of the interest payment may be made as per the related payment schedule. The authorized dealer may provide forward cover or hedging facility on the foreign currency loan to the MFB and institutions from the inter-bank market in accordance with the prevailing foreign exchange regulations. The MFB and institution will provide an undertaking that the loan deal is compliant with the legal and regulatory framework applicable to the lender and the borrower.

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Incentives for PromotingMicro Finance

ECONOMY

MICROFINANCE


ow the media changed over the years from an honest news provider to a tool of political strate-gists became clear from a series of recent events. Rupert Murdoch, who beat everyone in this race,

was till recently, the key stakeholder in a media empire made up of The Sky Corp., News of the World, The Times, and the Daily Sun. How his empire remained busy pursuing a Zionist strategy by telling lies and half truths, injecting bias in report-ing of events, and hacking of telephones to deprive its

targets of the privacy that the law guarantees, was shocking. However, what gradually exposed the filth in the media were the many concocted stories that projected Afghanistan as the country from where came the perpetrators of 9/11, and for a decade, the projection of Iraq as a

nuclear threat to justify its invasion.

But as do all lies, these too were exposed. Yet, the media gurus didn’t realize that by becoming the proxy of evil strate-gists, they lost credibility. A Pakistani reporter working for a foreign news agency quit his job because he was being pressurised into distorting his reports to fulfil the wishes of those who want to disintegrate Pakistan by 2015.In June 2012, exposure of the activities of Rupert Murdoch’s media empire forced the British government to set up an inquiry–The Leveson Inquiry–to look into the accusations about hidden connections between 10 Downing Street, and Murdoch’s empire. Prime Minister David Cameron had to appear as a witness before the inquiry commission, where he made some shocking revelations: that British politicians had become too close to newspapers, that there must “be greater transparency, and better regulation” and that media and politicians should have “little more distance” between them.He found it impossible to explain his relations with the now arrested Ms. Rebekah Brooks, Chief Executive of Murdoch’s British wing of News International, or to explain his decision to hire the ex-Editor of News of the World, Andy Coulson, as his media advisor. Coulson too was charged with perjury. In this shady affair, the other individual under clouds is Jeremy Hunt, a member

Apart from this, NGOs are also being encouraged to restruc-ture themselves into licensed banks, so that they can operate transparently with an adequate capital base, while providing comfort to depositors and borrowers. To encourage transfor-mation of NGOs into MFBs the federal government in June 2007 allowed a five year income tax holiday to such institutions and now some major NGOs are in the process of transforma-tion into banks. Central bank has also executed partnership with the UK Department for International Development for a financial inclusion programme which promotes market devel-opment through well considered subsidies. Thus efforts are being made to promote the micro finance sector by striking a balance between prudence and growth and paving the way for scaling micro finance services in sustainable manner. Now Micro Finance Banks (MFBs) have an increased ceiling on lending limits and relaxed borrower criteria to allow for client graduation. MFBs can now extend micro loans up to Rs. 500,000/- for micro enterprises and Rs. 500,000/- for hous-ing loans. Borrowers’ income has been relaxed upwards from Rs.150, 000/ to Rs. 300,000/ for general loans and Rs 600,000/ for housing loans to allow room for graduation of microfi-nance clients. Similarly the loan classification criteria for MFBs have been rationalized to bring it in line with the international best practices and industry norms. Now loans overdue by 30 days or more but less than 60 days will be classified as ‘other assets especially mentioned’ and will require no specific provisioning. This will reduce stress on MFBs capital allowing them to upscale their services. The loan overdue by 60 days or more but less than 90 days will be classified as sub-standard and require a specific provi-sion of 25% of outstanding principal net of cash collaterals. Also, the CIB report has been made compulsory for borrowers with exposure greater than Rs.50000/. This will encourage MFBs to properly assess borrowers risk and avoid over indebted clients. Micro Finance Banks (MFBs) have shown considerable growth during 2011 in all indicators despite many challenges. The asset base has remarkably increased from Rs 21.437 billion in December 2010 to Rs 30.263 billion in December 2011 show-ing an increase of 41%, the most significant rise in a year since 2001, on the back of robust increase of secured advances and inclusion of NRSP portfolio into the ambit of microfinance banking. Deposits were up from Rs 10.338 billion to Rs 13.927 billion or 35% in the same period on the back of term finance certificates offered by major MFBs at higher rates and micro-saving mobilization through alternative delivery channels.The funding base of the MFBs has reached Rs 30 billion with 41% growth on YoY basis, on the back of Rs 14 billion depos-its, Rs 8.2 billion commercial borrowing and Rs 6.7 billion equity. Total deposits, being the largest part, have contributed 46% of the total funding. However, few MFBs are still facing funding constraints due to inadequate equity (free of losses), and limited commercial funding due to unsustainable models. On positive side, the weaker MFBs have now been required or are in the process of acquisition by new investors. On YoY basis the number of outstanding borrowers -availed development finance rose by 2.4% as on Dec. 2011 chiefly attrib-uted to the micro sector. Growth of 16.3% in the Micro Finance borrowers from 631,238 in December 10 to 733,931 in Decem-ber 11 can be attributed to the use of alternative delivery mecha-nism adopted by MFBs and in particular the Branchless Banking. There are a large number of small savers in the country but most of them save informally as the banks are mostly urban based and do not bother to mobilize the savings from majority of the people

of rural areas. They are not interested in tapping such savings even in urban areas mainly due to cost and their orientation to big depositors. Basic objective of the micro finance banks was to bring the poor, underprivileged and unbanked majority in the formal sector but they have also not succeeded in mobilizing such savings significantly due to variety of reasons.In the beginning micro finance banks mainly depended for funding their operations on the donations from external donors and borrowings from the commercial banks. However, this was not sustainable in the long term and the banks had ultimately resorted to core resource of funding i.e. deposit mobilization which has benefits other than low cost fund generation such as stability of funds, independence from exter-nal lenders, opportunities for cross-selling and client acquisition and retention. Although various micro finance banks have introduced various types of products offering attractive profit rates and there is also an increasing trend of deposits but still majority of the deposits belonged to corporate clients, big depositors and borrowers of the banks. The share of the common man has been quite meager. One reason is that these institutions are relatively new and not as oriented to mobilization of deposits as commercial banks which are in the field for decades. Moreover, they do not have the network, expertise and the resources for mobilizing depos-its which the commercial banks have. Most important factor is that the banking is a matter of trust and credibility and these institutions are still in the process to establish the same. Another factor which hampers their efforts to mobilize small savers is the cost. Studies show that small accounts cost more than large accounts. Interest paid to depositors also varies drastically across institutions ranging from 17% to nearly 80% of total deposit cost. Although Branchless Banking may be of great help in this regard which may be seen by growth of 69% to Rs 503 million in its deposits as on Dec. 2011 but it is still just a drop in the ocean and requires efforts to tap the great potential of the small savers in the country. This will also play a role in improving the national savings ratio to GDP which is quite low among the peer group of countries. In spite of the fact that there were 22000 retail agents of branchless banking as on December 2011 in the country, and the number is also increasing rapidly, but majority of the population is still not familiar with this concept and needs proper education and training in this regard.Overall, the macro level environment is healthy in the country. Pakistan’s Micro Finance sector does not suffer from regulatory hurdles or shortcomings as is the case in many parts of the world. However, while the SBP’s concern for the growth of the industry and their well informed legislation is commendable, there is also a concern that they may push institutions to move too fast even though organization may not be ready due to insufficient incentives, initiative and capacity.


of David Cameron’s Cabinet. That is not all; former PMs Gordon Brown and Tony Blair too appeared before the inquiry commission to record their statements. It is worth remembering that one of Tony Blair’s former press advisors recently authored a book wherein he disclosed that Tony Blair joined the WMD

campaign against Iraq only after he was coerced into doing so by Rupert Murdoch.Western media was also used to infuriate the Muslim world into hurting itself via self-destructive protests. Beginning with the sacreligious book by UK-based Salman Rushdie, the Danish cartoons, the controversial film made in the US and the cartoons published in the French magazine Charlie Hebdo, all efforts were aimed at achieving that nefarious end. Fogh Rasmussen (Danish Premier when the sacreligious Danish cartoons were published) was rewarded well; he was made the Secretary General of Nato. Simultaneously, West-ern media backed a US-EU-inspired Nato-led ‘Arab spring’ –a campaign aimed at disrupting all resource- rich Muslim states. Arab Spring aims to create chaos in these countries that will justify Western intervention in the guise of UN peace-keeping, as done in Libya and now Syria. The latest event involving media in Pakistan was the rumour about several Pakistani TV anchors being on the payrolls of some powerful political magicians. While this issue remains a bone of contention in the Supreme Court, the fact that some TV anchors continue very visibly to pursue specific political agendas, strengthens the view that all isn’t as “white” as the media gurus want you to believe. In TV talk shows, some anchors specialize in ‘putting’ words in respondents’ mouths and the fact that directors/producers of these programmes neither note these aggressive postures, nor punish the anchors for these clearly visible indiscretions, conveys the impres-sion that the TV channels too are a part of this whole scenario. Given the supremacy of TV channels in the overall media mix, such biased, in fact doctored shows try to (and, seemingly) succeed in misguiding the majority of the viewers. Repeated opportunities given by some channels to the likes of PPP’s Faisal Raza Abedi in the highly sensitive Arslan Iftikhar case left no doubt that the channels doing so were pursuing a specific political agenda.The print media, however, can’t be blamed as much for the pursuit of similar strategies. In this media segment, while the columnists have the right to pursue specific political agendas, their scripts don’t amount to putting words into the mouths of those they praise or criticise. That said, the owners of the newspapers display shocking tendencies; they do not appear bothered over the morality of the messages conveyed by the advertisements they publish in their newspapers – a tendency that shows that this media segment is overly consumed by a desire to earn profits.For the past four-and-a-half years, almost every government- sponsored advertisement carried (often large) photos of the

President of Pakistan, Prime Minister, Provincial Gover-nors, and federal and provincial ministers. The message this portrayal of the politicians conveyed was that the people should thank them, not their country and its government. As if that wasn’t enough of a continuing distortion that portrays use of state funds for personal glorification, recently, several newspapers carried a full page containing four advertisements that were sponsored by the US Aid, but contained the photos of the Pakistani President, Prime Minister, Governor Sindh, some federal ministers, and the leader of a coalition party, which displayed media concerns for its own integrity as well as of the regime in Pakistan. These instances force you to think seriously about where media is headed for in its pursuit of material gains.The fact that the government seems unwilling to confirm the amount of ‘discretionary’ funds (Rs 40 million or Rs 4 billion) of Federal Ministry of Information and other state offices is eroding the credibility of the stance that the government didn’t ‘buy’ favourable coverage by the media. If anything, it is strengthening the view that the govern-ment is buying such a profile in the media. The regimes viewed as responsible don’t have to resort to such tactics – the logic that doesn’t apply to the regime in power.The reality is that none other than the superior judiciary has repeatedly blamed the government of misconduct and waste. On top thereof, the regime’s defiance of court orders renders its reputation doubtful and it is only logical that, given its refusal to act responsibly, it is trying to build its image using deceptive mechanisms. Unfortunately, the media is one of them. The tragedy that no politician seems worried about is Pakistan’s loss of image that devious administration in every sector has caused; corruption of its media could be the last nail in its coffin.

by Tahir Rauf

emittances due to their important role in the develop-ment of a country have been generating much interest especially over the past decade. These have a special significance in many countries. Although these are

not the earnings of those countries but they form a major part of their foreign exchange reserves. Presently about 3% of the world’s total population consist of immigrants who remit from $80 billion to $100 billion annually to their parent countries. For some Caribbean countries these remittances form more than 10% of their GDP. In some cases these exceed the amount of Direct Foreign Investment. It is also considered a more sustain-able and consistent source of foreign exchange than the foreign aid and the direct foreign investment. Although USA is a major source for the remittances for the Latin American countries but major part of the remittances of South Asian countries comes from the Gulf States.Remittances also occupy an important place in Pakistan’s economy for more than three decades. It has also assumed importance due to the fact that the country’s exports earnings remained stagnant for a long period at less than $10 billion which barrier has only recently been crossed. After exports it is the second largest source of foreign exchange of the country. In the recent past a drastic decline had occurred in the remittances through banking channels. This did not mean that the Pakistani workers were not sending the money back home but in fact they were not sending the same through the formal channels of banking system due to rate differential between the inter-bank and kerb markets and not so efficient services of the banking system for transmission of money. In the fiscal year 1999- 2000 these were less than $ one billion. This had become a matter of concern for the policy makers. Efforts were made to improve the services and make the banking system more attractive for the overseas workers. Resultantly it gradually increased and just

crossed the threshold of $ one billion in 2000-01. But thereaf-ter it increased sharply to $ 2.4 billion in 2001-02 and reached at $4.2 billion in 2002-03 which were 5.1% of GDP. The main contributing factor in this radical shift in the mode of transfer of remittances was the events of 9/11 and tightening of laws in the host countries thereafter which forced the people to adopt the formal channels. However, to supplement this process the banking system of Pakistan also took certain steps. Although remittances remained above the target of $3.6 billion in FY 2003-04 but declined as compared to the previous year to $3.9 or 4.1% of GDP. This decline occurred mainly due to fall in receipts from UAE which is attributable to an end of the reversal of capital flight and the increased investment in Dubai real estate as this sector has been opened for investment by foreigners. However, its volume is increasing since then. Its importance may not be overestimated especially when the exports instead of increasing had in fact declined by 2.8% to $ 24.7 billion in 2011-12 as compared to the preceding year. The remittances in 2011-12 were 53.5% of exports as compared to 44.2% in 2010-11. Remit-tances flow continued to rise and particularly in 2011-12 country received the highest ever amount of over $ 13.2 billion recording a growth of 17.7% as compared to the last year. However, the com- position and sources of remittances flows were slightly different from that of the previous year. For instance increase in remittance during 2011-12 was largely owed to higher inflows through banking channel whereas inflows through exchange companies declined as compared to the same period last year. Likewise the remittance growth is largely contributed by Gulf region (60.9%) while almost all the regions contributed to the remittances growth. In the July-September period of the current fiscal year the amount of remittances was $ 3.6 billion which was about 9% more than $ 3.3 billion in the same period last year.

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Remittances:Effects on Pakistan Economy

KSA US UK OthersUAE

$ 961.09 M $ 753.08 M $ 623.72 M $ 500.15 M $ 761.07 M

$ 3599.11 MFirst Quarter (july to Sep 2012) 9.16%


Murdoch has played a key role in shaping British politics for the last four decades, and testimony at The Leveson Inquiry into media ethics has highlighted how British prime ministers have both courted and feared Rupert Murdoch, the 81-year- old media mogul. His influence remained strong despite the phone hacking scandal involving his newspapers and leading to an ethics inquiry, and Rupert Murdoch has retained his reputation as a potential kingmaker. Below is a brief of his four-decade long dealings with Britain’s prime ministers.Harold Wilson Murdoch entered the British media scene in 1969, buying the Sunday tabloids News of the World and The Sun. In January ’76, according to a recently discovered file in National Archives, Murdoch approached Prime Minister Harold Wilson seeking relief from wage controls. Murdoch wanted to buy new high-speed presses to support the growing circulation of the two newspapers but the wage controls prevented him from meet-ing union demands for higher pay. Wilson rebuffed him.James Callaghan “We had very good relations with him and with Mr Wilson,” Murdoch told the inquiry, led by Justice Brian Leveson. But, the fact is that, in the 1979 election, which James Callaghan lost, Murdoch newspapers had switched their support to the Conser-vatives led by Margaret Thatcher. As a payback, Callaghan later tried for a staff buyout of both The Times and The Sunday Times but the failed bid helped Murdoch acquire full control of these newspapers, adding to his British media holdings.Margaret Thatcher Her government waived a regulatory review of the monopoly issues and allowed Murdoch’s British News Inter-national, to purchase The Times and The Sunday Times. Wood-row Wyatt, a confidant of Thatcher and a columnist for News of the World, recorded in his diaries that “I had all the rules bent for him (Murdoch).” Murdoch denies that he asked anyone to alter the rules in his favor. He says he can’t remem-ber a lunch hosted by Thatcher before the decision was made. “I didn’t expect any help from her, nor did I ask for any,” Murdoch told the Leveson Inquiry. John Major (1990-1997) The Sun supported Major in the 1992 election and boasted of its impact on the vote in a famous headline: “It’s the Sun who won it.” However, Major told the Leveson Inquiry that three months before the 1997 election, Murdoch had expressed his disap-proval of the government’s European policies, and said he won’t support Major unless he changed his policy stands. Murdoch says he has no memory of the meeting. “I wasn’t an admirer of many of the things Mr Murdoch did but .......... saving those newspapers and setting up alternative television channel made a very substantial contribution to our national life,” Major testified.Tony Blair (1997-2007) Blair flew to Australia before the 1997 elections, seeking and winning Murdoch’s support, which was crucial in helping the Labour Party break the Conservatives’ long run of electoral successes. “The minimum objective was to stop them tearing us to pieces and the maximum objective was, that if possible, to open the way to support,” Blair told the inquiry. And yet, Blair also testified that “there was no deal on the issues to do with the media, with Rupert Murdoch, or with anybody else, either express or implied, and to be fair, he never sought such a thing.” What, however, the inquiry commission didn’t ask him was why he spoke to Rupert Murdoch three times in the days leading up


This change is more pronounced especially after Oct. 09 when remittances flow through banking channel increased consider-ably, while remittances routed through exchange companies remained stagnant and then declined. This change coincided with the action against undocumented fund transfers. Thus it may be argued that this action might have diverted some of the funds to banking channels which were earlier being transferred through undocumented channel. Similarly country-wide data shows that after Oct. 09 remittances flow from Gulf region and in particular UAE increased rapidly while it remained stagnant in the case of USA and European countries. A part of this sharp rise from UAE may be attributed to possible diversion of funds from undocumented channel and a part, to the possible reverse capital flight to Pakistan. Stagnation in remittances flow from USA may be attributed to a) economic recession and subsequent job losses and b) some of the migrants might have withheld the funds for the time being owing to possibility of further crackdown against other exchange companies. It seems that the prediction of temporary increase in the remit-tances due to remitting of the severance amount of the work-ers laid off due to the global recession and then a decline in the remittances to Pakistan did not hold true as the flow of remit-tances in fact has shown a consistent increase for a reasonably long period which gives the hope for the future. However, as there is no indication about the end of the recession in the developed world as is obvious from the World Bank and IMF reports it may be said that the future flow of remittances may be uncertain from these countries.Keeping in view the importance of remittances for the develop-ing countries the donors such as UK and USA and multilaterals including the World Bank, the Inter-American Development Bank and Asian Development Bank have all launched substan-tial remittance initiatives and projects during this time. Similarly in Pakistan the Federal government and SBP have also launched the Pakistan Remittance Initiative (PRI). According to the then Finance Minister this project would be a ‘perpetual structure for facilitating the flow of remittances by non-resident Pakistanis and the initiative would be able to double the volume of remit-tances within the next two to three years.’ Before the launch of the initiative a detailed assessment was carried out pertaining to prevailing home remittance system in the country. One of the important findings of the system was that there was no owner of remittance structure in Pakistan. In order to provide a struc-ture whereby ownership of remittances to Pakistan could be placed PRI was established.Presently insufficient presence of Pakistani banks in overseas jurisdiction and lack of marketing efforts are some of the impediments to the flow of remittances. Apart from this the banks have not shown much interest in the quick disbursement of funds within the country despite the incentives offered by the central bank which has encouraged the diversion of funds to the informal market of hawala and hundi causing a considerable loss to the country. Under the new initiative a financial incentive scheme is being launched for overseas entities whereby they will be supported in their marketing efforts. The scheme will be performance based and such incentives shall start from bringing at least $ 100 million from the particular jurisdiction. With the help of PRI, the banks in Pakistan are being facilitated to change their approach. Instead of becoming a part of any foreign remittance product initiated by overseas entities/global money transfer operator, as has been the practice, they are now planning to take initiative of marketing overseas Pakistanis and design their own products while utilizing overseas counterparts as collection points.

Initially, five major banks have been selected to be the part of this initiative. Additional participants may be added going forward subject to pilot tests. In the first phase banks will be able to use RTGS to transfer and settle inter-bank transactions into beneficiaries’ accounts on the same day. In this respect the central bank is also introducing a mechanism for compensation to remittance beneficiaries for delay by the banks. There is large potential which may be tapped through this initiative but the success depends on the interest and the efficiency of the banks.Remittances have both positive as well as negative effects for the economy. Its immediate effect is the prosperity and well being of the recipient families and thus it helps in reducing poverty. These funds may be utilized for creating further employment and devel-opment if the concerned departments provide the necessary guidance and technical know-how to the people regarding the establishment of small business and industry. Besides, remit-tances reduce the country’s dependence on the foreign borrow-ings etc. Apart from this the employment in the foreign countries also helps those countries which are facing the problems of unemployment and resultant social unrest to export their surplus manpower and save them from the social and political instability. But at the same time the flow of remittances also induces consumption and especially of the imported goods which has various adverse effects. Exhibition effect of this activity is very strong. It forces people to change their habits and life pattern. One may remember that in seventies when the flow of remittances had just started very few homes in the country, both in cities as well as in rural areas, had the refrigerators and air conditioners etc. Very few had included these things among the necessities of life. But this trend changed with the passage of time and now a house is not considered complete without these things regardless of the question of affordability as all such items are now available on easy installments. This trend on the other hand affects savings which give rise to the foreign and domestic borrowings for meeting the investment needs of the country. Import of consumer goods also widens the gap between imports and exports which also give rise to foreign borrowings to meet the gap of current account deficit. Another drawback of the remittances is that they provide a cushion to the government in meeting its budgetary and trade requirements. But unlike exports these are not the earnings and in fact a windfall which is not a certain and sustainable source and may fluctuate due to the factors beyond the control of any government. Thus at the time of budget making it is possible that policy makers making estimates on the basis of the previous record may become complacent and do not give enough attention to the other alternatives. Therefore, any happening on the international scene or some policy change in the remitting country may disturb these estimates. Pakistan has experienced this situation in the past. It is necessary to avoid the distortions and flaws; the flow and the amount of the remittances should not be taken for granted. Brain drain is one of the major results of the attraction of remittances. A country spends a lot of time, money and skill in educating and imparting various skills to its people. Human capital is the best resource for the development of any nation. The departure of such people to green pastures in search of better careers deprives a country of its best talents which ultimately hampers its development efforts. It is, therefore, necessary that a policy is formulated through which a balance is maintained between the human resource needs of the country and its export to other countries.Remittances have become a necessary part of the country’s economy. Therefore, it is imperative that while formulating any policy in this regard consideration should be given to the various related factors.


ECONOMY

by Naila Aman Khan

conomic institutionalization has a critical role to play in the progress of any region. This is particu-larly true of stock markets. Joint stock companies played an instrumental role in the economic

growth and led to social and political developments during the Industrial Revolution, which Europe experienced in the 18th and 19th centuries. The capital, which was required for the extensive industrialization, was raised by companies by selling shares in the markets that slowly got the shape of capital markets. The capital markets, where stocks are traded, have been central to generating capital for industri-alization and businesses. The correlation of stock markets and development is also evident in Pakistan. Parts of the country where stock markets have been active are far more developed than the provinces and regions where they are not present to play their role as a factor for growth and development. Thus the underdevelopment of KPK, FATA and Balochistan can be attributed to a great extent to the absence of stock exchanges there. Because of this lack, KPK and FATA, are in many respects more underdeveloped than even Balo-chistan, for instance in terms of poverty and unemploy-ment rates thus underlining the need for them to have a combined capital market, if not separate for each of them. The challenges of development in these regions are enor-mous and cannot be met without the availability of huge monetary resources. These resources cannot be expected to be provided in entirety by foreign donors or lenders; at best they could provide a fraction of the money needed for development. Most of the monetary resources have to be channeled through the local sources and in this regard

raising capital for economic development through stock markets is one of the most suitable way. Keeping in view the critical role of capital markets in the development of KPK and FATA, the government should have established a stock market in Peshawar, the economic and cultural hub of both the regions, decades ago. How-ever, to make amends for the time lost, the government should move with speed and set up a stock market in Pesha-war an early as possible. The KPK and FATA have very narrow capital base, almost non-existent manufacturing sector and nascent services sector whereas corporate culture is nowhere to be found in the province. In KPK, the dominant form of investment is in real estate or bank deposits whereas in FATA there is no concept of real estate business as instead of individuals, clans and tribes own the land there while there is no banking sector there. Invest-ment in stocks in the region has not taken roots because of the absence of a financial market. People have even started shying away from investing in the real estate business; the meager savings they accumulate could not prove lucrative if invested in real estate businesses. In such a scenario, invest-ment in stock equities could be quite compatible with the small savings of the people of KPK and FATA’.If a stock exchange is established in Peshawar, entrepre-neurs of the KPK and FATA would get maximum advan-tage as it would raise equity in the local market that would provide succor to at least medium-sized industries apart from providing meaningful support to the services sector. The capital raised through the stock market could also be helpful in establishing strategic industries in the region. Besides, investors from the whole of the province, the

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KPK, FATA uplift throughEconomic Institutionalization

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he prayers of the millions in Pakistan, and those around the world, have seemingly been responded to as, according to the doctors in Queen Elizabeth’s Hospital in Birmingham, which has decades’ experience of

treating British casualties “Malala Youssufzai is now stable and recovering from her ordeal. She had had comfortable nights after arrival in the city on board an air ambulance”, said the hospital’s medical director Dave Rosser, adding “we are very pleased with the progress she’s made so far.” By October 19, Malala Yousafzai, who was shot in the head and the neck on October 9 for her championing the cause of the girls’ right to acquire education, was able to stand with help, though she still showed signs of infection. Doctors treating her at the British hospi-tal said. “She is also communicating ,” adding that the girl is “well enough; that she has agreed that she’s happy, in fact keen, for us to share more clinical detail.” Rosser said the infection is probably related to the track of a bullet which grazed her brain and caim within centemetres of killing her, travelling through her head and kneck before lodging in her left shoulder. But “she has every chance of making a good recovery,” said the doctors at the special hospital unit expert in dealing with complex trauma cases. The good news is that Malala is improving with encouraging speed. By October 26, she had recovered enough to meet her family members who had flown in just a day earlier to see her brave daughter. Talking to media, her father Ziauddin Yousufzai said, his daughter was strong. “She fell temporarily but she will rise again” said her father who looked happy and satisfied with her daughter speed of recovery.The incidents of extremism, terrorism and target killings in Pakistan are not new. The menace has grown over time and refused to die down posing a daunting challenge that requires being met incisively by hammering out a programme that is effective, feasible and actionable. Sadly, the lingering curse has not received the quality attention it deserved. As a result, it has spread all over the

length and breadth of the country, costing the nation not only thousands of precious lives but also impacting adversely on the national economy which has almost collapsed due to increasing trend of closing down or moving out of the industries and businesses to other countries. Of all the tragic attacks of target killings that the innocent people in different parts of the country have so far suffered from, the one that befell young Malala Yousuf-zai, the 14-year- old Pakistani rights activist, because of her bold and courageous campaign for the right of the girls to acquire education, was perhaps the most awful and horrendous in nature that gave way to an ‘enough is enough’ state of mind for action against the militants once for all. So enormous was the magnitude of the crime against this rights activist that, unlike several other instances of targeted killings that are generally over-looked as a matter of daily routine, it did not go unnoticed; it sparked an outrage not only inside Pakistan but all over the world transforming Malala – the young blogger – into an international symbol of defiance against the radical Islamist group that continues to wield influence in parts of Pakistan.The Taliban’s attempted assassination of Malala Yousufzai because of her identity as a symbol of knowledge or of girls’ aspiration to receive education, pricked and stirred the collective conscience of mankind the world over and aroused world-wide condemnation, in the strongest possible words. The incessant outpouring of public anger over the assault and expression of revulsion against the terrorists on the one hand and demonstration of solidarity and heart-rending prayers for survival of this ‘pride of the nation’ on the other, have been unprecedented which, perhaps, forced the Taliban to try to justify their action by saying “we did not attack her for raising her voice for education; we targeted her for opposing the mujahedeen and their war,” although they had closed down girls’ schools in Swat as part of their rule. Malala met with the attack on her life when she was returning home along with her other colleagues in a school van in the former


adjoining FATA, and of course, Afghanistan, where there is no stock market, would have an easy access to locally incorporated companies. Moreover, they will be in a better position to link corporate efficiency with share prices.Portfolio investment is more suitable for the residents of KPK and FATA, as it would not only divert savings from real estate businesses but would also help reduce prices of the latter. Investment in real estate enhances the social status of a person among Pukhtoons, the predominant ethnic group of KPK, FATA and Afghanistan. This status is a source of numerous acrimonies, especially protracted land disputes usually claiming precious lives and exhausting monetary resources. So, with attention diverting to portfolio investment the interest in real estate business would also dwindle, reduce the cost of the land and hence may act as deterrent against bloody animosities - the menace that has been a great hurdle in the development of the region. With consequent fall in land prices, entrepreneurs would buy more land for setting up big industrial units or services outlets. Besides, cheaper land would become available for agro-based industries like tobacco, orchards and vegetables—lifeline of the region’s economy.As local joint stock companies in KPK and FATA would have major stakes in the would-be stock exchange, they would be extra-cautious and efficient for obvious reasons. Likewise, they would be more interested to improving socio-economic milieu in the region for their own benefit. This, in the final analysis, would be beneficial for everyone. Presently, due to shortage of skilled labour, most indus-tries in the KPK are based in sectors that do not require skilled labour. Resultantly, profits are meager and wages minimum. There are no incentives for workers to improve technical skills. By floating shares on the stock market, the local companies would have more funds to dedicate to research and development (R&D)—a concept unknown to the corporate sector in the KPK.Both sole proprietorship and partnership in the KPK have limited finances for long-time investments; there-fore, there is quite a limited integration of different sectors. Consequently, there is nominal production of value-added goods as well as specialization that at times becomes counterproductive due to cost overruns - for instance, carpet industry, gemstones and agricultural commodities. The detrimental effect is that the indus-tries of the province cannot meet significant export orders. With capital formation through shares selling, companies would be adequately equipped not only to vertically integrate their enterprises but even opening outlets abroad.Currently, bank loans are the only source of financing for KPK businessmen and industrialists. With the rate of mark-up on bank loans being quite high, it is not feasible for the businessmen and industrialists to borrow for long term. Banks also find it difficult to lend for long terms. The account holders in the province deposit for short term. Therefore, it is extremely difficult for banks to extend long-term financing to the entrepreneurs. Long- term investors usually invest in federal government secu-rities having more return. Therefore, banking sector in KPK is bereft of necessary funds to loan out to industri-alists or services sector.

As bank loans form usually 70% of the initial capital for a new enterprise in KPK, the risk factor is quite high. The production stage usually takes considerably long for an industry during which it already accumu-lates interest in the range of 30-50% of the loan amount. In the KPK, only cigarette companies and certain pharmaceutical industries that produce coun-terfeit items could pay such high interest rate; most other industries financing their operations with 70% bank loan can hardly afford to do that. This is the underlying reason for the closure of more than half of the KPK’s industrial units. In this scenario, shares capi-tal is going to reduce companies’ reliance on heavy debt financing, thus, curtailing the risk.In the KPK, family based businesses dominate the corporate scene in which there is no concept of distinc-tion between ownership and management. With joint stock companies created through shared capital, a profes-sional and vibrant management would be a must for each company that would enhance its business prospects. Moreover, with more capital available, economies-of- scale could be created that could produce high quality products at competitive prices. These can especially be created in tobacco and fruit farming sectors.In KPK, investors’ confidence in banks has eroded tremendously with the ever reducing rate of return, unstable private sector banks, and other related factors. Stock investments may bring back the investor because the lure areas of investments include grocery stores, auto spare parts shops etc. the reason being that rampant unemployment and petty businesses have in-built mechanism of passing on impact of inflation to consumers. Investing in stocks may provide this in-built mechanism to offset inflation and also put an end to the mushroom growth of petty shops that have numerous socio-economic disadvantages.With the establishment of a stock exchange in Peshawar investment could be diverted from petty businesses to corporations, enabling the government to tax them due to their smaller number and easily calculable transac-tions. It is important to note that in KPK, generally people do not invest in banks, as they consider mark-up as un-Islamic. Stock investment offers opportunities for profits which are not pre-determined.What has been stated above underlines the need for establishment of a stock exchange in the KPK. How-ever, certain quarantine measures would need to be taken to protect the said entity from ill effects. For instance, capital markets often become volatile when speculation is unchecked. Therefore, initially all corpo-rations listed on the would-be Peshawar bourse should be owned by the shareholders from the province. In this manner people of the province would feel a sense of ownership and consider big corporate entities as their own, instead of outsiders exploiting provincial resources.A capital market in Peshawar can really boost industrial-ization and corporate culture if it is accompanied with a full-fledged economic package including reduction in both taxes and electricity prices in order to offset the locational disadvantage and giving KPK’s companies a competitive edge.

Taliban stronghold of the picturesque Swat valley. She was spotted, identified and shot in the head and the neck. That wasn’t all; as she struggled for life with the help of a ventilator in a Peshawar hospital, the Taliban not only trumpeted their responsibility for shooting her but also vowed that if some-how she survived, they would come after her again and finish her. They claimed that “Yousafzai is the symbol of the infidels and obscenity," adding that “if she survives, we would target her again.”. Would it be an act in accordance with Islam and its teachings, the Taliban claim to be professing, or sheer barbarism? It is difficult to reconcile with the idea that a human, not to speak of a Muslim, could be that barbaric, brutal, irrational and insane.Malala, who has been brought up in an environment chocked with roaring guns, began gaining international attention in 2009 when she was only 11 years old. This was the time when Swat, a valley in northwest Pakistan near the border with Afghanistan, was practically under the siege of the Taliban who were against girls’ education. They demanded veils for women, beards for men and a ban on music and television. They allowed boys' schools to operate but closed those for girls. Led by Maulana Faz-lul-lah, they burned girls’ schools and terrorized the valley. Malala came to prominence as she started writing a blog for the BBC wherein she detailed life under Taliban rule, their attempts to take control of the valley, and her own views on promoting education for girls under the constant threat of death by Islamist extremists. She also featured in two New York Times documentaries. Her touching diary earned her praise and fame – both national and international. "I had a terrible dream yesterday with military helicopters and the Taliban," she wrote. "I have had such dreams since the launch of the military opera-tion in Swat. My mother made me breakfast and I went off to school. I was afraid of going to school because the Taliban had issued an edict banning all girls from attending schools."In that environment of terror, Malala showed exemplary display of courage as she continued attending her school, and encouraged other girls as well to follow suit. The courage was symbolic as her life was at stake. She is a firm believer in educa-tion for all, girls included, and expressed it quite vociferously as she talked to CNN a year ago. She said, "I have the right to education, I have the right to play, I have the right to sing, I have the right to talk, I have the right to go to market, (and) I have the right to speak up." Her struggle resonated with tens of thousands of girls whom the Taliban had deprived of their right to get education. Though a teenager, she is strong from within and stronger in her belief and conviction. An example of the strength of her conviction and belief in the cause of education she stood for was seen in her brave and bold resistance against the edict of the Taliban depriving girls of the blessings of education. Even at a time when she is fighting against the onslaught of the seemingly sure death in the hospital in Birmingham, she has shown resilience and strength which, the doctors attending her said, was a good sign. “We are pleased with the progress she’s made so far, she’s shown signs of being just as strong, as we have been led to believe, she is” said David Rosser with the hope of an encouraging result. The first picture that the hospi-tal released on October 19 also showed her plastered around her face but looking “confident, thoughtful and brave as ever—the display of the same courage that gave her worldwide fame as she took on the most vicious of militants in Pakistan.” Malala’s ordeal has helped concentrate minds the way it rarely does. There is vociferous outcry of public anger and condem

Wazir Ali Khoja

NIT completes 50 yearsof its successful operations

product of the two institutions. In order to facilitate its unit holders, a state of the art Investors Facilitation Centre (IFC) has been established which is providing all sorts of customer related services to its unit holders under one roof. Recently, NIT has opened 3 new branches at Karachi and Lahore to expand its sales network. With the addition of these three branches, the nationwide distribution network now comprises 22 branches. Work on opening up a few more branches is in hand.

NIT has also been shouldering national responsibility of providing financial support to affectees of natural calami-ties. It has been funding trusts, institutions and agencies providing social services to the neglected population of the country. It has also played a vital role in motivating and acknowledging the services of legends in sports, culture, education etc. through awards. NIT as a national institu-tion of prestige did not forget welfare of its employees and has introduced Hajj Scheme for its employees so that they could perform the spiritual obligation without any financial burden.

Q: NIT has completed half a century of its successful operations. What are the major landmarks achieved?A: The National Investment Trust (NIT) has completed 50 years of its enviable track record. During this long journey, NIT has come a long way and has achieved various milestones including consistently paying dividends in billion of rupees since its inception in 1962, achieving the highest number of unit holders and introducing new products to cater to the needs of investors with varying risk appetite besides having largest branch network in the country to provide investment services to the customers at their door step. Keeping in view the long awaited demand by investors and in order to cater to their varied investment needs, NITL for the very first time, ventured into the fixed income fund category by launching two Funds in FY10. NIT Government Bond Fund, a very low risk product was launched in Nov. 2009 followed by NIT Income Fund, which was introduced in Feb. 2010 designed for low to medium risk taking investors.

NIT is also the pioneer in introducing the first Co-Branded ATM card facility for its customers in Mutual Fund Indus-try. NIT – Summit Bank Co-Branded ATM card is a joint

INTERVIEW

NIT completes 50 years of its successful operations in November 2012. Value Chain has had an occassion to have an interview with Mr. Wazir Ali Khoja, Chairman & Managing Director, N.I.T. and sought his views on the achieve-ments of his organisation. Given below is what he said.

Mr. Wazir Ali Khoja inaugurating NIT branch

Mr. Wazir Ali Khoja is seen awarding prize to a cricketer


he urge to seek independence is not new; it has been taking place from time to time and in different parts of the world. In recent years, it was the Republic of South Sudan which

appeared on the world map as an independent nation on 9th July 2011. Yet another significant change in the world map is in the offing. This time it is going to be ‘Bangsamoro’ (Moro Nation) seeking independence from Philippine after a 40 years long political and militant struggle by Moro Islamic Liberation Front (MILF). Through a peace deal signed on October 15 between the Government of Philippines and The Moro Islamic Liberation Front (MILF), it was agreed to estab-lish Bangsamoro as a new autonomous political entity replacing the Autonomous Region in Muslim Mindanao. The deal is seen as a major breakthrough in ending a decades-long separatist movement in Mindanao.The agreement would create the Bangsamoro, replacing the autonomous region in Muslim Mindanao as a new region run by a ministerial government.Minority Muslim groups in the southern Philippines - known collectively as the Moros - have been fighting for self-determination for over four decades. The struggle culminating into several conflicts in Mindanao led to the displacement of over 2 million people since 1970. An estimated 600,000 people were displaced in 2008 alone, making the Philippines a country with the highest number of the persons displaced in that one year. Together, the Moro and communist insurgencies have resulted into killing of at least 160,000 people.Various peace talks held on and off during the process of the struggle for freedom failed to produce any tangible results until the govern-ment of President Benigno Aquino III, elected in May 2010, said in August 2010 that it was optimistic of secur-ing lasting peace.The current armed conflict started in late 1960s, when a Muslim armed group (Moro National Liberation Front or MNLF) started advocating the need and demand for a “Moro homeland.” The Philippine government tried to quell the uprising through military. This led to numer-ous deaths and displacement of the civilian population (Muslims as well as Christians). In 1970s, the Philippine government initiated peace talks and concluded a peace agreement with the then main Muslim armed opposition group, MNLF, to stop the conflict and address the prob-lems. But armed conflicts and confrontations continued to take place intermittently, between the Philippine military and the MNLF and also with another Muslim armed opposition group (Moro Islamic Liberation Front or MILF). Every time an armed conflict broke out, thousands of non-combatants were caught in the crossfire, and suffered displacement and human rights violations.The declaration of martial law on 21 Septem-ber 1972 by the then President, Ferdinand E. Marcos, was a triggering event of the contemporary Moro armed struggle.

In December 1976, the Philippine government signed an agreement with the MNLF through the intercession of the Organization of Islamic Conference (OIC). This agree-ment, known as the “1976 Tripoli Agreement”, provided for the creation of an autonomous region in Mindanao and Palawan (covering thirteen provinces), and the estab-lishment of an autonomous government, judicial system (for Sharia law), and special security forces.The peace agreement proved elusive and formal peace talks between the government and MNLF had to be held again in 1993 through the mediation of OIC and the Indonesian government. The Philippine government and the MNLF signed the 1996 Final Peace Agreement (FPA) to formal-ize the implementation of the "1976 Tripoli Agreement.”By winning in the 1996 elections for the ARMM posts, the MNLF virtually gained control since 1996 over six prov-inces and one city with predominant Muslim population. But the formula for an autonomous region did not offer a complete solution for total peace in Mindanao. Hence, the Muslim armed opposition group, the MILF, demanded an independent Islamic state and the Philippine government had to deal with MILF separately for a negotiated settle-ment of its demands.The impact of the Mindanao conflict on society has been quite severe in several areas including health, education, and economic development. According to the United Nations Development Program’s Human Development Report for 2008/2009, the quality of life in the conflict-affected provinces of Mindanao is the worst in the Philip-pines, and the World Food Program Reports that over 50 percent of the population lives below the poverty line.Situated outside the typhoon belt, Mindanao enjoys a generally fair tropical climate, evenly distributed through-out the year. Its rich soil accounts for bountiful harvests of a variety of farm products. It grows most of the Philippines' major crops such as rubber (100% of national production), pineapple (91%), cacao (90%) as well as banana, coffee, corn and coconut (over 50%).

held in our portfolio by offloading the shares of the companies where the fund’s holding is non-remunerative. As a result, the number of companies has further been reduced to around 400. This exercise will continue in the period ahead as well, while keeping the best inter-est of the Fund in mind. The Fund also adopted buy/sell positions in other sectors during the year to benefit from short-term trading opportunities avail-able in the market without any detrimental impact on stock market. Q: What has been the role of NIT in providing liquidity to stock market, helping in price discov-ery and above all extending a helping hand during the bearish spells?A: Based on the track record of our performance, the Government and other stakeholders always reposed confidence in NIT and assigned it important roles on many occasions. Be it generation of liquidity or providing support to the capital market in times of crisis, NIT did its best to come up to the expectations and the trust reposed in it. NIT had an initial mandate to take up a specific percentage of every initial public offering (IPO) under the preferential quota regime. This helped accelerate the pace of industrialization in the country and also provided capital markets the much needed liquidity because of the long-term investment perspective. Furthermore, at the time of unprecedented crisis in the stock market, NIT launched NIT-Equity Market Opportunity Fund (NIT-EMOF) in July 2008 to support the stock market. At the time of removal of the floor on the stock market which remained in place for 110 days due to unproportional nature of the crisis, the Government and other stakeholders, foreseeing a massive selling pressure from local and foreign inves-tors, once again asked NIT to launch a fund to support the stock market. NIT launched its NIT-State Enter-prise Fund to help support the market. It is evident from the record that NIT succeeded in bringing stabil-ity in the stock market by restoring the confidence level of investors.Q: What are the reasons that attract investors to NIT even during the bearish spells?A: The first and the foremost is the investors’ trust in NIT. Besides, the value of assets under NIT manage-ment is inching towards Rs 80 billion. NIT has always played its role in stabilizing the market sentiments. A highly professional team of NIT, under the guidance of highly qualified and experienced Board, has the expertise to deliver in the toughest of times and possesses the ability to prudently manage the invest-ment portfolio, thereby generating good and consistent returns for its investors. NIT has never made a distress sale during the bearish spells in the markets. A certain portion of our portfolio has remained invested in short term highly liquid government securities and bank deposits to meet redemptions. During the last couple of years, NIT has met all redemptions through internal cash generation without recourse to borrowing which is a milestone in itself. This has created a strong image which has built a trust among NIT unit holders.

NIT has a history of generating consistent returns for its valuable investors and infact has not missed a dividend payment even once in its entire history of operation. Q: As you said, over these 50 years NIT has been consistently paying dividend to its unit holders. How has this been possible despite economic downturn in Pakistan and elsewhere in world? A: This became possible due to investments made by NIT in a number of companies enjoying growth poten-tial and providing a regular stream of dividend inflow. Further, NIT follows a strategy of investing in blue chip companies offering a mix of both dividend income and capital gains potential.Q: NIT is said to be the first ever open-ended mutual fund established in Pakistan and it has the largest assets under its management. What are the factors that helped in maintaining the leadership?A: NIT commenced its operations in 1962 with the launch of an equity Fund, NI(U)T, which was the first ever mutual fund in the country. NIT has been success-fully managing its flagship product of NI(U)T Fund which has grown to be the single largest equity mutual fund of the country in terms of asset size. NITL has the prestige of serving the highest number of unit holders of any mutual fund in the country. The number of unit holders adding up to around 57,000 is the highest ever customer base served by a single mutual fund service provider in the country. With net assets constituting about 21% of the entire mutual funds industry, NIT’s equity funds constituted 85% of the industry’s open-end equity funds as on September 30, 2012.The equity portfolio of NI(U)T comprises more than 400 companies spread across all the sectors of the economy that provides it with maximum diversification and also minimizes the risk to its investors. NIT has representation on the highest number of the compa-nies’ boards with a total of 130 directorships on the board of 115 companies within our portfolio which, besides safeguarding the interest of our unit holders, also protects the rights of other shareholders by provid-ing professional inputs in running the affairs of the companies and delivering healthy returns. All investment decisions of NIT are taken by an investment committee of NITL which comprises highly qualified professionals. These professionals take decisions on the basis of in-depth research carried out by Research Depart-ment of NIT. Moreover, we have specialized trading department for quick and timely execution of transactions. Q: NIT’s performance as you mentioned is quite com-mendable. What were the key strategies followed by NIT for achieving this performance level?A: NIT designs its investment strategy according to the prevailing market conditions. The institution has a team of qualified and experienced professionals. The team has been very active and successful in improving the performance of the Fund, the result of which is evident from the fact that NI(U)T Fund outperformed its benchmark by 0.34% during the 1st quarter ended 30th September 2012.In line with the strategy adopted during the last couple of years, we are striving to reduce the number of companies


Key points of the accord:Autonomy: The MILF will drop its bid to set up a separate state in the southern Philippine region of Mind-anao and settle for parliamentary-style self-rule in an autonomous region.Disarmament: The 12,000-member MILF will disarm in stages, while the local police force gradually assumes law enforcement functions from the Philippine military. Powers: The Philippine government will retain exclusive powers on defence, foreign policy, monetary policy and citizenship matters.Taxes: The autonomous government will be able to levy its own taxes, charges and fees. Both sides will have a “just and equitable share” of revenues from the region’s natural resources, although no specifics have been outlined.Islamic Law: Sharia law will apply only to Muslims and only for civil cases, not for criminal offences. All residents are guaranteed basic rights to life and freedom of religion and speech.Territory: Five provinces plus two cities, six towns and several nearby villages in the south, comprising about 10 percent of the Philippines’ total land area. Each of these areas may choose to opt out in a plebiscite.Constitutional Amendment: A provision calling for amendments to the Philippine constitution is a potential stumbling block to a final peace treaty because the rebels are insisting on changes while the national government prefers it untouched. The framework agreement leaves the question unresolved.Timetable: Comprehensive peace agreement to be signed at the end of this year. “Basic law” for the autono-mous region to be drafted and passed by the Philippine parliament in 2015, then ratified in a regional plebiscite. A regional parliament would be elected in 2016.

Support from the International Com-munity for the 2012 Framework Agree-ment:Hillary Clinton, Secretary of State, USA:“The United States welcomes the announcement of the framework agreement between the Government of the Philippines and the Moro Islamic Liberation Front. This agreement is a testament to the commit-ment of all sides for a peaceful resolution to the conflict in the southern Philippines.We encourage all parties to work together to build peace, prosperity and greater opportunities for all the people of the Philippines”.

Ministry of Foreign Affairs of Japan:“Japan heartily welcomes that the Framework Agree-ment concerning the Mindanao Peace Process has reached after many years of negotiation between the Government of the Republic of the Philippines and the Moro Islamic Liberation Front.”

Bob Carr, Foreign Minister, Australia:“Australia welcomes this agreement and hopes that the conflict in Mindanao is drawing to a close.I particularly acknowledge the leadership of Philip-pines President Benigno Aquino, who has been a strong advocate for peace.”William Hague, Foreign Secretary, UK:“I wholeheartedly welcome the announcement of the framework agreement. The UK's role as a member of the International Contact Group has allowed us to see the leadership shown by President Aquino and the Government Panel and the Leadership of the Moro Islamic Liberation Front. The UK is pleased to have supported the parties and Tengku Dato' Abdul Ghafar the Malaysian facilitator during the process. We stand ready to provide further assistance if such a role would be valuable to the parties."Catherine Ashton, High Representative of the European Union for Foreign Affairs, EU:I wish to express my congratulations to the Govern-ment of the Philippines and the Moro Islamic Liberation Front on the successful conclusion of the negotiations on the Framework Peace Agreement. The EU, as a member of the International Monitor-ing Team and major development partner in poverty alleviation in Mindanao since 1990, will continue to lend its full support.Ban Ki-moon, Secretary General, UN:“I welcome the announcement that the Government of the Republic of the Philippines and the Moro Islamic Liberation Front (MILF) reached a framework peace agreement aimed at ending decades of fighting in Mindanao, South Philippines. I am grateful to all national and international actors, in particular the Government of Malaysia, for their contributions to the success of the peace negotiations. The United Nations stands ready to provide assistance to the parties, as needed, in implementing the framework peace agreement.”

COVER STORY

Pharma industry:some shocking revelations

hat fake medicines were available in most of the under-developed and developing countries was a known fact, but the fact that this tragedy is hurting the developed countries as well, was

recently revealed by Western analysts who have come up with some shocking revelations. A contaminated blood thinner (herpin) killed 140 during 2007-08 in the US, and tainted steroids from a compounding pharmaceutical company (one that mixes its own drugs) near Boston, killed 11, and made many others to suffer for months at a stretch. The incidents show that fake medicines alone are not the killers; ill-made medicines are as much of a threat. But the bigger issue is the regulation of the pharmaceutical sector that is in a mess everywhere.In developing and under-developed countries (as is the case with all other activities) compared to their demand, supply for medicines is grossly short, consumers are desperate and are always looking for cheap medicines, health systems-hospitals and health-care centres–are shambolic, national borders are porous, and bureaucracy in health regulatory setups is easily bribe-able.An example thereof is Nigeria where, according to a WHO survey conducted in 2011, 64% of anti-malarial drugs turned out to be fakes. The WHO survey induced a very concerted counter-attack by the Nigerian government on the fake drug producers, which brought the proportion of fake medicines down to a fifth of their 2011 level. To check this profitable business, Nigeria has developed a “scratch-off label system” that allows drug users to convey the code on the packets via internet text messages to de-coding offices in pharmaceutical companies to verify the authentic-ity of the products before using them.

But, success of this experiment requires nationwide knowl-edge about availability of this facility, internet facility with drug users, and pharmaceutical manufacturers setting up decoding offices that operate round the clock. These big ‘ifs’, especially in under-developed countries like Pakistan, restrict this system’s use. Besides, as yet, in Pakistan we do not have this setup, nor is the Ministry of Health even aware of the plus side of setting up such a system, despite the fact that fake drugs are now flooding the markets–a fact confirmed by almost every pharmaceutical company, and is condemned for its being overlooked; to ‘The Economist’, 21st Century is turning into the ‘golden age’ of bad medicine. To crooks, making fake drugs is a good business, since penalties are low, and supply-chains have turned into ‘cheats’ paradise’.Besides regulatory weaknesses, what makes this paradise more attractive is the global pharma cycle. Raw materials for medicines come from one country (in the US, 80% of the ingredients for medicines come from other countries); they are converted into active ingredients in another country, and mixed together to manufacture medicines in yet another country. Thereafter begins the distribution system wherein medicines are often re-packed – bulk medicines, tablets and capsules being re-packed into smaller retail packages. This complex supply chain creates a regulatory “nightmare”, especially the re-packing and packaging part thereof, which provides fake drug producers a vast scope of benefitting by resorting to corrupt practices because even the best possible supervisory arrangement can’t stop fake drugs being inject-ed into the system. On-line drug pushers and suppliers add a huge dimension of complexity to the system.A global attempt in checking counterfeiting was launched in 100 countries via Operation Pangea (a policing campaign to

T


by A. B. Shahid

ords of wisdom that “today’s foes are tomorrow’s friends” and “don’t put all your eggs in one basket”, hold as good today as ever before. The advice seems to have been

well taken by Pakistan, though belatedly; for decades Pakistan had been excessively reliant on, and tagged to the US. A perceptible change is visible in Pakistan’s foreign policy which is now gravitating towards Central Asia, and seeks close and cordial relations with Russia, which in the past had played a significant role in Pakistan’s development, the gift of the Pakistan Steel Mills being the great landmark in the history of Russo-Pakistan relationship. The paradigm shift in Pakistan’s foreign policy with an urge to balance out and diversify its relations by constructively engaging with other major powers, has been prompted by the ongoing geopolitical scenario, which is undergoing profound change in the wake of mistrust and misunder-standings among the partners in the war on terror in the region where Russia enjoys a place of strategic importance in view of its strong linkages with Europe and Asia, and Pakistan has always had great strategic value for major powers, given its geographical location at the crossroads of the subcontinent. Revival of the warmth and strong bonds of relationship between Pakistan and Russia is of crucial importance in the light of the current regional and global situation. Things in Afghanistan are changing where both Pakistan and Russia have convergence of interests. Russia and China are two important forces that have great interest in the geopolitical and strategic developments in the region, and have major roles to play, while Pakistan views it as a source of stability and peace both at regional and global levels. After a decade of crisis beginning 1989 and dismember-ment of the USSR, Russia has bounced back and regained its lost strength. It is now one of the fastest growing econo-mies in the G-8 group, and is well on its way to redefine its strategies in the region. Therefore, it may not seem surpris-ing to see it playing a significant role in shaping things that take place in the region, especially in the context of the scenario likely to emerge in Afghanistan in the aftermath of US curtailing its presence there. Russia is a key player in the regional politics where Pakistan needs to play its proper role and share its burden to achieve its own strategic and economic objectives. Pakistan already has cordial relations with China, which has proved to be its all weather friend. Closer relations between Pakistan and Russia at this critical moment of the Afghan war could help in offsetting the pressures that USA has put on Pakistan by its confused policy on engaging in a dialogue with the Taliban. Historically, Pakistan’s relations with Russia have experi-enced a series of ebbs and flows ever since independence in 1947. During the initial years of Pakistan’s emergence on the world map as a sovereign, independent nation, relations between the two countries were strong and healthy under the civilian control, but began cooling off after Prime Minister

Liaquat Ali Khan chose to visit America instead of Russia. The relations became colder after the martial law of 1958, but much worse after the U-2 affair – the US spy plane that took off from a US airbase in Badabair (NWFP) and was shot down by the Russian air force. Pakistan’s joining CENTO and SEATO made things worse.From 1973 to 1979, Soviet Union and Pakistan developed strong relations with each other. But they too proved short-lived and went down with the popular unrest follow-ing the heavily rigged 1977 elections in Pakistan and the subsequent execution of the then Prime Minister Zulfikar Ali Bhutto on April 4, 1979, disregarding the repeated calls for clemency by Leonid Brezhnev, Alexei Kosygin, and other members of Politburo. During the decade of the Soviet invasion of Afghanistan the relations often became antagonistic. However, the disintegration of the Soviet Union provided an opportunity for a new beginning in Pak-Russia relations based on mutual understanding of each other. Since then, the relations have slowly but steadily improved. Russia is a former superpower, is industrially developed, technologi-cally advanced, rich in mineral resources, and has now emerged as the world’s leading oil and natural gas exporter. Russia also has a history of providing assistance for strengthening the industrial infrastructure of Pakistan. In the ongoing geopolitical environment, Russia considers Pakistan crucial for fighting out the threats to its security and sovereignty due to militancy and extremism. Russia’s increased interest in forging close relations with Islamabad, which has now acquired a greater strategic significance in the calculus for the region, is motivated primarily by the political situation in Pakistan and around. In the wake of US preparations to leave Afghanistan by the year 2014, Russia apprehends failure of the state in Afghanistan which could cause spill over of Islamic fundamentalism, initially into Central Asia, and then into Southern regions of Russia. Any successful attempt to avoid and avert the problems spilling out of Afghanistan would not be successful without the involvement and active support of Pakistan. Russia has already dealt with Islamic secessionist movements in Chech-nya and the South Caucasus, and would naturally not like to


identify online pharmacies supplying drugs). This was a great success in the sense that it was able to identify and shut over 18,000 on-line drug pushers, but also proved that all on-line drug suppliers are not criminals. In essence, and like corrupt-tion in most other businesses, production of fake drugs also reflects a craving for wealth that is totally devoid of a sense of morality or social responsibility–the outcome of injecting in human mind a love for profit by the ‘free for all’ (i.e. unregulated), not the free enterprise system. That this scenario is hurting the image of free enterprise is yet to be appreciated by its committed supporters. But responsible governments have been making efforts to contain this distortion. China achieved remarkable success in curbing the manufacturing of fakes. Over 2,000 owners of such outfits were arrested, fined and sentenced, and in 2007, the top bureaucrat in its drug regulatory authority was executed for accepting bribes for approving untested medi-cines. Then there are the above-quoted examples of regula-tory administration in Nigeria but not many other countries have taken similar steps. India is one of the largest manufac-turers of medicines but well-informed individuals in this sector accept that almost 50% of the medicines manufac-tured in India, are fake. This is despite the efforts of the

Indian government to check fakes in order to sustain its image as one of the big export-ers of medicines.On their part, the highly reputed pharma manufacturers are employing ex-police detectives to oversee their distribution

chains, and spot criminals therein, but their efforts too are having marginal impact on their supply operations in under-developed and developing countries. Pfizer has been making extraordinary efforts to check counterfeiting of its products. Yet, while in January 2009, 81 countries reported counterfeit versions of 20 Pfizer drugs, by July 2012, things had become worse; 106 countries reported the counterfeit versions of as many as 60 Pfizer drugs but Pfizer is continuing with its efforts, and hopes that it will succeed at least partially, if not wholly, which is what it can do. It only proves the point that, despite all their sincere efforts, for which Pfizer and the other drug manufacturers must be commended, they can’t do what is primarily the job of the state.

The Medicrime Con- vention of 2011 was acceptance of this harsh reality. This con- vention was jointly sponsored by 18 Euro-pean countries, but has done nothing much in terms of inducing governments to check counterfeiting; what has now happened though is the development of the ‘TruScan’ technology that scans medicines to detect fakes in the consignments on port of arrival. America’s Food & Drug Administration (FDA) is acting as a strict supervisor not only in the US but, since 2008, it has opened its offices abroad including in China, India, and Mexico. But even the FDA, that sought much higher penalties for fake medicine produc-ers, admits that it can’t police the world’s pharma mafias, which are far too big and too clever for the bureaucrats to handle. Then there is another issue; the manufacture of cheaper drug. WHO authorized the manufacture of cheap drugs for distri-bution through its medical aid programme, but is being blamed by Western pharma manufacturers for the role it played in encouraging the manufacture of sub-standard medicines. This claim has been contested by many pharmaceutical manufacturers in the under-developed and developing coun-tries because the cheaper versions of many medicines they manufacture are being blamed for violating proprietary rights and for false labelling of medicines–not a fair return for the sincere efforts these countries put in for a human cause. To settle this debate, WHO created its International Medi-cal Products Counterfeiting Taskforce (IMPACT) but this outfit faces criticism over its definition of counterfeit drugs–SFFC – which is the abbreviation for “spurious, falsely-labelled, falsified, counterfeit”, because many devel-oping and under developed countries consider this defini-tion an excuse for the global pharma manufacturers to suppress production of medicines in developing countries. What is lacking on the part of the pharma giants are efforts that could help produce cheap medicines in large quantities for the poor of the world that the WHO wanted.This conflict is most tragic because manufacturers in both developed and the under-developed countries are hurting the cause of healthcare by not coming to an understanding on the issue. What they need is to cooperate, not fight because, as being predicted, environmental degradation, courtesy un-regulated industrialization will cause diseases to increase and the number of those affected by these diseases will rise every year. It is a pity that profits, not social responsibility, are driving all the big wigs in this sector. But, in essence, this conflict shows the collective failure of governments that aren’t worried about limiting environmental pollution, or containing the corrupt practices in their pharma sectors. The element missing is a concern for humanity, and the biggest role in this failure is shared by governments. Politi-cians are often not capable of governing the state because they are not unbiased professionals. They have to rely on bureaucrats for advice on managing the affairs of the state. Back in 1987, a columnist writing for the ‘Observer’ had very rightly pointed

What they need iscooperation, notdissent; environmentaldegradation, courtesy un-regulatedindustrialization, is causing diseases to escalate

Pharma manufacturers in developing countries

trying to manufacture cheaper medicines are blamed by the pharma

giants of violatingproprietary rights and

false labelling

be involved in dealing with a similar situation again. There-fore, Pakistan has an important place in Russia’s foreign policy regime. For Pakistan, it is important not to look at this as expediency, but as a move to secure mutual interests.Seen in this perspective, the recent developments pointing to a change of heart between Pakistan and Russia are not Russian expediency. The initiatives that have so far been taken to strengthen bilateral relationships in several areas, including in political and economic sectors, should be seen as moves in the right direction. In the changing geopolitical scenario, Pakistan has a great strategic value for major powers, and in view of its strategic location such initiatives were important and essential, if not altogether inevitable. A beginning towards a new era of bilateral relations with Russia was made through exchange of high-level visits to Moscow and Pakistan in the recent past. President Asif Ali Zardari’s visit to Moscow lent strength to these efforts. The planned visit to Islamabad by President Viladimir Putin could have greatly helped in bridging the void that was created by the Moscow’s South Asia policy of keeping Pakistan at arm’s length while cultivating a special relation-ship with India, and could be instrumental in further enhancing cooperation between both the countries.An obvious and, perhaps ominous, shift towards improved relationships was evidenced by the Russian Foreign Minis-ter, Sergei Lavrov’s hastily-planned visit to Islamabad following the last minute postponement of President Vladimir Putin’s visit to Pakistan. President Putin had only recently called for greater pragmatism in Russian foreign policy. Though the primary purpose of Putin’s visit was to join a quadrilateral meeting of the Tajik, Afghan and Pakistan, he was also scheduled to hold bilateral talks with his Pakistani counterpart. Had President Putin’s visit materialized, he would have created history by being the first Russian head of state to visit Pakistan. However, the frustration and dismay the abrupt postponement of his scheduled visit caused in Pakistan was somewhat allayed by Lavrov’s arrival, and the simultaneous visit of the Pakistan Army Chief Gen-eral Ashfaq Pervez Kayani to Moscow for consolidating defence cooperation in the years to come – a signal about cooperating in the post-US withdrawal scenario begin-ning 2014.

No less important was the fact that Lavrov’s visit was preceded by the visit of a high-powered Russian delegation that came to Islamabad and signed memorandums of under-standing about three important sectors of our economy – expansion and modernization of Pakistan Steel Mills, coop-eration in the revamping of the Pakistan Railways, and in the energy sector to assist Pakistan in exploration and recovery of natural resources to help reduce reliance on energy imports.In the current political environment, Russia is interested in Pakistan more than ever before and has demonstrated it quite perceptibly. Lavrov’s open condemnation of drone attacks as infringement of Pakistan’s territorial integrity was significant. The wide range of discussions that took place during his hastily-arranged two-day visit to Islamabad, and the issues that were put forth for finding solutions thereof, suggest positive developments marking a departure from the decades-old cold relationship and Moscow’s revived strategic interest in this region after the withdrawal of Soviet troops from Afghanistan back in 1989. In 2010, President Putin was against Russia developing strategic and military ties with Pakistan; in 2011 Russia changed its policy and publicly endorsed Pakistan’s bid to join Shanghai Cooperation Organisation (SCO), and declared Pakistan as a “very important partner in South Asia and the Muslim World.” This is a definite change of the Russian mind and heart towards Pakistan and a pointer towards Moscow’s readiness to establish new strategic relationship that has been eluding Pakistan and Russia for decades. Good and cordial relations between Islamabad and Moscow could pay rich dividends. The changed scenario is a good opportunity for both to move in that direction. Despite coldness in political relationship for decades, avenues for economic cooperation between Pakistan and Russia were always there. In areas like energy and steel the relationships were especially productive in terms of the valuable help Russia provided to Pakistan. In the ongoing improved environment of bilateral relationships Russia can be of greater help in these vital sectors of our economy. It is only advisable that sincere efforts are made to establish strong economic links with Russia. This calls for developing a mechanism to focus on economic cooperation through increased market access to Pakistani products in Russia, and building connectivity in trade and energy sectors. If done, this could pay rich dividends to both.


to an undeniable reality; that in any democracy, govern-ments keep coming and going; what provides stability to the state is its bureaucracy. Even the “ill-governed” democracies–many now even in Europe–survive because they have responsible bureaucracies that aren’t corruptable by the politicians. The unfortunate reality of our country (as indeed of many other developing states) is that, over the years, beginning with the Ayub era, the responsible bureau-crats were unceremoniously shown the door. This record eroded a sense of responsibility in the bureaucracy, which explains why corrupt practices in the pharma sector remain unattended. This setup does not hold out much of a prom-ise for the coming generations, which is a reflection on the concern the leaders have for the future. The habit they all have got into is “living in today,” with zero concern for tomorrow.

Latest change in Pakistan’s health sectorOn October 17, the National Assembly unanimously passed the Drug Regulatory Authority of Pakistan (DRAP) Bill 2012 to establish an authority to bring harmony in inter-provincial trade in drugs/therapeutic goods, and to regulate the import, storage, manufacture, distribution, and export of medicines and medical devices as well as drug research.According to objectives of the Bill, the new Drug Regula-tory Authority shall ‘advise’ the federal government on issues that relate to obligations and commitments with global organisations concerning therapeutic goods, drugs, medicines as well as medical devices besides developing ethical criteria on drug promotion, marketing, advertising and rational use of drugs, and research and development in this sector. Under this law, DRAP will undertake steps to ensure self-sufficiency in fields of drugs, medicines and allied therapeutic goods, and create conducive environments for the manufacture and promotion of pharma-ceutical export.Going by the track record of the Ministry of Health, and the current outfit that registers medicines for their import/ local production, and issues licenses therefor, too many expectations await realization – transparency in drug licens-ing, real efforts to effectively check counterfeiting, encour-age production of more drugs locally, and use this weapon to stamp out manufacturers of fake medicines.

Suppressing innovation in pharma sectorTowards the end of October, Public Accounts Com-mittee (PAC) of the National Assembly was hearing a shocking case wherein the Ministry of Health officials penalized a team of pharma researchers for inventing a much cheaper drug that could bring the cost of treat-ing hepatitis down to less than 10 percent of its current level. As per the estimates presented to the PAC by an independent investigation team, by not allowing the production of the medicine and import of the foreign alternatives, the state may have spent Rs 70bn. What this incident reflects is the clout of some, not all, of pharma manufacturers operating in Pakistan. PAC had constituted a committee headed by the renowned scientist Dr Samar Mubarkmand and com-prised of Secretary, Ministry of Science and Technol-ogy Ikhlaq Chatta and the Secretary, Higher Education Commission to probe into the technical side of this affair, and report back to the committee within 15-days, which revealed that this tragedy occurred because in 2010, the Ministry of Science & Technology had asked FIA to launch an inquiry against the research team that had invented the injection, accusing the head of the team Dr Riazuddin of embezzlement of funds (and placed on the exit control list) while another scientist on the team was denied salary for two years. As a consequence thereof, over 100,000 injections that had been manufactured and a sample thereof tested in a German laboratory, expired. According to the Acting Chairperson of the PAC Ms. Yasmeen Rehman during the investigation it was also revealed that Irfan Nadeem (a ministry of health staffer) had forged documents and lied to the Supreme Court by stating that the National Assembly’s standing commit-tee had ordered investigations against Dr Riazuddin.

However, after two years of investigation, FIA’s inquiry gave a clean chit to Dr Riazuddin and his team of researchers, and dismissed allegations against him. Now the Public Accounts Committee (PAC) has asked the NAB to investigate the roles of the officials in the Ministry of Science & Technology who sabotaged the domestic production of Interferon. The acting chair-person of the PAC also informed PAC members that she has written to the Supreme Court to punish the culprits in the Ministry of Health, and assigned MNA Khawaja Asif the responsibility of taking this issue to the Supreme Court for hearing. The view expressed by many observers was that this incident reflects the pressure foreign pharma mag-nates apply on staff members of the Ministry of Health to prevent introduction of domestically manu-factured medicines. According to Ms. Yasmeen Rehman, besides this sad affair, 28,000 other drugs were being denied registration because of pressure of multi-national companies. According to Akram Masih Gill, MNA of PML-Q, given this environment, no scientist wants to be a part of the Ministry of Science & Tech-nology; if what Gill said is right, it doesn’t bode well for the future of Pakistan’s pharma sector– ironically, the sector that must expand rapidly to keep pace with the rise in Pakistan’s population.

icro Finance is considered to be the main vehicle for tar-

geting poverty, according to ‘Pakistan Poverty Red- uction Paper’ and ‘2007 World Bank Study on Poverty Reduction and Rural Growth.’ Access to financial services, includ-ing savings, can certainly play a role in alleviating poverty. Pakistan’s National Strategy for Micro Finance was approved at the highest level during 2007. A look at the strategy shows that policy-makers recognize the industry’s lack of focus on saving services in the past and accept its importance in pushing the sector forward. Savings are thus expected to be a vital component of private domes-tic capital needed to achieve the target set in this regard. The SBP recommends product development and capacity build-ing of MFBs in this area, along with looking into credit unions as an effective mode of mobilizing small savings. Micro Finance is an important part of the strategy for reducing poverty in the country. Keeping in view its importance in providing the financing facilities to the majority of unbanked poor in the country the concerned authorities are constantly trying to improve and expand its scope. Although traditional banking also needs support from the government and regula-tory authorities, the survival of micro finance institutions, especially at the present stage, is not possible without such support. It is said that micro finance has prospered in countries like Bangladesh because of interest- free loans and grants to the lenders. Grameen bank has survived because of government support and it will collapse if grants and funding are stopped. Thus the micro finance sector in the country is also justified in demanding assistance and facilities. Realizing these facts the central bank has recently taken certain steps to further strengthen and facilitate the sector. Micro Finance Institution Ordinance of 2001 has been instrumental in catalyzing growth, creating investors confidence, and protecting depositors. The State Bank has recently amended the prudential regulations for microfinance banks removing regulatory bottlenecks pointed out by the industry. Moreover, SBP has also set up a microfinance exclusive credit information bureau (CIB) to reduce risks associated with micro finance operations and their clients. Several initiatives have been taken by SBP to support low- income financial development. These together form a strategy which includes measures to address most common causes of banking exclusion. Efforts have been made to facilitate and create an enabling environment for banks to address needs of underserved and unbanked segments through dedicated prudential regulations and through guidelines for microfinance, SME finance, agricultural finance and other areas.

SBP’s Credit Guarantee Scheme is an important initiative to channel liquid-ity into the cash strapped micro-finance lenders. The facility covers risk for commercial banks which lend to their microfinance counterparts as the SBP guarantees up to 40% of loss in case of default. The facility dictates that the commercial banks can not charge more than 2% plus the discount rate from the borrowing microfinance banks. The interest over

the discount rate reflects the risk premium in lending to the microfinance banks. According to the CEO of one of the major micro finance banks of the country, “it took time to make commercial banks understand our business but soon a substantial amount will be available with us.” However, he was of the view that “we need some sort of concessional financing like export finance and the loan at the interest rate being offered under Credit Guarantee Scheme is not just viable for us. We also need soft loans.”In addition to above steps, the central bank, in order to facilitate the micro-finance banks and institutions, has also decided to allow them to raise foreign currency loans from international financial institutions or donor agencies or specialized banks and institutions. Purpose of the loan must be only to finance the loan portfolio of MFBs and institutions. The borrowing may be raised in four major currencies i.e. Euro, Dollar, Pound and Japanese Yen. Minimum tenor of FCY borrowing should not be less than 2 years. The loan pricing will be based on a reference rate such as LIBOR. Interest rate may be decided on best possible terms and must be competitive to other options available locally. The disbursed FCY funds would immedi-ately be converted into Pakistani Rupee credited to borrowing MFB and institution’s Pakistan rupee account maintained with the concerned authorized dealer. Under no circumstances MFB and institution will be allowed to retain such funds in foreign currency. The borrowing MFB and institution will be allowed to make payment of the principal amount in bullet on maturity or may start repay-ment of principal amount in installments after six-months through the authorized dealer receiving disbursement of loan. Frequency of the interest payment may be made as per the related payment schedule. The authorized dealer may provide forward cover or hedging facility on the foreign currency loan to the MFB and institutions from the inter-bank market in accordance with the prevailing foreign exchange regulations. The MFB and institution will provide an undertaking that the loan deal is compliant with the legal and regulatory framework applicable to the lender and the borrower.


TRADE & INDUSTRY

Pakistan dairy sector vs. the world’s:need for better regulation

urrent Status and Potential: Pakistan's dairy industry has immense potential for growth. According to statistics, it is the third largest milk producing country in the world and over 10

million farming families are producing 36.6 billion liters of milk annually. Milk is the largest commodity produced in the livestock sector accounting for 51 percent of its total value. The dairy industry helps sustain the lives of millions of people, by providing employment, serving as a vehicle to alleviate poverty in the rural areas, and contributing 11.30% to nation's GDP. If Pakistan were to improve its overall milk yields by just 15%, it would displace New Zealand as the largest exporter of milk in the world.Pakistan has over three times more ‘dairy animals’ compared to Germany. Comparison of average milk yields across various countries shows that just one New Zealand dairy animal produces as much milk as do three dairy animals in Pakistan, while one American cow produces as much as seven Pakistani cows. This dramatic difference in productiv-ity is due to a variety of factors (genetics, food, manage-ment, dairy farming technologies in use, etc.), and the bulk of the total production of milk is marketed through infor-mal, traditional channels, that remain unregulated. Only about 3 to 4% of the total milk produced in Pakistan, is handled through the formal channels. Pakistan’s dairy sector operates largely on non-commercial basis in the unorganized sector, while the organized sector processes only a small fraction of the total milk produced in the country. Ironically, despite being one of the largest producers of milk in the world, Pakistan still imports powdered milk to meet the domestic demand. Dairy farm-ing in Pakistan is characterized by fragmented, smallholder farmers operating at subsistence level. Absence of dairy farming knowledge limits their opportunities for commer-cial benefits. The milk supply and marketing chain involves traditional milkmen or ‘Gawalas’, who lack the proper infrastructure for distributing milk, little knowledge and technical dairy expertise, and thus resort to malpractices such as ice addition to prevent it from rotting before it reaches the consumers. This is a highly alarming practice, which not only results in poor quality and unhygienic milk, but also poses a serious health risk to consumers. Furthermore, the poor infrastructure and lack of storage and distribution facilities in rural areas results in wastage of milk, resulting in huge economic losses. An estimated 20% of potential revenue from milk production is lost due to a poor infra-structure for processing and distributing milk. With every passing day, dairy products are becoming costlier because live stock farming has not grown logically with the increase in population, and also it did not match the pace of urbanization. Due to a lack of regulation, tradi-tional milkmen are mostly unaccountable for their actions, and are not punished for their malpractices. The regulatory structure currently in vogue in the dairy sector is archaic and quite inadequate for modern times, while the ability of

government to implement any regulations is limited, given its prolonged neglect of realizing economic and nutrition importance of this sector. Comparison of Pakistan Dairy Industry with World: Globally, the dairy sector is highly regulated, and in most devel-oped countries, the sale of raw milk is completely prohibited. There are many examples of countries where an organized dairy sector governed by food safety programs, dairy standards and regulations, is benefiting its stakeholders and the lives of millions of people it impacts in the dairy supply chain and sub-sectors involved in secondary and tertiary processing of milk i.e. cream, yoghurt, cheese, butter, etc. Indian Dairy Industry: India serves as an excellent example of a nation where dairy regulations revolutionized the dairy industry and contributed to its success. The past couple of decades have seen massive developments in India's dairy sector owing to the rise in the number of the country's dairy scientists and technologists, and several institutions such as the National Dairy Research Institute, Karnal, agricultural universities and, most importantly, the National Dairy Development Board (NDDB), which played a central role in dairy development and regulations. In 1970, NDDB implemented a collective action model as part of “operation flood” (1970-1996), one of the world's largest rural development initiatives aimed at increasing milk production and the income of dairy farmers. This led to India's transformation into a “milk surplus” country. India has now emerged as the world's largest milk producer with an estimated 121 million tones of milk production since 2011, which is close to 17 percent of world milk production. This unique model, transformed the country’s ad hoc milk production system into a structured and continuous dairy supply chain, from production to consumption. The model had a vertically integrated three-tiered structure with the dairy co-operative societies at the village level federated under a milk union at the district level, and a federation of member unions at the state level. While the village co-operatives procured milk from the producers, the district unions transported and processed the milk products. This "national milk grid" linked rural dairy co-operatives in India with major cities, and has also linked dairy producers

Cby Syed Asif Ali

Apart from this, NGOs are also being encouraged to restruc-ture themselves into licensed banks, so that they can operate transparently with an adequate capital base, while providing comfort to depositors and borrowers. To encourage transfor-mation of NGOs into MFBs the federal government in June 2007 allowed a five year income tax holiday to such institutions and now some major NGOs are in the process of transforma-tion into banks. Central bank has also executed partnership with the UK Department for International Development for a financial inclusion programme which promotes market devel-opment through well considered subsidies. Thus efforts are being made to promote the micro finance sector by striking a balance between prudence and growth and paving the way for scaling micro finance services in sustainable manner. Now Micro Finance Banks (MFBs) have an increased ceiling on lending limits and relaxed borrower criteria to allow for client graduation. MFBs can now extend micro loans up to Rs. 500,000/- for micro enterprises and Rs. 500,000/- for hous-ing loans. Borrowers’ income has been relaxed upwards from Rs.150, 000/ to Rs. 300,000/ for general loans and Rs 600,000/ for housing loans to allow room for graduation of microfi-nance clients. Similarly the loan classification criteria for MFBs have been rationalized to bring it in line with the international best practices and industry norms. Now loans overdue by 30 days or more but less than 60 days will be classified as ‘other assets especially mentioned’ and will require no specific provisioning. This will reduce stress on MFBs capital allowing them to upscale their services. The loan overdue by 60 days or more but less than 90 days will be classified as sub-standard and require a specific provi-sion of 25% of outstanding principal net of cash collaterals. Also, the CIB report has been made compulsory for borrowers with exposure greater than Rs.50000/. This will encourage MFBs to properly assess borrowers risk and avoid over indebted clients. Micro Finance Banks (MFBs) have shown considerable growth during 2011 in all indicators despite many challenges. The asset base has remarkably increased from Rs 21.437 billion in December 2010 to Rs 30.263 billion in December 2011 show-ing an increase of 41%, the most significant rise in a year since 2001, on the back of robust increase of secured advances and inclusion of NRSP portfolio into the ambit of microfinance banking. Deposits were up from Rs 10.338 billion to Rs 13.927 billion or 35% in the same period on the back of term finance certificates offered by major MFBs at higher rates and micro-saving mobilization through alternative delivery channels.The funding base of the MFBs has reached Rs 30 billion with 41% growth on YoY basis, on the back of Rs 14 billion depos-its, Rs 8.2 billion commercial borrowing and Rs 6.7 billion equity. Total deposits, being the largest part, have contributed 46% of the total funding. However, few MFBs are still facing funding constraints due to inadequate equity (free of losses), and limited commercial funding due to unsustainable models. On positive side, the weaker MFBs have now been required or are in the process of acquisition by new investors. On YoY basis the number of outstanding borrowers -availed development finance rose by 2.4% as on Dec. 2011 chiefly attrib-uted to the micro sector. Growth of 16.3% in the Micro Finance borrowers from 631,238 in December 10 to 733,931 in Decem-ber 11 can be attributed to the use of alternative delivery mecha-nism adopted by MFBs and in particular the Branchless Banking. There are a large number of small savers in the country but most of them save informally as the banks are mostly urban based and do not bother to mobilize the savings from majority of the people

of rural areas. They are not interested in tapping such savings even in urban areas mainly due to cost and their orientation to big depositors. Basic objective of the micro finance banks was to bring the poor, underprivileged and unbanked majority in the formal sector but they have also not succeeded in mobilizing such savings significantly due to variety of reasons.In the beginning micro finance banks mainly depended for funding their operations on the donations from external donors and borrowings from the commercial banks. However, this was not sustainable in the long term and the banks had ultimately resorted to core resource of funding i.e. deposit mobilization which has benefits other than low cost fund generation such as stability of funds, independence from exter-nal lenders, opportunities for cross-selling and client acquisition and retention. Although various micro finance banks have introduced various types of products offering attractive profit rates and there is also an increasing trend of deposits but still majority of the deposits belonged to corporate clients, big depositors and borrowers of the banks. The share of the common man has been quite meager. One reason is that these institutions are relatively new and not as oriented to mobilization of deposits as commercial banks which are in the field for decades. Moreover, they do not have the network, expertise and the resources for mobilizing depos-its which the commercial banks have. Most important factor is that the banking is a matter of trust and credibility and these institutions are still in the process to establish the same. Another factor which hampers their efforts to mobilize small savers is the cost. Studies show that small accounts cost more than large accounts. Interest paid to depositors also varies drastically across institutions ranging from 17% to nearly 80% of total deposit cost. Although Branchless Banking may be of great help in this regard which may be seen by growth of 69% to Rs 503 million in its deposits as on Dec. 2011 but it is still just a drop in the ocean and requires efforts to tap the great potential of the small savers in the country. This will also play a role in improving the national savings ratio to GDP which is quite low among the peer group of countries. In spite of the fact that there were 22000 retail agents of branchless banking as on December 2011 in the country, and the number is also increasing rapidly, but majority of the population is still not familiar with this concept and needs proper education and training in this regard.Overall, the macro level environment is healthy in the country. Pakistan’s Micro Finance sector does not suffer from regulatory hurdles or shortcomings as is the case in many parts of the world. However, while the SBP’s concern for the growth of the industry and their well informed legislation is commendable, there is also a concern that they may push institutions to move too fast even though organization may not be ready due to insufficient incentives, initiative and capacity.


to urban consumers through dairy co-operatives, trucking networks, chilling plants and processing plants. All this helped direct supply of milk from surplus producing areas to the urban areas across the country. NDDB has also begun imple-menting a National Dairy Plan (NDP) in early 2012. NDP is a scientifically planned multi-state initiative with a 15-year horizon and an estimated investment of around Rs 173 billion aimed at further increasing domestic milk production.Australian Dairy Industry: Australia has a national services body for dairy farmers and the industry, called Dairy Australia. Its goal is to achieve a "profitable, sustain-able dairy industry". The National Dairy Food Safety Regu-latory Framework is an integrated system involving federal and state regulatory agencies, dairy farmers, dairy compa-nies and Dairy Australia, driven by international Codes and Standards. As part of this framework, industry quality assurance programs require all sectors of the supply chain to take responsibility for food safety. American Dairy Industry: USA has the Farm Milk Handlers Law, and a comprehensive set of rules and regula-tions for implementing this law. The Regulatory Services' Milk Program ensures "fair and accurate marketing” of raw farm milk produced or marketed in USA. This body moni-tors the complete value chain, from the time the producers’ milk samples are obtained, milk is delivered and tested in laboratories, and payments are collected. The regulators engage in various activities to ensure quality standards and enforcement of regulations. For example, milk handlers and transfer stations are routinely visited to examine buying records, collecting samples from haulers, and to examining sample-handling procedures. Besides, America has a proper system in place to ensure that accurate payment is made to milk producers. For this purpose, producer pay audits are conducted at locations responsible for issuing payments.

Canadian Dairy Industry: In Canada, the Canadian On- Farm Food Safety Program, based on the HACCP–Hazard Analysis Critical Control Point–an internationally accepted food safety control system, provides national producer organizations with the opportunity to develop strategies and tools to educate producers, and to implement the programs. Furthermore, the Canadian Food Inspection Agency (CFIA) is responsible for the administration and enforcement of several acts related to dairy products. The CFIA has strict compliance and enforcement actions for ensuring that domestically-produced and imported prod-ucts meet Canadian regulations and quality standards. The CFIA also provides key information to consumers such as food safety tips, and information about milk. New Zealand Dairy Industry: The New Zealand dairy industry is predominantly an export business, with less than

five per cent of the production being consumed domesti-cally. DairyNZ, a state financed department for promotion and regulation of dairy industry, has implemented a strategy for the 2009-2020 period. Main components of the strategy are to generate new options from research and development in universities, test government policy initiatives in a farming system context, and communicate these results back to government to influence policy design and to ensure that dairy business managers have the financial and business skills to evaluate different options to achieve their desired goals. The strategy is now resulting in great outcomes in shape of better production, processing, profitability and quality.

Recent initiatives in Pakistan in the dairy sector: The government has finally realized that livestock sector offers tremendous potential for growth and has taken a large number of initiatives in this direction. Government had extended special incentives and benefits to livestock farmers through medication of animals, tax flexibilities and duty free import of necessary machinery and equipments. Over 200 dispensaries have been established for provision of free treatment facility to cattle under supervision of qualified veterinary experts. Policy makers are extracting good practices from Indian and New Zealand dairy industry models. Livestock Development Policy approved by the previous regime needs to be upgraded for better results. Under the policy, while the federal government will be responsible for national policies, planning and economic coordination, import/export of animals and animal products, quarantine, research and international coordination, the provisional governments will work for livestock development, veteri-nary vaccine production, research etc.Way forward for Pakistan’s dairy sector: In Pakistan's dairy industry, still there is no implemented food safety management system. There is an urgent need for proper regulation of the dairy industry to safeguard the interests of all stakeholders in the sector. Regulation will lead to better monitoring and control of the dairy sector, quality controls for dairy suppliers, and licensing of dairy farmers and other key players in the supply chain. Regulation will also allow for stable milk prices and increased productivity, ultimately ensuring the safety of milk being provided to end consumers. The milk production capacity is increasing in the country at the rate of three percent which is one of the highest in Asia. Currently, Pakistan is not exporting milk or dairy products to any other country but on the reverse countries that possess far less number of animals compared to Pakistan are leading exporters of milk and dairy products. Through proper regulations and bringing latest innovations in dairy industry, Pakistan can achieve dairy products exporter status as there is no lack of potential.

emittances due to their important role in the develop-ment of a country have been generating much interest especially over the past decade. These have a special significance in many countries. Although these are

not the earnings of those countries but they form a major part of their foreign exchange reserves. Presently about 3% of the world’s total population consist of immigrants who remit from $80 billion to $100 billion annually to their parent countries. For some Caribbean countries these remittances form more than 10% of their GDP. In some cases these exceed the amount of Direct Foreign Investment. It is also considered a more sustain-able and consistent source of foreign exchange than the foreign aid and the direct foreign investment. Although USA is a major source for the remittances for the Latin American countries but major part of the remittances of South Asian countries comes from the Gulf States.Remittances also occupy an important place in Pakistan’s economy for more than three decades. It has also assumed importance due to the fact that the country’s exports earnings remained stagnant for a long period at less than $10 billion which barrier has only recently been crossed. After exports it is the second largest source of foreign exchange of the country. In the recent past a drastic decline had occurred in the remittances through banking channels. This did not mean that the Pakistani workers were not sending the money back home but in fact they were not sending the same through the formal channels of banking system due to rate differential between the inter-bank and kerb markets and not so efficient services of the banking system for transmission of money. In the fiscal year 1999- 2000 these were less than $ one billion. This had become a matter of concern for the policy makers. Efforts were made to improve the services and make the banking system more attractive for the overseas workers. Resultantly it gradually increased and just

crossed the threshold of $ one billion in 2000-01. But thereaf-ter it increased sharply to $ 2.4 billion in 2001-02 and reached at $4.2 billion in 2002-03 which were 5.1% of GDP. The main contributing factor in this radical shift in the mode of transfer of remittances was the events of 9/11 and tightening of laws in the host countries thereafter which forced the people to adopt the formal channels. However, to supplement this process the banking system of Pakistan also took certain steps. Although remittances remained above the target of $3.6 billion in FY 2003-04 but declined as compared to the previous year to $3.9 or 4.1% of GDP. This decline occurred mainly due to fall in receipts from UAE which is attributable to an end of the reversal of capital flight and the increased investment in Dubai real estate as this sector has been opened for investment by foreigners. However, its volume is increasing since then. Its importance may not be overestimated especially when the exports instead of increasing had in fact declined by 2.8% to $ 24.7 billion in 2011-12 as compared to the preceding year. The remittances in 2011-12 were 53.5% of exports as compared to 44.2% in 2010-11. Remit-tances flow continued to rise and particularly in 2011-12 country received the highest ever amount of over $ 13.2 billion recording a growth of 17.7% as compared to the last year. However, the com- position and sources of remittances flows were slightly different from that of the previous year. For instance increase in remittance during 2011-12 was largely owed to higher inflows through banking channel whereas inflows through exchange companies declined as compared to the same period last year. Likewise the remittance growth is largely contributed by Gulf region (60.9%) while almost all the regions contributed to the remittances growth. In the July-September period of the current fiscal year the amount of remittances was $ 3.6 billion which was about 9% more than $ 3.3 billion in the same period last year.


This change is more pronounced especially after Oct. 09 when remittances flow through banking channel increased consider-ably, while remittances routed through exchange companies remained stagnant and then declined. This change coincided with the action against undocumented fund transfers. Thus it may be argued that this action might have diverted some of the funds to banking channels which were earlier being transferred through undocumented channel. Similarly country-wide data shows that after Oct. 09 remittances flow from Gulf region and in particular UAE increased rapidly while it remained stagnant in the case of USA and European countries. A part of this sharp rise from UAE may be attributed to possible diversion of funds from undocumented channel and a part, to the possible reverse capital flight to Pakistan. Stagnation in remittances flow from USA may be attributed to a) economic recession and subsequent job losses and b) some of the migrants might have withheld the funds for the time being owing to possibility of further crackdown against other exchange companies. It seems that the prediction of temporary increase in the remit-tances due to remitting of the severance amount of the work-ers laid off due to the global recession and then a decline in the remittances to Pakistan did not hold true as the flow of remit-tances in fact has shown a consistent increase for a reasonably long period which gives the hope for the future. However, as there is no indication about the end of the recession in the developed world as is obvious from the World Bank and IMF reports it may be said that the future flow of remittances may be uncertain from these countries.Keeping in view the importance of remittances for the develop-ing countries the donors such as UK and USA and multilaterals including the World Bank, the Inter-American Development Bank and Asian Development Bank have all launched substan-tial remittance initiatives and projects during this time. Similarly in Pakistan the Federal government and SBP have also launched the Pakistan Remittance Initiative (PRI). According to the then Finance Minister this project would be a ‘perpetual structure for facilitating the flow of remittances by non-resident Pakistanis and the initiative would be able to double the volume of remit-tances within the next two to three years.’ Before the launch of the initiative a detailed assessment was carried out pertaining to prevailing home remittance system in the country. One of the important findings of the system was that there was no owner of remittance structure in Pakistan. In order to provide a struc-ture whereby ownership of remittances to Pakistan could be placed PRI was established.Presently insufficient presence of Pakistani banks in overseas jurisdiction and lack of marketing efforts are some of the impediments to the flow of remittances. Apart from this the banks have not shown much interest in the quick disbursement of funds within the country despite the incentives offered by the central bank which has encouraged the diversion of funds to the informal market of hawala and hundi causing a considerable loss to the country. Under the new initiative a financial incentive scheme is being launched for overseas entities whereby they will be supported in their marketing efforts. The scheme will be performance based and such incentives shall start from bringing at least $ 100 million from the particular jurisdiction. With the help of PRI, the banks in Pakistan are being facilitated to change their approach. Instead of becoming a part of any foreign remittance product initiated by overseas entities/global money transfer operator, as has been the practice, they are now planning to take initiative of marketing overseas Pakistanis and design their own products while utilizing overseas counterparts as collection points.

Initially, five major banks have been selected to be the part of this initiative. Additional participants may be added going forward subject to pilot tests. In the first phase banks will be able to use RTGS to transfer and settle inter-bank transactions into beneficiaries’ accounts on the same day. In this respect the central bank is also introducing a mechanism for compensation to remittance beneficiaries for delay by the banks. There is large potential which may be tapped through this initiative but the success depends on the interest and the efficiency of the banks.Remittances have both positive as well as negative effects for the economy. Its immediate effect is the prosperity and well being of the recipient families and thus it helps in reducing poverty. These funds may be utilized for creating further employment and devel-opment if the concerned departments provide the necessary guidance and technical know-how to the people regarding the establishment of small business and industry. Besides, remit-tances reduce the country’s dependence on the foreign borrow-ings etc. Apart from this the employment in the foreign countries also helps those countries which are facing the problems of unemployment and resultant social unrest to export their surplus manpower and save them from the social and political instability. But at the same time the flow of remittances also induces consumption and especially of the imported goods which has various adverse effects. Exhibition effect of this activity is very strong. It forces people to change their habits and life pattern. One may remember that in seventies when the flow of remittances had just started very few homes in the country, both in cities as well as in rural areas, had the refrigerators and air conditioners etc. Very few had included these things among the necessities of life. But this trend changed with the passage of time and now a house is not considered complete without these things regardless of the question of affordability as all such items are now available on easy installments. This trend on the other hand affects savings which give rise to the foreign and domestic borrowings for meeting the investment needs of the country. Import of consumer goods also widens the gap between imports and exports which also give rise to foreign borrowings to meet the gap of current account deficit. Another drawback of the remittances is that they provide a cushion to the government in meeting its budgetary and trade requirements. But unlike exports these are not the earnings and in fact a windfall which is not a certain and sustainable source and may fluctuate due to the factors beyond the control of any government. Thus at the time of budget making it is possible that policy makers making estimates on the basis of the previous record may become complacent and do not give enough attention to the other alternatives. Therefore, any happening on the international scene or some policy change in the remitting country may disturb these estimates. Pakistan has experienced this situation in the past. It is necessary to avoid the distortions and flaws; the flow and the amount of the remittances should not be taken for granted. Brain drain is one of the major results of the attraction of remittances. A country spends a lot of time, money and skill in educating and imparting various skills to its people. Human capital is the best resource for the development of any nation. The departure of such people to green pastures in search of better careers deprives a country of its best talents which ultimately hampers its development efforts. It is, therefore, necessary that a policy is formulated through which a balance is maintained between the human resource needs of the country and its export to other countries.Remittances have become a necessary part of the country’s economy. Therefore, it is imperative that while formulating any policy in this regard consideration should be given to the various related factors.


TRADE & INDUSTRY

Trade associations:their unfulfilled responsibilities

uring the past three quarters, State Bank of Pakistan (SBP) lowered its discount rate four times bringing it down by 350 basis points with its declared aim of boosting investment that has been going down

continuously. This policy has had less to do with fall in inflation than with meeting the demands of the trade associations to reduce mark-up rates. But the trade associations are rarely, in fact never, bothered about the ‘real’ (not the PBS-manicured) Consumer Price Index (CPI) which reflects the true inflation, that hurts the sentiment for saving, and causes many other economic distortions to grow in size.Doing so, trade associations reflect a denial of the critical impor-tance of “real” interest rate (CPI minus profit rate paid on savings). Unless profit rate paid on savings is above the CPI, there is no incentive to save. Negative real rates of return on savings are a continuing tragedy that never allowed savings’ growth rate to reach a minimum of 20% – the rate Pakistan needs to drastically cut its reliance on external resources for plugging the gaps in its physical infrastructure. Courtesy this resource gap, Pakistan’s external debt is already at a suicidal level.Given Pakistan’s current circumstances–result of the inability to appreciate the need for offering real positive returns to the savers, and a grossly investment unfriendly environment that now prevails–external resources could only come in the form of debt with tough conditionalities, not as direct investment. Oddly, while all chambers of trade and industry demand low mark-up rates, none seems bothered about the real CPI (not its fudged PBS version) that kills the desire to save, and thus causes a mismatch between the demand for, and supply of, savings to commercial and industrial sectors. No chamber of commerce & industry explains why it can’t take steps to check that part of inflation that results from hoarding to cause an artificial supply shortage as well as the avoidable supply uncertainty that triggers the price increases at wholesale and retail levels. Given this big failure of the chambers of trade and industry (which reflects no concern for self-regulation), how can they demand mark-up rates of their choice? In a TV talk show after SBP cut its discount rate on October 5, senior businessmen demanded that mark-up rates must come down to 8% i.e. SBP discount rate must drop to between around 5% and impliedly, profit rate on savings to come down in the 1.5%. Some expectation it is! Of course this is possible, but will the businessmen agree to at least bring CPI down to 1.5% so that the real profit rate on savings is at least zero if not negative? That the chambers of commerce and industry can’t (seemingly, on purpose) see the criticality of keeping inflation low to induce a higher level of saving, is unfortu-nate. As long as they will not accept this undeniable reality, the only way mark-up rate can be lowered would be for the state to do what is already escalating the fiscal deficit– subsidize this cost at the cost of foregoing the achievement of far more important economic objectives–e.g. infrastructure development. Trade bodies (though rightly) never lose any opportunity to fault the government for the ever-expanding gaps and flaws in the country’s physical infrastructure, but why can’t they see that unless domestic savings rise, resources for development won’t be available. At present, bulk of the savings are consumed merely

in financing the current expenditure of the government. The harsh reality is that, courtesy high inflation, savings are not rising at the required pace. Unless chambers of trade and indus-try address this issue nothing could change for the better.That the power sector crisis is virtually eating away the roots of business and industry is undeniable. But, wasn’t this crisis building up since the early 1990s, or did it unfold overnight? The last two decades during which this crisis was building up, what were the chambers of trade and industry doing to push for containing this crisis via increase in domestic oil and gas recovery, building more dams to generate more of the cheap hydropower, BMR of all the existing power houses, or for cutting distribution losses, etc.? If they had resisted a switch to rental power and sought the domestic system to improve, things could be different; the system must change if it is to become adequate to support uninterrupted opera-tions in all the economic sectors, stop continued slide in GDP growth, and curtail the rise in poverty to ensure that Pakistan’s youth does not anymore opt for joining crime or terrorist gangs. This is the biggest challenge that Pakistan faces, as admitted by rational businessmen. Opting for a shift of business to the Persian Gulf or South East Asian countries is, to begin with, admission of defeat and insincerity to both Pakistan and the Pakistani nation.In the context of checking lawlessness, crime, and the rising culture of extortion (bhatta khori) so far what the trade bodies have opted for, is getting linked-up with the political parties in power. That is a grave error and the outcome thereof was seen on September 11, in the biggest-ever industrial tragedy in Pakistan’s history; it also manifested a huge failure in the area of self-regulation of internal safety arrangements. This highly irresponsible aspect of the role of trade bodies was highlighted in the past as well, but touched a new height on September 11, exposing ‘zero’ self-regulation of internal safety and security of markets, shopping and trading centres, and factories. Current thinking among the businesses is that all they need to worry about, and provide for, are external threats i.e. risk of theft, dacoity and terrorism. This is a deliberate suicidal tendency. What has been exposed thus far clearly manifests that there are no codes for internal safety and security, especially in the context of the adequacy of the gadgets to confront emer-gencies like fire, the spread of those gadgets all over the prem-ises, be they a market or a factory, and shopkeepers and factory workers’ familiarity with use of those gadgets in putting out fires effectively. This is a regulatory gap that has not been addressed, either by the government’s industrial sector regulators or by the industry’s own regulators. In a TV programme about the investi-gations into this tragedy, Chief Engineer of the Sindh Industrial & Trading Estate (SITE)–venue of the September 11, astonish-ing tragedy– said that, for approving factory layout designs, what SITE needs is a building plan (on paper) that has been cleared by a building ‘consultant’. Whether that consultant actually exists, what is its expertise and professional capacity and of performing this function, are not specified by the mandate he is supposed to abide by. This mandate manifests self-regulation of no more than ceremonial nature. These are hardly the kind of disciplines that government’s regulators should be required to follow. They exposed gaps that now cast serious doubts over reliability of Pakistan’s industrial

Dby A. B. Shahid

conomic institutionalization has a critical role to play in the progress of any region. This is particu-larly true of stock markets. Joint stock companies played an instrumental role in the economic

growth and led to social and political developments during the Industrial Revolution, which Europe experienced in the 18th and 19th centuries. The capital, which was required for the extensive industrialization, was raised by companies by selling shares in the markets that slowly got the shape of capital markets. The capital markets, where stocks are traded, have been central to generating capital for industri-alization and businesses. The correlation of stock markets and development is also evident in Pakistan. Parts of the country where stock markets have been active are far more developed than the provinces and regions where they are not present to play their role as a factor for growth and development. Thus the underdevelopment of KPK, FATA and Balochistan can be attributed to a great extent to the absence of stock exchanges there. Because of this lack, KPK and FATA, are in many respects more underdeveloped than even Balo-chistan, for instance in terms of poverty and unemploy-ment rates thus underlining the need for them to have a combined capital market, if not separate for each of them. The challenges of development in these regions are enor-mous and cannot be met without the availability of huge monetary resources. These resources cannot be expected to be provided in entirety by foreign donors or lenders; at best they could provide a fraction of the money needed for development. Most of the monetary resources have to be channeled through the local sources and in this regard

raising capital for economic development through stock markets is one of the most suitable way. Keeping in view the critical role of capital markets in the development of KPK and FATA, the government should have established a stock market in Peshawar, the economic and cultural hub of both the regions, decades ago. How-ever, to make amends for the time lost, the government should move with speed and set up a stock market in Pesha-war an early as possible. The KPK and FATA have very narrow capital base, almost non-existent manufacturing sector and nascent services sector whereas corporate culture is nowhere to be found in the province. In KPK, the dominant form of investment is in real estate or bank deposits whereas in FATA there is no concept of real estate business as instead of individuals, clans and tribes own the land there while there is no banking sector there. Invest-ment in stocks in the region has not taken roots because of the absence of a financial market. People have even started shying away from investing in the real estate business; the meager savings they accumulate could not prove lucrative if invested in real estate businesses. In such a scenario, invest-ment in stock equities could be quite compatible with the small savings of the people of KPK and FATA’.If a stock exchange is established in Peshawar, entrepre-neurs of the KPK and FATA would get maximum advan-tage as it would raise equity in the local market that would provide succor to at least medium-sized industries apart from providing meaningful support to the services sector. The capital raised through the stock market could also be helpful in establishing strategic industries in the region. Besides, investors from the whole of the province, the


units to fulfil their commitments, particularly to foreign buyers, and could have impli-cations for exports that are already on a steady slide courtesy the power sector crisis.Trade bodies and chambers of commerce and industry also need to

impose strict codes of self-regulation on the sectors they represent, whereby all members are obliged to ensure against all corrupt practices that cause artificial supply shortages to escalate the prices. No government anywhere has the resources to catch every wholesaler or retailer involved in corrupt practices. In Pakistan, retailers alone add up to over 3 million. That the huge majority of this sector learns to behave responsibly, can be achieved only by self-regulatory codes that promptly blackball the corrupt making sure that no member deals with blackballed traders. Our trade bodies show no concern over this self-damaging issue, even though Pakistan’s record in checking hoarding-driven inflation has been one of the worst, which leaves no one in doubt that it is an obligation that must be enforced via tough codes of self-regulation. This is yet to be done by the trade bodies although there are long stories of organized corruption in industries dealing in commodities, especially processed commodities like sugar.The other area that the chambers of trade and industry must address is the payment of taxes, especially the sales and with-holding taxes that businesses collect for payment to the state. That the bulk of these taxes, although collected, is not being handed over to the state is no longer in doubt; clear evidence thereof is repeatedly provided by the mismatch between the gross sales of retail and wholesale sectors compared to its proportion collected by FBR; if both the sectors are, paying total amounts of these taxes to the FBR, it should have been proved credibly by the trade bodies. This is a job they can’t do because it implies something they haven’t thought about. In this scenario, it amounts to asking for too much of the trade bodies because it implies that trade bodies are well organized to collect data from their members–area that attracts only ceremonial attention of the trade bodies and the chambers of trade and industry. There is no tradition of the chambers periodically publishing consolidated facts and statistics about various sectors of the economy; the lone source of such data is the PBS, whose statistics are roundly rejected by most of the trade bodies. If that is so, doesn’t it build a strong case for trade bodies to gather as well as consolidate sector-wise data that are defend-able on the basis of authentic facts collected by the trade bodies? If the trade bodies also keep record of all punitive actions against corrupt businesses, they could claim authen-ticity, and clout of a much higher order. Sadly, trade bodies and chambers of commerce and industry do none of it. What these bodies push for are the demands for reduction in taxes and higher tax rebates. Doing just that amounts to taking a very limited view of their role.But that is what has been going on for decades. Trade bodies don’t realize that in the long run, what will matter is how well the whole economy is organized, co-ordinated, and thus imbibed with the capacity to become more reliable by the passage of time, and strong enough to withstand the regular

and deadly bouts of the disease being spread by shortening of economic cycles. By now, businesses everywhere must accept the fact that if the free enterprise system becomes more and more of the sort of ‘free-for-all’ dispensa-tion, they need ever-stronger protective system so as not to suffer ‘avoidable’ losses from the downswings of the economic cycles. This calls for better organization, updating sector-wise statistics, preferably on a real-time basis, quickly knowing the economy’s strengths and developing weaknesses to help devise purpose-oriented solutions there for.

Traders withdraw their strike callsDespite tall claims to check it, the law and order situation in Karachi has continued to deteriorate. Target killings have become the order of the day. So has been the alarming increase in extortion, kidnapping and killings of businessmen and their family members. After countless killings and restlessness among the industrial-ists and traders of the economic hub of the country, All Karachi Traders association called on a protest movement against the extortion mafia. So did the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) and Karachi Chambers of Commerce and Industry (KCCI). They issued strike calls for November 8 and November 10 respectively. Shutter downs, protest demonstrations or strikes are no solution to a problem but, as the business leaders had said in widely publicized media conferences, the increasing trend of kidnappings, killings and extortion had forced them to seek recourse to these measures; the law enforcement agencies had miserably failed to take any effective measure as deterrence against the evil. The strike calls were given against persistent death threats to the business community by criminals. The calls have since been withdrawn, though temporarily. Following long delibera-tions with the Governor of Sindh at the Governor House, the business community has agreed to delay their strike call for 20 days up to November 30 on the assurance by the Sindh Governor that the government will take all possible measures to improve law and order situation and provide security to business community so that they could run their businesses smoothly. “Ibad has assured us that the police will take on-spot action against criminals in order to establish minimum deter-rence since we had told him that criminals released from prison harass businessmen even more,” said one of the partici-pants at the meeting with the Governor of Sindh. “If govern-ment fails to resolve our problems, we will go to observe strike on November 30,” said Siraj Qasim Teli, a businessmen community leader who was part of the negotiating team. The businessmen observed that the withdrawal of their strike call was linked to better performance of police and law enforcement agencies. Has the situation improved? Is the law and order situation better than what it was at the time of their meeting at the Governor House? Apparently not. The killings and kidnappings continue unabated; reports of harassment for extortion money are still pouring in. One only wishes that the promises made now are honoured in letter and spirit. Otherwise, the nation would be constrained to conclude that the traders have failed to fulfill their duties.

Codes specifyinginternal safety gadgets, their adequacy for fire emergencies, spread of equipment all over the premises, and worker familiarity with its use, are not there

That bulk of sales and withholding taxes isn’t being surrendered is not in doubt; evidence thereof is the mismatch in gross sector sales and taxes deposited by the operators

adjoining FATA, and of course, Afghanistan, where there is no stock market, would have an easy access to locally incorporated companies. Moreover, they will be in a better position to link corporate efficiency with share prices.Portfolio investment is more suitable for the residents of KPK and FATA, as it would not only divert savings from real estate businesses but would also help reduce prices of the latter. Investment in real estate enhances the social status of a person among Pukhtoons, the predominant ethnic group of KPK, FATA and Afghanistan. This status is a source of numerous acrimonies, especially protracted land disputes usually claiming precious lives and exhausting monetary resources. So, with attention diverting to portfolio investment the interest in real estate business would also dwindle, reduce the cost of the land and hence may act as deterrent against bloody animosities - the menace that has been a great hurdle in the development of the region. With consequent fall in land prices, entrepreneurs would buy more land for setting up big industrial units or services outlets. Besides, cheaper land would become available for agro-based industries like tobacco, orchards and vegetables—lifeline of the region’s economy.As local joint stock companies in KPK and FATA would have major stakes in the would-be stock exchange, they would be extra-cautious and efficient for obvious reasons. Likewise, they would be more interested to improving socio-economic milieu in the region for their own benefit. This, in the final analysis, would be beneficial for everyone. Presently, due to shortage of skilled labour, most indus-tries in the KPK are based in sectors that do not require skilled labour. Resultantly, profits are meager and wages minimum. There are no incentives for workers to improve technical skills. By floating shares on the stock market, the local companies would have more funds to dedicate to research and development (R&D)—a concept unknown to the corporate sector in the KPK.Both sole proprietorship and partnership in the KPK have limited finances for long-time investments; there-fore, there is quite a limited integration of different sectors. Consequently, there is nominal production of value-added goods as well as specialization that at times becomes counterproductive due to cost overruns - for instance, carpet industry, gemstones and agricultural commodities. The detrimental effect is that the indus-tries of the province cannot meet significant export orders. With capital formation through shares selling, companies would be adequately equipped not only to vertically integrate their enterprises but even opening outlets abroad.Currently, bank loans are the only source of financing for KPK businessmen and industrialists. With the rate of mark-up on bank loans being quite high, it is not feasible for the businessmen and industrialists to borrow for long term. Banks also find it difficult to lend for long terms. The account holders in the province deposit for short term. Therefore, it is extremely difficult for banks to extend long-term financing to the entrepreneurs. Long- term investors usually invest in federal government secu-rities having more return. Therefore, banking sector in KPK is bereft of necessary funds to loan out to industri-alists or services sector.

As bank loans form usually 70% of the initial capital for a new enterprise in KPK, the risk factor is quite high. The production stage usually takes considerably long for an industry during which it already accumu-lates interest in the range of 30-50% of the loan amount. In the KPK, only cigarette companies and certain pharmaceutical industries that produce coun-terfeit items could pay such high interest rate; most other industries financing their operations with 70% bank loan can hardly afford to do that. This is the underlying reason for the closure of more than half of the KPK’s industrial units. In this scenario, shares capi-tal is going to reduce companies’ reliance on heavy debt financing, thus, curtailing the risk.In the KPK, family based businesses dominate the corporate scene in which there is no concept of distinc-tion between ownership and management. With joint stock companies created through shared capital, a profes-sional and vibrant management would be a must for each company that would enhance its business prospects. Moreover, with more capital available, economies-of- scale could be created that could produce high quality products at competitive prices. These can especially be created in tobacco and fruit farming sectors.In KPK, investors’ confidence in banks has eroded tremendously with the ever reducing rate of return, unstable private sector banks, and other related factors. Stock investments may bring back the investor because the lure areas of investments include grocery stores, auto spare parts shops etc. the reason being that rampant unemployment and petty businesses have in-built mechanism of passing on impact of inflation to consumers. Investing in stocks may provide this in-built mechanism to offset inflation and also put an end to the mushroom growth of petty shops that have numerous socio-economic disadvantages.With the establishment of a stock exchange in Peshawar investment could be diverted from petty businesses to corporations, enabling the government to tax them due to their smaller number and easily calculable transac-tions. It is important to note that in KPK, generally people do not invest in banks, as they consider mark-up as un-Islamic. Stock investment offers opportunities for profits which are not pre-determined.What has been stated above underlines the need for establishment of a stock exchange in the KPK. How-ever, certain quarantine measures would need to be taken to protect the said entity from ill effects. For instance, capital markets often become volatile when speculation is unchecked. Therefore, initially all corpo-rations listed on the would-be Peshawar bourse should be owned by the shareholders from the province. In this manner people of the province would feel a sense of ownership and consider big corporate entities as their own, instead of outsiders exploiting provincial resources.A capital market in Peshawar can really boost industrial-ization and corporate culture if it is accompanied with a full-fledged economic package including reduction in both taxes and electricity prices in order to offset the locational disadvantage and giving KPK’s companies a competitive edge.

BANKING & FINANCE

by Ferozeali Hussaini

ntroduction: The Basel accords are a series of recommendations on banking laws and regulations issued by the Basel Committee on Banking Super-vision (BCBS). Basel III is a set of standards and

practices created to ensure that international banks maintain adequate capital to sustain themselves during periods of economic strain. It adds further controls to those required by Basel II which in turn was a refine-ment of Basel I. Basel III was developed by the Basel Committee on Bank-ing Supervision in response to deficiencies revealed by the global financial crisis, and represents the biggest regula-tory change that the banking industry has seen in decades. The new accord strengthens bank capital requirements and introduces new regulatory requirements on bank liquidity and leverage. The financial crisis showed that not all institutions did hold sufficient capital and that the capital was sometimes of poor quality and was not avail-able to absorb losses as they materialized. The economic cost of the global financial crisis during the past five years has been frighteningly large. One clear lesson from the crisis is that regulatory capital require-ments for the banking system were too low. Or in other words, leverage was too high. Under the pre-crisis rules, banks were allowed to increase their leverage to unprec-edented levels. This increased risk in the financial system and when the crisis hit, the implicit guarantees resulted in massive public bailouts around the globe. Tougher capital standards are considered critical for preventing another financial crisis, but bankers had warned that if the new standards were too harsh or the implementation deadlines too short, lending could be curtailed, cutting economic growth and costing jobs.Basel III is part of the Committee's continuous effort to enhance the banking regulatory framework. It builds on the International Convergence of Capital Measurement and Capital Standards document (Basel II). The Basel II accord mandates that banks holding riskier assets have more capital on hand than those maintaining safer portfo-lios. According to Basel II, companies must publish both, the details of risky investments and risk management practices, whereas Basel III establishes more stringent capital requirements - tripling the amount of capital banks must keep on hand to absorb losses during financial crises. It also requires banks to maintain higher common equity than before, including a capital conservation buffer of 2.5% of their assets.Salient Features of the Accord: The package, known as Basel III, sets a new key capital ratio of 4.5 per cent, more than double the current 2 per cent level, plus a new buffer of a further 2.5 per cent. Banks whose capital falls within the buffer zone will face restrictions on paying dividends and discretionary bonuses, so the rule sets an effective floor of 7 per cent. The new rules will be phased in from January 2013 through to January 2019. Banks will be required to triple

core tier one capital ratios from 2 per cent to 7 per cent by 2019. This ratio measures the buffer of highest quality capital that banks hold against future losses.In addition to the 4.5 per cent core tier one ratio, and the 2.5 per cent buffer, the reform package also endorses the idea of an additional buffer of up to 2.5 per cent of core tier one capital to counter the economic cycle. Tier-1 capital requirements will be implemented gradually between 2013 and 2015; the capital buffers between 2016 and 2019. The new prudential adjustments will be intro-duced gradually, 20% a year from 2014, reaching 100% in 2018. In the event of a credit boom, banks under Basel III would potentially need to hold a further 2.5% in common equity, bringing the total to 9.5%. Finally, the most systemically important banks must hold up to 2.5% in additional common equity. That makes a total of 12%, a six fold increase from pre-crisis levels for these institu-tions. According to the Bank for International Settle-ments, Basel III would result in higher capital require-ments for longer tenor loan and bonds, in addition to more punitive liquidity requirements.But we should not underestimate how Basel III strength-ens bank-capital adequacy rules. A fundamental feature of the new framework is the significant increase in required minimum capital levels. All banks must hold common-equity capital of at least 7% of their risk-based assets, compared with only 2% previously. Banks will be required to triple core Tier-1 capital ratios from 2 per cent to 7 per cent by 2019. This ratio measures the buffer of highest quality capital that banks hold against future losses.Tougher capital standards are considered critical for preventing another financial crisis, but bankers had warned that if the new standards were too harsh or the implemen-tation deadlines too short, lending could be curtailed, cutting economic growth and costing jobs.Timeline of Basel III implementation:Capital requirements: The national implementation will start on 1 January 2013. Thus, legislation and regula-tions will have to be amended during the period prior to that date. From 1 January 2013 onwards, banks will have to meet the following minimum capital requirements expressed in risk-weighted assets: 3.5% share capital, 4.5% Tier-1 capital and 8% total capital. During the transitional period from 1 January 2013 up to and including 2019, these ratios will gradually be stepped up to 4.5% share capital, 6% Tier-1 capital and 8% total capital. The conservation buffer will build up along gradual lines to a percentage of 2.5%. from 1 January 2016 through 1 January 2019. Thus, banks will ultimately have to hold 10.5% of their total capital expressed in risk-weighted assets.Leverage ratio: As regards the introduction of the Leverage Ratio, from 1 January 2011 onwards the supervi-sor will concentrate on the development of templates to consistently monitor the components of this ratio. The

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Basel III: New accord strengtheningbanking regulatory framework


product of the two institutions. In order to facilitate its unit holders, a state of the art Investors Facilitation Centre (IFC) has been established which is providing all sorts of customer related services to its unit holders under one roof. Recently, NIT has opened 3 new branches at Karachi and Lahore to expand its sales network. With the addition of these three branches, the nationwide distribution network now comprises 22 branches. Work on opening up a few more branches is in hand.

NIT has also been shouldering national responsibility of providing financial support to affectees of natural calami-ties. It has been funding trusts, institutions and agencies providing social services to the neglected population of the country. It has also played a vital role in motivating and acknowledging the services of legends in sports, culture, education etc. through awards. NIT as a national institu-tion of prestige did not forget welfare of its employees and has introduced Hajj Scheme for its employees so that they could perform the spiritual obligation without any financial burden.

Q: NIT has completed half a century of its successful operations. What are the major landmarks achieved?A: The National Investment Trust (NIT) has completed 50 years of its enviable track record. During this long journey, NIT has come a long way and has achieved various milestones including consistently paying dividends in billion of rupees since its inception in 1962, achieving the highest number of unit holders and introducing new products to cater to the needs of investors with varying risk appetite besides having largest branch network in the country to provide investment services to the customers at their door step. Keeping in view the long awaited demand by investors and in order to cater to their varied investment needs, NITL for the very first time, ventured into the fixed income fund category by launching two Funds in FY10. NIT Government Bond Fund, a very low risk product was launched in Nov. 2009 followed by NIT Income Fund, which was introduced in Feb. 2010 designed for low to medium risk taking investors.

NIT is also the pioneer in introducing the first Co-Branded ATM card facility for its customers in Mutual Fund Indus-try. NIT – Summit Bank Co-Branded ATM card is a joint

period from 1 January 2013 through 1 January 2017 will be a parallel run period. During this period, the develop-ment of the Leverage Ratio will be monitored. The inten-tion is to migrate the Leverage Ratio into the Pillar 1 requirements as from 1 January 2018.Liquidity ratio: As from 2011, the Liquidity Coverage Ratio will be monitored by both the Basel Committee and the supervisor in order to officially make it mandatory with effect from 1 January 2015. The Net Stable Funding Ratio will be introduced as a minimum standard as from 1 January 2018.Basel III introduces a new definition of capital to increase the quality, consistency and transparency of the capital base. It also requires higher capital ratios. Key elements of the revision include:• Raise quality and quantity of Tier 1 capital;• Simplification and reduction of Tier 2 capital;• Elimination of Tier 3 capital; • More stringent criteria for each instrument;• Harmonization of regulatory adjustments;• Enhanced disclosure requirements;• Introduction of a new limit system for the capital elements.The Gist: Basel III is all about capital - the amount of high quality assets a bank must hold to cushion against losses. The new rules will force banks to have more capital, higher quality capital, and more "liquid" capital. Here are five important features:1. More Capital: The capital changes could be the most significant since the original Basel Accord was agreed to in 1988. The most vital change that Basel seeks is to force banks to hold more capital. By having a bigger cushion, banks won't be as vulnerable to losses hitting in times of economic turmoil. The additional capital required of banks is significant. There are different kinds of assets that can count as capital, and they have different levels of quality. Common equity is the purest form of capital, a cushion that can absorb losses best. Under current rules, banks are only required to hold 2.0% common equity. Under Basel III banks need an additional 2.5%, to total 7.0%, during good times. That can be reduced to as low as 4.5% under times of stress. Moving to the next highest form of capital, "Tier 1" adds another 1.5% of capital, and "Tier 2" results in another 2.0%. So in total, banks will now need 10.5% capital in normal times, or 8.0% capital in times of stress. This is much higher than what was required in the past. 2. Better Capital: The definitions of these sorts of capital have also been tightened, to focus on higher quality assets. As already mentioned, far more of the high-est quality capital -- common equity -- will be required. But the definitions of Tier 1 and Tier 2 capital are also being adjusted to be more conservative. Before, these sorts of capital included some types of assets that were not very reliable for cushioning losses during times of economic distress.3. Bubble Busting: The new rules also contain an inter-esting provision to combat the ups and downs of economic cycles. Financial crises put pressure on banks' capital cushion, so there's also a measure to ensure that banks build up more padding during the upswings to protect against the downturns. That's the "countercyclical

buffer" ranging between 0% and 2.5%, that will be in place when the economy is hot. This is good for two reasons. First, this will slow banks' lending during upswings in comparison to their capital, to guard against runaway lending. Second, if a bubble has been created, and it pops, there will be additional cushion to absorb the resulting losses. At the peak of economic cycles, banks will have a buffer of up to 9.5% of common equity -- the highest quality capital -- to fall back on. Currently the amount required is just 2.0%.4. Better Liquidity: Another problem during economic turmoil is liquidity -- the ability to turn your assets into cash. The credit crunch was a major problem because liquidity "dried up," banks couldn't unload their assets or make their payments, and many large banks needed govern-ment assistance to survive. Basel III will be the first time regulators would have a numerical standard for liquidity. The new rules require banks to have enough high quality liquid assets to cover cash outflows over a 30-day stress period. These assets would include very liquid assets like government securities.5. Timing: Finally, the new rules provide a clear timeline for when and how these changes should be implemented. The process will be quite gradual, not in full effect until 2019. But the implementation will be done in a very smart way, providing benchmarks within the process to ensure that banks are on the way to full compliance, with some preliminary standards needing to be met starting in 2013. It's likely that the market will push banks to implement the new standards faster than Basel III requires.Basel III and Financial Stability: The Basel III regula-tions contain several important changes for banks' capital structures. First of all, the minimum amount of equity, as a percentage of assets, will increase from 2% to 4.5%. There is also an additional 2.5% "buffer" required, bringing the total equity requirement to 7%. This buffer can be used during times of financial stress, but banks doing so will face constraints on their ability to pay dividends and otherwise deploy capital. Banks will have, until 2019, to implement these changes.Basel III framework strengthens risk-based capital regula-tion, regulatory supervision principles and risk manage-ment practices in the banking sector. While maintaining the micro-prudential regulatory toolkit introduced in the previ-ous Basel Accords that ensure the safe, sound and prudent operations of banks, Basel III seeks to address the effects of systemic risks.However, Basel III is not a panacea, and will not single-handedly restore stability to the financial system and prevent future financial crisis. But in combination with other measures, these regulations are likely to help produce a more stable financial system. In turn, greater financial stability will help produce steady economic growth, with less risk for crisis fueled recessions such as that experienced following the global financial crisis of 2008-2009.References:• www.bis.org/bcbs/basel3• Basel III: A global regulatory framework for more resilient banks

and banking systems - revised version June 2011 • Basel III: International framework for liquidity risk measurement,

standards and monitoring•www.investopedia.com/articles/economics/10/understanding-basel-3


held in our portfolio by offloading the shares of the companies where the fund’s holding is non-remunerative. As a result, the number of companies has further been reduced to around 400. This exercise will continue in the period ahead as well, while keeping the best inter-est of the Fund in mind. The Fund also adopted buy/sell positions in other sectors during the year to benefit from short-term trading opportunities avail-able in the market without any detrimental impact on stock market. Q: What has been the role of NIT in providing liquidity to stock market, helping in price discov-ery and above all extending a helping hand during the bearish spells?A: Based on the track record of our performance, the Government and other stakeholders always reposed confidence in NIT and assigned it important roles on many occasions. Be it generation of liquidity or providing support to the capital market in times of crisis, NIT did its best to come up to the expectations and the trust reposed in it. NIT had an initial mandate to take up a specific percentage of every initial public offering (IPO) under the preferential quota regime. This helped accelerate the pace of industrialization in the country and also provided capital markets the much needed liquidity because of the long-term investment perspective. Furthermore, at the time of unprecedented crisis in the stock market, NIT launched NIT-Equity Market Opportunity Fund (NIT-EMOF) in July 2008 to support the stock market. At the time of removal of the floor on the stock market which remained in place for 110 days due to unproportional nature of the crisis, the Government and other stakeholders, foreseeing a massive selling pressure from local and foreign inves-tors, once again asked NIT to launch a fund to support the stock market. NIT launched its NIT-State Enter-prise Fund to help support the market. It is evident from the record that NIT succeeded in bringing stabil-ity in the stock market by restoring the confidence level of investors.Q: What are the reasons that attract investors to NIT even during the bearish spells?A: The first and the foremost is the investors’ trust in NIT. Besides, the value of assets under NIT manage-ment is inching towards Rs 80 billion. NIT has always played its role in stabilizing the market sentiments. A highly professional team of NIT, under the guidance of highly qualified and experienced Board, has the expertise to deliver in the toughest of times and possesses the ability to prudently manage the invest-ment portfolio, thereby generating good and consistent returns for its investors. NIT has never made a distress sale during the bearish spells in the markets. A certain portion of our portfolio has remained invested in short term highly liquid government securities and bank deposits to meet redemptions. During the last couple of years, NIT has met all redemptions through internal cash generation without recourse to borrowing which is a milestone in itself. This has created a strong image which has built a trust among NIT unit holders.

NIT has a history of generating consistent returns for its valuable investors and infact has not missed a dividend payment even once in its entire history of operation. Q: As you said, over these 50 years NIT has been consistently paying dividend to its unit holders. How has this been possible despite economic downturn in Pakistan and elsewhere in world? A: This became possible due to investments made by NIT in a number of companies enjoying growth poten-tial and providing a regular stream of dividend inflow. Further, NIT follows a strategy of investing in blue chip companies offering a mix of both dividend income and capital gains potential.Q: NIT is said to be the first ever open-ended mutual fund established in Pakistan and it has the largest assets under its management. What are the factors that helped in maintaining the leadership?A: NIT commenced its operations in 1962 with the launch of an equity Fund, NI(U)T, which was the first ever mutual fund in the country. NIT has been success-fully managing its flagship product of NI(U)T Fund which has grown to be the single largest equity mutual fund of the country in terms of asset size. NITL has the prestige of serving the highest number of unit holders of any mutual fund in the country. The number of unit holders adding up to around 57,000 is the highest ever customer base served by a single mutual fund service provider in the country. With net assets constituting about 21% of the entire mutual funds industry, NIT’s equity funds constituted 85% of the industry’s open-end equity funds as on September 30, 2012.The equity portfolio of NI(U)T comprises more than 400 companies spread across all the sectors of the economy that provides it with maximum diversification and also minimizes the risk to its investors. NIT has representation on the highest number of the compa-nies’ boards with a total of 130 directorships on the board of 115 companies within our portfolio which, besides safeguarding the interest of our unit holders, also protects the rights of other shareholders by provid-ing professional inputs in running the affairs of the companies and delivering healthy returns. All investment decisions of NIT are taken by an investment committee of NITL which comprises highly qualified professionals. These professionals take decisions on the basis of in-depth research carried out by Research Depart-ment of NIT. Moreover, we have specialized trading department for quick and timely execution of transactions. Q: NIT’s performance as you mentioned is quite com-mendable. What were the key strategies followed by NIT for achieving this performance level?A: NIT designs its investment strategy according to the prevailing market conditions. The institution has a team of qualified and experienced professionals. The team has been very active and successful in improving the performance of the Fund, the result of which is evident from the fact that NI(U)T Fund outperformed its benchmark by 0.34% during the 1st quarter ended 30th September 2012.In line with the strategy adopted during the last couple of years, we are striving to reduce the number of companies

by Value Chain Report

ow strategic managers look at potential and future of consumer banking in Pakistan which has the population base of 180 million and, in terms of population segmentation, is one of the youngest

nations in the world, politically marred, graft-ridden gover-nance yet showing high potential and large customer base vis-à-vis the global consumer landscape. Pakistan has 23 commercial banks, 5 public sector banks (National Bank of Pakistan and 4 provincial banks), 6 multi- national banks and 4 specialized banks - total 38 banks having a network of 9,390 branches across Pakistan (excluding micro-finance and investment banking institutions). Still less than 20% of the population is being banked and over 80% yet remain unbanked; this segment is being brought into the banking net through branchless and mobile banking solutions but still it is less than 4% which is likely to increase to 35% till 2020. Out of overall total loans of PKR 3,310 billion disbursed by the banking system, the consumer banking stands at PKR 213 billion. Total non-performing loans (“NPLs”) stand at PKR 543 billion. Last decade witnessed great potential that trans-lated into large increase in sales of banking sector’s consumer products i.e. personal loans, housing finance, auto loans and credit cards. However, in recent years consumer banking finance continued to decline and its share reduced from over 13% to 8% in total loans portfolio. Unsupportive economic conditions, higher interest rates, lower GDP growth and growing non-performing loans in consumer segment marred progress of consumer banking sector over the last few years. Pakistan, with a population of 180 million people, has untapped huge consumer potential, having an estimated over 25 million households whereby potential consumer banking customers outlook may be worked out to 19 million plus comprising of household customers for vehicle finance, housing finance, personal loans, credit cards and other general consumer durable customers. If business customers are included to buy, through consumer banking, consumer durables for business uses, small businesses or start-ups infrastructure related purchases, personal credit lines then consumer banking market can go even further up.In monetary terms, these 19 million households can trans-late into PKR 9,643 billion worth of consumer banking customers. Pakistan’s mobile density model may be (currently 120 million users within last decade alone) used and rem-

odeled for creating and developing a scalable consumer banking platform. A senior execu-tive of a commercial bank while talking to Value Chain suggested that a 10 – year plan should be developed and consumer bank-ing industry should also

be given incentives and infrastructural support like branch-less banking (3rd party outlets, internet banking, mobile banking and e-commerce platforms).Relevant regulatory framework is being provided by the country’s pro-active central bank (“SBP”). However, Federal Bureau of Revenue (“FBR”) and Securities and Exchange Commission of Pakistan (“SECP”) need to be actively involved in regularizing the economy, at grassroots level, by enforcing proper documentation at smaller level and market level businesses. This will create professional and enabling environment for banks to manage their credit risk related issues more practically and effectively.

During mid of last decade, consumer financing helped people enhance their quality of life and build their startup businesses and in return the banking sector earned huge profits out of it and became a win-win proposition for both segments of the society. Within the banking industry, consumer banking is based on 2–types of loans (a) financing to individuals to buy or upgrade their housing facilities, purchase a car, credit cards, personal loans for household and wedding related expenses and on the other hand (b) financing to start up businesses as Consumer Programmed Lending which up to a certain limit forms part of SMEs financing. This source of funding and personal credit lines can serve to enhance quality of life as well as meet working capital or other small business requirements.At present banking sector’s total consumer portfolio is less than 10% of total commercial lending which should be increased to at least 30% to meet individual and small businessmen’s needs. The country has witnessed a sharp decline in consumer related lending since 2008, however, as Value Chain spoke to executives at many leading banks to get their views on consumer banking short and long term future plans, the officials expressed their strong optimism and referred that during the year 2012 consumer sector has started showing some progress and the banks have planned to re-launch their consumer products cautiously. They said that some had planned to stick to fewer products while several others would like to go full-length in terms of number of products. The scale of lending may be limited in the begin-ning but in line with market needs pace will be maintained.

H

Consumer BankingHorizon in Pakistan

BANKING & FINANCE

FBR and SECP should come forward to put in place a

mechanism to createprofessional, documented

economy at grassroots level providing enabling

environment for smaller business and markets.


hat fake medicines were available in most of the under-developed and developing countries was a known fact, but the fact that this tragedy is hurting the developed countries as well, was

recently revealed by Western analysts who have come up with some shocking revelations. A contaminated blood thinner (herpin) killed 140 during 2007-08 in the US, and tainted steroids from a compounding pharmaceutical company (one that mixes its own drugs) near Boston, killed 11, and made many others to suffer for months at a stretch. The incidents show that fake medicines alone are not the killers; ill-made medicines are as much of a threat. But the bigger issue is the regulation of the pharmaceutical sector that is in a mess everywhere.In developing and under-developed countries (as is the case with all other activities) compared to their demand, supply for medicines is grossly short, consumers are desperate and are always looking for cheap medicines, health systems-hospitals and health-care centres–are shambolic, national borders are porous, and bureaucracy in health regulatory setups is easily bribe-able.An example thereof is Nigeria where, according to a WHO survey conducted in 2011, 64% of anti-malarial drugs turned out to be fakes. The WHO survey induced a very concerted counter-attack by the Nigerian government on the fake drug producers, which brought the proportion of fake medicines down to a fifth of their 2011 level. To check this profitable business, Nigeria has developed a “scratch-off label system” that allows drug users to convey the code on the packets via internet text messages to de-coding offices in pharmaceutical companies to verify the authentic-ity of the products before using them.

But, success of this experiment requires nationwide knowl-edge about availability of this facility, internet facility with drug users, and pharmaceutical manufacturers setting up decoding offices that operate round the clock. These big ‘ifs’, especially in under-developed countries like Pakistan, restrict this system’s use. Besides, as yet, in Pakistan we do not have this setup, nor is the Ministry of Health even aware of the plus side of setting up such a system, despite the fact that fake drugs are now flooding the markets–a fact confirmed by almost every pharmaceutical company, and is condemned for its being overlooked; to ‘The Economist’, 21st Century is turning into the ‘golden age’ of bad medicine. To crooks, making fake drugs is a good business, since penalties are low, and supply-chains have turned into ‘cheats’ paradise’.Besides regulatory weaknesses, what makes this paradise more attractive is the global pharma cycle. Raw materials for medicines come from one country (in the US, 80% of the ingredients for medicines come from other countries); they are converted into active ingredients in another country, and mixed together to manufacture medicines in yet another country. Thereafter begins the distribution system wherein medicines are often re-packed – bulk medicines, tablets and capsules being re-packed into smaller retail packages. This complex supply chain creates a regulatory “nightmare”, especially the re-packing and packaging part thereof, which provides fake drug producers a vast scope of benefitting by resorting to corrupt practices because even the best possible supervisory arrangement can’t stop fake drugs being inject-ed into the system. On-line drug pushers and suppliers add a huge dimension of complexity to the system.A global attempt in checking counterfeiting was launched in 100 countries via Operation Pangea (a policing campaign to

Re-launch and increase in the number of products will serve to improve job markets as well as provide business to allied vendors and services sector. Thousands of jobs will be created across Pakistan in banks and allied services sector to cater to the needs of consumer banking customers whilst equally adding quality to customers’ lives and startups. As the number and amount of loans grow, NPLs will immediately start showing decreasing trends in a comparative study mode. In the initial stage of re-launch which started taking place towards the end of 2011, prime stress was placed on car finance and credit cards gradually including mortgages and consumer programmed lending i.e. loaning facilities to small businesses in the shape of personal credit lines. During the last 4 years, the banking sector heavily invested in government papers and found no lucrative options elsewhere. It seemed that banks had gone overboard in terms of taking deposits and investing in sovereign investment schemes. But they are now striving at their level best to revert to their normal course of business i.e. commercial lending and foreign trade that includes consumer banking which earns lucrative returns and is always considered as a major earning arm of the overall commercial lending products of banking. In corporate lending, risk is taken on fewer customers whereas in consumer banking risk is taken on large number of customers and if credit initiation and risk management practices are meticulously followed, risk is managed more effectively at a much higher rate of return in comparison with corporate lending. Recent cuts in discount rates have brought deposit rates down but will also assist in keeping consumer products rate fairly low, making it easy for customers to utilize consumer banking facilities because of lower rates. Businessmen and banking sector officials expect more reduction in key rates which will further help in improving consumer banking customer base. In addition, this will also assist in lowering loan defaults and unhealthy consumer portfolio. Consumer personal loans will also increase volume in trading at stock exchanges, due to liquidity available to individuals in terms of personal loans and personal credit lines. The banks have also focused on their customer service and risk management structures with a view to make their customer services proactive, keeping level of complaints to a minimum and dealing with the customers in a way that makes them satisfied to serve as ambassadors for increase in their sales – so far most of the complaints have been related to consumer banking custom-ers due to low quality of services provided by this banking sector. Improved risk management mechanism will not only help in reducing default rate but also enhance quality of credit applica-tions logging into the banking system, minimum turn-downs and bringing the uncalled for credit application rejections to a nil or minimized.

One of the most important segments of the markets - the banks- will need to focus on informal lending market practices in relevant markets like country-wide commodity markets, consumer durables markets, jewelry and gems markets, fruit and grocery markets, livestock and dairy cattle markets, meeting real estate and general working capital needs. There are individuals who, as part of routine business practices, extend informal credit facilities to individuals for their small business and personal needs and charge profit at the rate over 18% to 35% and their default rate is very low. If consumer banking sector covers this segment and meets such individual and business needs specially in line with our society needs and culture, Islamic banking consumer products can even play more effective role in replacing those informal credit facilities with formal banking products. This can make huge contribu-tion towards individual customers whilst creating equally better proposition for the banks. Easy paisa’s model (now more banks have entered in these branchless banking products) may be followed which has replaced informal channel, domestic remit-tances channel, with their professionally developed platform. The banks can save on costs and make their products customer- centric by adopting international best practices, local market knowledge, outsourcing many of their processes to professional service providers who can do the same very effec-tively as their first hand business and as their number one prior-ity. Information technology can play a pivotal role in driving consumer loans portfolios professionally and successfully along with professional policies and procedures to manage credit and operational risk through professionally trained human resources in customer relations management specially those who understand customer needs and make way out for continuous sales and recovery, avoiding resort to bad recovery procedures and getting into litigations; the banks ideally prefer recovery based on relationships rather than recovery through asset sales – which approach has been one of the reasons for the growth of non-performing loans portfolio.During interaction with banking officials it transpired that branchless banking will likely play a key role in increasing density of consumer banking products across Pakistan, reducing infrastructure cost, extending outreach to every part of the country and eventually outsourcing of many procedural and processes- centric elements as it will bring in new dimensions of consumer banking whereby service sector will have opportuni-ties for providing independent third party unbiased services. Full functional ATM machines whereby cash is withdrawn and also deposited can play a vital role in enhancing customer conve-nience and reliance thus adding to consumer customer base.A study shows that consumer banking related regulations issued by SBP continued to assist in strengthening consumer banking business. However, banking sector needs to upgrade systems and maintain their pace to provide their custom-ers with innovative products and conve-nience thus becoming their partners in business, focusing more on customer relations and less on becoming recovery masters.

Bankers believe branchless banking is likely to play a key role in increasing density of consumer banking products across Pakistan, reduction in infrastructure costs and providing g extended outreach to every part of the country.


identify online pharmacies supplying drugs). This was a great success in the sense that it was able to identify and shut over 18,000 on-line drug pushers, but also proved that all on-line drug suppliers are not criminals. In essence, and like corrupt-tion in most other businesses, production of fake drugs also reflects a craving for wealth that is totally devoid of a sense of morality or social responsibility–the outcome of injecting in human mind a love for profit by the ‘free for all’ (i.e. unregulated), not the free enterprise system. That this scenario is hurting the image of free enterprise is yet to be appreciated by its committed supporters. But responsible governments have been making efforts to contain this distortion. China achieved remarkable success in curbing the manufacturing of fakes. Over 2,000 owners of such outfits were arrested, fined and sentenced, and in 2007, the top bureaucrat in its drug regulatory authority was executed for accepting bribes for approving untested medi-cines. Then there are the above-quoted examples of regula-tory administration in Nigeria but not many other countries have taken similar steps. India is one of the largest manufac-turers of medicines but well-informed individuals in this sector accept that almost 50% of the medicines manufac-tured in India, are fake. This is despite the efforts of the

Indian government to check fakes in order to sustain its image as one of the big export-ers of medicines.On their part, the highly reputed pharma manufacturers are employing ex-police detectives to oversee their distribution

chains, and spot criminals therein, but their efforts too are having marginal impact on their supply operations in under-developed and developing countries. Pfizer has been making extraordinary efforts to check counterfeiting of its products. Yet, while in January 2009, 81 countries reported counterfeit versions of 20 Pfizer drugs, by July 2012, things had become worse; 106 countries reported the counterfeit versions of as many as 60 Pfizer drugs but Pfizer is continuing with its efforts, and hopes that it will succeed at least partially, if not wholly, which is what it can do. It only proves the point that, despite all their sincere efforts, for which Pfizer and the other drug manufacturers must be commended, they can’t do what is primarily the job of the state.

The Medicrime Con- vention of 2011 was acceptance of this harsh reality. This con- vention was jointly sponsored by 18 Euro-pean countries, but has done nothing much in terms of inducing governments to check counterfeiting; what has now happened though is the development of the ‘TruScan’ technology that scans medicines to detect fakes in the consignments on port of arrival. America’s Food & Drug Administration (FDA) is acting as a strict supervisor not only in the US but, since 2008, it has opened its offices abroad including in China, India, and Mexico. But even the FDA, that sought much higher penalties for fake medicine produc-ers, admits that it can’t police the world’s pharma mafias, which are far too big and too clever for the bureaucrats to handle. Then there is another issue; the manufacture of cheaper drug. WHO authorized the manufacture of cheap drugs for distri-bution through its medical aid programme, but is being blamed by Western pharma manufacturers for the role it played in encouraging the manufacture of sub-standard medicines. This claim has been contested by many pharmaceutical manufacturers in the under-developed and developing coun-tries because the cheaper versions of many medicines they manufacture are being blamed for violating proprietary rights and for false labelling of medicines–not a fair return for the sincere efforts these countries put in for a human cause. To settle this debate, WHO created its International Medi-cal Products Counterfeiting Taskforce (IMPACT) but this outfit faces criticism over its definition of counterfeit drugs–SFFC – which is the abbreviation for “spurious, falsely-labelled, falsified, counterfeit”, because many devel-oping and under developed countries consider this defini-tion an excuse for the global pharma manufacturers to suppress production of medicines in developing countries. What is lacking on the part of the pharma giants are efforts that could help produce cheap medicines in large quantities for the poor of the world that the WHO wanted.This conflict is most tragic because manufacturers in both developed and the under-developed countries are hurting the cause of healthcare by not coming to an understanding on the issue. What they need is to cooperate, not fight because, as being predicted, environmental degradation, courtesy un-regulated industrialization will cause diseases to increase and the number of those affected by these diseases will rise every year. It is a pity that profits, not social responsibility, are driving all the big wigs in this sector. But, in essence, this conflict shows the collective failure of governments that aren’t worried about limiting environmental pollution, or containing the corrupt practices in their pharma sectors. The element missing is a concern for humanity, and the biggest role in this failure is shared by governments. Politi-cians are often not capable of governing the state because they are not unbiased professionals. They have to rely on bureaucrats for advice on managing the affairs of the state. Back in 1987, a columnist writing for the ‘Observer’ had very rightly pointed

BANKING & FINANCE

he regulation framing forum of the Bank for International Settlements–the Basel Committee on Banking Supervision– is overly concerned about the capital adequacy regulations that are being

framed by the European Banking Authority (EBA). It has prompted a fairly blunt response from the Basel Committee that claims that EU rules for implementing the Basel Accord III on bank capital (to be phased in from January 2013), are materially non-compliant with the terms of the Basel Accord III. According to the Basel Committee, distortions in these regulations could give EU banks unfair advantage over their global rivals because of EU failure to apply the international capital rules, which could create disparities.According to the Basel Committee, this non-compliance with its Accord III would allow EU banks to end up holding too little capital against exposure to risky assets such as low-rated government debt, or their buffers may not be of the quality that could absorb losses in a crisis. This criticism has visibly touched a sensitive nerve in the EU, which is already facing a variety of problems in reviving its banking system to restore confidence therein. The Basel Accord requires banks across the world to triple their minimum capital buffer to avoid more taxpayer-funded bailouts, like those offered to prevent bank failures in the 2007-09 financial crisis. Basel Committee's inspection team says it is concerned that two big differences in this respect in European banks will allow big EU banks to hold less capital than they should. Potentially, this could have material impact in terms of financial stability, and in provid-ing a level playing field internationally. The first big discrepancy is in the definition of core capital – the financial instruments that could be included in the banks’ core buffer. Basel Accord III stipulates that common shares are the instruments defined in its Accord III, while Germany is pushing hard to include what Basel regulators consider as the ‘less proven’ financial instruments. The other discrepancy is in how banks use internal models to add up risks on their books of account e.g. exposure to government debt, thereby determining the size of the core buffers i.e. their core capital. Core buffers are seen by markets as the key indicators of the banks’ strength that underpin investor confidence and many banks already report their ratios under Basel III, even though the requirement does not become effective until 2019. The Basel Committee report says that 10 out of 13 cross-border banks reported over-statement of their core buffers by up to 50 basis points, while the other three reported overstatement of 100 basis points. This was achieved by fiddling with the risk-weights assigned to risk assets. The effect was to reduce the required core buffers. For long, US banks have accused their European rivals of "optimising" on risk weights to push down how the capital they need, which gives them an unfair advantage over the banks that comply with the Basel regulations. These findings were expected to fuel concern about the true state of banks in the EU after several stress

tests forcing banks to beef up their capital buffers failed to bring prudent investors back into the battered European banking sector. The report faults “too many permanent partial exemptions" in the EBA model that allow banks to attach a too low or zero risk weight to the sovereign debt holdings, and thus avoid setting aside more capital. The provi-sion in Basel Accord that allows applying “low or zero risk rating was to apply only in exceptional circumstances not broadly." In a scenario in which large sums of the Euro zone sovereign debt have been downgraded to ‘junk’ ratings, such “partial” exemptions are uncalled for. The Basel Committee team found that some EU states allow only narrow exemptions so that the notional amount of exempted exposure to sovereign debt averages 5.49% of the banks’ total exposure. But in the 13 banks that the Basel Committee has examined, the most affected bank, however, had 20% of the exposures to sovereigns treated too leniently. Responding to Basel Committee’s criticism, EU’s financial services chief Michel Barnier issued a statement questioning the findings of the Basel Committee by saying they were not "supported by rigorous evidence".The EU parliament wants the EBA to check whether instruments in core buffers are valid, but EU member states, like Germany, oppose this role for EBA, while law-makers like Sharon Bowles, a British Liberal Democrat, want to end the ease with which zero risk weight can be applied to sovereign debt holdings. The logjam means that EBA will not be able to finalise its rules by January although the EBA has already forced banks to hold far more capital than they would need to, under the early part of the Basel Accord III phase that begins in January 2013. Interestingly enough, the same Basel report included similar, but far less critical comments on the banks in the US and Japan, exposing the stress the European banks face, and the efforts being made by the EU to restore confidence in its financial services sector.Whatever may be the final outcome of the ongoing tussle between the EU and the Basel Committee, the aspect it clearly points to is the overly ‘text book’ approach of the Basel Committee – reflected in the failures of the Basel Accords I and II, and the expediency oriented approach of the EU to somehow get its financial services sector back on track. Sadly, neither of them is concerned about imposing a discipline to force the revival of basic ethics in managers of their financial services – a firm commitment to lending prudently and recovering the debt– obligations sidelined by a target meeting culture that was injected in these services by bankers with an American business orientation.

T

Banking:the capital adequacy debate

Neither the EU nor Basel Committee want to

impose conditions that revive basic ethics

among managers of their financial services

sector – a commitment to lending prudently,

and debt recovery




Suppressing innovation in pharma sectorTowards the end of October, Public Accounts Com-mittee (PAC) of the National Assembly was hearing a shocking case wherein the Ministry of Health officials penalized a team of pharma researchers for inventing a much cheaper drug that could bring the cost of treat-ing hepatitis down to less than 10 percent of its current level. As per the estimates presented to the PAC by an independent investigation team, by not allowing the production of the medicine and import of the foreign alternatives, the state may have spent Rs 70bn. What this incident reflects is the clout of some, not all, of pharma manufacturers operating in Pakistan. PAC had constituted a committee headed by the renowned scientist Dr Samar Mubarkmand and com-prised of Secretary, Ministry of Science and Technol-ogy Ikhlaq Chatta and the Secretary, Higher Education Commission to probe into the technical side of this affair, and report back to the committee within 15-days, which revealed that this tragedy occurred because in 2010, the Ministry of Science & Technology had asked FIA to launch an inquiry against the research team that had invented the injection, accusing the head of the team Dr Riazuddin of embezzlement of funds (and placed on the exit control list) while another scientist on the team was denied salary for two years. As a consequence thereof, over 100,000 injections that had been manufactured and a sample thereof tested in a German laboratory, expired. According to the Acting Chairperson of the PAC Ms. Yasmeen Rehman during the investigation it was also revealed that Irfan Nadeem (a ministry of health staffer) had forged documents and lied to the Supreme Court by stating that the National Assembly’s standing commit-tee had ordered investigations against Dr Riazuddin.

However, after two years of investigation, FIA’s inquiry gave a clean chit to Dr Riazuddin and his team of researchers, and dismissed allegations against him. Now the Public Accounts Committee (PAC) has asked the NAB to investigate the roles of the officials in the Ministry of Science & Technology who sabotaged the domestic production of Interferon. The acting chair-person of the PAC also informed PAC members that she has written to the Supreme Court to punish the culprits in the Ministry of Health, and assigned MNA Khawaja Asif the responsibility of taking this issue to the Supreme Court for hearing. The view expressed by many observers was that this incident reflects the pressure foreign pharma mag-nates apply on staff members of the Ministry of Health to prevent introduction of domestically manu-factured medicines. According to Ms. Yasmeen Rehman, besides this sad affair, 28,000 other drugs were being denied registration because of pressure of multi-national companies. According to Akram Masih Gill, MNA of PML-Q, given this environment, no scientist wants to be a part of the Ministry of Science & Tech-nology; if what Gill said is right, it doesn’t bode well for the future of Pakistan’s pharma sector– ironically, the sector that must expand rapidly to keep pace with the rise in Pakistan’s population.

Value Chain Report

s of 2012, nearly a third of the world’s popula-tion uses the internet, and an even greater portion possesses a mobile phone. The internet has transformed the way in which people obtain

news, conduct business, communicate with one another, socialize, and interact with public officials. Concerned with the power of new technologies to catalyze political change, many authoritarian states have taken various measures to filter, monitor, or otherwise obstruct free speech online. These tactics were particularly evident over the past year in countries such as Saudi Arabia, Ethiopia, Uzbekistan, and China, where the authorities imposed further restrictions following the political uprisings in Egypt and Tunisia, in which social media played a key role.Freedom House, a US research organisation advocating democracy, political freedom and human rights, has conducted a comprehensive study of internet freedom in 47 countries around the globe. The annual study evaluates each country based on barriers to access, limits on content, and violations of user rights. This year’s findings indicate that restrictions on internet freedom in many countries have continued to grow, though the methods of control are slowly evolving and becoming less visible. Of the 47 coun-tries examined, 20 have experienced a negative trajectory since January 2011, with Bahrain, Pakistan, and Ethiopia reg- istering the greatest declines. In Bahrain, Egypt, and Jordan,

the downgrades reflected intensified censorship, arrests, and violence against bloggers as the authorities sought to quell public calls for political and economic reform. Ethiopia, a country with a tiny population of users, presented an unusual dynamic of growing restrictions reflecting a government effort to establish more sophisticated controls before allowing access to expand. And Pakistan’s downgrade reflected extreme punishments meted out for dissemination of allegedly blasphemous messages and the increasingly aggressive efforts of the telecom regulator to censor content transmitted via infor-mation and communications technologies (ICTs).The methods of control are becoming more sophisticated, and tactics previously evident in only the most repressive environments—such as governments instigating deliberate connection disruptions or hiring armies of paid commen-tators to manipulate online discussions—are appearing in a wider set of countries.Countries at Risk: As part of its analysis, Freedom House identified a number of important countries that are seen as particularly vulnerable to deterioration in the coming 12 months. They include Azerbaijan, Libya, Malaysia, Pakistan, Russia, Rwanda, and Sri Lanka.Key Trends:* New laws restrict free speech: In 19 of the 47 countries examined, new laws or directives have been passed since

A

INFORMATION & TECHNOLOGY

Freedom on the Internet 2012: A globalassessment of internet and digital media


urrent Status and Potential: Pakistan's dairy industry has immense potential for growth. According to statistics, it is the third largest milk producing country in the world and over 10

million farming families are producing 36.6 billion liters of milk annually. Milk is the largest commodity produced in the livestock sector accounting for 51 percent of its total value. The dairy industry helps sustain the lives of millions of people, by providing employment, serving as a vehicle to alleviate poverty in the rural areas, and contributing 11.30% to nation's GDP. If Pakistan were to improve its overall milk yields by just 15%, it would displace New Zealand as the largest exporter of milk in the world.Pakistan has over three times more ‘dairy animals’ compared to Germany. Comparison of average milk yields across various countries shows that just one New Zealand dairy animal produces as much milk as do three dairy animals in Pakistan, while one American cow produces as much as seven Pakistani cows. This dramatic difference in productiv-ity is due to a variety of factors (genetics, food, manage-ment, dairy farming technologies in use, etc.), and the bulk of the total production of milk is marketed through infor-mal, traditional channels, that remain unregulated. Only about 3 to 4% of the total milk produced in Pakistan, is handled through the formal channels. Pakistan’s dairy sector operates largely on non-commercial basis in the unorganized sector, while the organized sector processes only a small fraction of the total milk produced in the country. Ironically, despite being one of the largest producers of milk in the world, Pakistan still imports powdered milk to meet the domestic demand. Dairy farm-ing in Pakistan is characterized by fragmented, smallholder farmers operating at subsistence level. Absence of dairy farming knowledge limits their opportunities for commer-cial benefits. The milk supply and marketing chain involves traditional milkmen or ‘Gawalas’, who lack the proper infrastructure for distributing milk, little knowledge and technical dairy expertise, and thus resort to malpractices such as ice addition to prevent it from rotting before it reaches the consumers. This is a highly alarming practice, which not only results in poor quality and unhygienic milk, but also poses a serious health risk to consumers. Furthermore, the poor infrastructure and lack of storage and distribution facilities in rural areas results in wastage of milk, resulting in huge economic losses. An estimated 20% of potential revenue from milk production is lost due to a poor infra-structure for processing and distributing milk. With every passing day, dairy products are becoming costlier because live stock farming has not grown logically with the increase in population, and also it did not match the pace of urbanization. Due to a lack of regulation, tradi-tional milkmen are mostly unaccountable for their actions, and are not punished for their malpractices. The regulatory structure currently in vogue in the dairy sector is archaic and quite inadequate for modern times, while the ability of

government to implement any regulations is limited, given its prolonged neglect of realizing economic and nutrition importance of this sector. Comparison of Pakistan Dairy Industry with World: Globally, the dairy sector is highly regulated, and in most devel-oped countries, the sale of raw milk is completely prohibited. There are many examples of countries where an organized dairy sector governed by food safety programs, dairy standards and regulations, is benefiting its stakeholders and the lives of millions of people it impacts in the dairy supply chain and sub-sectors involved in secondary and tertiary processing of milk i.e. cream, yoghurt, cheese, butter, etc. Indian Dairy Industry: India serves as an excellent example of a nation where dairy regulations revolutionized the dairy industry and contributed to its success. The past couple of decades have seen massive developments in India's dairy sector owing to the rise in the number of the country's dairy scientists and technologists, and several institutions such as the National Dairy Research Institute, Karnal, agricultural universities and, most importantly, the National Dairy Development Board (NDDB), which played a central role in dairy development and regulations. In 1970, NDDB implemented a collective action model as part of “operation flood” (1970-1996), one of the world's largest rural development initiatives aimed at increasing milk production and the income of dairy farmers. This led to India's transformation into a “milk surplus” country. India has now emerged as the world's largest milk producer with an estimated 121 million tones of milk production since 2011, which is close to 17 percent of world milk production. This unique model, transformed the country’s ad hoc milk production system into a structured and continuous dairy supply chain, from production to consumption. The model had a vertically integrated three-tiered structure with the dairy co-operative societies at the village level federated under a milk union at the district level, and a federation of member unions at the state level. While the village co-operatives procured milk from the producers, the district unions transported and processed the milk products. This "national milk grid" linked rural dairy co-operatives in India with major cities, and has also linked dairy producers

January 2011 that either restrict online speech, violate user privacy, or punish individuals who post content deemed obj- ectionable or undesirable.* Bloggers and ordinary users increasingly face arrest for political speech on the web: In 26 of the 47 countries, including several democratic states, at least one blogger or ICT user was arrested for content posted online or sent via text message.* Physical attacks against government critics are inten-sifying: In 19 of the 47 countries assessed, a blogger or internet user was tortured, disappeared, beaten, or brutally assaulted as a result of their online posts. In five countries, an activist or citizen journalist was killed in retribution for posting information that exposed human rights abuses.* Paid commentators, hijacking attacks are proliferat-ing: The phenomenon of paid pro-government commenta-tors has spread over the past two years from a small set of countries to 14 of the 47 countries examined. Meanwhile, government critics faced politically motivated cyber attacks in 19 of the countries covered.* Citizen pushback is yielding results: A significant uptick in civic activism related to internet freedom, alongside impor-tant court decisions, has produced notable victories in a wide set of countries. Advocacy campaigns, mass demonstrations, website blackouts, and constitutional court decisions have resulted in censorship plans being shelved, harmful legislation being overturned, and jailed activists being released. In 23 of the 47 countries assessed, at least one such victory occurred.Significant Country Findings:* Estonia (1): Estonia has become a model for free internet access as a development engine for society. Restrictions on internet content and communications in Estonia are among the lightest in the world. There are over 70,000 active Esto-nian- language blogs on the internet, including an increasing number of group, project, and corporate blogs. The vibrancy and activities of the blogosphere are frequently covered by traditional media, particularly when blog discussions center on civic issues. Freedom of speech and freedom of expres-sion are protected by Estonia’s constitution and by the country’s obligations as an EU member state. Anonymity is unrestricted, and there have been extensive public discus-sions on anonymity and the respectful use of the internet.* United States (2): Internet access in the United States remains open and fairly free compared with the rest of the world. Courts have consistently held that prohibitions against government regulation of speech apply to material published on the internet, but the government’s surveillance powers are cause for some concern. In early 2012, campaigns by civil society and technology companies helped to halt passage of the Stop Online Piracy Act (SOPA) and the Protect IP Act (PIPA), which were criticized for their potentially negative effects on free speech.* India (20): Although India’s internet penetration rate of less than 10 percent is low by global standards, the country is none-theless home to over 100 million users. Parliament passed amendments to the Information Technology Act (ITA) in 2008, expanding censorship and monitoring capabilities. This trend continued in 2011 with the adoption of regulations increasing surveillance in cybercafes. Many of India’s users access the internet via cybercafes, as only 3 percent of households have an internet connection. There were no reports of government-imposed internet connectivity disruptions in 2011 and 2012.

However, in January 2012, mobile phone providers in Jammu and Kashmir shut off their services for one day as part of security precautions in place for Republic Day. As of early 2012, the Indian authorities blocked a small number of websites, including some with content in the public interest. * Russia (30): The internet is the last relatively uncensored platform for public debate in Russia. However, since January 2011, massive distributed denial-of-service (DDoS) attacks and smear campaigns to discredit online activists have intensified. After online tools played a critical role in galvanizing massive anti- government protests that began in December 2011, the Kremlin signaled its intention to further tighten control over internet communications.* Pakistan (36): Disconcerting recent developments in Pakistan include a ban on encryption and virtual private networks (VPNs), a death sentence imposed for transmitting allegedly blasphemous content via text message, and a one-day block on all mobile phone networks in Balochistan province. Several other initiatives to increase censorship—including a plan to filter text messages by keyword and a proposal to develop a nationwide internet firewall—were officially shelved in response to civil society advocacy campaigns, although some suspect that the government is still working on them behind closed doors.* China (45): China is home to the world’s largest population of internet users, but also the most advanced system of controls—one that has become even more restrictive. In 2011, the authorities abducted dozens of activists and bloggers, holding them incommunicado for weeks and sentencing several to prison. The government also tightened controls over popular domestic microblogging platforms, pressuring key firms to more stringently censor political content and to register their users’ real names. Meanwhile, China’s influence as an incubator for sophisticated restrictions was felt across the globe, with governments such as Belarus, Uzbekistan, and Iran using China as a model for their own new internet controls.* Iran (47): The Iranian authorities used more nuanced tactics in a continued campaign against internet freedom that began after disputed elections in 2009. These tactics included: upgrading content filtering technology, hacking digital certifi-cates to undermine user privacy, and moving closer to estab-lishing a National Internet. Iranian judicial authorities also meted out some of the harshest sentences in the world for online activities, including imposing the death penalty on three bloggers and IT professionals.


to urban consumers through dairy co-operatives, trucking networks, chilling plants and processing plants. All this helped direct supply of milk from surplus producing areas to the urban areas across the country. NDDB has also begun imple-menting a National Dairy Plan (NDP) in early 2012. NDP is a scientifically planned multi-state initiative with a 15-year horizon and an estimated investment of around Rs 173 billion aimed at further increasing domestic milk production.Australian Dairy Industry: Australia has a national services body for dairy farmers and the industry, called Dairy Australia. Its goal is to achieve a "profitable, sustain-able dairy industry". The National Dairy Food Safety Regu-latory Framework is an integrated system involving federal and state regulatory agencies, dairy farmers, dairy compa-nies and Dairy Australia, driven by international Codes and Standards. As part of this framework, industry quality assurance programs require all sectors of the supply chain to take responsibility for food safety. American Dairy Industry: USA has the Farm Milk Handlers Law, and a comprehensive set of rules and regula-tions for implementing this law. The Regulatory Services' Milk Program ensures "fair and accurate marketing” of raw farm milk produced or marketed in USA. This body moni-tors the complete value chain, from the time the producers’ milk samples are obtained, milk is delivered and tested in laboratories, and payments are collected. The regulators engage in various activities to ensure quality standards and enforcement of regulations. For example, milk handlers and transfer stations are routinely visited to examine buying records, collecting samples from haulers, and to examining sample-handling procedures. Besides, America has a proper system in place to ensure that accurate payment is made to milk producers. For this purpose, producer pay audits are conducted at locations responsible for issuing payments.

Canadian Dairy Industry: In Canada, the Canadian On- Farm Food Safety Program, based on the HACCP–Hazard Analysis Critical Control Point–an internationally accepted food safety control system, provides national producer organizations with the opportunity to develop strategies and tools to educate producers, and to implement the programs. Furthermore, the Canadian Food Inspection Agency (CFIA) is responsible for the administration and enforcement of several acts related to dairy products. The CFIA has strict compliance and enforcement actions for ensuring that domestically-produced and imported prod-ucts meet Canadian regulations and quality standards. The CFIA also provides key information to consumers such as food safety tips, and information about milk. New Zealand Dairy Industry: The New Zealand dairy industry is predominantly an export business, with less than

five per cent of the production being consumed domesti-cally. DairyNZ, a state financed department for promotion and regulation of dairy industry, has implemented a strategy for the 2009-2020 period. Main components of the strategy are to generate new options from research and development in universities, test government policy initiatives in a farming system context, and communicate these results back to government to influence policy design and to ensure that dairy business managers have the financial and business skills to evaluate different options to achieve their desired goals. The strategy is now resulting in great outcomes in shape of better production, processing, profitability and quality.

Recent initiatives in Pakistan in the dairy sector: The government has finally realized that livestock sector offers tremendous potential for growth and has taken a large number of initiatives in this direction. Government had extended special incentives and benefits to livestock farmers through medication of animals, tax flexibilities and duty free import of necessary machinery and equipments. Over 200 dispensaries have been established for provision of free treatment facility to cattle under supervision of qualified veterinary experts. Policy makers are extracting good practices from Indian and New Zealand dairy industry models. Livestock Development Policy approved by the previous regime needs to be upgraded for better results. Under the policy, while the federal government will be responsible for national policies, planning and economic coordination, import/export of animals and animal products, quarantine, research and international coordination, the provisional governments will work for livestock development, veteri-nary vaccine production, research etc.Way forward for Pakistan’s dairy sector: In Pakistan's dairy industry, still there is no implemented food safety management system. There is an urgent need for proper regulation of the dairy industry to safeguard the interests of all stakeholders in the sector. Regulation will lead to better monitoring and control of the dairy sector, quality controls for dairy suppliers, and licensing of dairy farmers and other key players in the supply chain. Regulation will also allow for stable milk prices and increased productivity, ultimately ensuring the safety of milk being provided to end consumers. The milk production capacity is increasing in the country at the rate of three percent which is one of the highest in Asia. Currently, Pakistan is not exporting milk or dairy products to any other country but on the reverse countries that possess far less number of animals compared to Pakistan are leading exporters of milk and dairy products. Through proper regulations and bringing latest innovations in dairy industry, Pakistan can achieve dairy products exporter status as there is no lack of potential.

en cases reported this year in a populous country like Pakistan, where death is counted by the dozen every day, sounds a trivial figure for the statistical mind. However, from the medical science point

of view, the number of mortalities caused by a untreatable bacterial infection that can “silently” attack with a more than 99% probability of causing death is a potential catas-trophe, a major public hazard!This possibility of a potential disaster in the form of lethal infection to a larger number of people causing unimagi-nable tragedies is the reason why the medical fraternity in Pakistan is pursuing this issue with such curiosity and concern. “Naegleria Fowleri”, commonly referred to as the "brain- eating amoeba”, is a free-living parasitic microscopic organ-ism. It causes fatally serious infection of the brain called Primary Amebic Meningo-encephalitis (PAM).The parasite is a heat liking (hemophilic) organism that is commonly found worldwide in warm fresh water (e.g. lakes, rivers, and hot springs) and moist soil. However, the organ-ism can only infect human beings when conditions are optimum for its growth and infective capacity. Mechanism of actionThe active form of parasite, called trophozoite, causes the disease. Infection occurs when people come in contact with warm, fresh water by swimming, diving, bathing, nasal irriga-tion (ritual ablution) or any other water-related recreational activity. Parasite penetrates through the inner covering of soft tissues of nose (nasal mucosa) and travels along the path of olfactory nerve (nerve of smell) into the brain to cause inflammation and damage to brain tissue, hence the disease called Primary Amebic Meningo-encephalitis (PAM). PAM is more common in males probably due to their outdoor activities. Children are more vulnerable because of soft skull bones and pervious coverings of inside of nose.Transmission of the bacteria or disease from one person to another or through routes other than soft inside covering of nose (nasal mucosa) has never been reported by scien-tific researchers.Incubation PeriodAfter the initial exposure, the contaminated water source and infection by the organism, the symptoms of PAM appear over a period of few days to one week. Initially, the symptoms are non-specific, like change in the sense of taste and smell with mild to moderate headache. The condition

may mimic viral flue initially with body ache, lethargy and malaise. The symptoms worsen gradually with severe head-ache, fever and vomiting. The condition deteriorates over a period of 1–2 weeks leading to severe neurological effects, disturbed consciousness and death. DiagnosisThe diagnosis of PAM is always parasitic and is based on microscopic detection and identification of N. Fowleri trophozoites in the cerebro-spinal fluid (CSF) which is the liquid present all around the brain and spinal cord in the body. The CSF can be aspirated from patients’ spine for investigating the disease. Post-mortem diagnosis is made on biopsy from brain or spinal cord, which is examined under microscope for the detection of the organism. Newer tests based on Polymerase Chain Reactions (PCR), a biochemical technology in molecular biology to amplify DNA of a particular DNA sequence, are developed for the accurate and in-depth identification of the organism in humans and environment. The PCR based tests are expen-sive and require expertise. TreatmentTill date there is no definitive treatment for the disease caused by the brain-eating amoeba. Different antibiotics and anti- parasitic medicines are under trial throughout the world. The drug combinations that are used on experimen-tal basis across the globe include Amphotericin B, Rifampi-cin, Flucanozole and Albendazole. None have shown any promising results yet.PAM in KarachiIn Karachi, the deadly disease has been showing its presence off and on during the last four years. In 2008-9, 13 cases of PAM were reported from one of the tertiary care hospitals in Karachi. During the current year of 2012, about ten cases have been reported till date from different tertiary care private hospitals in the city. All of the reported patients were males, ranging between the ages of 22 to 49 years. All of the ill-fated patients met their demise within one week of the onset of symptoms.

Naegleria Fowleri:Brain Eating Amoeba

Tby Dr. Saba Shahid, Dr. Shahid Shamim

HEALTH & ENVIRONMENT

Sign and symptoms of PAMEarly stage Secondary stage

• Altered sense of taste and smell• Severe frontal headache• Fever • Vomiting• Neck stiffness

• Altered mental status• Fits/Seizures• Hallucinations

Table 1


EVENTS

The pattern of disease in Karachi has shown some differences when compared to other parts of the world. Most of the patients reported in the western countries had history of swimming in freshwater lakes, ponds or pools. In our scenario, none of the patients who died due to PAM had a significantly authentic history of special aquatic activities. Wudu (Ablution) with contaminated tap water is reported as the most probable cause of disease among these individuals. Medically prescribed nasal irrigation with tap water causing PAM has also been reported from Louisiana, USA. The report states that in 2011, 2 adults died in Louisiana hospitals of infectious meningo-encephalitis after brief illnesses. Both patients were diagnosed as PAM. Their only reported water exposures were tap water used for household activities, including regular sinus irrigation. Water samples and tap swab samples were collected from both households and tested. Naegleria Fowleri organisms were identi-fied in water samples from both homes.Possibility of contaminated “tap water” causing the disease is an extremely alarming situation for public health. If this is the case in Karachi and is not controlled in time, the city can have an epidemic of PAM causing loss of human lives in massively disastrous numbers.PreventionAppropriate chlorination of water being supplied to the city, by the concerned authorities, are the only means of acquiring acceptable control over the potential disaster. In the meantime, people need to take their own precautions to prevent the exposure as much as possible. The only way to evade Naegleria Fowleri infection is to avoid contaminated water. Some preventive measures are: • The swimming pools, home water tanks should be effec-

tively chlorinated.• When doing the ritual ablution, care should be taken that

the warm untreated tap water is not sniffed into the nose.• Swimming, bathing in warm fresh water needs to be avoi-

ded. When taking part in such activities, it would be better to avoid the accidental entry of water into the nose.

Recommendations for chlorinating drinking waterHealth Link BC (Canada) guidelines recommendations state that water for domestic use can be chlorinated by adding appropriate quantity of 5% solution of household bleach. Disinfection using bleach works best with warm water. After mixing bleach, water should be left to stand for at least an hour before using. If the water is colder than 10°C or has a pH higher than 8, let the water stand for at least two hours before domestic use. Table 2 shows amount of bleach to be used for disinfecting water.

References:1. Fowler M, Carter RF. Acute pyogenic meningitis probably due to

Acanthamoeba sp: a preliminary report. Br Med J 1965; 5464: 740-2.2. SadiaShakoor et al. Primary Amebic Meningoencephalitis Caused by

Naegleria fowleri, Karachi, Pakistan. Emerging Infectious Diseases.Vol. 17, No. 2, 2011:258-61.

3. "The Centers for Disease Control and Prevention, Division of Parasitic Diseases - Naegleria FAQs". http://www.cdc.gov/parasites/naegleria/ faqs.html Retrieved 2012-10-14

4.http://en.wikipedia.org/wiki/Naegleria_fowleri Retrieved 2012-10-145. Health Link BC www.HealthLinkBC.ca Retrieved 2012-10-146. Primary Amebic Meningo-encephalitis Deaths Associated With Sinus Irriga-

tion Using Contaminated Tap Water. Clin Infect Dis. (2012). http://cid.oxfordjournals.org/content/early/2012/08/22/cid.cis626. full.pdf+html Retrieved 2012-10-14

Gallons of water to disinfect(equivalent shown inbrackets)

Amount of household bleach (5%) to add

1 gal. (4.5 litres)2 1/2 gal. (10 litres)5 gal. (23 litres)10 gal. (45 litres)22 gal. (100 litres)45 gal. (205 litres)50 gal. (230 litres)100 gal. (450 litres)220 gal. (1000 litres)500 gal. (2200 litres)

2 drops (0.18 mL)5 drops (0.4 mL)11 drops (0.9 mL)22 drops (1.8 mL)3/4 teaspoon (4 mL)1 1/2 teaspoons (8 mL)1 3/4 teaspoons (9 mL)3 1/2 teaspoons (18 mL)8 teaspoons (40 mL)6 tablespoons

Sign and amount of bleach to be used to disinfect water PAM

Table 2


uring the past three quarters, State Bank of Pakistan (SBP) lowered its discount rate four times bringing it down by 350 basis points with its declared aim of boosting investment that has been going down

continuously. This policy has had less to do with fall in inflation than with meeting the demands of the trade associations to reduce mark-up rates. But the trade associations are rarely, in fact never, bothered about the ‘real’ (not the PBS-manicured) Consumer Price Index (CPI) which reflects the true inflation, that hurts the sentiment for saving, and causes many other economic distortions to grow in size.Doing so, trade associations reflect a denial of the critical impor-tance of “real” interest rate (CPI minus profit rate paid on savings). Unless profit rate paid on savings is above the CPI, there is no incentive to save. Negative real rates of return on savings are a continuing tragedy that never allowed savings’ growth rate to reach a minimum of 20% – the rate Pakistan needs to drastically cut its reliance on external resources for plugging the gaps in its physical infrastructure. Courtesy this resource gap, Pakistan’s external debt is already at a suicidal level.Given Pakistan’s current circumstances–result of the inability to appreciate the need for offering real positive returns to the savers, and a grossly investment unfriendly environment that now prevails–external resources could only come in the form of debt with tough conditionalities, not as direct investment. Oddly, while all chambers of trade and industry demand low mark-up rates, none seems bothered about the real CPI (not its fudged PBS version) that kills the desire to save, and thus causes a mismatch between the demand for, and supply of, savings to commercial and industrial sectors. No chamber of commerce & industry explains why it can’t take steps to check that part of inflation that results from hoarding to cause an artificial supply shortage as well as the avoidable supply uncertainty that triggers the price increases at wholesale and retail levels. Given this big failure of the chambers of trade and industry (which reflects no concern for self-regulation), how can they demand mark-up rates of their choice? In a TV talk show after SBP cut its discount rate on October 5, senior businessmen demanded that mark-up rates must come down to 8% i.e. SBP discount rate must drop to between around 5% and impliedly, profit rate on savings to come down in the 1.5%. Some expectation it is! Of course this is possible, but will the businessmen agree to at least bring CPI down to 1.5% so that the real profit rate on savings is at least zero if not negative? That the chambers of commerce and industry can’t (seemingly, on purpose) see the criticality of keeping inflation low to induce a higher level of saving, is unfortu-nate. As long as they will not accept this undeniable reality, the only way mark-up rate can be lowered would be for the state to do what is already escalating the fiscal deficit– subsidize this cost at the cost of foregoing the achievement of far more important economic objectives–e.g. infrastructure development. Trade bodies (though rightly) never lose any opportunity to fault the government for the ever-expanding gaps and flaws in the country’s physical infrastructure, but why can’t they see that unless domestic savings rise, resources for development won’t be available. At present, bulk of the savings are consumed merely

in financing the current expenditure of the government. The harsh reality is that, courtesy high inflation, savings are not rising at the required pace. Unless chambers of trade and indus-try address this issue nothing could change for the better.That the power sector crisis is virtually eating away the roots of business and industry is undeniable. But, wasn’t this crisis building up since the early 1990s, or did it unfold overnight? The last two decades during which this crisis was building up, what were the chambers of trade and industry doing to push for containing this crisis via increase in domestic oil and gas recovery, building more dams to generate more of the cheap hydropower, BMR of all the existing power houses, or for cutting distribution losses, etc.? If they had resisted a switch to rental power and sought the domestic system to improve, things could be different; the system must change if it is to become adequate to support uninterrupted opera-tions in all the economic sectors, stop continued slide in GDP growth, and curtail the rise in poverty to ensure that Pakistan’s youth does not anymore opt for joining crime or terrorist gangs. This is the biggest challenge that Pakistan faces, as admitted by rational businessmen. Opting for a shift of business to the Persian Gulf or South East Asian countries is, to begin with, admission of defeat and insincerity to both Pakistan and the Pakistani nation.In the context of checking lawlessness, crime, and the rising culture of extortion (bhatta khori) so far what the trade bodies have opted for, is getting linked-up with the political parties in power. That is a grave error and the outcome thereof was seen on September 11, in the biggest-ever industrial tragedy in Pakistan’s history; it also manifested a huge failure in the area of self-regulation of internal safety arrangements. This highly irresponsible aspect of the role of trade bodies was highlighted in the past as well, but touched a new height on September 11, exposing ‘zero’ self-regulation of internal safety and security of markets, shopping and trading centres, and factories. Current thinking among the businesses is that all they need to worry about, and provide for, are external threats i.e. risk of theft, dacoity and terrorism. This is a deliberate suicidal tendency. What has been exposed thus far clearly manifests that there are no codes for internal safety and security, especially in the context of the adequacy of the gadgets to confront emer-gencies like fire, the spread of those gadgets all over the prem-ises, be they a market or a factory, and shopkeepers and factory workers’ familiarity with use of those gadgets in putting out fires effectively. This is a regulatory gap that has not been addressed, either by the government’s industrial sector regulators or by the industry’s own regulators. In a TV programme about the investi-gations into this tragedy, Chief Engineer of the Sindh Industrial & Trading Estate (SITE)–venue of the September 11, astonish-ing tragedy– said that, for approving factory layout designs, what SITE needs is a building plan (on paper) that has been cleared by a building ‘consultant’. Whether that consultant actually exists, what is its expertise and professional capacity and of performing this function, are not specified by the mandate he is supposed to abide by. This mandate manifests self-regulation of no more than ceremonial nature. These are hardly the kind of disciplines that government’s regulators should be required to follow. They exposed gaps that now cast serious doubts over reliability of Pakistan’s industrial

EVENTS

Value Chain Report

In a shocking assessment of the prospects of meeting food needs, Lester Brown, President of the Earth Policy Research Centre in Washington, said that the climate is no longer reliable and the demands for food are growing so fast that a breakdown is inevitable, unless urgent action is taken. The price of key staples, including wheat and rice, may double in the next 20 years, threatening disastrous consequences for poor people who spend a large propor-tion of their income on food. The global risk analysis firm ‘Maplecroft’ has also released its Food Security Risk Index for 2013, along with a map, that highlights the food security of individual states. According to the report, out of the 48 countries considered to be at “high” risk of a food crisis, Pakistan is ranked 27th. Three- quarters of African countries and several “Arab Spring” nations are at high or extreme risk of a food crisis as well. The report adds that food insecurity could become yet another factor fueling the already tense relations and civil unrest in the Middle East.Out of the 11 countries that are in the “extreme risk” category, nine are in Africa. They include Somalia and the Democratic Republic of Congo (DR Congo), which are ranked joint first, Haiti (3rd), Burundi (4th), Chad (5th), Ethiopia (6th), Eritrea (7th), Afghanistan (8th), South Sudan (9th), the Comoros (10th) and Sierra Leone (11th).

eople around the world are exposed to the imminent threat of hunger and malnutrition because of lower yield and higher consumption. Food and Agricultural Organization of the United Nations (FAO) that has

declared timely warnings on global level that due to lower yield and higher consumption, the world grain reserves are getting so dangerously low that they could trigger a major hunger crisis in 2013. Failing harvests in the US, Ukraine, China, India and Pakistan (because of 2 consecutive floods) and other countries grain reserves this year have eroded to their lowest level. The report states that the world has not been producing as much as it is consuming. That is why grain stocks are running down, supplies are now very tight across the world and reserves are at a very low level, leaving no room for meeting unexpected future eventualities. Prices of main food crops such as wheat and maize are now close to those that sparked riots in 25 countries in 2008. FAO figures released recently suggest that 870 million people are malnourished and the food crisis is growing in the Middle East and Africa. The global food supply system could collapse at any point, leaving hundreds of millions more people hungry, sparking widespread riots which in consequence could bring down governments.

P

Food Security Index 2013

AGRICULTURE

CountrySomaliaDR CongoHaitiBurundiChadEthiopiaEritreaAfghanistanSouth SudanComoros

Rank12345678910

Categoryextremeextremeextremeextremeextremeextremeextremeextremeextremeextreme

Legend

Extreme Risk0 - 2.5

High Risk>2.5 - 5

Medium Risk>5 - 7.5

Low Risk>7.5 - 10 No data

maplecroftrisk responsibility

™

reputation

DR Congo

South Sudan

Chad

Ethiopia

Afghanistan

Eritrea

Haiti

Somalia

BurundiComoros


units to fulfil their commitments, particularly to foreign buyers, and could have impli-cations for exports that are already on a steady slide courtesy the power sector crisis.Trade bodies and chambers of commerce and industry also need to

impose strict codes of self-regulation on the sectors they represent, whereby all members are obliged to ensure against all corrupt practices that cause artificial supply shortages to escalate the prices. No government anywhere has the resources to catch every wholesaler or retailer involved in corrupt practices. In Pakistan, retailers alone add up to over 3 million. That the huge majority of this sector learns to behave responsibly, can be achieved only by self-regulatory codes that promptly blackball the corrupt making sure that no member deals with blackballed traders. Our trade bodies show no concern over this self-damaging issue, even though Pakistan’s record in checking hoarding-driven inflation has been one of the worst, which leaves no one in doubt that it is an obligation that must be enforced via tough codes of self-regulation. This is yet to be done by the trade bodies although there are long stories of organized corruption in industries dealing in commodities, especially processed commodities like sugar.The other area that the chambers of trade and industry must address is the payment of taxes, especially the sales and with-holding taxes that businesses collect for payment to the state. That the bulk of these taxes, although collected, is not being handed over to the state is no longer in doubt; clear evidence thereof is repeatedly provided by the mismatch between the gross sales of retail and wholesale sectors compared to its proportion collected by FBR; if both the sectors are, paying total amounts of these taxes to the FBR, it should have been proved credibly by the trade bodies. This is a job they can’t do because it implies something they haven’t thought about. In this scenario, it amounts to asking for too much of the trade bodies because it implies that trade bodies are well organized to collect data from their members–area that attracts only ceremonial attention of the trade bodies and the chambers of trade and industry. There is no tradition of the chambers periodically publishing consolidated facts and statistics about various sectors of the economy; the lone source of such data is the PBS, whose statistics are roundly rejected by most of the trade bodies. If that is so, doesn’t it build a strong case for trade bodies to gather as well as consolidate sector-wise data that are defend-able on the basis of authentic facts collected by the trade bodies? If the trade bodies also keep record of all punitive actions against corrupt businesses, they could claim authen-ticity, and clout of a much higher order. Sadly, trade bodies and chambers of commerce and industry do none of it. What these bodies push for are the demands for reduction in taxes and higher tax rebates. Doing just that amounts to taking a very limited view of their role.But that is what has been going on for decades. Trade bodies don’t realize that in the long run, what will matter is how well the whole economy is organized, co-ordinated, and thus imbibed with the capacity to become more reliable by the passage of time, and strong enough to withstand the regular

and deadly bouts of the disease being spread by shortening of economic cycles. By now, businesses everywhere must accept the fact that if the free enterprise system becomes more and more of the sort of ‘free-for-all’ dispensa-tion, they need ever-stronger protective system so as not to suffer ‘avoidable’ losses from the downswings of the economic cycles. This calls for better organization, updating sector-wise statistics, preferably on a real-time basis, quickly knowing the economy’s strengths and developing weaknesses to help devise purpose-oriented solutions there for.

Traders withdraw their strike callsDespite tall claims to check it, the law and order situation in Karachi has continued to deteriorate. Target killings have become the order of the day. So has been the alarming increase in extortion, kidnapping and killings of businessmen and their family members. After countless killings and restlessness among the industrial-ists and traders of the economic hub of the country, All Karachi Traders association called on a protest movement against the extortion mafia. So did the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) and Karachi Chambers of Commerce and Industry (KCCI). They issued strike calls for November 8 and November 10 respectively. Shutter downs, protest demonstrations or strikes are no solution to a problem but, as the business leaders had said in widely publicized media conferences, the increasing trend of kidnappings, killings and extortion had forced them to seek recourse to these measures; the law enforcement agencies had miserably failed to take any effective measure as deterrence against the evil. The strike calls were given against persistent death threats to the business community by criminals. The calls have since been withdrawn, though temporarily. Following long delibera-tions with the Governor of Sindh at the Governor House, the business community has agreed to delay their strike call for 20 days up to November 30 on the assurance by the Sindh Governor that the government will take all possible measures to improve law and order situation and provide security to business community so that they could run their businesses smoothly. “Ibad has assured us that the police will take on-spot action against criminals in order to establish minimum deter-rence since we had told him that criminals released from prison harass businessmen even more,” said one of the partici-pants at the meeting with the Governor of Sindh. “If govern-ment fails to resolve our problems, we will go to observe strike on November 30,” said Siraj Qasim Teli, a businessmen community leader who was part of the negotiating team. The businessmen observed that the withdrawal of their strike call was linked to better performance of police and law enforcement agencies. Has the situation improved? Is the law and order situation better than what it was at the time of their meeting at the Governor House? Apparently not. The killings and kidnappings continue unabated; reports of harassment for extortion money are still pouring in. One only wishes that the promises made now are honoured in letter and spirit. Otherwise, the nation would be constrained to conclude that the traders have failed to fulfill their duties.

The 48 countries considered to be at “high” risk for food supplies include Yemen (15th), Syria (16th), Paki-stan (27th), Papua New Guinea (33rd), North Korea (35th), Iraq (54th) and Libya (58th). Egypt, ranked 71st of the 197 countries, and Tunisia, 100th, are among medium-risk countries.Reasons of food insecurity range from conflict and instability in the DR Congo and eastern Africa to rising prices for corn, caused by the worst US drought in 50 years and declining production in former Soviet coun-tries, British Analyst firm Maplecroft said in analysis.Droughts hit global food prices, raising fears of a food crisis: The fragility of global food security was once again brought into the spotlight this year after the USA’s worst drought in 50 years drove corn prices to near record highs, while wheat also climbed on the back of a 10% drop in production across the former Soviet Union. Low crop yields pushed global food prices up 6% in July 2012, sparking fears of a repeat of the 2007/2008 food crisis, which resulted in food riots across several countries, including Bangladesh, Cote d’Ivoire, Egypt, Mexico, Senegal, Tunisia, Algeria and Yemen.Maplecroft’s Head of Maps and Indices Helen Hodge said that food price forecasts for 2013 provide a worry-ing picture. Although a food crisis has not emerged yet, there is potential for food related upheaval across the most vulnerable regions, including sub-Saharan Africa.In a report revealed in September by Rabobank, a finan-cial specialist in agro-commodities, estimated that prices of food staples could rise by as much as 15% by June 2013, resulting in record highs that will squeeze household incomes in many countries.

Conflict and instability driving food insecurity in Somalia and DR Congo: Food security is a complex issue, which is driven by a number of factors, including armed conflict, which can acutely affect levels of agricultural output and investment. Nowhere is this seen more intensely than in the countries topping the Food Security Risk Index, Somalia and DR Congo (DRC), where sustained violence has had a profound impact on the economic circumstances of their govern-ments and populations.Ongoing conflict in DR Congo has left huge numbers of civilians unable to secure access to sufficient stable food supplies and the population remains vulnerable to price shocks, as entrenched poverty means a large proportion of household expenditure is spent on purchase of food items.

DRC’s eastern provinces have been subject to armed conflict for more than a decade. According to the UN, as of mid-June, at least 400,000 people were displaced in this region and long-term food security has been put at further risk, as civilians have been forced to flee from their fields during the crucial harvest period.Maplecroft also highlighted the countries of Chad (ranked 5th in the index), Niger (23), Mauritania (38), Mali (42), and Burkina Faso (45), as an important region to watch. Each of these countries has seen substantial increases in risk in the Food Security Risk Index over the last 3 years due to armed conflict, political instability, changing rainfall patterns and locust infections. Risks for the region are forecast to remain high.The impacts of food inflation in Arab states: Aside from being aggravated by conflict, food security issues can also create civil unrest and political instability when popula-tions are driven to stage large scale protests by inflationary pressures on staple foods. In 2011, rising food prices were a contributing factor to the protests in Tunisia and Egypt, which led to popular revolutions and inspired the ‘Arab Awakening’ across the Middle East and North African (MENA) region.Countries with the highest risk across MENA include Yemen (ranked 15th), Syria (16), Iraq (54) and Libya (58) all of which are classified as ‘high risk.’ Egypt (71) and Tunisia (100) are meanwhile categorized as ‘medium risk.’ The region remains at elevated levels of risk from reduced US and Russian crop production, as these countries rely heavily on cereal imports and are therefore vulnerable to market prices.The drivers of the ‘Arab Awakening’ were varied and complex and included long standing public anger at high levels of governmental corruption and oppressive tactics against populations and political opposition. When these factors combine with food insecurity, sparked by rising global prices, it can create an environment for social unrest and regime change. Identifying these markers is a key challenge in the identification of threats to political stability and business continuity. The Food Security Risk Index has been developed for governments, NGOs and businesses to use as a barometer to identify those countries which may be susceptible to famine and societal unrest stemming from food shortages and price fluctuations. Maplecroft reaches its results by evaluating the availability, access and stability of food supplies in 197 countries, as well as the nutritional and health status of populations.


ntroduction: The Basel accords are a series of recommendations on banking laws and regulations issued by the Basel Committee on Banking Super-vision (BCBS). Basel III is a set of standards and

practices created to ensure that international banks maintain adequate capital to sustain themselves during periods of economic strain. It adds further controls to those required by Basel II which in turn was a refine-ment of Basel I. Basel III was developed by the Basel Committee on Bank-ing Supervision in response to deficiencies revealed by the global financial crisis, and represents the biggest regula-tory change that the banking industry has seen in decades. The new accord strengthens bank capital requirements and introduces new regulatory requirements on bank liquidity and leverage. The financial crisis showed that not all institutions did hold sufficient capital and that the capital was sometimes of poor quality and was not avail-able to absorb losses as they materialized. The economic cost of the global financial crisis during the past five years has been frighteningly large. One clear lesson from the crisis is that regulatory capital require-ments for the banking system were too low. Or in other words, leverage was too high. Under the pre-crisis rules, banks were allowed to increase their leverage to unprec-edented levels. This increased risk in the financial system and when the crisis hit, the implicit guarantees resulted in massive public bailouts around the globe. Tougher capital standards are considered critical for preventing another financial crisis, but bankers had warned that if the new standards were too harsh or the implementation deadlines too short, lending could be curtailed, cutting economic growth and costing jobs.Basel III is part of the Committee's continuous effort to enhance the banking regulatory framework. It builds on the International Convergence of Capital Measurement and Capital Standards document (Basel II). The Basel II accord mandates that banks holding riskier assets have more capital on hand than those maintaining safer portfo-lios. According to Basel II, companies must publish both, the details of risky investments and risk management practices, whereas Basel III establishes more stringent capital requirements - tripling the amount of capital banks must keep on hand to absorb losses during financial crises. It also requires banks to maintain higher common equity than before, including a capital conservation buffer of 2.5% of their assets.Salient Features of the Accord: The package, known as Basel III, sets a new key capital ratio of 4.5 per cent, more than double the current 2 per cent level, plus a new buffer of a further 2.5 per cent. Banks whose capital falls within the buffer zone will face restrictions on paying dividends and discretionary bonuses, so the rule sets an effective floor of 7 per cent. The new rules will be phased in from January 2013 through to January 2019. Banks will be required to triple

core tier one capital ratios from 2 per cent to 7 per cent by 2019. This ratio measures the buffer of highest quality capital that banks hold against future losses.In addition to the 4.5 per cent core tier one ratio, and the 2.5 per cent buffer, the reform package also endorses the idea of an additional buffer of up to 2.5 per cent of core tier one capital to counter the economic cycle. Tier-1 capital requirements will be implemented gradually between 2013 and 2015; the capital buffers between 2016 and 2019. The new prudential adjustments will be intro-duced gradually, 20% a year from 2014, reaching 100% in 2018. In the event of a credit boom, banks under Basel III would potentially need to hold a further 2.5% in common equity, bringing the total to 9.5%. Finally, the most systemically important banks must hold up to 2.5% in additional common equity. That makes a total of 12%, a six fold increase from pre-crisis levels for these institu-tions. According to the Bank for International Settle-ments, Basel III would result in higher capital require-ments for longer tenor loan and bonds, in addition to more punitive liquidity requirements.But we should not underestimate how Basel III strength-ens bank-capital adequacy rules. A fundamental feature of the new framework is the significant increase in required minimum capital levels. All banks must hold common-equity capital of at least 7% of their risk-based assets, compared with only 2% previously. Banks will be required to triple core Tier-1 capital ratios from 2 per cent to 7 per cent by 2019. This ratio measures the buffer of highest quality capital that banks hold against future losses.Tougher capital standards are considered critical for preventing another financial crisis, but bankers had warned that if the new standards were too harsh or the implemen-tation deadlines too short, lending could be curtailed, cutting economic growth and costing jobs.Timeline of Basel III implementation:Capital requirements: The national implementation will start on 1 January 2013. Thus, legislation and regula-tions will have to be amended during the period prior to that date. From 1 January 2013 onwards, banks will have to meet the following minimum capital requirements expressed in risk-weighted assets: 3.5% share capital, 4.5% Tier-1 capital and 8% total capital. During the transitional period from 1 January 2013 up to and including 2019, these ratios will gradually be stepped up to 4.5% share capital, 6% Tier-1 capital and 8% total capital. The conservation buffer will build up along gradual lines to a percentage of 2.5%. from 1 January 2016 through 1 January 2019. Thus, banks will ultimately have to hold 10.5% of their total capital expressed in risk-weighted assets.Leverage ratio: As regards the introduction of the Leverage Ratio, from 1 January 2011 onwards the supervi-sor will concentrate on the development of templates to consistently monitor the components of this ratio. The

BRIEFS

Tax Registration Scheme (TRS) 2012:The Federal Board of Revenue (FBR) has decided to take extreme measure of auctioning movable and immovable assets of the unregistered persons, who would fail to come into the tax net by making declarations under the Tax Registration Scheme (TRS) 2012.

Importers to face penalties for dishonored cheques:According to reports, the Federal Board of Revenue (FBR) has decided to invoke prosecution provisions of the Customs Act 1969 against importers, whose financial securities including post-dated cheques and bank guarantees could not be encashed for release of overstayed goods in the Customs bonded warehouses. Prosecution provisions would include imposition of heavy fines and penalties, auction of goods and other recovery measures available in the said law.

FBR to issue IT return form in Urdu:The Federal Board of Revenue has decided to issue income tax return form in Urdu language also to attract retailers and small and medium business units to voluntarily file their returns in national language.

FBR told to act against errant shop, factory owners:Finance Minister Dr. Abdul Hafeez Sheikh has directed the Federal Board of Revenue (FBR) to enforce the existing provi-sion of law for documentation of the economy making it compulsory for owners of shops, retail outlets and factories to prominently display National Tax Numbers (NTN).

FBR constitutes special monitoring teams to enforce display of NTNs: The Federal Board of Revenue (FBR) has constituted special monitoring teams in all major cities to conduct survey of markets and business centres to register thousands of shop-keepers, retailers and wholesalers not displaying their National Tax Number (NTNs) in the business outlets.The Board has reportedly issued instructions to all Regional Tax Offices (RTOs) for constitution of special monitoring teams to take action against the shopkeepers not displaying their NTNs at the business premises.According to the FBR’s instructions, as per provisions of Rule 83 of the Income Tax Rules 2002, it is mandatory for every person who has been issued a National Tax Number to display the same at a prominent place of business. Rule 83 says: “ Every person deriving income from business chargeable to tax has been issued with a NTN shall display the person’s NTN at a conspicuous place at every unit of business of the person.” Section 181 of the Income Tax Ordinance 2001 requires every person to obtain NTN, if he is deriving income chargeable to tax.

FTO asks FBR to revise three upper tax slabs:Federal Tax Ombudsman (FTO), Dr. Muhamamad Shoaib Suddle has asked the Federal Board of Reenue (FBR) to take urgent steps to address the anomalies in upper income tax slabs of the salaried class as introduced through Finance Act 2012. The FTO office has proposed revision in the tax slabs number 4, 5 and 6 extending a major tax relief to salaried persons falling within these three categories.

LTU Chief Commissioners em-powered to register FIRs: The Federal Board of Revenue (FBR) has empowered the Chief Commissioners of Large Taxpayer Units (LTUs) and Regional Tax Offices (RTOs) to register FIRs against persons involved in tax frauds and evasions of duties and taxes without obtaining proper approval from the Board.

SBP makes installment of ATM mandatory: The State Bank of Pakistan has made it mandatory for all banks operating in the country to add at least one Automated Teller Machine (ATM) in their network while opening a new branch in a calendar year from next year.

SBP reduces Overnight Reverse Repo (Ceiling) rate:According to SBP DMMD Circular No. 20 of 2012, SBP Overnight Reverse Repo (Ceiling) rate has been reduced from 10.50 percent to 10.00 percent p.a. In addition, SBP Overnight Repo facility will be available at 7.00 percent and this will serve as the “Floor” for the Interest Rate corridor. To dissuade frequent accesses to the SBP Overnight Reverse Repo and Repo facilities, the SBP has also taken some steps. Eligible institutions have to pay some 50 bps above SBP Overnight Reverse Repo (Ceiling), if any institu-tion accesses over 7 times during a quarter for this facility. The 7 instances will be recorded from October 8, 2012.

Amendments in CRR: According to SBP DMMD Circular No. 21, issued on Octo-ber 5, in order to facilitate banks with regard to their liquidity management, the SBP has introduced some amendments in the maintenance of Cash Reserve Ratio (CRR). Through these amendments, the SBP has also increased the reserve mainte-nance period by seven days. Now, it will be two weeks starting from Friday and ending on Thursday of subsequent week. According to the circular, Time and Demand Liabilities (TDLs) as of close of business on Friday (first day of reserve maintenance period) will be taken into account for determination of required CRR and if Friday is a holiday then TDL as of close of business on preceding working day will be taken into account.

Regulatory Compliance


period from 1 January 2013 through 1 January 2017 will be a parallel run period. During this period, the develop-ment of the Leverage Ratio will be monitored. The inten-tion is to migrate the Leverage Ratio into the Pillar 1 requirements as from 1 January 2018.Liquidity ratio: As from 2011, the Liquidity Coverage Ratio will be monitored by both the Basel Committee and the supervisor in order to officially make it mandatory with effect from 1 January 2015. The Net Stable Funding Ratio will be introduced as a minimum standard as from 1 January 2018.Basel III introduces a new definition of capital to increase the quality, consistency and transparency of the capital base. It also requires higher capital ratios. Key elements of the revision include:• Raise quality and quantity of Tier 1 capital;• Simplification and reduction of Tier 2 capital;• Elimination of Tier 3 capital; • More stringent criteria for each instrument;• Harmonization of regulatory adjustments;• Enhanced disclosure requirements;• Introduction of a new limit system for the capital elements.The Gist: Basel III is all about capital - the amount of high quality assets a bank must hold to cushion against losses. The new rules will force banks to have more capital, higher quality capital, and more "liquid" capital. Here are five important features:1. More Capital: The capital changes could be the most significant since the original Basel Accord was agreed to in 1988. The most vital change that Basel seeks is to force banks to hold more capital. By having a bigger cushion, banks won't be as vulnerable to losses hitting in times of economic turmoil. The additional capital required of banks is significant. There are different kinds of assets that can count as capital, and they have different levels of quality. Common equity is the purest form of capital, a cushion that can absorb losses best. Under current rules, banks are only required to hold 2.0% common equity. Under Basel III banks need an additional 2.5%, to total 7.0%, during good times. That can be reduced to as low as 4.5% under times of stress. Moving to the next highest form of capital, "Tier 1" adds another 1.5% of capital, and "Tier 2" results in another 2.0%. So in total, banks will now need 10.5% capital in normal times, or 8.0% capital in times of stress. This is much higher than what was required in the past. 2. Better Capital: The definitions of these sorts of capital have also been tightened, to focus on higher quality assets. As already mentioned, far more of the high-est quality capital -- common equity -- will be required. But the definitions of Tier 1 and Tier 2 capital are also being adjusted to be more conservative. Before, these sorts of capital included some types of assets that were not very reliable for cushioning losses during times of economic distress.3. Bubble Busting: The new rules also contain an inter-esting provision to combat the ups and downs of economic cycles. Financial crises put pressure on banks' capital cushion, so there's also a measure to ensure that banks build up more padding during the upswings to protect against the downturns. That's the "countercyclical

buffer" ranging between 0% and 2.5%, that will be in place when the economy is hot. This is good for two reasons. First, this will slow banks' lending during upswings in comparison to their capital, to guard against runaway lending. Second, if a bubble has been created, and it pops, there will be additional cushion to absorb the resulting losses. At the peak of economic cycles, banks will have a buffer of up to 9.5% of common equity -- the highest quality capital -- to fall back on. Currently the amount required is just 2.0%.4. Better Liquidity: Another problem during economic turmoil is liquidity -- the ability to turn your assets into cash. The credit crunch was a major problem because liquidity "dried up," banks couldn't unload their assets or make their payments, and many large banks needed govern-ment assistance to survive. Basel III will be the first time regulators would have a numerical standard for liquidity. The new rules require banks to have enough high quality liquid assets to cover cash outflows over a 30-day stress period. These assets would include very liquid assets like government securities.5. Timing: Finally, the new rules provide a clear timeline for when and how these changes should be implemented. The process will be quite gradual, not in full effect until 2019. But the implementation will be done in a very smart way, providing benchmarks within the process to ensure that banks are on the way to full compliance, with some preliminary standards needing to be met starting in 2013. It's likely that the market will push banks to implement the new standards faster than Basel III requires.Basel III and Financial Stability: The Basel III regula-tions contain several important changes for banks' capital structures. First of all, the minimum amount of equity, as a percentage of assets, will increase from 2% to 4.5%. There is also an additional 2.5% "buffer" required, bringing the total equity requirement to 7%. This buffer can be used during times of financial stress, but banks doing so will face constraints on their ability to pay dividends and otherwise deploy capital. Banks will have, until 2019, to implement these changes.Basel III framework strengthens risk-based capital regula-tion, regulatory supervision principles and risk manage-ment practices in the banking sector. While maintaining the micro-prudential regulatory toolkit introduced in the previ-ous Basel Accords that ensure the safe, sound and prudent operations of banks, Basel III seeks to address the effects of systemic risks.However, Basel III is not a panacea, and will not single-handedly restore stability to the financial system and prevent future financial crisis. But in combination with other measures, these regulations are likely to help produce a more stable financial system. In turn, greater financial stability will help produce steady economic growth, with less risk for crisis fueled recessions such as that experienced following the global financial crisis of 2008-2009.References:• www.bis.org/bcbs/basel3• Basel III: A global regulatory framework for more resilient banks

and banking systems - revised version June 2011 • Basel III: International framework for liquidity risk measurement,

standards and monitoring•www.investopedia.com/articles/economics/10/understanding-basel-3

BRIEFS

ICH becomes operational:The International Clearing House (ICH) has become operational and effective from October 1 in compliance with the Policy Directive dated August 13, 2012, issued by the Ministry of IT. ICH is now serving as a single termination exchange for all international, incoming voice traffic. Fourteen LDI operators will now share the total quantum of international voice traffic terminating in Pakistan. The business volume sharing mechanism, which will evolve over time, is said to be currently based on each operator’s historic share and infrastructure capacity.

Drug Regulatory Authority Bill passed:The National Assembly on October 16 unanimously passed ‘The Drug Regula-tory Authority of Pakistan Bill 2012’ to establish an authority to bring harmony in inter-provincial trade and commerce of drugs and therapeutic goods to regulate, manufacture, import, export, storage, distribution, sale of medical devices and drug research. The Drug Regulatory Authority will advise the federal government on issues relating to obligations and commitments with interna-tional organizations relating to therapeutic goods, including drugs, medicines and medical devices, besides developing ethical criteria on drug promotion, marketing, advertising and the rational use of drugs, including research and development. Under the law, the Authority shall undertake measures to ensure self-sufficiency in fields of drugs, medicines and allied therapeutic goods to create a conducive environment for manufacture, import and promotion of export.

Service charges on collection of shares:The National Clearing Company of Pakistan Limited (NCCPL) has reportedly imposed Rs. 3 per Rs. 100,000 as service charges on Capi-tal Gain Tax (CGT) calculation on share trading. NCCPL is reported to have collected around Rs. 2 million as service charges on CGT calculation for the period April-June 2012. The service charges for the remaining period would be charged/deducted once the calculation of CGT for the staid period completes.

CCP issues notice for violation of Competition Act:The Competition Commission of Pakistan (CCP) has issued a show-cause notice to a pharmaceutical firm Reckitt & Benckiser for its advertisement “9/10 women prefer Veet”, a claim being made without any reasonable basis. According to the notice, the advertisement is prima facie a violation of Section 10 of the Competition Act 2010 which deals with deceptive market-ing practices and prevents disseminating misleading and false information to the consumers.

All banks (including Islamic banks/branches) have to main-tain CRR at an average of 5.0 percent of total demand liabilities (including time deposits with tenor of less than 1 year) during the reserve maintenance period. However, daily minimum requirement is being reduced to 3 percent. Time liabilities (including time deposits with tenor of 1 year and above) will continue to be exempt from cash reserves.According to SBP, DFIs will continue to maintain CRR at 1.0 percent of their Time and Demand Liabilities (TDLs) during the reserve maintenance period. New measures are effective from October 12, 2012.

SBP signs agency agreement with PBoC: The People’s Bank of China (PBoC) Governor Dr. Zhou Xiaochuan and State Bank of Pakistan (SBP) Governor Yaseen Anwar signed an Agency Agreement regarding Bond Investment in the Interbank Bond Market of China, which permits the SBP to conduct investment activity in the Chinese Interbank Bond Market, the largest RMB denominated bond market with RMB 21.4 trillion turnover during 2011. The agreement is part of follow-up coopera-tion to the bilateral Currency Swap Agreement between the two central banks. Access to the Chinese Bond Market wll provide the necessary flexibility to SBP in diversifying and optimal management of foreign exchange reserves in order to meet the associated objectives.

SECP fines two insurance companies:The Securities and Exchange Comission of Pakistan (SECP) has imposed a fine of Rs. 0.5 million each on two insurance companies and issued a stern warning to another insurer for their defaults of different sections of the Insurance Ordinance 2000.In an order passed against M/s EFU General Insurance Limited, the SECP, has imposed a fine of Rs 500,000 for not complying with the provisions of Section 45 of the Ordinance, by not maintaining proper books and records of the Company relating to the claims. In another separate order, the SECP imposed a fine of Rs 500,000 on M/s East West Life Assurance Company Limited for non-compliance.

Asset management firms allowed to offer commodity schemes:The Securities and Exchange Commission of Pakistan (SECP) is learnt to have allowed asset management compa-nies to offer commodity schemes to investors taking into account the record appreciation in global commodity prices. The introduction of new class of commodity funds will facilitate asset management companies (AMCs) to broaden their product range by offering commodity schemes to investors in addition to their conventional equity, money market and income funds. This will also enable small inves-tors to take potential advantage of gains promised by the commodity market such as gold through pooled invest-ments being managed by professional fund managers.


ow strategic managers look at potential and future of consumer banking in Pakistan which has the population base of 180 million and, in terms of population segmentation, is one of the youngest

nations in the world, politically marred, graft-ridden gover-nance yet showing high potential and large customer base vis-à-vis the global consumer landscape. Pakistan has 23 commercial banks, 5 public sector banks (National Bank of Pakistan and 4 provincial banks), 6 multi- national banks and 4 specialized banks - total 38 banks having a network of 9,390 branches across Pakistan (excluding micro-finance and investment banking institutions). Still less than 20% of the population is being banked and over 80% yet remain unbanked; this segment is being brought into the banking net through branchless and mobile banking solutions but still it is less than 4% which is likely to increase to 35% till 2020. Out of overall total loans of PKR 3,310 billion disbursed by the banking system, the consumer banking stands at PKR 213 billion. Total non-performing loans (“NPLs”) stand at PKR 543 billion. Last decade witnessed great potential that trans-lated into large increase in sales of banking sector’s consumer products i.e. personal loans, housing finance, auto loans and credit cards. However, in recent years consumer banking finance continued to decline and its share reduced from over 13% to 8% in total loans portfolio. Unsupportive economic conditions, higher interest rates, lower GDP growth and growing non-performing loans in consumer segment marred progress of consumer banking sector over the last few years. Pakistan, with a population of 180 million people, has untapped huge consumer potential, having an estimated over 25 million households whereby potential consumer banking customers outlook may be worked out to 19 million plus comprising of household customers for vehicle finance, housing finance, personal loans, credit cards and other general consumer durable customers. If business customers are included to buy, through consumer banking, consumer durables for business uses, small businesses or start-ups infrastructure related purchases, personal credit lines then consumer banking market can go even further up.In monetary terms, these 19 million households can trans-late into PKR 9,643 billion worth of consumer banking customers. Pakistan’s mobile density model may be (currently 120 million users within last decade alone) used and rem-

odeled for creating and developing a scalable consumer banking platform. A senior execu-tive of a commercial bank while talking to Value Chain suggested that a 10 – year plan should be developed and consumer bank-ing industry should also

be given incentives and infrastructural support like branch-less banking (3rd party outlets, internet banking, mobile banking and e-commerce platforms).Relevant regulatory framework is being provided by the country’s pro-active central bank (“SBP”). However, Federal Bureau of Revenue (“FBR”) and Securities and Exchange Commission of Pakistan (“SECP”) need to be actively involved in regularizing the economy, at grassroots level, by enforcing proper documentation at smaller level and market level businesses. This will create professional and enabling environment for banks to manage their credit risk related issues more practically and effectively.

During mid of last decade, consumer financing helped people enhance their quality of life and build their startup businesses and in return the banking sector earned huge profits out of it and became a win-win proposition for both segments of the society. Within the banking industry, consumer banking is based on 2–types of loans (a) financing to individuals to buy or upgrade their housing facilities, purchase a car, credit cards, personal loans for household and wedding related expenses and on the other hand (b) financing to start up businesses as Consumer Programmed Lending which up to a certain limit forms part of SMEs financing. This source of funding and personal credit lines can serve to enhance quality of life as well as meet working capital or other small business requirements.At present banking sector’s total consumer portfolio is less than 10% of total commercial lending which should be increased to at least 30% to meet individual and small businessmen’s needs. The country has witnessed a sharp decline in consumer related lending since 2008, however, as Value Chain spoke to executives at many leading banks to get their views on consumer banking short and long term future plans, the officials expressed their strong optimism and referred that during the year 2012 consumer sector has started showing some progress and the banks have planned to re-launch their consumer products cautiously. They said that some had planned to stick to fewer products while several others would like to go full-length in terms of number of products. The scale of lending may be limited in the begin-ning but in line with market needs pace will be maintained.

Company Open Close Diff High Low Avg.Rate Turnover*PTCL 19.39 16.89 -2.50 20.54 16.61 19.24 192,765,500DGKC 50.30 52.91 2.61 53.18 48.10 50.89 145,897,500FCCL 6.37 6.40 0.03 6.87 6.10 6.44 111,895,500JSCL 13.45 14.45 1.00 15.25 13.22 13.96 109,514,000NML 56.66 59.98 3.32 64.60 56.55 59.53 104,059,500KESC 6.39 5.74 -0.65 6.83 5.31 5.93 92,073,500MLCF 9.10 9.14 0.04 9.86 8.20 9.04 83,196,500PACE 3.14 3.02 -0.12 3.61 2.87 3.23 75,364,000LPCL 5.85 5.40 -0.45 6.05 5.28 5.70 71,397,500ANL 6.08 6.97 0.89 7.22 5.81 6.29 62,666,500

Top 10 Traded Companies(Oct 2012)

2012 Oct 8 Oct 15 Oct 22 Oct 30

15.90K

15.80K

15.70K

15.60K

15.50K

Gross Buy Gross Sell Rs Rs Rs $

FIPI 9,022,736,195 (5,364,806,935) 3,657,929,256 38,504,518Local Companies 38,009,647,678 (41,466,796,968) (3,457,149,287) (36,391,045)Banks/DFI 12,832,264,828 (9,418,777,322) 3,413,487,504 35,931,447Mutual Funds 7,138,066,093 (9,380,141,361) (2,242,075,266) (23,600,792)NBFC 2,075,180,086 (2,591,387,178) (516,207,092) (5,433,759)Local Investor 57,998,326,870 (59,244,383,330) (1,246,056,455) (13,116,384)Other Organization 1,999,699,303 (1,609,627,965) 390,071,338 4,106,014

Foreign Portfolio Investment Monthly (Sept 2012)Net Buy/Sell

T-Bills (3mth) 9.6383%T-Bills (6mth) 9.6481%T-Bills (12mth) 9.7118%Discount Rate 10.00%Kibor (1mth) 9.54%Kibor (3mth) 9.46%Kibor (6mth) 9.51%Kibor (9mth) 9.82%Kibor (12mth) 9.87%P.I.B (3 year) 10.3935%P.I.B (5 year) 10.9563%P.I.B (10 year) 11.4495%

Money Market

Company Open Close Diff High Low Avg.Rate Turnover*RMPL 4,177.15 3,760.00 -417.20 3,968.30 3,700.00 3,817.69 740ULEVER 9,700.00 9,498.04 -202.00 10,500.00 9,225.00 9,892.99 3,920SIEM 800.00 745.00 -55.00 761.78 713.00 745.12 5,600CLOV 112.69 73.96 -38.73 118.09 73.96 97.38 278,500DREL 418.00 380.00 -38.00 397.10 380.00 -- --THAL 130.13 96.18 -33.95 132.99 93.75 115.17 980,000SRVI 187.10 161.33 -25.77 189.00 159.99 178.66 311,200APL 523.74 499.12 -24.62 530.99 470.50 496.87 1,060,200POL 433.36 409.97 -23.39 458.30 404.25 424.01 9,665,300NRL 235.21 212.78 -22.43 246.90 210.00 228.89 3,092,900

Top 10 Losers (Oct 2012)

Company Open Close Diff High Low Avg.Rate Turnover*NESTLE 4,200.00 4,800.00 600.00 5,733.00 4,400.00 5,026.48 7,180BATA 1,013.33 1,515.00 501.67 1,515.00 971.00 1,204.26 20,600UPFL 3,500.00 3,690.00 190.00 3,690.00 3,380.00 3,474.77 860SHEZ 286.62 445.00 158.38 522.61 295.00 410.91 145,200COLG 1,150.00 1,282.08 132.08 1,434.00 1,125.00 1,285.22 14,600ILTM 295.00 382.87 87.87 382.87 295.00 327.69 2,900NATF 249.33 325.69 76.36 364.00 250.00 304.90 397,400SAPL 214.50 285.61 71.11 285.61 204.00 234.01 9,300IDYM 439.99 492.35 52.36 520.00 406.10 451.74 33,900PKGS 117.18 159.67 42.49 167.87 117.75 148.34 3,967,00

Top 10 Gainers(Oct 2012)

by Zeeshan Ahmed Mirza

SE-100 index closed the first week at 15,754 points, up 2%WoW as the mar-

ket rallied on rate cut expec-tations. In the process, the KSE-100 index also brea- ched its all-time high of 15,676 points, achieved in Apr’08. There was pickup in trading activity with average daily volumes of 134mn compared with 95mn last week. The textile sector was in vogue during the week, amid a string of announce-ments, where textile compa-nies generally surprised with above line payouts. Cement sector scrips also witnessed brisk activity as expectations of rate cut as well as soft coal price outlook generated interest in the sector.The KSE-100 Index was volatile during the second week of the month, coming close to the 16,000 points mark but eventually closing at 15,694 points, down 0.4%WoW. In this regard, despite a de-escalation in political noise (SC acceptance of draft letter to be sent to Swiss authorities), the market was negatively impacted by a lower than anticipated 50bps cut in the Discount Rate amidst slower global growth projections by the IMF. Average daily volumes in the outgoing week were recorded at 117mn shares, down 13%WoW. The KSE-100 Index gained 0.63%WoW to close at 15,792 points in the third week. The market witnessed mixed movement during the week while average daily turnover was recorded at 120mn shares, up 3%WoW. Important news flow during the week included a Current Account surplus of US$432mn in 1QFY13 (deficit of US$331mn), conflicting developments post ICH implementation (revenue has started streaming in but nascent political opposition has surfaced) and above-target PSDP utilization (federal component) in 1QFY13. The KSE-100 Index continued to maintain the gradual upward momentum – the index rose 0.13% WoW to close at 15,812.72 points in the fourth week. Activity at the KSE picked up this week with average daily turnover rising by 10.89% WoW to 133.03mn shares. Market sentiment was driven by the result season which was in full season this week. Key news flows included i) devel-opments on long term gas supply to Sui based fertilizer plants, ii) robust textile export reading for Sep’12, which was up by 12.9%YoY/3.3% MoM, more importantly yarn exports rose by 40.8%YoY/ 28.3%MoM, and iii) US opposition over the ICH mechanism as well as LHC’s notification of suspension of MoIT’s notifica-tion on increase in international incoming call tariffs.

Stock Market ReviewOctober 2012

MARKET REVIEW

K Oct 31, 2012: ^KSE 15910.11

62 www.valuechainmagazine.com62 www.valuechainmagazine.com

Re-launch and increase in the number of products will serve to improve job markets as well as provide business to allied vendors and services sector. Thousands of jobs will be created across Pakistan in banks and allied services sector to cater to the needs of consumer banking customers whilst equally adding quality to customers’ lives and startups. As the number and amount of loans grow, NPLs will immediately start showing decreasing trends in a comparative study mode. In the initial stage of re-launch which started taking place towards the end of 2011, prime stress was placed on car finance and credit cards gradually including mortgages and consumer programmed lending i.e. loaning facilities to small businesses in the shape of personal credit lines. During the last 4 years, the banking sector heavily invested in government papers and found no lucrative options elsewhere. It seemed that banks had gone overboard in terms of taking deposits and investing in sovereign investment schemes. But they are now striving at their level best to revert to their normal course of business i.e. commercial lending and foreign trade that includes consumer banking which earns lucrative returns and is always considered as a major earning arm of the overall commercial lending products of banking. In corporate lending, risk is taken on fewer customers whereas in consumer banking risk is taken on large number of customers and if credit initiation and risk management practices are meticulously followed, risk is managed more effectively at a much higher rate of return in comparison with corporate lending. Recent cuts in discount rates have brought deposit rates down but will also assist in keeping consumer products rate fairly low, making it easy for customers to utilize consumer banking facilities because of lower rates. Businessmen and banking sector officials expect more reduction in key rates which will further help in improving consumer banking customer base. In addition, this will also assist in lowering loan defaults and unhealthy consumer portfolio. Consumer personal loans will also increase volume in trading at stock exchanges, due to liquidity available to individuals in terms of personal loans and personal credit lines. The banks have also focused on their customer service and risk management structures with a view to make their customer services proactive, keeping level of complaints to a minimum and dealing with the customers in a way that makes them satisfied to serve as ambassadors for increase in their sales – so far most of the complaints have been related to consumer banking custom-ers due to low quality of services provided by this banking sector. Improved risk management mechanism will not only help in reducing default rate but also enhance quality of credit applica-tions logging into the banking system, minimum turn-downs and bringing the uncalled for credit application rejections to a nil or minimized.

One of the most important segments of the markets - the banks- will need to focus on informal lending market practices in relevant markets like country-wide commodity markets, consumer durables markets, jewelry and gems markets, fruit and grocery markets, livestock and dairy cattle markets, meeting real estate and general working capital needs. There are individuals who, as part of routine business practices, extend informal credit facilities to individuals for their small business and personal needs and charge profit at the rate over 18% to 35% and their default rate is very low. If consumer banking sector covers this segment and meets such individual and business needs specially in line with our society needs and culture, Islamic banking consumer products can even play more effective role in replacing those informal credit facilities with formal banking products. This can make huge contribu-tion towards individual customers whilst creating equally better proposition for the banks. Easy paisa’s model (now more banks have entered in these branchless banking products) may be followed which has replaced informal channel, domestic remit-tances channel, with their professionally developed platform. The banks can save on costs and make their products customer- centric by adopting international best practices, local market knowledge, outsourcing many of their processes to professional service providers who can do the same very effec-tively as their first hand business and as their number one prior-ity. Information technology can play a pivotal role in driving consumer loans portfolios professionally and successfully along with professional policies and procedures to manage credit and operational risk through professionally trained human resources in customer relations management specially those who understand customer needs and make way out for continuous sales and recovery, avoiding resort to bad recovery procedures and getting into litigations; the banks ideally prefer recovery based on relationships rather than recovery through asset sales – which approach has been one of the reasons for the growth of non-performing loans portfolio.During interaction with banking officials it transpired that branchless banking will likely play a key role in increasing density of consumer banking products across Pakistan, reducing infrastructure cost, extending outreach to every part of the country and eventually outsourcing of many procedural and processes- centric elements as it will bring in new dimensions of consumer banking whereby service sector will have opportuni-ties for providing independent third party unbiased services. Full functional ATM machines whereby cash is withdrawn and also deposited can play a vital role in enhancing customer conve-nience and reliance thus adding to consumer customer base.A study shows that consumer banking related regulations issued by SBP continued to assist in strengthening consumer banking business. However, banking sector needs to upgrade systems and maintain their pace to provide their custom-ers with innovative products and conve-nience thus becoming their partners in business, focusing more on customer relations and less on becoming recovery masters.

by Raeda Latiflumping energy and metal prices sent commodities to their biggest monthly loss since May, 2012, lagging behind stocks, bonds and

the dollar, as the global economy grew at the slowest pace since the 2009 reces-sion. The Standard & Poor’s GSCI Total Return Index of 24 raw materials fell 4.1 percent. The MSCI All‐Country World Index of stocks slid 0.6 percent, includ-ing dividends, while the U.S. Dollar Index slid 0.02 percent. Bonds of all types gave positive returns, according to Bank of America Merrill Lynch’s Global Broad Market Index.During October, 2012, the traded volumes at the Exchange increased to Rs. 108.6 bn from Rs. 66.9 bn in the corre-sponding month of the previous year, witnessing a growth of 62 %.

CRUDE OIL [USD / barrel]

SILVER [USD / troy Oz]

IRRI 6 [Rs. / 100 kg]

2012. Although gold had climbed to near $1,800 an ounce in early October after aggressive stimulus measures announced by central banks including the U.S. Federal Reserve and European Central Bank which fuelled a rally.Gold prices were stuck in a narrow band in the last week of the month as investors stayed put ahead of the release of the U.S. non-farm payrolls data on Friday, and the presidential election next week.During October 2012, the traded volumes on the Exchange were Rs. 58.56 billion as compared to 51.62 billion for the corresponding month of last year.

although silver rebounded in the last couple of days on news that in China, the world’s second largest user, demand will jump near about 10% next year. Over-all silver dropped a little above 7% in prices after a stunning gain of 9.17 % in September, 2012.Volumes for Silver were Rs. 6.49 billion for October 2012. The figure was Rs. 6.88 billion for the corresponding month of last year.

A decreasing trend was observed in the month of October, 2012 for IRRI‐6 prices. This decrease was mainly due to the arrival of new crop in the market.At PMEX trading in IRRI‐6 resumed in the month of October, 2012. A total volume of Rs. 16.6 million was recorded during the month.

Commodity Market October-2012

Open: 34.71 Low: 31.62Close: 32.25 High: 35.02Change: ‐ 7.09 %

Open: 3,019 Low: 2,991Close: 3,035 High: 3,070Change: + 0 .52 %

Open: 1,776.2 Low: 1,702.6Close: 1,720.8 High: 1,790.9Change: ‐ 3.20 %A continuous drop has been witnessed in gold prices over the month of October,

Open: 92.29 Low: 85.27Close: 86.11 High: 92.41Change: ‐ 6.70 %Biggest monthly drop of 6.70 % in oil prices has been recorded since May, 2012. Oil rebounded in last days of month as refineries resumed operations after the Atlantic super storm Sandy moved away from the U.S. East Coast.Crude Oil volumes for October, 2012 were Rs.61.5 billion as compared to Rs.4.7 billion for the corresponding month of last year 2011. A significant growth of 419 % has been observed.

A steep fall in silver prices has been recorded in the month of October, 2012

Open: 3,475 Low: 3,250Close: 3,250 High: 3,475Change: 6.47 %

Oct, 2012Oct, 2011Sep, 2012

Traded Value Traded Lots (Rs)

420,959 304,798 414,272

108.6 billion 66.9 billion 152.4 billion

PMEX Commodity INDEX

GOLD [USD / troy Oz]

PALMOLEIN [Rs. / 37.324 kg]

Except in the first week, an upward trend in palm olein prices was witnessed in October, 2012. Palm Olein prices posted around 4% drop in first week which was balanced out in later part of the month.Overall the prices of palm olein remained in a band of Rs 4,025 /37.324 kg and Rs. 4,225 / 37.324kg.

Open: 4,200 Low: 4,025Close: 4,180 High: 4,225Change: ‐ 0.48 %

MARKET REVIEW

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PMEX COMMODITY INDEX

3,070 3,055

3,040

3,025

3,010 2,995

2,980

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IRRI-6 RS/100 kg

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PALM OLEIN RS / 37.324 kg

4,020

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EDUCATION & TRAINING

by Ferozeali Hussaini

oday’s organizations face an increasingly complex set of risks. As a result, key internal and external stakeholders have increased their scrutiny of and expectations for risk management, raising signifi-

cant questions around risk and how it is addressed. The Enterprise Risk Management (ERM) provides a framework to understand and respond to business uncertainties and opportunities with relevant risk insight delivered through common, integrated risk identification, analysis and manage-ment disciplines. ERM enhances organizational resilience by improving decision making, strengthening governance and supporting a risk intelligent culture. In recent years, external factors have fueled a heightened interest by organizations in ERM. Industry and government regulatory bodies, as well as investors, have begun to scrutinize companies' risk-management policies and procedures. In an increasing number of industries, boards of directors are required to review and report on the adequacy of risk- manage-ment processes in the organizations they administer.Definition: According to the Casualty Actuarial Society (CAS), enterprise risk management is defined as: "The process by which organizations in all industries assess, control, exploit, finance and monitor risks from all sources for the purpose of increasing the organization's short and long term value to its stakeholders."The CAS then proceeds to enumerate the types of risk subject to enterprise risk management as hazard, financial, operational and strategic. Hazard risks are those risks that have traditionally been addressed by insurers, including fire, theft, windstorm,

liability, business interruption, pollution, health and pensions. Financial risks cover potential losses due to changes in financial markets, including interest rates, foreign exchange rates, commodity prices, liquidity risks and credit risk. Operational risks cover a wide variety of situations, including customer satisfaction, product development, product failure, trademark protection, corporate leadership, information technology, management fraud and information risk. Strategic risks include such factors as competition, customer preferences, technological innovation and regulatory or political impediments. Although there can be disagreement over which category would apply to a specific instance, the primary point is that enterprise risk management considers all types of risk an organization faces.

What is ERM? Enterprise risk management (ERM) is the process of planning, organizing, leading, and controlling the activities of an organization in order to minimize the effects of risk on an organization's capital and earnings. Enterprise risk management expands the process to include not just risks associated with accidental losses, but also financial, strategic, operational, and other risks.As a strategic business discipline, the Enterprise Risk Manage-ment (“ERM”) supports the achievement of an organization’s objectives by addressing the full spectrum of its risks and managing the combined impact of those risks as an interrelated risk portfolio. ERM represents a significant evolution beyond previous approaches to risk management in that it:1. Encompasses all areas of organizational exposure to risk (financial, operational, reporting, compliance, governance, strategic, reputational, etc.);2. Prioritizes and manages those exposures as an interrelated risk portfolio rather than as individual “silos”;3. Evaluates the risk portfolio in the context of all significant internal and external environments, systems, circumstances, and stakeholders;4. Recognizes that individual risks across the organization are interrelated and can create a combined exposure that differs from the sum of the individual risks;5. Provides a structured process for the management of all risks, whether those risks are primarily quantitative or qualita-tive in nature;6. Views the effective management of risk as a competitive advantage; and 7. Seeks to embed risk management as a component in all critical decisions throughout the organization.In essence, Enterprise Risk Management is the latest name for an overall risk management approach to business risks. A common thread of enterprise risk management is that the overall risks of the organization are managed in aggregate, rather than independently. Risk is also viewed as a potential profit opportunity, rather than as something simply to be minimized or eliminated. The level of decision making under enterprise risk management is also shifted, from the insurance risk manager, who would generally seek to control risk, to the chief executive officer, or board of directors, who would be willing to embrace profitable risk opportunities (Kawamoto, 2001).Historical Development: Risk management has been practiced for thousands of years. One can imagine a proto-risk manager burning a fire at night to keep wild animals away. Early lenders must have quickly learned to reduce the risk of loan defaults by limiting the amount loaned to any one individual and by restricting loans to those considered most likely to repay them. Individuals and firms could manage the risk of fire through the choice of building materials and safety practices, or after the introduction of fire insurance in 1667, by shifting it to an insurer. However, it wasn't until the 1960s that the field was formally named, principles developed and guidelines estab-lished. Robert Mehr and Bob Hedges, widely acclaimed as the fathers of risk management, enumerated the following steps

T

Enterprise RiskManagement (E.R.M.)

1970s 1980s1990s

Strategic

Operational

Financial

Hazard

Market

Credit

Hazard

Credit

Hazard

Enterprise RiskManagement

Exhibit 1: Evolution Of Risk Management


s of 2012, nearly a third of the world’s popula-tion uses the internet, and an even greater portion possesses a mobile phone. The internet has transformed the way in which people obtain

news, conduct business, communicate with one another, socialize, and interact with public officials. Concerned with the power of new technologies to catalyze political change, many authoritarian states have taken various measures to filter, monitor, or otherwise obstruct free speech online. These tactics were particularly evident over the past year in countries such as Saudi Arabia, Ethiopia, Uzbekistan, and China, where the authorities imposed further restrictions following the political uprisings in Egypt and Tunisia, in which social media played a key role.Freedom House, a US research organisation advocating democracy, political freedom and human rights, has conducted a comprehensive study of internet freedom in 47 countries around the globe. The annual study evaluates each country based on barriers to access, limits on content, and violations of user rights. This year’s findings indicate that restrictions on internet freedom in many countries have continued to grow, though the methods of control are slowly evolving and becoming less visible. Of the 47 coun-tries examined, 20 have experienced a negative trajectory since January 2011, with Bahrain, Pakistan, and Ethiopia reg- istering the greatest declines. In Bahrain, Egypt, and Jordan,

the downgrades reflected intensified censorship, arrests, and violence against bloggers as the authorities sought to quell public calls for political and economic reform. Ethiopia, a country with a tiny population of users, presented an unusual dynamic of growing restrictions reflecting a government effort to establish more sophisticated controls before allowing access to expand. And Pakistan’s downgrade reflected extreme punishments meted out for dissemination of allegedly blasphemous messages and the increasingly aggressive efforts of the telecom regulator to censor content transmitted via infor-mation and communications technologies (ICTs).The methods of control are becoming more sophisticated, and tactics previously evident in only the most repressive environments—such as governments instigating deliberate connection disruptions or hiring armies of paid commen-tators to manipulate online discussions—are appearing in a wider set of countries.Countries at Risk: As part of its analysis, Freedom House identified a number of important countries that are seen as particularly vulnerable to deterioration in the coming 12 months. They include Azerbaijan, Libya, Malaysia, Pakistan, Russia, Rwanda, and Sri Lanka.Key Trends:* New laws restrict free speech: In 19 of the 47 countries examined, new laws or directives have been passed since

for the risk management process:1. Identifying loss exposures2. Measuring loss exposures3. Evaluating the different methods for handling risk Risk assumption Risk transfer Risk reduction4. Selecting a method5. Monitoring resultsA variety of risks confront organizations today, and any one of them could threaten an organization’s success and ultimately lead to a decrease in stakeholder value. The need for greater risk awareness by leaders is driven by much more than just terrorism. Forces such as globalization and the geopolitical environment in which organizations operate add complexity to business, thereby increasing risks. Technology and the Internet require companies to rethink their business models, core strategies, and target markets. Customers have ever-increasing demands for customized products and services leading to more risks. If customer expectations are not met, market share and, ultimately, revenue and profits can be significantly and quickly impacted.Organizations must also comply with increased regulations in some cases and deregulation in others, both of which drive risks. Mergers and restructurings are causing organizations to downsize and undergo changes in management responsibilities, which also create the potential for enterprise risks.As organizations grow in complexity and serve global markets, the leadership challenge is to understand fully how the various organizational units interact and relate, and, in turn, how the risks cut across the silos. Instead of managing risk in many individual silos, enterprise risk management (ERM) takes an integrated and holistic perspective on risks facing an organiza-tion. Risk centric leadership does not mean that the organiza-tion will be risk averse, but that it strives to identify, assess, and manage risks and, when taking risks, the leadership does so intentionally rather than unknowingly. The key is to take calcu-lated risks across the enterprise and appropriately manage and mitigate the risks for the benefit of the stakeholders.ERM Frameworks: A Global PerspectiveERM is a globally accepted and growing field. As a result, a number of risk frameworks and statements have been published by professional organizations around the world; such as:1. A Risk Management Standard by the Federation of Euro-pean Risk Management Association (FERMA);2.Australian/NewZealand Standard 4360—Risk Management;3.COSO’s Enterprise Risk Management—Integrated Frame-work;4. The Institute of Management Accountants’ (IMA);5. “A Global Perspective on Assessing Internal Control over Financial Reporting” (ICoFR); 6. Standard & Poor’s and ERMSome of the publications urge businesses to use these frame-works. Some of the documents were written by guidance- setting organizations such as COSO, while others were written by individuals with a wide range of backgrounds, including insurance, government, safety, and engineering. The different backgrounds lead to very different approaches in these risk frameworks. Some lean toward financial reporting and internal control, and others lean toward management, corporate gover-nance, and accountability. Some even try ambitiously to cover every possible aspect of risk. Still, enterprise risk management frameworks are valuable tools.

Basic Components of ERM FrameworkThe basic components found in most ERM frameworks are:• Set strategy and objectives,• Identify risks,• Assess risks,• Treat risks,• Control risks, and• Communicate and monitor.

Set Strategy and Objectives: The first step in the ERM framework requires an understanding and clarity of strategy and objectives. The opportunities that a company decides to pursue are articulated in its strategy and objectives. Risks are the events or actions that jeopardize the achievement of the strategy and related objectives. The identification of risk is dependent on clarity of objectives for the unit under analy-sis, which might be the overall organization, a strategic business unit, a function, an activity, a process, or a reporting and compliance requirement. ERM requires companies to state objectives clearly at every level of the organization where risks are identified—literally, from the workroom to the boardroom.Identify Risks: The goal in identifying risks is to produce a comprehensive list of risks and to assess them, narrowing the list down to the top risks facing the organization. Because of the diversity and complexity of risks, using several of the techniques on the list may be required to ensure that as many risks are identified as possible. If some risks fail to be identi-fied in the process, they may later lead to a major problem for the organization.Assess Risks: Once risks have been identified, risk assess-ment is the next step. A key to ERM is to know the risks the company can control and those over which it has little or no control. A second and related key is to know which risks can and cannot be measured. Knowing the importance of a risk through risk assessment can lead to better management and resource allocation. Further, knowing how that risk interre-lates with other risks in the organization can enhance ERM. Risks must be assessed or measured in some way. When a risk is identified, the implication is that it has some signifi-cance and can be ranked on some scale of importance. Risks can also be assessed using a low, medium, or high level of

Set Strategy/Objectives

Identify Risks

Assess Risks

Treat Risks

Control Risks

Communicate &Monitor

Exhibit 2: A Continous Risk Management Process

Source: Adapted from the Institute of Chartered Accountants in England & WalesNo Surprises: The Case for Better Risk Reporting, ICAEW, London, U.K., 1999, p. 47.


January 2011 that either restrict online speech, violate user privacy, or punish individuals who post content deemed obj- ectionable or undesirable.* Bloggers and ordinary users increasingly face arrest for political speech on the web: In 26 of the 47 countries, including several democratic states, at least one blogger or ICT user was arrested for content posted online or sent via text message.* Physical attacks against government critics are inten-sifying: In 19 of the 47 countries assessed, a blogger or internet user was tortured, disappeared, beaten, or brutally assaulted as a result of their online posts. In five countries, an activist or citizen journalist was killed in retribution for posting information that exposed human rights abuses.* Paid commentators, hijacking attacks are proliferat-ing: The phenomenon of paid pro-government commenta-tors has spread over the past two years from a small set of countries to 14 of the 47 countries examined. Meanwhile, government critics faced politically motivated cyber attacks in 19 of the countries covered.* Citizen pushback is yielding results: A significant uptick in civic activism related to internet freedom, alongside impor-tant court decisions, has produced notable victories in a wide set of countries. Advocacy campaigns, mass demonstrations, website blackouts, and constitutional court decisions have resulted in censorship plans being shelved, harmful legislation being overturned, and jailed activists being released. In 23 of the 47 countries assessed, at least one such victory occurred.Significant Country Findings:* Estonia (1): Estonia has become a model for free internet access as a development engine for society. Restrictions on internet content and communications in Estonia are among the lightest in the world. There are over 70,000 active Esto-nian- language blogs on the internet, including an increasing number of group, project, and corporate blogs. The vibrancy and activities of the blogosphere are frequently covered by traditional media, particularly when blog discussions center on civic issues. Freedom of speech and freedom of expres-sion are protected by Estonia’s constitution and by the country’s obligations as an EU member state. Anonymity is unrestricted, and there have been extensive public discus-sions on anonymity and the respectful use of the internet.* United States (2): Internet access in the United States remains open and fairly free compared with the rest of the world. Courts have consistently held that prohibitions against government regulation of speech apply to material published on the internet, but the government’s surveillance powers are cause for some concern. In early 2012, campaigns by civil society and technology companies helped to halt passage of the Stop Online Piracy Act (SOPA) and the Protect IP Act (PIPA), which were criticized for their potentially negative effects on free speech.* India (20): Although India’s internet penetration rate of less than 10 percent is low by global standards, the country is none-theless home to over 100 million users. Parliament passed amendments to the Information Technology Act (ITA) in 2008, expanding censorship and monitoring capabilities. This trend continued in 2011 with the adoption of regulations increasing surveillance in cybercafes. Many of India’s users access the internet via cybercafes, as only 3 percent of households have an internet connection. There were no reports of government-imposed internet connectivity disruptions in 2011 and 2012.

However, in January 2012, mobile phone providers in Jammu and Kashmir shut off their services for one day as part of security precautions in place for Republic Day. As of early 2012, the Indian authorities blocked a small number of websites, including some with content in the public interest. * Russia (30): The internet is the last relatively uncensored platform for public debate in Russia. However, since January 2011, massive distributed denial-of-service (DDoS) attacks and smear campaigns to discredit online activists have intensified. After online tools played a critical role in galvanizing massive anti- government protests that began in December 2011, the Kremlin signaled its intention to further tighten control over internet communications.* Pakistan (36): Disconcerting recent developments in Pakistan include a ban on encryption and virtual private networks (VPNs), a death sentence imposed for transmitting allegedly blasphemous content via text message, and a one-day block on all mobile phone networks in Balochistan province. Several other initiatives to increase censorship—including a plan to filter text messages by keyword and a proposal to develop a nationwide internet firewall—were officially shelved in response to civil society advocacy campaigns, although some suspect that the government is still working on them behind closed doors.* China (45): China is home to the world’s largest population of internet users, but also the most advanced system of controls—one that has become even more restrictive. In 2011, the authorities abducted dozens of activists and bloggers, holding them incommunicado for weeks and sentencing several to prison. The government also tightened controls over popular domestic microblogging platforms, pressuring key firms to more stringently censor political content and to register their users’ real names. Meanwhile, China’s influence as an incubator for sophisticated restrictions was felt across the globe, with governments such as Belarus, Uzbekistan, and Iran using China as a model for their own new internet controls.* Iran (47): The Iranian authorities used more nuanced tactics in a continued campaign against internet freedom that began after disputed elections in 2009. These tactics included: upgrading content filtering technology, hacking digital certifi-cates to undermine user privacy, and moving closer to estab-lishing a National Internet. Iranian judicial authorities also meted out some of the harshest sentences in the world for online activities, including imposing the death penalty on three bloggers and IT professionals.

impact or significance. In addition to the impact or signifi-cance of risks, the probability of a risk occurring should be considered. Once impact and probability are determined, a risk map can be generated as illustrated in Exhibit (Risk Map). Some companies display risk in zones on maps desig-nated by color, e.g., a risk in the green zone indicates a low dollar impact and probability of occurrence, the yellow zone indicates moderate risk, and the risks with the highest impact and likelihood are marked with red color.

Treat and Control Risks: After risks are identified and assessed, management must decide how to respond to them. One of the goals of ERM should be to make conscious decisions about risk. The actions that management might take for a given risk include: avoidance, reduction, sharing, and acceptance. Management determines its response to a risk by considering the impact a given decision will have the likelihood of the risk, and the costs and benefits of its action. The goal is to take actions that will bring the organization’s overall residual risk within its risk appetite. Risk tolerances may vary, but overall they should fall within the risk appetite approved by executive management and the board. Treating and controlling risks can require a variety of actions. For example, companies can implement new policies and controls, purchase derivatives, hire new management, or implement new training programs. This variety of risk treatment approaches signify why ERM is a much broader concept than financial reporting and internal control risk. Communicate and Monitor: The desired outcome for ERM is not that organizations become risk adverse, but that proactive, risk-based decision making is fostered at all levels of the organization and managers knowingly and intention-ally take risk while utilizing appropriate risk indicators. Accordingly, communication of risk-related information must flow down, across, and up the organization. Summary reports of risk assessments at the division or function level provide senior management with valuable information on

how middle management views the top risks facing the organization. Under ERM, monitoring is enhanced by incor-porating information on risk identification and assessment and identifying the owners of specific risks. Conclusion: ERM is a powerful management tool, but successful implementation requires education and training for managers and associates at all levels of the organization, includ-ing the board. In today’s risky world, companies can no longer rely on a silo approach to risk management. An integrated and holistic perspective of all the risks facing the organization is needed. A risk-centric organization does not avoid risks, but rather it knowingly takes risks aligned with its risk appetite. Integration of ERM with ongoing management activities serves to drive in risk management throughout a company. ERM is essential in today’s business environment, where companies are required to disclose risk factors in the finan-cial reports and the board of directors regularly questions top management about the company’s risk. The new focus on the concept of enterprise risk management provides an opportunity for risk managers to apply their well established and successful approaches to risk on a broader and more vital scale than previously. This is an excellent opportunity to advance the science of risk management.ReferencesAckerman, Shawna. 2001. The Enterprise in Enterprise Risk Management. Casualty Actuarial Society Enterprise Risk Manage-ment Seminar.ARI Risk Management Consultants. 2001. Enterprise Risk Management: The Intersection of Risk and Strategy. Casualty Actuarial Society Websites: http://www.casact.org/ research/ermsurv.htmFriedel, Wolfgang F. 2001. Enterprise Risk Management - Fad or Fact? CasualtyActuarial Society Enterprise Risk Management Seminar.Institute of Internal Auditors. 2001. Risk Management Readings (http://www.theiia.org)Kawamoto, Brian. 2001. Issues in Enterprise Risk Management: From Theory toApplication. Casualty Actuarial Society Spring Meeting.Mehr, Robert I. and Bob A. Hedges. 1963. Risk Management in the Business Enterprise. Basel Committee on Banking Supervision, International Convergence of CapitalMeasurement and Capital Standards, A Revised Framework, June 2004.Committee of Sponsoring Organizations of the Treadway Commis-sion (COSO), InternalControl—Integrated Framework:

Exhibit 3: Risk Map

High

Low High

Impact onAchievementof Objectives(Significance)

Likelihood of Occurrence

Low ImpactLow Likelihood

High ImpactHigh Likelihood

High ImpactLow Likelihood

Low ImpactHigh Likelihood


en cases reported this year in a populous country like Pakistan, where death is counted by the dozen every day, sounds a trivial figure for the statistical mind. However, from the medical science point

of view, the number of mortalities caused by a untreatable bacterial infection that can “silently” attack with a more than 99% probability of causing death is a potential catas-trophe, a major public hazard!This possibility of a potential disaster in the form of lethal infection to a larger number of people causing unimagi-nable tragedies is the reason why the medical fraternity in Pakistan is pursuing this issue with such curiosity and concern. “Naegleria Fowleri”, commonly referred to as the "brain- eating amoeba”, is a free-living parasitic microscopic organ-ism. It causes fatally serious infection of the brain called Primary Amebic Meningo-encephalitis (PAM).The parasite is a heat liking (hemophilic) organism that is commonly found worldwide in warm fresh water (e.g. lakes, rivers, and hot springs) and moist soil. However, the organ-ism can only infect human beings when conditions are optimum for its growth and infective capacity. Mechanism of actionThe active form of parasite, called trophozoite, causes the disease. Infection occurs when people come in contact with warm, fresh water by swimming, diving, bathing, nasal irriga-tion (ritual ablution) or any other water-related recreational activity. Parasite penetrates through the inner covering of soft tissues of nose (nasal mucosa) and travels along the path of olfactory nerve (nerve of smell) into the brain to cause inflammation and damage to brain tissue, hence the disease called Primary Amebic Meningo-encephalitis (PAM). PAM is more common in males probably due to their outdoor activities. Children are more vulnerable because of soft skull bones and pervious coverings of inside of nose.Transmission of the bacteria or disease from one person to another or through routes other than soft inside covering of nose (nasal mucosa) has never been reported by scien-tific researchers.Incubation PeriodAfter the initial exposure, the contaminated water source and infection by the organism, the symptoms of PAM appear over a period of few days to one week. Initially, the symptoms are non-specific, like change in the sense of taste and smell with mild to moderate headache. The condition

may mimic viral flue initially with body ache, lethargy and malaise. The symptoms worsen gradually with severe head-ache, fever and vomiting. The condition deteriorates over a period of 1–2 weeks leading to severe neurological effects, disturbed consciousness and death. DiagnosisThe diagnosis of PAM is always parasitic and is based on microscopic detection and identification of N. Fowleri trophozoites in the cerebro-spinal fluid (CSF) which is the liquid present all around the brain and spinal cord in the body. The CSF can be aspirated from patients’ spine for investigating the disease. Post-mortem diagnosis is made on biopsy from brain or spinal cord, which is examined under microscope for the detection of the organism. Newer tests based on Polymerase Chain Reactions (PCR), a biochemical technology in molecular biology to amplify DNA of a particular DNA sequence, are developed for the accurate and in-depth identification of the organism in humans and environment. The PCR based tests are expen-sive and require expertise. TreatmentTill date there is no definitive treatment for the disease caused by the brain-eating amoeba. Different antibiotics and anti- parasitic medicines are under trial throughout the world. The drug combinations that are used on experimen-tal basis across the globe include Amphotericin B, Rifampi-cin, Flucanozole and Albendazole. None have shown any promising results yet.PAM in KarachiIn Karachi, the deadly disease has been showing its presence off and on during the last four years. In 2008-9, 13 cases of PAM were reported from one of the tertiary care hospitals in Karachi. During the current year of 2012, about ten cases have been reported till date from different tertiary care private hospitals in the city. All of the reported patients were males, ranging between the ages of 22 to 49 years. All of the ill-fated patients met their demise within one week of the onset of symptoms.

EVENTS

(L-R) Mr. Tahir Raza Naqvi, Mr. Amin Faheem &Mr. Mirza Ikhtiar Baig at exhibition.

Chairman TDAP, Tahir Raza Naqvi is speaking at soft launching ceremony of ‘Expo Pakistan 2012’.

Mr. Amin Faheem visiting a stallat the exhibition.

7th Expo Pakistan 2012

The pattern of disease in Karachi has shown some differences when compared to other parts of the world. Most of the patients reported in the western countries had history of swimming in freshwater lakes, ponds or pools. In our scenario, none of the patients who died due to PAM had a significantly authentic history of special aquatic activities. Wudu (Ablution) with contaminated tap water is reported as the most probable cause of disease among these individuals. Medically prescribed nasal irrigation with tap water causing PAM has also been reported from Louisiana, USA. The report states that in 2011, 2 adults died in Louisiana hospitals of infectious meningo-encephalitis after brief illnesses. Both patients were diagnosed as PAM. Their only reported water exposures were tap water used for household activities, including regular sinus irrigation. Water samples and tap swab samples were collected from both households and tested. Naegleria Fowleri organisms were identi-fied in water samples from both homes.Possibility of contaminated “tap water” causing the disease is an extremely alarming situation for public health. If this is the case in Karachi and is not controlled in time, the city can have an epidemic of PAM causing loss of human lives in massively disastrous numbers.PreventionAppropriate chlorination of water being supplied to the city, by the concerned authorities, are the only means of acquiring acceptable control over the potential disaster. In the meantime, people need to take their own precautions to prevent the exposure as much as possible. The only way to evade Naegleria Fowleri infection is to avoid contaminated water. Some preventive measures are: • The swimming pools, home water tanks should be effec-

tively chlorinated.• When doing the ritual ablution, care should be taken that

fter the earlier six exhibitions that proved a success, the 7th ‘Expo Pakistan- 2012’ was held during 4 to 7 October, in Karachi Expo Centre. The inaugural ceremony of the event was

performed by the Governor of Sindh in Governor House on 3rd October, 2012. Senior Ministers, President, Federation of Pakistan Chamber of Commerce and Industry, diplomats, TDAP management, foreign delegates and those who set up their stalls in the exhibition also attended the ceremony.The exhibition showcased a wide variety of Pakistani prod-ucts ranging from textile, garments, surgical goods, food and grocery items, carpets, leather, jewelry, ceramics, sports goods, and pharmaceuticals to the buyers from more than 67 countries. Over 700 (Last year 582) trade delegates mainly from Sri Lanka, UK, Kuwait, USA, Japan, China, India, Australia, Korea and Europe attended the exhibition. Overall 356 exhibitors, who are the leading exporters of Pakistan, set up their stalls in Expo Pakistan recording a marked improvement over the last year when the number of exhibitors was 295. The exhibition was organized by the Trade Development Authority of Pakistan (TDAP) which greatly facilitated the foreign buyers by providing the services of interpreters in Chinese, Japanese, French, Spanish, Arabic, German and Russian. During the exhibition, security issues were one of the biggest concerns of foreign businessmen. They were deftly addressed by the TDAP and security agencies who provided fool-proof security arrangements for the partici-pants. During Expo Pakistan 2012 the Federal Minister for Commerce Makhdoom Amin Faheem met with high level delegations from India and Nigeria. The Chief Executive TDAP, Tahir Raza Naqvi and Secretary TDAP, Kabir Kazi also held meetings with the delegations from Hong Kong, Russia, Egypt, France, Bahrain, South Africa, Japan, Brazil, Kuwait, Afghanistan, Korea and China which evoked positive business results in terms of MoUs signed and the volume of businesses generated.An important aspect of the ‘Expo Pakistan’ was the ‘Business2Business’ meetings between Pakistani sellers and foreign buyers. It has been revealed by the TDAP officials that more than 1912 business meetings were held during the 4 days of the event. As per feedback received from the exhibitors, the meetings and negotiations culminated into business deals worth around US Dollar 350 Million.On special invitations of the exhibitors, various delegates visited the production units in different factories located in Karachi, Lahore, Sialkot, and Faisalabad for finalizing further business deals based on satisfaction derived from the inspection of the quality of production. Expo Pakistan 2012 generated an overall business of around US Dollar 690 Million as against the expectations of around $ 1 billion raised during soft launch of the event earlier in September. Memorandums of Understanding (MoUs) were also signed between different trade bodies and government organizations

and foreign associations. The Sindh Board of Investment (SBI) and DTS Inc Japan on (date) signed a memorandum of understanding (MoU) for the development of 250-acre Pak-Japan Special Economic Zone at Dhabeji, Sindh. Expressing his views on the occasion Sindh Board of Invest-ment (SBI) Chairman Zubair Motiwala said the Japanese would build all infrastructure facilities for the project while the SBI and Sindh government would assist them. The delegates from Japanese External Trade Organization visited all exhibition halls and showed keen interest in Pakistani products. TDAP Chief Executive Tahir Raza Naqvi announced that members of a Hong Kong based company met with project team of Kherpur Special Economic Zone and held talks with them for setting up a power plant worth $20 million. MoUs were signed by KCCI with: Pakistan Chamber of Commerce USA, Malaysia Chamber of Commerce, Russian Business Council Co-operation for Pakistan, Hong Kong Cable Council Co-operation, Pak Malaysia Business Council and Pak China Cultural Business Society. Malay Chamber of Com-merce Malaysia (MCCM) urged Malaysian entrepreneurs and businessmen to explore what it sees as “vast invest-ment opportunities” in the surgical instruments, textile and leather sectors in Pakistan. Malaysia attended the exhibition with their 57 member delegates. Besides, around 30 companies from UK, recruited by the Pakistan High Commission in London and the Pakistani Consulate in Manchester, also attended the exhibition and showed keen interest in Pakistani textile, agriculture, infor-mation technology, sports goods, home-ware and food items. The recent duty waiver from the European Union on 75 products from Pakistan is likely to encourage the British businesses to buy from Pakistan. UK is one of Pakistan's most important markets and that the bilateral trade between the two countries is on a steady rise due to the focused efforts and commitment of both the governments to achieve the target of Pounds 2.5 billion by the year 2015.Out of these fields, the surgical was one of the interests for many Europeans and North American guests and buyers. More than 16 Pakistani companies manufacturing surgical items showcased their products in the exhibition. Pakistani surgical goods are already being exported to US, Europe and Middle East in large quantity. Pakistan presents numerous and significant opportunities for investments aiming both at using Pakistan as an export base and at tapping into an emerging market with a rapidly growing middle class. Events like Expo Pakistan facilitate this exchange of people, knowledge and ideas and are crucial in achieving the objective of increasing bilateral trade between UK and Pakistan. Despite the multiple issues, the participation of hundreds of foreign buyers in the event was highly encouraging for Pakistan. International partici-pants at the exhibition will also develop new partnership and deepen existing ones, for the benefit of all stakeholders. This will also help in attracting foreign direct investment, which in recent times has showed a declining trend.

A

EVENTS

7th Expo Pakistan 2012 EVENTS


In a shocking assessment of the prospects of meeting food needs, Lester Brown, President of the Earth Policy Research Centre in Washington, said that the climate is no longer reliable and the demands for food are growing so fast that a breakdown is inevitable, unless urgent action is taken. The price of key staples, including wheat and rice, may double in the next 20 years, threatening disastrous consequences for poor people who spend a large propor-tion of their income on food. The global risk analysis firm ‘Maplecroft’ has also released its Food Security Risk Index for 2013, along with a map, that highlights the food security of individual states. According to the report, out of the 48 countries considered to be at “high” risk of a food crisis, Pakistan is ranked 27th. Three- quarters of African countries and several “Arab Spring” nations are at high or extreme risk of a food crisis as well. The report adds that food insecurity could become yet another factor fueling the already tense relations and civil unrest in the Middle East.Out of the 11 countries that are in the “extreme risk” category, nine are in Africa. They include Somalia and the Democratic Republic of Congo (DR Congo), which are ranked joint first, Haiti (3rd), Burundi (4th), Chad (5th), Ethiopia (6th), Eritrea (7th), Afghanistan (8th), South Sudan (9th), the Comoros (10th) and Sierra Leone (11th).

eople around the world are exposed to the imminent threat of hunger and malnutrition because of lower yield and higher consumption. Food and Agricultural Organization of the United Nations (FAO) that has

declared timely warnings on global level that due to lower yield and higher consumption, the world grain reserves are getting so dangerously low that they could trigger a major hunger crisis in 2013. Failing harvests in the US, Ukraine, China, India and Pakistan (because of 2 consecutive floods) and other countries grain reserves this year have eroded to their lowest level. The report states that the world has not been producing as much as it is consuming. That is why grain stocks are running down, supplies are now very tight across the world and reserves are at a very low level, leaving no room for meeting unexpected future eventualities. Prices of main food crops such as wheat and maize are now close to those that sparked riots in 25 countries in 2008. FAO figures released recently suggest that 870 million people are malnourished and the food crisis is growing in the Middle East and Africa. The global food supply system could collapse at any point, leaving hundreds of millions more people hungry, sparking widespread riots which in consequence could bring down governments.

o extend bilateral economic and business ties and to provide market access, the first ever Pak-US Business Opportunity Conference was held during 4-5 Octo-ber in London. The conference was co-hosted by the

United States Trade Representative (USTR), Embassy of Pakistan, Washington DC, Board of Investment, and Pakistan’s Commerce Ministry.Around 100 leading businessmen from private sector of both sides interacted and found ways to broaden the trade and invest-ment ties in the areas of energy, oil and gas exploration, textile, information technology, investment finance, capital funds, construction, transportation, steel, food and consumer goods.The Chairman, Board of Investment (BOI) Saleem H. Mandvi-walla led the Pakistani side while the Trade Representative from US side lead the American delegation. The US Special Repre-sentative for Pakistan and Afghanistan Daniel Feldman assisted the US side while Secretary Commerce, Muneer Qureshi, and Pakistan High Commissioner in UK, Wajid Shamul Hassan assisted BOI Chairman. Both sides would discuss the possibili-ties and potential for the private-public partnership for enhanc-ing cooperation between the two countries.The conference was significant as it was the first time a bilateral business initiative was taken between the two governments under the Pakistan-USA Trade & Investment Framework Agreement (TIFA). The Pakistan Private Investment Initiative (PPII) that would attract private investment for the Small and Medium Enterprises sector of Pakistan was also launched in London. The conference held sector specific breakout sessions on textiles, energy, access to finance, consumer goods and financial services. A US company, Case New Holland, termed its business in Pakistan successful and that they were attending the conference to seek opportunities for growth of their business in Pakistan.International Electric Power (IEP) President, Paul Daley, signed an agreement with Faysal Bank Pakistan with the support of Overseas Private Investment Corporation (OPIC) for revamp-ing and restarting the 94megawatt gas power plant in DHA,

Karachi. Leading Pakistani textile houses and the Chairman of Pakistan Readymade Garments Association (PREGMEA) also held detailed meetings with US firms GAP, JC Penny and Target to discuss exports of apparel from Pakistan.T

EVENTS

First Pakistan-USA Bilateral BusinessOpportunities Conference

Power Project being signed by Peter J Dailey CEO, IEP and Naveed Khan, CEO, Faisal Bank of Pakistan.

A group photo of Chairman Board of Investment Salim H. Mandviwala, Secretary Commerce Munir Qureshi, Assistant USTR, Michael Delaney, Pakistan High Commissioner for UK Wajid Shamsul Hasan, CEO IEP, Peter J Dailey, Pakistan

Ambassador to USA Sherry Rehman, CEO Faisal Bank of Pakistan Naveed Khan .


The 48 countries considered to be at “high” risk for food supplies include Yemen (15th), Syria (16th), Paki-stan (27th), Papua New Guinea (33rd), North Korea (35th), Iraq (54th) and Libya (58th). Egypt, ranked 71st of the 197 countries, and Tunisia, 100th, are among medium-risk countries.Reasons of food insecurity range from conflict and instability in the DR Congo and eastern Africa to rising prices for corn, caused by the worst US drought in 50 years and declining production in former Soviet coun-tries, British Analyst firm Maplecroft said in analysis.Droughts hit global food prices, raising fears of a food crisis: The fragility of global food security was once again brought into the spotlight this year after the USA’s worst drought in 50 years drove corn prices to near record highs, while wheat also climbed on the back of a 10% drop in production across the former Soviet Union. Low crop yields pushed global food prices up 6% in July 2012, sparking fears of a repeat of the 2007/2008 food crisis, which resulted in food riots across several countries, including Bangladesh, Cote d’Ivoire, Egypt, Mexico, Senegal, Tunisia, Algeria and Yemen.Maplecroft’s Head of Maps and Indices Helen Hodge said that food price forecasts for 2013 provide a worry-ing picture. Although a food crisis has not emerged yet, there is potential for food related upheaval across the most vulnerable regions, including sub-Saharan Africa.In a report revealed in September by Rabobank, a finan-cial specialist in agro-commodities, estimated that prices of food staples could rise by as much as 15% by June 2013, resulting in record highs that will squeeze household incomes in many countries.

Conflict and instability driving food insecurity in Somalia and DR Congo: Food security is a complex issue, which is driven by a number of factors, including armed conflict, which can acutely affect levels of agricultural output and investment. Nowhere is this seen more intensely than in the countries topping the Food Security Risk Index, Somalia and DR Congo (DRC), where sustained violence has had a profound impact on the economic circumstances of their govern-ments and populations.Ongoing conflict in DR Congo has left huge numbers of civilians unable to secure access to sufficient stable food supplies and the population remains vulnerable to price shocks, as entrenched poverty means a large proportion of household expenditure is spent on purchase of food items.

DRC’s eastern provinces have been subject to armed conflict for more than a decade. According to the UN, as of mid-June, at least 400,000 people were displaced in this region and long-term food security has been put at further risk, as civilians have been forced to flee from their fields during the crucial harvest period.Maplecroft also highlighted the countries of Chad (ranked 5th in the index), Niger (23), Mauritania (38), Mali (42), and Burkina Faso (45), as an important region to watch. Each of these countries has seen substantial increases in risk in the Food Security Risk Index over the last 3 years due to armed conflict, political instability, changing rainfall patterns and locust infections. Risks for the region are forecast to remain high.The impacts of food inflation in Arab states: Aside from being aggravated by conflict, food security issues can also create civil unrest and political instability when popula-tions are driven to stage large scale protests by inflationary pressures on staple foods. In 2011, rising food prices were a contributing factor to the protests in Tunisia and Egypt, which led to popular revolutions and inspired the ‘Arab Awakening’ across the Middle East and North African (MENA) region.Countries with the highest risk across MENA include Yemen (ranked 15th), Syria (16), Iraq (54) and Libya (58) all of which are classified as ‘high risk.’ Egypt (71) and Tunisia (100) are meanwhile categorized as ‘medium risk.’ The region remains at elevated levels of risk from reduced US and Russian crop production, as these countries rely heavily on cereal imports and are therefore vulnerable to market prices.The drivers of the ‘Arab Awakening’ were varied and complex and included long standing public anger at high levels of governmental corruption and oppressive tactics against populations and political opposition. When these factors combine with food insecurity, sparked by rising global prices, it can create an environment for social unrest and regime change. Identifying these markers is a key challenge in the identification of threats to political stability and business continuity. The Food Security Risk Index has been developed for governments, NGOs and businesses to use as a barometer to identify those countries which may be susceptible to famine and societal unrest stemming from food shortages and price fluctuations. Maplecroft reaches its results by evaluating the availability, access and stability of food supplies in 197 countries, as well as the nutritional and health status of populations.

n order to highlight the immense potential and invest-ment opportunities of textile industry in Pakistan, the 7th edition of IGATEX Pakistan, organised by FAKT Exhibitions Private Limited, was held at Lahore Interna-

tional Expo Centre during October 11 to 14, 2012. The event is termed as one of the largest and well established garment and textile machinery and accessories exhibitions in South Asia.Abbas Mooraj, Chairman TEXMAP inaugurated the four-day exhibition. The attendees termed the exhibition as a golden opportunity of developing business relations between local enterprises and the visiting delegates from across the world.The event was committed to create strong business alliances between Pakistan and the rest of the world by putting the local industry in the forefront. IGATEX Pakistan 2012 witnessed more than 446 companies from over 30 countries including China, India, US, Germany, Turkey, UK and other European countries, which displayed their latest textile machinery for all sorts of industry solutions. Various functioning and standalone demonstrations of several cutting edge industry tools and technology, such as the circular knitting machinery, bleaching and washing machines, fabric processing equipment and acces-sories, chemicals and dyes, cutting and laying apparatus, felting needles, and sewing machine attachments and parts were displayed in the event.

I

he Pakistan Embassy in Jakarta performed a Three- day exhibition of Pakistani carpets opened by H.E. Sanaullah, the Ambassador of the Islamic Republic of Pakistan to Indonesia on October 22, 2012.

Pakistani designs follow classic and traditional patterns enriched by dying techniques of the Indus valley. A large diplomatic community including Ambassadors from Turkey, Saudi Arabia, Morocco, Belarus, Serbia, Cuba, Nigeria, Bilo Russia, Syria and other diplomatic missions and business houses attended the opening ceremony. In his inaugural remarks, H.E. Sanaullah said that carpets symbolize luxury, comfort and aesthetic – beauty personified in weaving. Carpets which represent finer oriental and Islamic traditions constitute an important part of Pakistan exports today. The exhibition displayed exclusive new and semi antique carpets.

T

EVENTS

IGATEX Pakistan-2012

Pakistani carpets exhibitedin Jakarta

H.E. Sanaullah, the Ambassador of the Islamic Republic of Pakistan to Indonesia, addressing the opening ceremony of

carpet exhibition in Jakarta.


Tax Registration Scheme (TRS) 2012:The Federal Board of Revenue (FBR) has decided to take extreme measure of auctioning movable and immovable assets of the unregistered persons, who would fail to come into the tax net by making declarations under the Tax Registration Scheme (TRS) 2012.

Importers to face penalties for dishonored cheques:According to reports, the Federal Board of Revenue (FBR) has decided to invoke prosecution provisions of the Customs Act 1969 against importers, whose financial securities including post-dated cheques and bank guarantees could not be encashed for release of overstayed goods in the Customs bonded warehouses. Prosecution provisions would include imposition of heavy fines and penalties, auction of goods and other recovery measures available in the said law.

FBR to issue IT return form in Urdu:The Federal Board of Revenue has decided to issue income tax return form in Urdu language also to attract retailers and small and medium business units to voluntarily file their returns in national language.

FBR told to act against errant shop, factory owners:Finance Minister Dr. Abdul Hafeez Sheikh has directed the Federal Board of Revenue (FBR) to enforce the existing provi-sion of law for documentation of the economy making it compulsory for owners of shops, retail outlets and factories to prominently display National Tax Numbers (NTN).

FBR constitutes special monitoring teams to enforce display of NTNs: The Federal Board of Revenue (FBR) has constituted special monitoring teams in all major cities to conduct survey of markets and business centres to register thousands of shop-keepers, retailers and wholesalers not displaying their National Tax Number (NTNs) in the business outlets.The Board has reportedly issued instructions to all Regional Tax Offices (RTOs) for constitution of special monitoring teams to take action against the shopkeepers not displaying their NTNs at the business premises.According to the FBR’s instructions, as per provisions of Rule 83 of the Income Tax Rules 2002, it is mandatory for every person who has been issued a National Tax Number to display the same at a prominent place of business. Rule 83 says: “ Every person deriving income from business chargeable to tax has been issued with a NTN shall display the person’s NTN at a conspicuous place at every unit of business of the person.” Section 181 of the Income Tax Ordinance 2001 requires every person to obtain NTN, if he is deriving income chargeable to tax.







ovember 1989 was a significant period because it witnessed the beginning of the fall of the stubbornly controlled Soviet empire. The public unrest that started in Czechoslovakia and East

Germany in November 1989 marked the beginning of the end of the Soviet Union although it’s last Prime Minister Mikhail Gorbachev–a liberal–tried to convince other Soviet Republics to introduce reforms. He began that process with his ‘Perestroika Revolution” once he became the Secretary General of the Communist Party. In 1986, he offered to withdraw from Afghanistan, a process that was completed by end-1980. The costs of the ‘cold war’ and the over a decade long Afghan war impov-erished Russia, and hence, all the other Soviet Republics. Mikhail Gorbachev therefore could do little to reverse the process of collapse of the second super power, the US being the first, after WW-II. Soviet Union withdrew from Afghanistan after suffering a defeat at the hands of US-supported Mujahidin. The long war in Afghanistan did what US Secretary of State Zbigniew Brezinski called ‘giving the Soviet Union its Viet Nam’. The over a decade long Viet Nam war wiped out the wealth that the US had accumulated as a supplier of arms to both Allied and Axis powers until 1942. That’s why the US thought that a deadly war with the Soviet Union, in which the US used its proxies to fight on the battle fields, won’t just impoverish the Soviet Union but destroy it.After a student demonstration in Prague in early November 1989 was violently dispersed by the police, Czechoslovakia’s opposition groups organized them-selves as the ‘Civic Forum Movement’. Vaclav Havel, a prominent playwright and founding member of an anti-communist dissident movement–the “Charter 77”– emerged as the unofficial leader of that movement. His calls for a return to ‘liberal democratic traditions’ had led to his being imprisoned a number of times, the last time being in early November 1989.On November 24, after more than 300,000 Czechoslovaks gathered in the centre of Prague for the eighth consecu-tive day, Milos Jakes and several other senior communist leaders resigned. Alexander Dubcek, leader of the ‘Prague Spring’ in 1968 who had lived in exile since, finally returned to Prague to join Vaclav Havel, and was later elected Chairman of the Czechoslovak parliament, and Vaclav Havel became the president. The new republic however didn’t last long enough because differences between the Czechs and Slovaks began to mount as the Slovaks, forming the minority, blamed the Czech major-ity for economic segregation. Nevertheless, liberation of Czechoslovak was a major blow for the Soviet Union but the next blow was even more devastating for the Soviet Union–the unification of East and West Germany, for which as well the movement began in November 1989. This makes November a memorable month.

By the spring of 1989, large groups of East Germans began fleeing to West Germany via other East European countries that had liberalised travel restrictions to allow the dissidents to escape to other Republics. That is why, throughout 1989, East Germany’s hardliner communist leader Erich Honecker stubbornly defied Soviet Premier Mikhail Gorbachev’s calls for reform. It is no surprise that Honecker was forced out of office in October 1989. On November 9, the new regime removed practically every restriction on travel to West Germany, and several openings were made in the Berlin Wall. The very next day thousands of East Germans thronged these gates, and celebrated their new found freedom. During the next few days, over 3 million East Germans crossed over to West Germany. This was the beginning of the move-ment that eventually led to demolishing the Berlin Wall that had stood there dividing the German nation for nearly 45 years. The demolition of the Berlin Wall was telecast live on TV networks all over the world. The two parts of Germany were finally united on October 3, 1990. Unification of Germany was a land-mark achievement, which led at first to the creation of the European Common Market, then the European Union, and subsequently creation of the Euro. But the US and Britain couldn’t reconcile to the idea of a third currency becoming an internationally accepted medium of exchange, and since 1997–the year the Euro was launched–have been busy doing everything to under-mine the Euro’s global acceptability.The long Afghan war weakened a financially strapped Soviet Union, and resource shortfalls in other Soviet Republics led to widespread protests and chaos, which eventually resulted in the break-up of this super power. Soviet military intervention in Afghanistan to access the warm waters of the Arabian and Indian Oceans was a blunder but while the Soviet Union disappeared from the map of the world, the bloody war went on impoverishing the West because it opted to take over the mess that was left behind by the Soviet Union.

N

HISTORY

Start of the collapseof the Soviet Union

ICH becomes operational:The International Clearing House (ICH) has become operational and effective from October 1 in compliance with the Policy Directive dated August 13, 2012, issued by the Ministry of IT. ICH is now serving as a single termination exchange for all international, incoming voice traffic. Fourteen LDI operators will now share the total quantum of international voice traffic terminating in Pakistan. The business volume sharing mechanism, which will evolve over time, is said to be currently based on each operator’s historic share and infrastructure capacity.

Drug Regulatory Authority Bill passed:The National Assembly on October 16 unanimously passed ‘The Drug Regula-tory Authority of Pakistan Bill 2012’ to establish an authority to bring harmony in inter-provincial trade and commerce of drugs and therapeutic goods to regulate, manufacture, import, export, storage, distribution, sale of medical devices and drug research. The Drug Regulatory Authority will advise the federal government on issues relating to obligations and commitments with interna-tional organizations relating to therapeutic goods, including drugs, medicines and medical devices, besides developing ethical criteria on drug promotion, marketing, advertising and the rational use of drugs, including research and development. Under the law, the Authority shall undertake measures to ensure self-sufficiency in fields of drugs, medicines and allied therapeutic goods to create a conducive environment for manufacture, import and promotion of export.

Service charges on collection of shares:The National Clearing Company of Pakistan Limited (NCCPL) has reportedly imposed Rs. 3 per Rs. 100,000 as service charges on Capi-tal Gain Tax (CGT) calculation on share trading. NCCPL is reported to have collected around Rs. 2 million as service charges on CGT calculation for the period April-June 2012. The service charges for the remaining period would be charged/deducted once the calculation of CGT for the staid period completes.

CCP issues notice for violation of Competition Act:The Competition Commission of Pakistan (CCP) has issued a show-cause notice to a pharmaceutical firm Reckitt & Benckiser for its advertisement “9/10 women prefer Veet”, a claim being made without any reasonable basis. According to the notice, the advertisement is prima facie a violation of Section 10 of the Competition Act 2010 which deals with deceptive market-ing practices and prevents disseminating misleading and false information to the consumers.

All banks (including Islamic banks/branches) have to main-tain CRR at an average of 5.0 percent of total demand liabilities (including time deposits with tenor of less than 1 year) during the reserve maintenance period. However, daily minimum requirement is being reduced to 3 percent. Time liabilities (including time deposits with tenor of 1 year and above) will continue to be exempt from cash reserves.According to SBP, DFIs will continue to maintain CRR at 1.0 percent of their Time and Demand Liabilities (TDLs) during the reserve maintenance period. New measures are effective from October 12, 2012.

SBP signs agency agreement with PBoC: The People’s Bank of China (PBoC) Governor Dr. Zhou Xiaochuan and State Bank of Pakistan (SBP) Governor Yaseen Anwar signed an Agency Agreement regarding Bond Investment in the Interbank Bond Market of China, which permits the SBP to conduct investment activity in the Chinese Interbank Bond Market, the largest RMB denominated bond market with RMB 21.4 trillion turnover during 2011. The agreement is part of follow-up coopera-tion to the bilateral Currency Swap Agreement between the two central banks. Access to the Chinese Bond Market wll provide the necessary flexibility to SBP in diversifying and optimal management of foreign exchange reserves in order to meet the associated objectives.

SECP fines two insurance companies:The Securities and Exchange Comission of Pakistan (SECP) has imposed a fine of Rs. 0.5 million each on two insurance companies and issued a stern warning to another insurer for their defaults of different sections of the Insurance Ordinance 2000.In an order passed against M/s EFU General Insurance Limited, the SECP, has imposed a fine of Rs 500,000 for not complying with the provisions of Section 45 of the Ordinance, by not maintaining proper books and records of the Company relating to the claims. In another separate order, the SECP imposed a fine of Rs 500,000 on M/s East West Life Assurance Company Limited for non-compliance.

Asset management firms allowed to offer commodity schemes:The Securities and Exchange Commission of Pakistan (SECP) is learnt to have allowed asset management compa-nies to offer commodity schemes to investors taking into account the record appreciation in global commodity prices. The introduction of new class of commodity funds will facilitate asset management companies (AMCs) to broaden their product range by offering commodity schemes to investors in addition to their conventional equity, money market and income funds. This will also enable small inves-tors to take potential advantage of gains promised by the commodity market such as gold through pooled invest-ments being managed by professional fund managers.

ew men in history achieved as much as did Sir Syed Ahmed Khan. He created not just a university but a massive breeding

ground for nourishing generation after generation of the youth that turned the course of history for a nation that was shattered after its defeat on the battlefield in a war it fought to defend its values that had become out-dated, but it was not prepared to accept this harsh reality. The message of Sir Syed was to accept all the new realities and prepare to confront them. Sir Syed Ahmed Khan was born on Nov- ember 19, 1817. He witnessed the war of 1857 that ended whatever was left of a one-time all powerful Moughal Empire, and knew the reason of the collapse of that empire that was ended by the war that the victorious British later labeled as ‘The Indian Mutiny’. He therefore took it upon himself to correct history by writing his famous book the ‘Asbab-e-Baghawat-e-Hind’, or the causes of the Indian mutiny.After the British took over control of India, Sir Syed joined the civil service and was appointed a magistrate. During this assignment, his British civil service colleagues often used to make fun of the Moughal imperial systems, the biggest of the criticism being that it was not a constitutional monarchy like the British monarchy. Sir Syed then realized that, well before the British monarchy became constitutional, Moughal king Akbar-e-Azam had adopted the ‘Aaeen-e-Akbari’ making the monarchy subservient to a constitution. But that consti-tution was drafted in Persian. Thinking that it would be too much to ask of the British to read and understand ‘Aaeen-e-Akbari’, he quietly began translating it into Urdu.Once that massive task was over, he realized that he was not an expert of the Persian language and to ensure that the translation was error-free, he sought the editorial help of Mirza Ghalib, for whom he had enormous admiration. While Mirza Ghalib did the job of editing the translation he advised Sir Syed “mian tum kin chakaron mein par gaye ho, Aaeen-e-Akbari ka zamana gaya; ab daur hai jamhoor ka” (young man what have you got involved into; the age of Aaeen-e-Akbari is over; now it is the age of peoples’ democracy). Later on, when he stayed with Sir Syed for a few days on way to Delhi from Rampur, Mirza Ghalib told him about the eye-opening inventions of the British that he observed during his stay in Calcutta, and the huge gap in the knowledge base of the Indians that had, over time, rendered them vulnerable to foreign conquerors. During this dialogue lasting several days, Mirza Ghalib convinced Sir Syed to establish an educa-tional institution that could provide Muslim youth a sound knowledge base in modern sciences, besides a grasp over traditional subjects. Sir Syed pledged that he will fulfill the dream of Mirza Ghalib. Approximately five years after this event, Mirza Ghalib departed for the heavens.

After this meeting, in 1862 Sir Syed formed a scientific society, and thirteen years later, he assisted in setting up the Muhammadan Anglo-Oriental College, which prospered, and became the key intellectual center for Indian Muslims – The Aligarh Muslim University. The success of the college was due to his leadership and a curriculum combining Western and Oriental studies. Sir Syed's aim was not just to set up a college at Aligarh, but pursue the Muslims to acquire knowl-edge of modern sciences to lift them from the downfall suffered in 1857, and devoted whole of his life for this purpose. Sir Syed was that great reformer who gave a new direction to the Muslims of South Asia. To him, a grasp over the evolving sciences and

technology, and tampering it with our traditional values was the only solution for the problems faced by the Muslims.Sir Syed was that motivator, who launched a movement for Muslims to acquire modern education, and created a wave of awakening in them. He exhorted the youth to focus on their education, which was the solution to the problems they faced and was the reservoir that could give them the edge they had lost. To him success at the battle field was a temporary affair, but knowledge-based superiority was lasting and nations that sidelined its criticality were headed for ultimate annihilation. While he was a strong proponent of studying and research-ing the developing sciences and technologies he was a strong defender of our values, and pointed to the need for ridding them of their distortions and contradictions. This he boldly expressed in his articles written for the ‘Risala-e-Tehzeeb-ul-Akhlaq’. How much he eulogized the bright spots of history has been summed up in his other masterpiece called ‘Aasar- us-Sanadeed’, which is a highly technical book, describing the achievements of Indian Muslims in architecture, its design-ing and decor. For writing this masterpiece, for hours he would sit in a bucket hung from the top of the building with a rope, and slowly brought down as he noted details of the building design; there were no mechanised cranes at the time. To obtain donations for his cause, he could go to any extent. A shameless Nawab once asked him to dance in front of his courtiers to get a donation. Sir Syed did that; when criticized by his contemporary Akbar Allahabadi, for this act, Sir Syed said, “God knows my intentions.” Akbar went to the extent of composing a couplet saying,

Bhai Syed to kuch diwaney hainWoh bhala kis ki baat manein hain

Yet, Sir Syed was a visionary par excellence–key reformer of the 19th century who relentlessly worked to put the Muslims on route to salvation. Pakistan is the result of the grass root leadership Aligarh University generated, as acknowledged by the Quaid-e-Azam, who was often the chief guest at annual convocation functions of the Aligarh Muslim University.

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Sir Syed:a visionary par excellence

HISTORY


SE-100 index closed the first week at 15,754 points, up 2%WoW as the mar-

ket rallied on rate cut expec-tations. In the process, the KSE-100 index also brea- ched its all-time high of 15,676 points, achieved in Apr’08. There was pickup in trading activity with average daily volumes of 134mn compared with 95mn last week. The textile sector was in vogue during the week, amid a string of announce-ments, where textile compa-nies generally surprised with above line payouts. Cement sector scrips also witnessed brisk activity as expectations of rate cut as well as soft coal price outlook generated interest in the sector.The KSE-100 Index was volatile during the second week of the month, coming close to the 16,000 points mark but eventually closing at 15,694 points, down 0.4%WoW. In this regard, despite a de-escalation in political noise (SC acceptance of draft letter to be sent to Swiss authorities), the market was negatively impacted by a lower than anticipated 50bps cut in the Discount Rate amidst slower global growth projections by the IMF. Average daily volumes in the outgoing week were recorded at 117mn shares, down 13%WoW. The KSE-100 Index gained 0.63%WoW to close at 15,792 points in the third week. The market witnessed mixed movement during the week while average daily turnover was recorded at 120mn shares, up 3%WoW. Important news flow during the week included a Current Account surplus of US$432mn in 1QFY13 (deficit of US$331mn), conflicting developments post ICH implementation (revenue has started streaming in but nascent political opposition has surfaced) and above-target PSDP utilization (federal component) in 1QFY13. The KSE-100 Index continued to maintain the gradual upward momentum – the index rose 0.13% WoW to close at 15,812.72 points in the fourth week. Activity at the KSE picked up this week with average daily turnover rising by 10.89% WoW to 133.03mn shares. Market sentiment was driven by the result season which was in full season this week. Key news flows included i) devel-opments on long term gas supply to Sui based fertilizer plants, ii) robust textile export reading for Sep’12, which was up by 12.9%YoY/3.3% MoM, more importantly yarn exports rose by 40.8%YoY/ 28.3%MoM, and iii) US opposition over the ICH mechanism as well as LHC’s notification of suspension of MoIT’s notifica-tion on increase in international incoming call tariffs.


by Farhan Anwar

Asurvey was recently conducted by a local consult-ing group Sustainable Initiatives in collaboration with the International Restructuring Education Network Europe (IRENE) through which an assessment

was made of the citizen group’s knowledge, understanding and level of activism on matters of corporate social respon-sibility (CSR). In addition the general level of understanding on environmental issues and corresponding legislations in Pakistan, their connectivity with corporate sector environ-mental practices and compliance was also identified. The research type for analyzing the citizen group’s was Quantita-tive. The aim of the exercise was to prepare a baseline strate-gic framework of capacity building and action for citizen groups based on the findings and evaluation of the data to render the CSR process more effective.Prior to conducting the survey, a baseline review of the NGO sector in Pakistan was made to identify the thematic areas of work where most of the NGO efforts are being targeted. An evaluation of the credible NGO’s working in these areas was made with reference to the project objec-tives and a total of fifteen (15) NGO’s based in different parts of the country or having national and regional focus were short-listed to be included in the survey. The basis for final selection was credibility and diversity of work so that organizations active in different socio-economic surround-ings, tackling a range of environmental and social issues and having varied organizational and management systems find representation in the final list. While selecting the survey method, consideration was given to issues such as understanding of the problem, capacity to link cross-cutting issues with the overriding concern, levels of active advocacy and willingness to build capacity for better under-standing and relating with the environmental aspects of corporate social responsibility.Awareness on CSR practices and national envi-ronmental legislation/regulationThe section of the survey questionnaire that dealt with gauging the level of awareness of the citizen groups on matters of corporate social responsibility and relevant environmental legislations in Pakistan was aimed at identi-fying the understanding of the issue and perceptions and views on the subject. It was heartening to note that 73% of the surveyed groups were aware of the term corporate social responsibility. However, only 7% expressed satisfac-tion over the state of corporate environmental practices. It was a bit disconcerting to note that only 53% of the groups working in the environment sector expressed awareness and understanding of the relevant national rules and legislations. This statistic points to an urgent need for capacity building among the citizen groups as the basic requirement for active advocacy in a particular sector is knowledge and understanding of the applicable policy and legal framework. Of the 53% citizen groups that stated awareness of the legal framework, only 20% felt that the scope and quality of the environmental legislation was satisfactory, while all (100%) showed dissatisfaction

with performance of the relevant government regulatory agencies. Involvement with the corporate sector: Collabora-tive and adversarialA significant portion of the survey questionnaire was struc-tured to determine the existing relationship of any of the citizen groups with the corporate sector. It was important to know whether they have participated in any campaign activity against the corporate sector or received funding from the corporate sector for their projects and associated linkages. Such information can help establish the nature and pattern of the existing relationship between the corpo-rate sector and the NGO’s. It was found that while 33% of the groups had waged independent campaigns against the corporate sector, 40% of the surveyed NGO’s formed part of a group campaign. A significant statistic is that 20% of the NGO’s that stated that they had been part of a campaign effort against the corporate sector ended up initiating a litigation process and seeking the judiciary’s intervention. 33% claimed some form of success in achiev-ing their campaign objectives. An encouraging finding was that 47% of the citizen groups that were involved in the survey process had in some capacity assisted communities that had in some way been adversely affected by some corporate activity. Involvement of a more collaborative nature also seems to exist between the citizen groups and the corporate sector as 20% of the citizen groups have in the past been consulted by the corporate sector to seek input in the planning and implementation of corporate projects and activities while 33% of the citizen groups have received funds and have participated in the corporate social responsibility (CSR) activities of the corporate sector. Willingness to build capacity on CSR mattersThe section on ascertaining the willingness of the NGO’s to involve themselves in CSR matters and build their capac-ity for more informed and more pro-active engagement provided the most one sided and revealing results. 87% of the groups felt that citizen groups should act as watchdogs

SOCIAL ISSUES

Facilitating corporate compliance:Potential role of citizen groups

A continuous drop has been witnessed in gold prices over the month of October,

A steep fall in silver prices has been recorded in the month of October, 2012

over the environmen-tal practices of the corporate sector. All the citizen groups (100%) identified the need of building capacity to better under-stand matters related to environmental practices and CSR work of national and multi-national corporate ent-

erprises. An overwhelming 93% expressed willingness to participate in capacity building training programs while the same 93% showed keenness to link up with citizen groups outside Pakistan in campaigns related with the environmen-tal practices of corporate enterprises. These figures are most encouraging as they provide both the space and justification for planning capacity building exercises for the local citizen groups in the coming phase of the project aimed at enhancing their skills and capacities for more meaningful and pro-active engagement in ensuring respon-sible and transparent environmental and social practices of the corporate sector. Some of the key statistics that came out of the survey relate to the level of dissatisfaction felt by the citizen groups over the performance of both the government and the corpo-rate sector in meeting their environmental obligations and responsibilities. Only 7% felt that the corporate sector was doing a satisfactory job while an overwhelming 100% expressed their dissatisfaction with the quality of the regulation, enforcement/monitoring of environmental standards and legislations in the country. These statistics match well with the need identified by 87% groups that citizen bodies should act as watchdogs over the corporate sector environmental practices. The commitment of the citizen groups to this issue is further strengthened by the expressed desire of 93% groups to participate in training programs to better understand matters related to environ-mental practices of the corporate sector. The answers to certain survey questions were cross matc- hed and correlated to establish linkages, check validity of data and identify useful inter-relationships for accurate assessment and evaluation of the survey findings. Follow-ing are discussed the correlations: Correlation #1 - It was found that 60% of the groups that stated that they have waged campaigns against the corpo-rate sector also revealed that they have in some way been funded and have formed part of CSR projects of certain corporate enterprises. This correlation indicates both positive and negative trends in relationships and suggests that a significant percentage of even those groups that have campaigned against the corporate sector have also engaged in a collaborative relationship with the same sector, though not necessarily the same enterprise. Correlation #2 - An interesting correlation relates to the strong desire expressed by the citizen groups to build capacity for more informed and pro-active advocacy and action. All (100%) the citizen groups that had said that they had in the past waged successful campaigns against the corporate sector also stated the need and desire for further capacity building for better understanding of the issue. This statistic indicates a very positive attitude on the part of the

citizen groups and encourages putting into practice exercises aimed at training and capacity building of the citizen groups on CSR related matters. Correlation #3 - A correlation drawn between the groups that have campaigned against the corporate sector and those that have entered into litigation process suggests that consultative skills and mechanisms need to be strengthened for enhancing opportunities for amicable conflict resolution. It was found that 60% of the groups that initiated campaigns against the corporate sector ended up seeking the courts intervention to address their grievances. This is a high figure for litigation and suggests the need for improving the channels and forums for com-munication and dialogue between the citizen groups and the corporate sector.Correlation #4 - While 47% of the groups expressed their ignorance about the national rules and regulations that regulate the environmental practices of the corporate enter-prises in Pakistan, all of them (100%) said they were dissatis-fied with the performance of the government regulatory agencies. While their perception may be correct, neverthe-less there is definite need indicated here to build understand-ing among the citizen groups on the relevant policy and legislative frameworks so that they can act as better, more informed and educated pressure and advocacy groups. The analysis of the survey data has indicated that while the desire and willingness to act as watchdog and pressure groups for ensuring corporate compliance with stated environmental obligations is strong within the NGO commu-nity, the requisite knowledge and understanding on CSR matters and the national/international policy framework within which the corporate sector operates is lacking. However, what is encouraging is the expression of a strong desire to get trained and build capacity for more pro-active involvement. There is a need to raise consciousness and understanding of the target citizen groups on the follow-ing matters:• The concept and practice of corporate social responsibility• The applicable national/international policy/legislative frame-

works (such as the National Environmental Protection Act, OECD Guidelines etc.) • The role of the citizen groups as watchdogs/pressure groups

(methods of citizen advocacy and action research)

7% felt the corporate sector was doing

satisfactory job while 100% expressed

dissatisfaction with the quality of regulation,

enforcement ofenvironmental

standards and legislations.

86%

14%

Yes No

Citizen’s Role as Watchdogs


oday’s organizations face an increasingly complex set of risks. As a result, key internal and external stakeholders have increased their scrutiny of and expectations for risk management, raising signifi-

cant questions around risk and how it is addressed. The Enterprise Risk Management (ERM) provides a framework to understand and respond to business uncertainties and opportunities with relevant risk insight delivered through common, integrated risk identification, analysis and manage-ment disciplines. ERM enhances organizational resilience by improving decision making, strengthening governance and supporting a risk intelligent culture. In recent years, external factors have fueled a heightened interest by organizations in ERM. Industry and government regulatory bodies, as well as investors, have begun to scrutinize companies' risk-management policies and procedures. In an increasing number of industries, boards of directors are required to review and report on the adequacy of risk- manage-ment processes in the organizations they administer.Definition: According to the Casualty Actuarial Society (CAS), enterprise risk management is defined as: "The process by which organizations in all industries assess, control, exploit, finance and monitor risks from all sources for the purpose of increasing the organization's short and long term value to its stakeholders."The CAS then proceeds to enumerate the types of risk subject to enterprise risk management as hazard, financial, operational and strategic. Hazard risks are those risks that have traditionally been addressed by insurers, including fire, theft, windstorm,

liability, business interruption, pollution, health and pensions. Financial risks cover potential losses due to changes in financial markets, including interest rates, foreign exchange rates, commodity prices, liquidity risks and credit risk. Operational risks cover a wide variety of situations, including customer satisfaction, product development, product failure, trademark protection, corporate leadership, information technology, management fraud and information risk. Strategic risks include such factors as competition, customer preferences, technological innovation and regulatory or political impediments. Although there can be disagreement over which category would apply to a specific instance, the primary point is that enterprise risk management considers all types of risk an organization faces.

What is ERM? Enterprise risk management (ERM) is the process of planning, organizing, leading, and controlling the activities of an organization in order to minimize the effects of risk on an organization's capital and earnings. Enterprise risk management expands the process to include not just risks associated with accidental losses, but also financial, strategic, operational, and other risks.As a strategic business discipline, the Enterprise Risk Manage-ment (“ERM”) supports the achievement of an organization’s objectives by addressing the full spectrum of its risks and managing the combined impact of those risks as an interrelated risk portfolio. ERM represents a significant evolution beyond previous approaches to risk management in that it:1. Encompasses all areas of organizational exposure to risk (financial, operational, reporting, compliance, governance, strategic, reputational, etc.);2. Prioritizes and manages those exposures as an interrelated risk portfolio rather than as individual “silos”;3. Evaluates the risk portfolio in the context of all significant internal and external environments, systems, circumstances, and stakeholders;4. Recognizes that individual risks across the organization are interrelated and can create a combined exposure that differs from the sum of the individual risks;5. Provides a structured process for the management of all risks, whether those risks are primarily quantitative or qualita-tive in nature;6. Views the effective management of risk as a competitive advantage; and 7. Seeks to embed risk management as a component in all critical decisions throughout the organization.In essence, Enterprise Risk Management is the latest name for an overall risk management approach to business risks. A common thread of enterprise risk management is that the overall risks of the organization are managed in aggregate, rather than independently. Risk is also viewed as a potential profit opportunity, rather than as something simply to be minimized or eliminated. The level of decision making under enterprise risk management is also shifted, from the insurance risk manager, who would generally seek to control risk, to the chief executive officer, or board of directors, who would be willing to embrace profitable risk opportunities (Kawamoto, 2001).Historical Development: Risk management has been practiced for thousands of years. One can imagine a proto-risk manager burning a fire at night to keep wild animals away. Early lenders must have quickly learned to reduce the risk of loan defaults by limiting the amount loaned to any one individual and by restricting loans to those considered most likely to repay them. Individuals and firms could manage the risk of fire through the choice of building materials and safety practices, or after the introduction of fire insurance in 1667, by shifting it to an insurer. However, it wasn't until the 1960s that the field was formally named, principles developed and guidelines estab-lished. Robert Mehr and Bob Hedges, widely acclaimed as the fathers of risk management, enumerated the following steps

by K. Jehangeer Khan


TRAVEL & TOURISM

ravel and tourism is an important economic activ-ity in most of the countries around the world. It is one of the world’s largest industries that continue to grow in spite of the economic challenges.

Singapore is one of the shining stars in world travel and tourism industry. Lovingly referred to as ‘Lion City,’ it is acknowledged world-wide, as one of the most fascinating places for tourism and an iconic destination in the entire world where tourists from all over the globe converge in large numbers. An added characteristic of the country is that crime rates are the lowest in the world. Rich culture, rich heritage, unique traditions and fascinating lifestyle of the people here easily lure the visitors for fascinating vacation. The country offers a wide spectrum of tourists’ attractions all of which are no less than wonders worth visiting and exploring. Blessed with some of the most picturesque locations, beautiful architecture, fascinating river, fabulous parks and gardens and state-of-the–art museums Singapore offers the tourists unending excitement. The wildlife sanctuaries of Singapore are yet other impor-tant tourist attractions. They include the Singapore Zoo which is famous for the orangutan and small-clawed otter and reticulated python, The Jurong Bird Park which is famous for 600 different species of animals, The Underwa-ter World located on Sentosa which is home to different underwater animals, and The Butterfly Park and Insect Kingdom, etc. The Underwater World is the most adven-turous and thrilling oceanarium in the entire Asia and is truly the crowning glory of Singapore tourism. The country’s economy is predominantly based on services and manufacturing. In the second quarter of 2012 the economy grew by 2.0 percent. Its economy ranked in the top three countries in foreign trade and investment. Travel

and tourism make significant contribution to the country’s economy. The tourism industry accounts for 3 percent of the country’s GDP. Tourism Board of Singapore is actively working on the construction of new attractions and has successfully finished construction of two casinos- The Singapore Flyer, The Helix Bridge - and most recently the Marine Bay Sands. Some of the ‘must visiting’ tourist attractions in Singapore are Chinatown, Little India, Raffle Hotel, Night Safari, Sentosa Island, Supreme Court and City Hall, Jurong Bird- Park, Singapore Art Museum, Singpore Science Centre, Singapore Cable Car, Asian Civilization Museum, Changi Prison Chappel and Museum, Singapore Gardens, Bakit Timah Nature Resort, Chinese and Japanese Gardens.There ae many others to enthrall the visitors.Chinatown: It has ancient history dating as far back as 1821 when the first Chinese junk carrying immigrants arrived from Fujian province. Much of this historical place has been rebuilt yet it remains one of the most interesting areas to explore, with a lively street scene rich with tradi-tional architecture and customs. Its four main districts - Kreta Ayer, Telok Ayer, Tanjong Pagar and Bukit Pasoh - each have a distinctive flavour. The followers of all of the major religions in Singapore are to be found here. Little India: With colourful, noisy and crowded streets that reflect an important part of the island's history, Little India offers a completely different flavour of Singapore. For today's visitor, the attractions are mainly shopping, eating and places of worship. The Little India Arcade and Zhujiao Centre are newly converted shop-houses selling handicrafts, saris and spices, while fortune-tellers use small parrots to pick cards that will tell your future. Traditional and religious life is elaborately displayed at the magnificent

T

Singapore:An iconic destination

for the risk management process:1. Identifying loss exposures2. Measuring loss exposures3. Evaluating the different methods for handling risk Risk assumption Risk transfer Risk reduction4. Selecting a method5. Monitoring resultsA variety of risks confront organizations today, and any one of them could threaten an organization’s success and ultimately lead to a decrease in stakeholder value. The need for greater risk awareness by leaders is driven by much more than just terrorism. Forces such as globalization and the geopolitical environment in which organizations operate add complexity to business, thereby increasing risks. Technology and the Internet require companies to rethink their business models, core strategies, and target markets. Customers have ever-increasing demands for customized products and services leading to more risks. If customer expectations are not met, market share and, ultimately, revenue and profits can be significantly and quickly impacted.Organizations must also comply with increased regulations in some cases and deregulation in others, both of which drive risks. Mergers and restructurings are causing organizations to downsize and undergo changes in management responsibilities, which also create the potential for enterprise risks.As organizations grow in complexity and serve global markets, the leadership challenge is to understand fully how the various organizational units interact and relate, and, in turn, how the risks cut across the silos. Instead of managing risk in many individual silos, enterprise risk management (ERM) takes an integrated and holistic perspective on risks facing an organiza-tion. Risk centric leadership does not mean that the organiza-tion will be risk averse, but that it strives to identify, assess, and manage risks and, when taking risks, the leadership does so intentionally rather than unknowingly. The key is to take calcu-lated risks across the enterprise and appropriately manage and mitigate the risks for the benefit of the stakeholders.ERM Frameworks: A Global PerspectiveERM is a globally accepted and growing field. As a result, a number of risk frameworks and statements have been published by professional organizations around the world; such as:1. A Risk Management Standard by the Federation of Euro-pean Risk Management Association (FERMA);2.Australian/NewZealand Standard 4360—Risk Management;3.COSO’s Enterprise Risk Management—Integrated Frame-work;4. The Institute of Management Accountants’ (IMA);5. “A Global Perspective on Assessing Internal Control over Financial Reporting” (ICoFR); 6. Standard & Poor’s and ERMSome of the publications urge businesses to use these frame-works. Some of the documents were written by guidance- setting organizations such as COSO, while others were written by individuals with a wide range of backgrounds, including insurance, government, safety, and engineering. The different backgrounds lead to very different approaches in these risk frameworks. Some lean toward financial reporting and internal control, and others lean toward management, corporate gover-nance, and accountability. Some even try ambitiously to cover every possible aspect of risk. Still, enterprise risk management frameworks are valuable tools.

Basic Components of ERM FrameworkThe basic components found in most ERM frameworks are:• Set strategy and objectives,• Identify risks,• Assess risks,• Treat risks,• Control risks, and• Communicate and monitor.

Set Strategy and Objectives: The first step in the ERM framework requires an understanding and clarity of strategy and objectives. The opportunities that a company decides to pursue are articulated in its strategy and objectives. Risks are the events or actions that jeopardize the achievement of the strategy and related objectives. The identification of risk is dependent on clarity of objectives for the unit under analy-sis, which might be the overall organization, a strategic business unit, a function, an activity, a process, or a reporting and compliance requirement. ERM requires companies to state objectives clearly at every level of the organization where risks are identified—literally, from the workroom to the boardroom.Identify Risks: The goal in identifying risks is to produce a comprehensive list of risks and to assess them, narrowing the list down to the top risks facing the organization. Because of the diversity and complexity of risks, using several of the techniques on the list may be required to ensure that as many risks are identified as possible. If some risks fail to be identi-fied in the process, they may later lead to a major problem for the organization.Assess Risks: Once risks have been identified, risk assess-ment is the next step. A key to ERM is to know the risks the company can control and those over which it has little or no control. A second and related key is to know which risks can and cannot be measured. Knowing the importance of a risk through risk assessment can lead to better management and resource allocation. Further, knowing how that risk interre-lates with other risks in the organization can enhance ERM. Risks must be assessed or measured in some way. When a risk is identified, the implication is that it has some signifi-cance and can be ranked on some scale of importance. Risks can also be assessed using a low, medium, or high level of

temples of Sri Veeramakaliamman, Sri Srinivasa Perumal and Temple of 1000 Lights. During Hindu festivals, the area comes to life even more. Raffles Hotel: It was built in 1887 and subsequently declared a National Monument in 1987. It is Singapore's most famous landmark and considered as one of the world's greatest Victorian grand hotels. Somerset Maugham, Rudyard Kipling, Noel Coward and Charlie Chaplin made it a favourite retreat. There is a museum on the upper floor, houses fascinating Raffles memorabilia, with photographs of some of its more famous guests over the last 100 years, including Charlie Chaplin Elizabeth Taylor and Richard Burton.Sentosa Island: The tourist island, which attracted 19 million visitors in 2011, is located in the south of Singapore, consists of about 20-30 landmarks, such as Fort Siloso, which was built as a fortress to defend against the Japanese during World War II. It is a 'tropical isle of peace and tranquillity' in Singapore. Some of its biggest attractions include: Underwater World, one of Asia's largest tropical oceanariums with 2500 marine creatures in an 80m (262ft) submerged tunnel; Dolphin Lagoon, a water show with a pink dolphin; Volcano Land, which recreates a journey into the centre of the earth; the 37m (121ft) Merlion; and Magi-cal Sentosa, a musical fountain show twice every evening. Sentosa Island also offers beaches, golf, hotels and restau-rants, regional food and arts - all on an epic scale. There is a free monorail or bus around the island and visitors can jump off at any station. Jurong BirdPark: For those who love wild life, Jurong BirdPark is the place to visit and enjoy. This tourist attrac-tion in Singapore, managed by Wildlife Reserves Singapore, is a landscaped park, built on the western slope of Jurong Hill.This is one of the largest bird park in all of South-East Asia, and a refuge for more than 8000 birds of 600 differ-ent species from all over the world. Highlights include Waterfall Aviary, at 30m (98ft) the world's highest man- made waterfall; the South-East Asian Bird Aviary, where a thunderstorm is simulated every day at noon; and Jungle Jewels, featuring dazzling hummingbirds. At the Lodge on Flamingo Lake, visitors can dine surrounded by 1001 flamingos, or have breakfast on the Song Bird Terrace. One of the biggest attractions is the Penguin Parade, housing

more than 200 penguins of five species. An air-conditioned monorail covers the entire park. Singapore Cable Car: This is a new addition to Singa-pore's attractions that offers views of the city from an impressive height. Spanning over 1750m (5740ft), it is the first cable car in South-East Asia and the only one that crosses a harbour. The cable car stops at three stations - and visitors can board at all three. Each have beautiful, different views so the trip affords fantastic views of the sea. It is possible to travel in a glass-bottomed car, making the journey even more spectacular. Singapore Botanic Gardens: Epitomising the tropical island's luxuriant parks with a combination of primary jungle and elegantly laid-out flowerbeds and shrubs, The Singapore Botanic Gardens are a perfect respite from the city's urban landscape. Over 3000 species of plants thrive in the gardens, which also serve to educate and conserve. Spread over 52 hectares (128 acres), the gardens hold more than half a million plants, while the National Orchid Garden has the world's largest orchid display with over 60,000 plants. The gardens are also a venue for outdoor concerts. Chinese and Japanese Gardens: Spread over an area of 13-hectare (32.5-acre) Chinese Garden portrays the Impe-rial Sung Dynasty style, echoing the grandeur of the Beijing Summer Palace with its bridges and pagodas. It also has the largest Suzhou-style bonsai garden outside China, with over 1000 plants, as well as a seafood restaurant. The Japanese Garden, equally as big as the Chinese Garden, by contrast, emphasises Zen simplicity with stone lanterns, summer houses and Zen rock gardens. Classical Japanese motifs help create a soothing atmosphere. The Chinese Gardens also have the largest collection of tortoises and turtles in the world, with over 200 species. There are several others including The Orchard Road district, which is dominated by multi-story shopping centres and hotels and can be considered the center of tourism in Singapore; Boat Quay, a historical quay in Singapore which is situated upstream from the mouth of the Singapore River where shophouses have been carefully conserved and now house various bars, pubs and restaurants; Clarke Quay, a historical riverside quay and a buzzing party central in Singapore. and is situated even further upstream from the mouth of the Singapore River than Boat Quay.


impact or significance. In addition to the impact or signifi-cance of risks, the probability of a risk occurring should be considered. Once impact and probability are determined, a risk map can be generated as illustrated in Exhibit (Risk Map). Some companies display risk in zones on maps desig-nated by color, e.g., a risk in the green zone indicates a low dollar impact and probability of occurrence, the yellow zone indicates moderate risk, and the risks with the highest impact and likelihood are marked with red color.

Treat and Control Risks: After risks are identified and assessed, management must decide how to respond to them. One of the goals of ERM should be to make conscious decisions about risk. The actions that management might take for a given risk include: avoidance, reduction, sharing, and acceptance. Management determines its response to a risk by considering the impact a given decision will have the likelihood of the risk, and the costs and benefits of its action. The goal is to take actions that will bring the organization’s overall residual risk within its risk appetite. Risk tolerances may vary, but overall they should fall within the risk appetite approved by executive management and the board. Treating and controlling risks can require a variety of actions. For example, companies can implement new policies and controls, purchase derivatives, hire new management, or implement new training programs. This variety of risk treatment approaches signify why ERM is a much broader concept than financial reporting and internal control risk. Communicate and Monitor: The desired outcome for ERM is not that organizations become risk adverse, but that proactive, risk-based decision making is fostered at all levels of the organization and managers knowingly and intention-ally take risk while utilizing appropriate risk indicators. Accordingly, communication of risk-related information must flow down, across, and up the organization. Summary reports of risk assessments at the division or function level provide senior management with valuable information on

how middle management views the top risks facing the organization. Under ERM, monitoring is enhanced by incor-porating information on risk identification and assessment and identifying the owners of specific risks. Conclusion: ERM is a powerful management tool, but successful implementation requires education and training for managers and associates at all levels of the organization, includ-ing the board. In today’s risky world, companies can no longer rely on a silo approach to risk management. An integrated and holistic perspective of all the risks facing the organization is needed. A risk-centric organization does not avoid risks, but rather it knowingly takes risks aligned with its risk appetite. Integration of ERM with ongoing management activities serves to drive in risk management throughout a company. ERM is essential in today’s business environment, where companies are required to disclose risk factors in the finan-cial reports and the board of directors regularly questions top management about the company’s risk. The new focus on the concept of enterprise risk management provides an opportunity for risk managers to apply their well established and successful approaches to risk on a broader and more vital scale than previously. This is an excellent opportunity to advance the science of risk management.ReferencesAckerman, Shawna. 2001. The Enterprise in Enterprise Risk Management. Casualty Actuarial Society Enterprise Risk Manage-ment Seminar.ARI Risk Management Consultants. 2001. Enterprise Risk Management: The Intersection of Risk and Strategy. Casualty Actuarial Society Websites: http://www.casact.org/ research/ermsurv.htmFriedel, Wolfgang F. 2001. Enterprise Risk Management - Fad or Fact? CasualtyActuarial Society Enterprise Risk Management Seminar.Institute of Internal Auditors. 2001. Risk Management Readings (http://www.theiia.org)Kawamoto, Brian. 2001. Issues in Enterprise Risk Management: From Theory toApplication. Casualty Actuarial Society Spring Meeting.Mehr, Robert I. and Bob A. Hedges. 1963. Risk Management in the Business Enterprise. Basel Committee on Banking Supervision, International Convergence of CapitalMeasurement and Capital Standards, A Revised Framework, June 2004.Committee of Sponsoring Organizations of the Treadway Commis-sion (COSO), InternalControl—Integrated Framework:

by Taimoor Akhtar BhattiNobel Prize 2012

ward of the Nobel Prizes is an annual feature since 1901- the year when the prizes in Physics, Chemistry, Physiology or Medicine, Literature and Peace were first awarded. The Nobel Prize is

an international award administered by the Nobel Founda-tion in Stockholm, Sweden in recognition of exceptional achievements in a number of categories in pursuance of the will of the Swedish philanthropist inventor Alfred Nobel. The Nobel Prize is widely regarded as the most prestigious award. Each Nobel laureate is awarded a gold medal, a diploma, and a sum of money which is decided by Nobel Foundation yearly. As of 2012, each prize was worth 8 million SEK (c.US$1.2 million, €0.93 million).

Nobel Prize in Physiology and MedicineThe prestigious Nobel Prize for the year 2012 in Physiology and Medicine was shared by Sir John B. Gurdon and Shinya Yamanaka for their joint contri-butions to a method that reverses adult cells to pluripotent stem cells — cells with differentiating capabilities. In the 1950s, Gurdon discovered that mature cells retain the same genetic informa-tion they had as unspecified pluripotent cells, and in 1962, he demonstrated that a new organism could grow from the nucleus of an adult cell placed in a de-nucleated egg cell. This started the entire revolution of cloning, eventually leading to the cloning of mammals. Gurdon and Yamanaka’s research is profoundly significant in the area of regenerative medicine and the development of patient- specific cells. Though current procedures are efficacious,

there is controversy surrounding the destruction of embryos and fetuses. Because the methods developed by Gurdon and Yamanaka circumvent these controversies, they may very well be the foundation for a therapeutic revolution.

Nobel Prize in PhysicsOn October 9, Serge Haroche and David J. Wineland were declared the winners of the 2012 Nobel Prize in Physics. Haroche and Wineland are recognized for their development of experimental methods to measure and manipulate singular quantum systems. It was widely believed that single particles of matter or light could not be isolated from the environment without losing their quantum proper-ties. Wineland quashed these specula-tions by probing ionic quantum states of beryllium ions, while Haroche trapped and observed photons using microwaves and mirrors. Besides substantiating the claims of theoreti-cal quantum physics, Haroche and Wineland’s research may provide a basis for realizing quan-tum computing, a method of employing quantum proper-ties to represent data. Because quantum particles can be in more than one state simultaneously, a quantum computer could process data simultaneously, enabling ultrafast complex computations. Although Haroche and Wineland have showed that quantum computing is possible by enabling manipulations in a single quantum system, much more research needs to be done before a multisystem quan-tum computer can be produced.

A

SCIENCE & TECHNOLOGY

Sir John B. Gurdon

Shinya Yamanaka

David J. Wineland

Serge Haroche


Nobel Prize in ChemistryOn October 10, Robert J. Lefkowitz and Brian K. Kobilka were declared the winners of the 2012 Nobel Prize in Chemistry for uncovering a family of receptors called G-protein-coupled receptors (GPCRs), which transmit biological messages and regulate most of a cell’s physiological processes. Before the work of Lefkowitz and Kobilka, the mechanisms that permit-ted cells to sense their environment were unknown. In 2011, Kobilka capt- ured an image of one of these recep-tors being activated by a hormone via X-ray crystallography. The discovery has and will continue to provide insight into existing and potential medica-tions, most noticeably in the pharma-ceutical industry, since about half of all medications on the market target GPCRs.

Nobel Prize in Economic SciencesOn October 15, Alvin E. Roth and Lloyd S. Shapley were awarded the Nobel Prize in Economic Sciences for their work on market design and matching theory, which relate to how people and companies find and select one another for business. The research has examined organ exchange and the process of assigning students to schools, including Boston public schools. Mr. Roth’s system helps find the most efficient exchange of organs so that the most patients can be saved with the fewest number of pairs involved in a given trade. The idea is to try to diagnose why resource allocation systems are not working and how they can be engineered to produce effectively.

Nobel Prize in LiteratureOn October 11, Chinese writer Mo Yan was awarded the Nobel Prize in Literature for his literary works which combine “hallucinatory realism” with folk tales, history and contemporary life in China. Mo, who was once so destitute that he ate tree bark and weeds to survive, is the first Chinese national to win the $1.2 million litera-ture prize, awarded by the Swedish Academy. Mo Yan is a pen name which means “Don’t Speak”. His real name is Guan Moye and he was forced to drop out of primary school and herd cattle during China’s Cultural Revolution. Mo is best known in the West for his best seller book “Red Sorghum”, which portrayed the hardships endured by farmers in the early years of communist rule. His titles also include “The Republic of Wine”, a satire which uses cannibalism as a metaphor for Chinese self-destruction. The last Chinese-born winner was Gao Xingjian in 2000, although he was living in France by that time and had taken French citizenship.

Nobel Peace PrizeSurprisingly, the 2012 Nobel Peace Prize didn't go to any individual but to the European Union for promoting peace, democracy and human rights over six decades. Announcing the award in Oslo, Norway, on October 12 the Nobel Committee Chairman, Thorbjoern Jagland said the EU has transformed most of Europe "from a conti-nent of wars to a continent of peace". Over a seventy-year period, Germany and France had fought three wars. Today war between Germany and France is unthinkable. This shows how, through well-aimed efforts and by building up mutual confidence, historical enemies can become close partners. The introduction of democracy is a condition for membership in EU, thereby opening a new era in Euro-pean history. The prize for the EU came as a surprise to many at a time when European solidarity is facing its most daunting challenge in decades amid deep rifts between a south drowning in debt and a wealthier north, led by Germany, only reluctantly coming to the rescue. It was speculated before the announcement that the Malala Yousufzai, Pakistani female education activist, Abdul Sattar Edhi, Pakistani social activist, Maggie Gobran, a Coptic Christian nun who runs a children’s mission in Cairo and Nigerian religious leaders John Onaiyekan and Mohamed Sa’ad Abubakar, who have helped to calm their country’s Christian-Muslim violence this year would be among the most favourite contestants. The EU grew out of the tremendous devastation of World War II - fuelled by the conviction that ever-closer economic ties would make sure that centuries-old enemies never turned on each other again. However, some EU-member countries are accused of having caused the First and Second World Wars, some illegal regime changes in African countries such as Libya and other parts of the world under the auspices of the North Atlantic Treaty Organization. The Nobel Laureates will be occupying the center stage in Stockholm on 10 December when they would receive the Nobel Prize Medal, Nobel Prize Diploma and document confirming the Nobel Prize amount from King Carl XVI Gustaf of Sweden. However, the Nobel Peace Prize will be awarded to the winners in Oslo by the Chairman of the Norwegian Nobel Committee in the presence of King Harald V of Norway. An important part of the ceremony would be the presentation of the Nobel Lectures by the Nobel Laureates.

Brian K. Kobilka

Robert J. Lefkowitz

Lloyd S. Shapley

Alvin E. Roth

Mo Yan


fter the earlier six exhibitions that proved a success, the 7th ‘Expo Pakistan- 2012’ was held during 4 to 7 October, in Karachi Expo Centre. The inaugural ceremony of the event was

performed by the Governor of Sindh in Governor House on 3rd October, 2012. Senior Ministers, President, Federation of Pakistan Chamber of Commerce and Industry, diplomats, TDAP management, foreign delegates and those who set up their stalls in the exhibition also attended the ceremony.The exhibition showcased a wide variety of Pakistani prod-ucts ranging from textile, garments, surgical goods, food and grocery items, carpets, leather, jewelry, ceramics, sports goods, and pharmaceuticals to the buyers from more than 67 countries. Over 700 (Last year 582) trade delegates mainly from Sri Lanka, UK, Kuwait, USA, Japan, China, India, Australia, Korea and Europe attended the exhibition. Overall 356 exhibitors, who are the leading exporters of Pakistan, set up their stalls in Expo Pakistan recording a marked improvement over the last year when the number of exhibitors was 295. The exhibition was organized by the Trade Development Authority of Pakistan (TDAP) which greatly facilitated the foreign buyers by providing the services of interpreters in Chinese, Japanese, French, Spanish, Arabic, German and Russian. During the exhibition, security issues were one of the biggest concerns of foreign businessmen. They were deftly addressed by the TDAP and security agencies who provided fool-proof security arrangements for the partici-pants. During Expo Pakistan 2012 the Federal Minister for Commerce Makhdoom Amin Faheem met with high level delegations from India and Nigeria. The Chief Executive TDAP, Tahir Raza Naqvi and Secretary TDAP, Kabir Kazi also held meetings with the delegations from Hong Kong, Russia, Egypt, France, Bahrain, South Africa, Japan, Brazil, Kuwait, Afghanistan, Korea and China which evoked positive business results in terms of MoUs signed and the volume of businesses generated.An important aspect of the ‘Expo Pakistan’ was the ‘Business2Business’ meetings between Pakistani sellers and foreign buyers. It has been revealed by the TDAP officials that more than 1912 business meetings were held during the 4 days of the event. As per feedback received from the exhibitors, the meetings and negotiations culminated into business deals worth around US Dollar 350 Million.On special invitations of the exhibitors, various delegates visited the production units in different factories located in Karachi, Lahore, Sialkot, and Faisalabad for finalizing further business deals based on satisfaction derived from the inspection of the quality of production. Expo Pakistan 2012 generated an overall business of around US Dollar 690 Million as against the expectations of around $ 1 billion raised during soft launch of the event earlier in September. Memorandums of Understanding (MoUs) were also signed between different trade bodies and government organizations

and foreign associations. The Sindh Board of Investment (SBI) and DTS Inc Japan on (date) signed a memorandum of understanding (MoU) for the development of 250-acre Pak-Japan Special Economic Zone at Dhabeji, Sindh. Expressing his views on the occasion Sindh Board of Invest-ment (SBI) Chairman Zubair Motiwala said the Japanese would build all infrastructure facilities for the project while the SBI and Sindh government would assist them. The delegates from Japanese External Trade Organization visited all exhibition halls and showed keen interest in Pakistani products. TDAP Chief Executive Tahir Raza Naqvi announced that members of a Hong Kong based company met with project team of Kherpur Special Economic Zone and held talks with them for setting up a power plant worth $20 million. MoUs were signed by KCCI with: Pakistan Chamber of Commerce USA, Malaysia Chamber of Commerce, Russian Business Council Co-operation for Pakistan, Hong Kong Cable Council Co-operation, Pak Malaysia Business Council and Pak China Cultural Business Society. Malay Chamber of Com-merce Malaysia (MCCM) urged Malaysian entrepreneurs and businessmen to explore what it sees as “vast invest-ment opportunities” in the surgical instruments, textile and leather sectors in Pakistan. Malaysia attended the exhibition with their 57 member delegates. Besides, around 30 companies from UK, recruited by the Pakistan High Commission in London and the Pakistani Consulate in Manchester, also attended the exhibition and showed keen interest in Pakistani textile, agriculture, infor-mation technology, sports goods, home-ware and food items. The recent duty waiver from the European Union on 75 products from Pakistan is likely to encourage the British businesses to buy from Pakistan. UK is one of Pakistan's most important markets and that the bilateral trade between the two countries is on a steady rise due to the focused efforts and commitment of both the governments to achieve the target of Pounds 2.5 billion by the year 2015.Out of these fields, the surgical was one of the interests for many Europeans and North American guests and buyers. More than 16 Pakistani companies manufacturing surgical items showcased their products in the exhibition. Pakistani surgical goods are already being exported to US, Europe and Middle East in large quantity. Pakistan presents numerous and significant opportunities for investments aiming both at using Pakistan as an export base and at tapping into an emerging market with a rapidly growing middle class. Events like Expo Pakistan facilitate this exchange of people, knowledge and ideas and are crucial in achieving the objective of increasing bilateral trade between UK and Pakistan. Despite the multiple issues, the participation of hundreds of foreign buyers in the event was highly encouraging for Pakistan. International partici-pants at the exhibition will also develop new partnership and deepen existing ones, for the benefit of all stakeholders. This will also help in attracting foreign direct investment, which in recent times has showed a declining trend.

Wheel Chair that can climb stairs ife in a wheelchair is fraught with logistical problems, among them one being the need for ramps to circumnavigate even small steps. To overcome this problem, researchers at the Chiba Institute of Technology in Japan have developed a wheel-chair that can climb stairs steps, ditches, and other roadblocks. The best part is that

the design is completely user-friendly. The rider moves the device around just like a normal wheelchair, with a joystick that controls the speed and direction. However, if it detects that there is a step in the way, the wheels become legs that help lift the entire machine over the step. This technology also allows the chair to maintain level when it moves across slanted or uneven terrain. By dynamically adjusting the height of the wheels, the balance will remain intact. It is still a very nascent concept and further development is under way, but it’s a positive sign for the future. The scientists involved in the stair-climbing wheelchair say that this is still a concept, but they are confident that it can now be shown to the world. They say the main thing to work on now is fine-tuning the user experience. Group leader Shuro Nakajima explains that the chair, which is in fact a robot, has sensors in its 'feet' that detect the proximity and size of a step. The robot has five sensors on its feet, to see if there's anything nearby. The robot's various sensors can also assess a stair's size. Depending on when it hits the market and the price tag, this could be a major boon for wheelchair users in cities, where curbs and low steps abound.

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kidney-like organ grown from scratch in the lab has been shown to work in animals – an achievement that could be the prelude to growing spare kidneys for someone from their own stem cells. Donated kidneys are in huge demand worldwide. In the UK alone, there are 7200 people on the waiting list.

Christodoulos Xinaris of the Mario Negri Institute for Pharmacological Research in Bergamo, Italy, and his colleagues extracted cells from the kidneys of mouse embryos as they grew in the mother. The cells formed clumps that could be grown for a week in the lab to become "organoids" containing the fine plumbing of nephrons – the basic functional unit of the kidney. A human kidney can contain over 1 million nephrons. Next, Xinaris's team marinated the organoids in a chemical broth called vascular endothelial growth factor (VEGF), which makes blood vessels grow. Then they transplanted the organoids onto the kidneys of adult rats. The researchers then injected the animals with albumin proteins labeled with markers that give out light. They found that the kidney grafts successfully filtered the proteins from the bloodstream, proving that they could crudely perform the main function of real kidneys. This is the first kidney tissue in the world totally made from single cells. The final aim is to construct human tissues.

ALab-grown 'kidney' does its job in animals

SCIENCE & TECHNOLOGY

exus has unveiled a new version of the LF-LC hybrid sports coupe concept in a unique Opal Blue color. Lexus got the inspiration for the new color from the Australian outback which is home to the precious opal

stone. The LF-LC is powered by advanced Lexus Hybrid Drive engine that features a powerful and efficient combustion engine which generates 500 horsepower – the most of any Lexus hybrid. The high-energy battery pack is designed to deliver greater power from a smaller battery than those currently used in Lexus’ range of hybrid vehicles. The vehicle's exterior and interior styling was created by the Calty Design Research center in Newport Beach, California, which previously developed the exterior styling of the first generation Lexus SC coupe and the fourth generation Lexus GS.

LLexus unveils the LF-LC Hybrid Sports Coupe


o extend bilateral economic and business ties and to provide market access, the first ever Pak-US Business Opportunity Conference was held during 4-5 Octo-ber in London. The conference was co-hosted by the

United States Trade Representative (USTR), Embassy of Pakistan, Washington DC, Board of Investment, and Pakistan’s Commerce Ministry.Around 100 leading businessmen from private sector of both sides interacted and found ways to broaden the trade and invest-ment ties in the areas of energy, oil and gas exploration, textile, information technology, investment finance, capital funds, construction, transportation, steel, food and consumer goods.The Chairman, Board of Investment (BOI) Saleem H. Mandvi-walla led the Pakistani side while the Trade Representative from US side lead the American delegation. The US Special Repre-sentative for Pakistan and Afghanistan Daniel Feldman assisted the US side while Secretary Commerce, Muneer Qureshi, and Pakistan High Commissioner in UK, Wajid Shamul Hassan assisted BOI Chairman. Both sides would discuss the possibili-ties and potential for the private-public partnership for enhanc-ing cooperation between the two countries.The conference was significant as it was the first time a bilateral business initiative was taken between the two governments under the Pakistan-USA Trade & Investment Framework Agreement (TIFA). The Pakistan Private Investment Initiative (PPII) that would attract private investment for the Small and Medium Enterprises sector of Pakistan was also launched in London. The conference held sector specific breakout sessions on textiles, energy, access to finance, consumer goods and financial services. A US company, Case New Holland, termed its business in Pakistan successful and that they were attending the conference to seek opportunities for growth of their business in Pakistan.International Electric Power (IEP) President, Paul Daley, signed an agreement with Faysal Bank Pakistan with the support of Overseas Private Investment Corporation (OPIC) for revamp-ing and restarting the 94megawatt gas power plant in DHA,

Moon made from Earth

Roman coin hoard in St Albans

Planet with four Suns

DISCOVERY

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ne of the largest hoards of Roman gold coins ever discovered in the UK has been found in the St Albans district. A metal detectorist made the nationally-significant find of 159 Late Roman gold coins. A team from the district council’s museums service investigated the

site at the beginning of October and confirmed the find. The coins are in very good condition and were scattered across a fairly wide area. The coins date to the very end of Roman rule in Britain and there are practi-cally no other comparable gold hoards from that period because after AD 408 no further coin supplies reached Britain. According to David Thorold, curator at Verulamium Museum in St Albans, the coins – called solidus (plural – solidi) – date to the closing years of the Fourth Century. They were mostly struck in the Italian cities of Milan and Ravenna and issued under the Emperors Gratian, Valentinian, Theodosius, Arcadius and Honorius. During the period of the Roman occupation of Britain, coins were usually buried for two reasons. They were buried as a religious sacrifice to the gods, or as a secure store of wealth, with the aim of later recovery. Gold solidi were extremely valuable coins and were not traded or exchanged on a regular basis. They would have been used for large transac-tions such as buying land or goods by the shipload.

n international team of amateur and professional astronomers has discovered a planet whose skies are lit up by four suns -- the first known case of such a phenomenon. The planet, located about 5,000 light years from Earth, has been dubbed PH1 in honor of Planet

Hunters, a programme led by Yale University in the United States, which enlists volunteers to look for signs of new planets. PH1 is orbiting two suns, and in turn is orbited by a second distant pair of stars. Only six planets are known to orbit two stars, researchers say, and none of those are orbited by other distant stars. US citizen scientists and Planet Hunters participants Kian Jek and Robert Gagliano were the first to identify PH1. Their observations were then confirmed by a team of US and British researchers working in Hawaii. PH1 is a gas giant with a radius about 6.2 times that of Earth, making it slightly larger than Neptune. It orbits a pair of eclipsing stars that are 1.5 and 0.41 times the mass of the Sun roughly every 138 days.

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new theory put forward by Harvard scientists suggests the Moon was once part of the Earth that spun off after a giant collision with another body.In a paper published in the journal Science, Sarah Stewart and Matija

Ćuk claimed that the Earth was spinning much faster at the time the Moon was formed, and a day lasted only two to three hours. With the Earth spinning so quickly, a giant impact could have launched enough of the Earth's material to form a moon. Stewart is a professor of earth and planetary sciences at Harvard, and Ćuk, an astronomer and an investigator at the SETI Institute, which supports research into the search for extraterrestrial life. The latter was conducting post-doctoral research at Harvard. According to the new theory, the Earth later reached its current rate of spinning through gravitational interaction between its orbit around the Sun and the Moon's orbit around the Earth. The scientists noted that their proposition differed from the current leading theory, which holds that the Moon was created from material from a giant body that struck the Earth


n order to highlight the immense potential and invest-ment opportunities of textile industry in Pakistan, the 7th edition of IGATEX Pakistan, organised by FAKT Exhibitions Private Limited, was held at Lahore Interna-

tional Expo Centre during October 11 to 14, 2012. The event is termed as one of the largest and well established garment and textile machinery and accessories exhibitions in South Asia.Abbas Mooraj, Chairman TEXMAP inaugurated the four-day exhibition. The attendees termed the exhibition as a golden opportunity of developing business relations between local enterprises and the visiting delegates from across the world.The event was committed to create strong business alliances between Pakistan and the rest of the world by putting the local industry in the forefront. IGATEX Pakistan 2012 witnessed more than 446 companies from over 30 countries including China, India, US, Germany, Turkey, UK and other European countries, which displayed their latest textile machinery for all sorts of industry solutions. Various functioning and standalone demonstrations of several cutting edge industry tools and technology, such as the circular knitting machinery, bleaching and washing machines, fabric processing equipment and acces-sories, chemicals and dyes, cutting and laying apparatus, felting needles, and sewing machine attachments and parts were displayed in the event.







nternational cricket returns to Pakistan for the first time since the Sri Lanka team was attacked in 2009, but a resumption of tours by overseas sides remains a distant prospect. An International World XI captained by Sri Lankan legend Sanath Jayasuriya and featuring several former South African and West Indian

Test players played with Pakistan All Stars side in two exhibition Twenty 20s at National Stadium Karachi on 20th and 21st October. The first match was led by Shahid Afridi while Shoaib Malik captained the second one. The matches were organized by provincial sports minister Dr. Mohammad Ali Shah sending positive signals to the cricketing world. Around 5000 police and paramilitary officials were deputed for the safety of players. Pakistan squad won both the matches. In the first T20 match, Pakistan XI scored 222 runs for the loss of 7 wickets. Umar Akmal (67R/37B - not out) and Shahzaib Hassan (54R/21B) were the lead scorers from Pakistani side. Tabish Khan grabbed 3 wickets for 25 runs. From the World XI side, Shapoor Zadran from Afghanistan scored leading 42 runs of 51 balls. The World XI scored 138 runs for 8 t the end of 20 overs. In the 2nd T20 match, World XI scored 142 runs for the loss of 9 wickets. Nantie Hayward from South Africa played an aggressive 42 runs inning of 16 balls with 4 sixes and 3 fours. He was the lead scorer from World XI side. From the Pakistan XI side, Imran Nazir made 53 runs on 33 balls with 5 sixes and 4 fours. Pakistan XI chased the target in 16.4 overs with a speedy run rate of 8.70 runs per over. Steven Taylor grabbed 3 wickets for 22 runs. Pakistan XI Squad: Shahid Afridi (Capt), Younis Khan, Nasir Jamshed, Asad Shafiq, Shahzaib Hasan, Khalid Latif, Umar Akmal, Fawad Alam, Shoaib Malik, Umar Gul, Mohammad Sami, Wahab Riaz, Sarfraz Ahmed (wicketkeeper) and Imran Nazir.World XI Squad: Sanath Jayasuriya (Capt), Ricardo Powell (West Indies), Steven Taylor (West Indies), Jermaine Lawson (West Indies), Adam Sanford (West Indies), Justin Kemp (South Africa), Loots Bosman (South Africa), Andre Nel (South Africa), Andre Seymore (South Africa), Nantie Hayward (South Africa), Shapoor Zadran (Afghanistan) and Mohammad Shahzad (Afghanistan).

Asian Championship for Ju-Jitsu & Belt Wrestling Sports was held in Iran during 18-22 October. Over 150 players representing Iran, Kyrgyzstan, Thailand, Pakistan, India, Iraq, Vietnam, and Afghanistan participated in this mega event and won laurels for their respective countries. The National team of Pakistan which participated in the event with only 4 players including one girl gave a display of an outstanding performance

and secured 10 Medals, including 01 Gold, 04 Silver and 05 Bronze Medals in different weight categories and disci-plines such as Duo System, Fighting System and Belt Wrestling Classical Style and Free Style events. A young pair of Mohammad Ammar & Abu Hurrerra secured first Gold Medal for Pakistan in Men-Duo System, whereas Abu Hurrera secured Silver Medal in 62 Kg Fighting System, and Bronze Medal in Belt Wrestling Free Style and Bronze in Classic Style. Mohammad Ammar, secured Bronze Medal in 69 Kg Fighting event and also secured Bronze in BW Classic with another Bronze Medal in free style BW event. Mohammad Irfan of Pakistan won Silver medal in 77kg fighting event. The only female participant from Pakistan, Sundas Islam Khan, was awarded Silver medal in 49kg Fight-ing System and another silver Medal in 48 kg event of BW.

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SPORTS

Pakistan XI vs. World XI T20 Matches

4th Asian Championship for Ju-Jitsu

4th

Dr. Mohammad Ali Shah and captainsof both teams with trophy

Group photo of the Pakistani team at the event

ovember 1989 was a significant period because it witnessed the beginning of the fall of the stubbornly controlled Soviet empire. The public unrest that started in Czechoslovakia and East

Germany in November 1989 marked the beginning of the end of the Soviet Union although it’s last Prime Minister Mikhail Gorbachev–a liberal–tried to convince other Soviet Republics to introduce reforms. He began that process with his ‘Perestroika Revolution” once he became the Secretary General of the Communist Party. In 1986, he offered to withdraw from Afghanistan, a process that was completed by end-1980. The costs of the ‘cold war’ and the over a decade long Afghan war impov-erished Russia, and hence, all the other Soviet Republics. Mikhail Gorbachev therefore could do little to reverse the process of collapse of the second super power, the US being the first, after WW-II. Soviet Union withdrew from Afghanistan after suffering a defeat at the hands of US-supported Mujahidin. The long war in Afghanistan did what US Secretary of State Zbigniew Brezinski called ‘giving the Soviet Union its Viet Nam’. The over a decade long Viet Nam war wiped out the wealth that the US had accumulated as a supplier of arms to both Allied and Axis powers until 1942. That’s why the US thought that a deadly war with the Soviet Union, in which the US used its proxies to fight on the battle fields, won’t just impoverish the Soviet Union but destroy it.After a student demonstration in Prague in early November 1989 was violently dispersed by the police, Czechoslovakia’s opposition groups organized them-selves as the ‘Civic Forum Movement’. Vaclav Havel, a prominent playwright and founding member of an anti-communist dissident movement–the “Charter 77”– emerged as the unofficial leader of that movement. His calls for a return to ‘liberal democratic traditions’ had led to his being imprisoned a number of times, the last time being in early November 1989.On November 24, after more than 300,000 Czechoslovaks gathered in the centre of Prague for the eighth consecu-tive day, Milos Jakes and several other senior communist leaders resigned. Alexander Dubcek, leader of the ‘Prague Spring’ in 1968 who had lived in exile since, finally returned to Prague to join Vaclav Havel, and was later elected Chairman of the Czechoslovak parliament, and Vaclav Havel became the president. The new republic however didn’t last long enough because differences between the Czechs and Slovaks began to mount as the Slovaks, forming the minority, blamed the Czech major-ity for economic segregation. Nevertheless, liberation of Czechoslovak was a major blow for the Soviet Union but the next blow was even more devastating for the Soviet Union–the unification of East and West Germany, for which as well the movement began in November 1989. This makes November a memorable month.

By the spring of 1989, large groups of East Germans began fleeing to West Germany via other East European countries that had liberalised travel restrictions to allow the dissidents to escape to other Republics. That is why, throughout 1989, East Germany’s hardliner communist leader Erich Honecker stubbornly defied Soviet Premier Mikhail Gorbachev’s calls for reform. It is no surprise that Honecker was forced out of office in October 1989. On November 9, the new regime removed practically every restriction on travel to West Germany, and several openings were made in the Berlin Wall. The very next day thousands of East Germans thronged these gates, and celebrated their new found freedom. During the next few days, over 3 million East Germans crossed over to West Germany. This was the beginning of the move-ment that eventually led to demolishing the Berlin Wall that had stood there dividing the German nation for nearly 45 years. The demolition of the Berlin Wall was telecast live on TV networks all over the world. The two parts of Germany were finally united on October 3, 1990. Unification of Germany was a land-mark achievement, which led at first to the creation of the European Common Market, then the European Union, and subsequently creation of the Euro. But the US and Britain couldn’t reconcile to the idea of a third currency becoming an internationally accepted medium of exchange, and since 1997–the year the Euro was launched–have been busy doing everything to under-mine the Euro’s global acceptability.The long Afghan war weakened a financially strapped Soviet Union, and resource shortfalls in other Soviet Republics led to widespread protests and chaos, which eventually resulted in the break-up of this super power. Soviet military intervention in Afghanistan to access the warm waters of the Arabian and Indian Oceans was a blunder but while the Soviet Union disappeared from the map of the world, the bloody war went on impoverishing the West because it opted to take over the mess that was left behind by the Soviet Union.


QUOTES

“The extremists attacked Malala because they were scared of the power of her vision,” - Prime Minister Pakistan, Raja Pervez Ashraf, stated condemning attack on Malala after visiting her, at Armed Forces Institute of Cardiology, 12th October.

“My stand on drones is very clear. Drone attacks must stop. I did not say sorry to them, I still couldn’t understand why they did this. The official was questioning me about drones but I think he himself didn’t understand what he was talking about,” - President PTI, Imran Khan, said about his stance on drone strikes at fund raising event at New York city, 26th October.

"We are not a people to retreat on the nuclear issue, if some-body thinks they can pressure Iran, they are certainly wrong and they must correct their behavior"- Iranian President Mehmood Ahmadinejad, stated in a press conference at Tehran, 2nd October.

“I am deeply disappointed that the parties failed to respect the call to suspend fighting, this crisis cannot be solved with more weapons and bloodshed.” - Ban Ki-moon, Secretary General United Nations stated about bloodshed in Syria, at ceremony in the Republic of Korea at which he received the Seoul Peace Prize, 30th October.

“The President has tried, but his policies haven't worked. He's great as a speaker, and describing his plans and vision. That's wonderful, except we have a record to look at.” - US Presidential candidate Mitt Romney stated in his election campaign debate at Florida, a battleground State, 22nd October.

“Iran is not popular in the Arab world, far from it, and some governments in the region, as well as their citizens, have under-stood that a nuclear armed Iran would be dangerous for them, not just for Israel,” - Israeli Prime Minister Benjamin Netanyahu, said in an interview to French Magazine ‘Paris Match’, 30th October.

"You seem to want to import the foreign policy of the 1980s, just like the social policies of the 1950s and the economic policies of the 1920s."- US President Obama criticized Romney at Presidential election campaign debate at Florida, 22nd October.

ew men in history achieved as much as did Sir Syed Ahmed Khan. He created not just a university but a massive breeding

ground for nourishing generation after generation of the youth that turned the course of history for a nation that was shattered after its defeat on the battlefield in a war it fought to defend its values that had become out-dated, but it was not prepared to accept this harsh reality. The message of Sir Syed was to accept all the new realities and prepare to confront them. Sir Syed Ahmed Khan was born on Nov- ember 19, 1817. He witnessed the war of 1857 that ended whatever was left of a one-time all powerful Moughal Empire, and knew the reason of the collapse of that empire that was ended by the war that the victorious British later labeled as ‘The Indian Mutiny’. He therefore took it upon himself to correct history by writing his famous book the ‘Asbab-e-Baghawat-e-Hind’, or the causes of the Indian mutiny.After the British took over control of India, Sir Syed joined the civil service and was appointed a magistrate. During this assignment, his British civil service colleagues often used to make fun of the Moughal imperial systems, the biggest of the criticism being that it was not a constitutional monarchy like the British monarchy. Sir Syed then realized that, well before the British monarchy became constitutional, Moughal king Akbar-e-Azam had adopted the ‘Aaeen-e-Akbari’ making the monarchy subservient to a constitution. But that consti-tution was drafted in Persian. Thinking that it would be too much to ask of the British to read and understand ‘Aaeen-e-Akbari’, he quietly began translating it into Urdu.Once that massive task was over, he realized that he was not an expert of the Persian language and to ensure that the translation was error-free, he sought the editorial help of Mirza Ghalib, for whom he had enormous admiration. While Mirza Ghalib did the job of editing the translation he advised Sir Syed “mian tum kin chakaron mein par gaye ho, Aaeen-e-Akbari ka zamana gaya; ab daur hai jamhoor ka” (young man what have you got involved into; the age of Aaeen-e-Akbari is over; now it is the age of peoples’ democracy). Later on, when he stayed with Sir Syed for a few days on way to Delhi from Rampur, Mirza Ghalib told him about the eye-opening inventions of the British that he observed during his stay in Calcutta, and the huge gap in the knowledge base of the Indians that had, over time, rendered them vulnerable to foreign conquerors. During this dialogue lasting several days, Mirza Ghalib convinced Sir Syed to establish an educa-tional institution that could provide Muslim youth a sound knowledge base in modern sciences, besides a grasp over traditional subjects. Sir Syed pledged that he will fulfill the dream of Mirza Ghalib. Approximately five years after this event, Mirza Ghalib departed for the heavens.

After this meeting, in 1862 Sir Syed formed a scientific society, and thirteen years later, he assisted in setting up the Muhammadan Anglo-Oriental College, which prospered, and became the key intellectual center for Indian Muslims – The Aligarh Muslim University. The success of the college was due to his leadership and a curriculum combining Western and Oriental studies. Sir Syed's aim was not just to set up a college at Aligarh, but pursue the Muslims to acquire knowl-edge of modern sciences to lift them from the downfall suffered in 1857, and devoted whole of his life for this purpose. Sir Syed was that great reformer who gave a new direction to the Muslims of South Asia. To him, a grasp over the evolving sciences and

technology, and tampering it with our traditional values was the only solution for the problems faced by the Muslims.Sir Syed was that motivator, who launched a movement for Muslims to acquire modern education, and created a wave of awakening in them. He exhorted the youth to focus on their education, which was the solution to the problems they faced and was the reservoir that could give them the edge they had lost. To him success at the battle field was a temporary affair, but knowledge-based superiority was lasting and nations that sidelined its criticality were headed for ultimate annihilation. While he was a strong proponent of studying and research-ing the developing sciences and technologies he was a strong defender of our values, and pointed to the need for ridding them of their distortions and contradictions. This he boldly expressed in his articles written for the ‘Risala-e-Tehzeeb-ul-Akhlaq’. How much he eulogized the bright spots of history has been summed up in his other masterpiece called ‘Aasar- us-Sanadeed’, which is a highly technical book, describing the achievements of Indian Muslims in architecture, its design-ing and decor. For writing this masterpiece, for hours he would sit in a bucket hung from the top of the building with a rope, and slowly brought down as he noted details of the building design; there were no mechanised cranes at the time. To obtain donations for his cause, he could go to any extent. A shameless Nawab once asked him to dance in front of his courtiers to get a donation. Sir Syed did that; when criticized by his contemporary Akbar Allahabadi, for this act, Sir Syed said, “God knows my intentions.” Akbar went to the extent of composing a couplet saying,

Bhai Syed to kuch diwaney hainWoh bhala kis ki baat manein hain

Yet, Sir Syed was a visionary par excellence–key reformer of the 19th century who relentlessly worked to put the Muslims on route to salvation. Pakistan is the result of the grass root leadership Aligarh University generated, as acknowledged by the Quaid-e-Azam, who was often the chief guest at annual convocation functions of the Aligarh Muslim University.

E�ective communication has always been regarded as essential and important. Especially in the present era of information over-load, importance of e�ective communication has increased manifold. Writing is an Art and an essential part of e�ective com-munication. The ability to think creatively and write clearly, con-cisely and convincingly is not a closed preserve of some selected individuals or groups of individuals. This may come to anyone, anywhere, anytime. If you have original ideas and wield a facile pen, you are most cor-dially invited to use it for writing research papers and articles on topical subjects for Value Chain, a monthly publication. The magazine covers Global & National Economy, Politics, Bank-ing & Finance, Agriculture, Trade & Industry, Social Issues besides Art & Literature, History, Science, Games & Sports, Book Review etc. – subjects that will be of interest to any reader, no matter how intensely he or she may be involved in economic matters and issues.

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INVITATION TO WRITERSINVITATION TO WRITERS

Chief Editor

survey was recently conducted by a local consult-ing group Sustainable Initiatives in collaboration with the International Restructuring Education Network Europe (IRENE) through which an assessment

was made of the citizen group’s knowledge, understanding and level of activism on matters of corporate social respon-sibility (CSR). In addition the general level of understanding on environmental issues and corresponding legislations in Pakistan, their connectivity with corporate sector environ-mental practices and compliance was also identified. The research type for analyzing the citizen group’s was Quantita-tive. The aim of the exercise was to prepare a baseline strate-gic framework of capacity building and action for citizen groups based on the findings and evaluation of the data to render the CSR process more effective.Prior to conducting the survey, a baseline review of the NGO sector in Pakistan was made to identify the thematic areas of work where most of the NGO efforts are being targeted. An evaluation of the credible NGO’s working in these areas was made with reference to the project objec-tives and a total of fifteen (15) NGO’s based in different parts of the country or having national and regional focus were short-listed to be included in the survey. The basis for final selection was credibility and diversity of work so that organizations active in different socio-economic surround-ings, tackling a range of environmental and social issues and having varied organizational and management systems find representation in the final list. While selecting the survey method, consideration was given to issues such as understanding of the problem, capacity to link cross-cutting issues with the overriding concern, levels of active advocacy and willingness to build capacity for better under-standing and relating with the environmental aspects of corporate social responsibility.Awareness on CSR practices and national envi-ronmental legislation/regulationThe section of the survey questionnaire that dealt with gauging the level of awareness of the citizen groups on matters of corporate social responsibility and relevant environmental legislations in Pakistan was aimed at identi-fying the understanding of the issue and perceptions and views on the subject. It was heartening to note that 73% of the surveyed groups were aware of the term corporate social responsibility. However, only 7% expressed satisfac-tion over the state of corporate environmental practices. It was a bit disconcerting to note that only 53% of the groups working in the environment sector expressed awareness and understanding of the relevant national rules and legislations. This statistic points to an urgent need for capacity building among the citizen groups as the basic requirement for active advocacy in a particular sector is knowledge and understanding of the applicable policy and legal framework. Of the 53% citizen groups that stated awareness of the legal framework, only 20% felt that the scope and quality of the environmental legislation was satisfactory, while all (100%) showed dissatisfaction

with performance of the relevant government regulatory agencies. Involvement with the corporate sector: Collabora-tive and adversarialA significant portion of the survey questionnaire was struc-tured to determine the existing relationship of any of the citizen groups with the corporate sector. It was important to know whether they have participated in any campaign activity against the corporate sector or received funding from the corporate sector for their projects and associated linkages. Such information can help establish the nature and pattern of the existing relationship between the corpo-rate sector and the NGO’s. It was found that while 33% of the groups had waged independent campaigns against the corporate sector, 40% of the surveyed NGO’s formed part of a group campaign. A significant statistic is that 20% of the NGO’s that stated that they had been part of a campaign effort against the corporate sector ended up initiating a litigation process and seeking the judiciary’s intervention. 33% claimed some form of success in achiev-ing their campaign objectives. An encouraging finding was that 47% of the citizen groups that were involved in the survey process had in some capacity assisted communities that had in some way been adversely affected by some corporate activity. Involvement of a more collaborative nature also seems to exist between the citizen groups and the corporate sector as 20% of the citizen groups have in the past been consulted by the corporate sector to seek input in the planning and implementation of corporate projects and activities while 33% of the citizen groups have received funds and have participated in the corporate social responsibility (CSR) activities of the corporate sector. Willingness to build capacity on CSR mattersThe section on ascertaining the willingness of the NGO’s to involve themselves in CSR matters and build their capac-ity for more informed and more pro-active engagement provided the most one sided and revealing results. 87% of the groups felt that citizen groups should act as watchdogs

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over the environmen-tal practices of the corporate sector. All the citizen groups (100%) identified the need of building capacity to better under-stand matters related to environmental practices and CSR work of national and multi-national corporate ent-

erprises. An overwhelming 93% expressed willingness to participate in capacity building training programs while the same 93% showed keenness to link up with citizen groups outside Pakistan in campaigns related with the environmen-tal practices of corporate enterprises. These figures are most encouraging as they provide both the space and justification for planning capacity building exercises for the local citizen groups in the coming phase of the project aimed at enhancing their skills and capacities for more meaningful and pro-active engagement in ensuring respon-sible and transparent environmental and social practices of the corporate sector. Some of the key statistics that came out of the survey relate to the level of dissatisfaction felt by the citizen groups over the performance of both the government and the corpo-rate sector in meeting their environmental obligations and responsibilities. Only 7% felt that the corporate sector was doing a satisfactory job while an overwhelming 100% expressed their dissatisfaction with the quality of the regulation, enforcement/monitoring of environmental standards and legislations in the country. These statistics match well with the need identified by 87% groups that citizen bodies should act as watchdogs over the corporate sector environmental practices. The commitment of the citizen groups to this issue is further strengthened by the expressed desire of 93% groups to participate in training programs to better understand matters related to environ-mental practices of the corporate sector. The answers to certain survey questions were cross matc- hed and correlated to establish linkages, check validity of data and identify useful inter-relationships for accurate assessment and evaluation of the survey findings. Follow-ing are discussed the correlations: Correlation #1 - It was found that 60% of the groups that stated that they have waged campaigns against the corpo-rate sector also revealed that they have in some way been funded and have formed part of CSR projects of certain corporate enterprises. This correlation indicates both positive and negative trends in relationships and suggests that a significant percentage of even those groups that have campaigned against the corporate sector have also engaged in a collaborative relationship with the same sector, though not necessarily the same enterprise. Correlation #2 - An interesting correlation relates to the strong desire expressed by the citizen groups to build capacity for more informed and pro-active advocacy and action. All (100%) the citizen groups that had said that they had in the past waged successful campaigns against the corporate sector also stated the need and desire for further capacity building for better understanding of the issue. This statistic indicates a very positive attitude on the part of the

citizen groups and encourages putting into practice exercises aimed at training and capacity building of the citizen groups on CSR related matters. Correlation #3 - A correlation drawn between the groups that have campaigned against the corporate sector and those that have entered into litigation process suggests that consultative skills and mechanisms need to be strengthened for enhancing opportunities for amicable conflict resolution. It was found that 60% of the groups that initiated campaigns against the corporate sector ended up seeking the courts intervention to address their grievances. This is a high figure for litigation and suggests the need for improving the channels and forums for com-munication and dialogue between the citizen groups and the corporate sector.Correlation #4 - While 47% of the groups expressed their ignorance about the national rules and regulations that regulate the environmental practices of the corporate enter-prises in Pakistan, all of them (100%) said they were dissatis-fied with the performance of the government regulatory agencies. While their perception may be correct, neverthe-less there is definite need indicated here to build understand-ing among the citizen groups on the relevant policy and legislative frameworks so that they can act as better, more informed and educated pressure and advocacy groups. The analysis of the survey data has indicated that while the desire and willingness to act as watchdog and pressure groups for ensuring corporate compliance with stated environmental obligations is strong within the NGO commu-nity, the requisite knowledge and understanding on CSR matters and the national/international policy framework within which the corporate sector operates is lacking. However, what is encouraging is the expression of a strong desire to get trained and build capacity for more pro-active involvement. There is a need to raise consciousness and understanding of the target citizen groups on the follow-ing matters:• The concept and practice of corporate social responsibility• The applicable national/international policy/legislative frame-

works (such as the National Environmental Protection Act, OECD Guidelines etc.) • The role of the citizen groups as watchdogs/pressure groups

(methods of citizen advocacy and action research)

ASTROLOGY

Your HoroscopeNovember 2012ARIES: This is an especially introspective month during which you have the chance to truly uncover your personal strengths and talents. There is a stroke of luck, success in ventures, and joy in both marital and domestic life. Under the influence of your ruling planet Mars’ stay in the 9th house of your birth chart, you will feel inter-ested in studies and travel to foreign countries. Entrance of Mars in the 10th house from 18th to 30th November will help in your career progression. You’ll have to focus your attention on money matters even though there may still be some health problems nagging at you. Pending matters may come to an end. You focus strongly on relationships; there will be tremendous togetherness and warmth with close companions and loved ones; but get control over passions and don’t get carried away in emo-tions or excitement. It’s an extraordinary time for promoting your ideas and viewpoint; under the influence of Mars-Pluto conjunction, you will be able to convince others about your viewpoints. Be careful while driving. Offer devotional prayers on 28th November to avoid negative effects of the moon eclipse.

TAURUS: This month brings you caring and shar-ing, that is, fine companionship, close ties with loved ones and an overall feeling of both togetherness and contentment. Your ruling planet Venus’ stay in 6th house of birth chart from 1st to 22nd November will earn for you respect from colleagues. Mars in money house will help reduce financial problems. But be careful in legal matters. It is your work that you’ll focus on in this month. Inconsistency in routine work may create problems; so be careful. On 3rd and 4th of this month, Venus will make square with Pluto, so beware of the jealous people around you. On 9th November, Venus- Jupiter trine will influence your social status. You will also be looking at working for the community and for society at large. Unpleasant scenarios are possible; taxes, loans, insurance, wills, and such may be a source of concern and activity. Be extra careful about spending. On 28th November under the influence of moon eclipse in money house, be careful about financial dealings. Romantic and social activities may revolve around your working environment.

LEO: This is the time to do what you can to build trust in your family life and a strong foundation within yourself, so that regardless of what you meet in the outside world over the next months, you have a secure place to return to. Your ruling planet Sun in 4th house from 1st to 21st November will attract your attention towards financial and domestic matters. Essentially, you are quite companionable now. You want working condi-tions that satisfy you in every way, physically, technically and in the prevailing atmosphere and will take pains to achieve just that. You realize that what matters is the closeness of bonds and ties with those you love. Friends are always important to you. You are, therefore, not just willing but eager to maintain friendships and acquaint-ances. Depending on your circumstances, a new romance or even a series of romances is quite possible.

VIRGO: You are more curious and alert than usual, and you could be quite busy with errands, paperwork, phone calls, and light socializing. You may work hard at making yourself feel more safe and sound, and you may be called upon to take charge on the home and family front. Your ruling planet Mercury’s stay in 4th house from 1st to 14th November may bring in changes in domestic matters. You still need to learn to relate better with others, but now it’s more on the intimate and personal level – the exchange of ideas, innermost thoughts, personal beliefs rather than the emotions. Family ties, linkages of loving and caring now become sharing. No carelessness of any kind to be

CANCER: This is a very playful period of the year, when you are inspired creatively and emotionally. Your ruling planet Moon from 26th to 28th November in ascendant position may facilitate you in your efforts to achieve your goals. Saturn in 5th house will attract your attention towards children and sensitive matters. Jupiter in 12th house will influence financial problems to be solved. Avoid over-spending on holidays and extrava-gance in general. On 9th and 10th November, Venus-Jupiter trine will help you figure out financial problems created by the jealous people around you. After a period of self- protectiveness, you are now more spontaneous and more willing to take risks. Don’t fly too high or too far. It’s an excellent time to take care of your health. You may get engaged in love affairs under the influence of Mars-Saturn sextile.

GEMINI: You may be making changes in your job/profession, in your relationships with colleagues and co-workers, health and diet. There may be some mental strain, or perhaps financial difficulties. On 28th November, moon in ascendant position may cause anxi-ety, worry and disturbances in thoughts. Willingness to help and serve will pay dividends, both materially and in terms of a “feel-good” factor. Don’t expect gratitude and appreciation – just go ahead and do whatever needs to be done. This phase presents an opportunity to get rid of what doesn’t work in your life, while also discov-ering what does. You could seek distinction and strive towards perfection in your work. Efficiency should be


your goal now. On 14th November, Sun eclipse in 6th house will influence health matters; offer devotional prayers to minimize stress due to eclipse. Your close personal relationships are lively – full of conflicts and resolutions or reconciliations. Be ware of what you and your partner want for yourselves and what you want from the relationship. Let one another know what your needs are. On 14th and 15th November, Mercury will make square with Neptune; so avoid negativity and decision making without discussion.

ravel and tourism is an important economic activ-ity in most of the countries around the world. It is one of the world’s largest industries that continue to grow in spite of the economic challenges.

Singapore is one of the shining stars in world travel and tourism industry. Lovingly referred to as ‘Lion City,’ it is acknowledged world-wide, as one of the most fascinating places for tourism and an iconic destination in the entire world where tourists from all over the globe converge in large numbers. An added characteristic of the country is that crime rates are the lowest in the world. Rich culture, rich heritage, unique traditions and fascinating lifestyle of the people here easily lure the visitors for fascinating vacation. The country offers a wide spectrum of tourists’ attractions all of which are no less than wonders worth visiting and exploring. Blessed with some of the most picturesque locations, beautiful architecture, fascinating river, fabulous parks and gardens and state-of-the–art museums Singapore offers the tourists unending excitement. The wildlife sanctuaries of Singapore are yet other impor-tant tourist attractions. They include the Singapore Zoo which is famous for the orangutan and small-clawed otter and reticulated python, The Jurong Bird Park which is famous for 600 different species of animals, The Underwa-ter World located on Sentosa which is home to different underwater animals, and The Butterfly Park and Insect Kingdom, etc. The Underwater World is the most adven-turous and thrilling oceanarium in the entire Asia and is truly the crowning glory of Singapore tourism. The country’s economy is predominantly based on services and manufacturing. In the second quarter of 2012 the economy grew by 2.0 percent. Its economy ranked in the top three countries in foreign trade and investment. Travel

and tourism make significant contribution to the country’s economy. The tourism industry accounts for 3 percent of the country’s GDP. Tourism Board of Singapore is actively working on the construction of new attractions and has successfully finished construction of two casinos- The Singapore Flyer, The Helix Bridge - and most recently the Marine Bay Sands. Some of the ‘must visiting’ tourist attractions in Singapore are Chinatown, Little India, Raffle Hotel, Night Safari, Sentosa Island, Supreme Court and City Hall, Jurong Bird- Park, Singapore Art Museum, Singpore Science Centre, Singapore Cable Car, Asian Civilization Museum, Changi Prison Chappel and Museum, Singapore Gardens, Bakit Timah Nature Resort, Chinese and Japanese Gardens.There ae many others to enthrall the visitors.Chinatown: It has ancient history dating as far back as 1821 when the first Chinese junk carrying immigrants arrived from Fujian province. Much of this historical place has been rebuilt yet it remains one of the most interesting areas to explore, with a lively street scene rich with tradi-tional architecture and customs. Its four main districts - Kreta Ayer, Telok Ayer, Tanjong Pagar and Bukit Pasoh - each have a distinctive flavour. The followers of all of the major religions in Singapore are to be found here. Little India: With colourful, noisy and crowded streets that reflect an important part of the island's history, Little India offers a completely different flavour of Singapore. For today's visitor, the attractions are mainly shopping, eating and places of worship. The Little India Arcade and Zhujiao Centre are newly converted shop-houses selling handicrafts, saris and spices, while fortune-tellers use small parrots to pick cards that will tell your future. Traditional and religious life is elaborately displayed at the magnificent

SCORPIO: It might be a good time for introspective self-assessment with a degree of honesty and objectivity and where there is room for improvement, positive action be taken. You’ll need to establish good working relation-ships with colleagues, subordinates and bosses as well. It’s not a time to challenge the system! Stress and neglect both need to be guarded against too. Therein would lie content-ment, success, happiness – any or all of them, and it will come from your own changed attitude. Its time for you to get savvy and wise up in the worldly sense, and make sure your interests is safeguarded. What you need to do is proceed with caution, maintain a low profile and yet give vent to creative instincts. Your ruling planet Mars’ stay in money house from 1st to 17th November is strongly concerned about your struggle in financial and business dealings. Mars in the 3rd house may result in fruitful coop-erative efforts from relatives and you may travel. Your subordinate ruling planet Pluto in 3rd house will also influ-ence your preferences in expeditions. On 30th November, due to Venus-Mars sextile, you may tend to show-off what you have and own, and you could be trying to demonstrate your worth to others using money and possessions as the means to do so.

SAGITTARIUS: Under the influence of Saturn’s stay in 12th house, there could be some rivalry, jealousy, hard feelings. It might be a good idea to maintain a low profile and be less vocal. A time to make special efforts to get along with others – both professionally and pers- onally. Changes initiated now may prove beneficial in the long run, both materially and otherwise.You will be more friendly, more magnanimous but also more extravagant. Your mind will be uplifted to higher knowledge and the wisdom that comes with it. You are more willing to listen, to be patient and understanding. That certainly makes for accord and harmony. Avoid being over- ambitious. Take charge of your life, but don’t bully others in the progression! This is an excellent phase for assertiveness and physical liveliness. Love affairs may also be stepped up.

AQUARIUS: This is a lively and stimulating period, one in which taking advantage of unusual or unconventional opportunities may bring in growth and success. Reco- gnition is likely to come your way whether you ask for it or not, and the responsibility that comes right along with it! Do what you feel is right, keeping in mind that you are at your most visible during this month in the year. Your ruling planet Saturn’s stay in 10th house will enhance your interest in financial matters. Whereas your ascendant subordinate ruling planet Uranus in 3rd house will influence affections from relatives, Jupiter in the 5th house will make your siblings more obedient and ador-able. On 14th November, due to Sun eclipse, take care about business dealing. Your business will flourish and you will gain confidence in your decisions under the influence of Mars-Saturn sextile on 25th and 26th November.

PISCES: Under the influence of your ruling planet Jupiter in retrograde position during the whole month, you will be conscious about domestic matters. Your subordi-nate ascendant ruling planet Neptune from 1st to 11th November will give unnecessary trouble. Long-distance and foreign connections, exchange and trade will be favored. You’ll travel a fair amount and may strike up a chance acquaintance who shares your views, ideals and ideas. A full of meaning and warm relationship made now could be stimulating and even healing. You draw closer to a loved one/partner/spouse even as circumstances pull you apart. This will be a good time for money matters pertaining to fund-raising, capital-formation and long-range investments. Debts may happen, if you don’t do your homework in financial matters. Personal and intimate relationships find you doing/saying the right thing; so do most persons you interact with. This stems from your strong and sincere desire for peace and harmony. Everything that you undertake is sharpened, heightened and vitalized, and yields truly pleasing results. Success in career/business and rise in popularity and credit, public image can easily be foretold.

LIBRA: Your ruling planet Venus’ stay in ascendant position may enhance your mental faculties which in turn will help achieve success in your dealings. From 23rd to 30th November, Mercury in money house may reduce your financial problems like legal and inheritance matters. You will have a lot on your plate and most of it will pertain to money – both for immediate needs and future gains but good moves have to be thought out. On 3rd and 4th November, Venus-Pluto square will tempt you towards opposite sex, and it may cause you worry. You may develop passion for progress in work, entertainment and friendship may flourish on 9th and 10th November under the influ-ence of Mercury-Jupiter trine. Be careful in financial matters on 14th November due to Sun eclipse in money house; offer devotional prayers. Extra caution is advised in driving or anything related to transportation. You may be especially busy serving responsibilities and communicating with others. There might be an issue that might raise confronta-tions or require compromise with someone. Love is in the air and you will want to make most of it now.

CAPRICORN: This is a rather happy, goal-oriented month. Widening the vistas of your very exist-ence is what this month makes you do. You still extend warmth and friendship, as well as cooperation at work. You will be attracting quite a bit of interest, and your energy for making contact with others would be high. This is a time to follow your dreams and ideals, and to plant a seed in the form of a wish for the future. The month brings social opportunities to your occupation. Satisfaction comes through your career, your vocation and your business. Think of spiritual and intellectual growth, wisdom, caring and warmth in your personal relationships, as a natural development from wisdom. While some of you are still confused if what you’re doing now shall bring in anticipated results, rest are working their way through this rather slow and dry period. Getting things in order, avoiding frivolous and time wasting stuff, going through training sessions are a few possibilities. You have the ability and stamina to concentrate, to work carefully and thoroughly, and to accomplish something modest, yet of real practical value and substance now.


made if you want to achieve your goals. Much energy is expended in understanding and adapting to your immedi-ate environment. Siblings, neighbors, close relatives, friends, and co-workers may play a more important role than usual in your life.

temples of Sri Veeramakaliamman, Sri Srinivasa Perumal and Temple of 1000 Lights. During Hindu festivals, the area comes to life even more. Raffles Hotel: It was built in 1887 and subsequently declared a National Monument in 1987. It is Singapore's most famous landmark and considered as one of the world's greatest Victorian grand hotels. Somerset Maugham, Rudyard Kipling, Noel Coward and Charlie Chaplin made it a favourite retreat. There is a museum on the upper floor, houses fascinating Raffles memorabilia, with photographs of some of its more famous guests over the last 100 years, including Charlie Chaplin Elizabeth Taylor and Richard Burton.Sentosa Island: The tourist island, which attracted 19 million visitors in 2011, is located in the south of Singapore, consists of about 20-30 landmarks, such as Fort Siloso, which was built as a fortress to defend against the Japanese during World War II. It is a 'tropical isle of peace and tranquillity' in Singapore. Some of its biggest attractions include: Underwater World, one of Asia's largest tropical oceanariums with 2500 marine creatures in an 80m (262ft) submerged tunnel; Dolphin Lagoon, a water show with a pink dolphin; Volcano Land, which recreates a journey into the centre of the earth; the 37m (121ft) Merlion; and Magi-cal Sentosa, a musical fountain show twice every evening. Sentosa Island also offers beaches, golf, hotels and restau-rants, regional food and arts - all on an epic scale. There is a free monorail or bus around the island and visitors can jump off at any station. Jurong BirdPark: For those who love wild life, Jurong BirdPark is the place to visit and enjoy. This tourist attrac-tion in Singapore, managed by Wildlife Reserves Singapore, is a landscaped park, built on the western slope of Jurong Hill.This is one of the largest bird park in all of South-East Asia, and a refuge for more than 8000 birds of 600 differ-ent species from all over the world. Highlights include Waterfall Aviary, at 30m (98ft) the world's highest man- made waterfall; the South-East Asian Bird Aviary, where a thunderstorm is simulated every day at noon; and Jungle Jewels, featuring dazzling hummingbirds. At the Lodge on Flamingo Lake, visitors can dine surrounded by 1001 flamingos, or have breakfast on the Song Bird Terrace. One of the biggest attractions is the Penguin Parade, housing

more than 200 penguins of five species. An air-conditioned monorail covers the entire park. Singapore Cable Car: This is a new addition to Singa-pore's attractions that offers views of the city from an impressive height. Spanning over 1750m (5740ft), it is the first cable car in South-East Asia and the only one that crosses a harbour. The cable car stops at three stations - and visitors can board at all three. Each have beautiful, different views so the trip affords fantastic views of the sea. It is possible to travel in a glass-bottomed car, making the journey even more spectacular. Singapore Botanic Gardens: Epitomising the tropical island's luxuriant parks with a combination of primary jungle and elegantly laid-out flowerbeds and shrubs, The Singapore Botanic Gardens are a perfect respite from the city's urban landscape. Over 3000 species of plants thrive in the gardens, which also serve to educate and conserve. Spread over 52 hectares (128 acres), the gardens hold more than half a million plants, while the National Orchid Garden has the world's largest orchid display with over 60,000 plants. The gardens are also a venue for outdoor concerts. Chinese and Japanese Gardens: Spread over an area of 13-hectare (32.5-acre) Chinese Garden portrays the Impe-rial Sung Dynasty style, echoing the grandeur of the Beijing Summer Palace with its bridges and pagodas. It also has the largest Suzhou-style bonsai garden outside China, with over 1000 plants, as well as a seafood restaurant. The Japanese Garden, equally as big as the Chinese Garden, by contrast, emphasises Zen simplicity with stone lanterns, summer houses and Zen rock gardens. Classical Japanese motifs help create a soothing atmosphere. The Chinese Gardens also have the largest collection of tortoises and turtles in the world, with over 200 species. There are several others including The Orchard Road district, which is dominated by multi-story shopping centres and hotels and can be considered the center of tourism in Singapore; Boat Quay, a historical quay in Singapore which is situated upstream from the mouth of the Singapore River where shophouses have been carefully conserved and now house various bars, pubs and restaurants; Clarke Quay, a historical riverside quay and a buzzing party central in Singapore. and is situated even further upstream from the mouth of the Singapore River than Boat Quay.

by Umair Khan

Apple “iPad Mini”: An innovativetechnology or just a taller iPhone?

Apple has entered the small tablet market by launching its mini version of trendset-ting product ‘iPad’ on 23rd

October. The tablet will directly compete with several smaller tablets already in the market. It’s powered by the Apple A5 dual-core processors, the same processors that powered the iPhone 4S and iPad 2. The iPad mini is half the size of its existing iPad - to compete with Google's Nexus 7 and Amazon's Kindle Fire. But the price may prove a barrier for potential buyers: the iPad mini will start at $329, against $159 for the cheapest Kindle Fire and $249 for the Nexus 7. Apple has had about 70% of the entire tablet market up to now, but the launch of Google’s Nexus 7 in the summer - estimated to have sold around a million in three months - and of the Kindle Fire, launched in the US in October 2011, has pointed to huge potential in the market. Apple decided more than two years ago to enter the small-tablet niche, but was willing to take its usual develop-ment time despite pressure from competitors. Amazon introduced its first 7-inch Kindle Fire a year ago, and Google put its brand on the widely praised Nexus 7 tablet in June. Samsung also makes small tablets based on Google's Android operating system. A computing and technology research group is forecasting that sales of smaller tablets will double this year. ‘IHS iSuppli’ expects about 34m smaller tablets – with screens of about 7 inches diagonally– will be sold worldwide in 2012, up from 17m last year. Salman Chaudhry, mobile computing analyst at the UK-based research company Context, said sales of 7 inches tablets in the UK alone have soared from 10,000 between April and June to 220,000 from July to September - principally by the Google’s Nexus 7 and Samsung Galaxy Tab.


TREND

Apple iPad mini

7.9 inches

1024x768

163 ppi

10.88oz

7.8x5.3x.28 inches

Dual-core Apple A5

16GB, 32GB or 64GB, no card slot

iOS 6

10 hours

5MP rear, 1.2MP front

Dual-band Wi-Fi, LTE

Amazon Kindle Fire Hd

7 inches

1,280x600

216 ppi

13.9 oz

7.6 x 5.4 x 0.4 inches

Dual-core 1.2GHz ARM Cortex A9

16GB or 32 GB, no card slot

Android 4 (Ice Cream Sandwich)

11 hours

1.3 MP front-facing

Dual-band Wi-Fi

Screen Size

Resolution

Pixel Density

Weight

Dimensions (WxHxD)

CPU

Storage

Operating System

Battery

Camera

Networking

Comparison of iPad mini with other latest tabletsNook HD

7 inches

1,440 x 900

243 ppi

11.1 oz

7.65 x 5.0 x 0.43 inches

TI OMAP 4470

8GB, 16GB + microSD

Adroid 4 (Ice Cream Sandwich)

10.5 hours

none

Wi-Fi

GoogleNexus 7

7 inches

1,280 x 800

216 ppi

12 oz

7.81 x 4.72 x 0.41 inches

Quad-core NVIDIA Tegra 3, 1200 MHz,ARM Cortex-A9

8GB or 16GB, no card slot

Android 4.1 (Jelly Bean)

10 hours

1.2MP front-facing

Wi-Fi

Galaxy Tab 27.0

7 inches

1,024 x 600

170 ppi

12.13 oz

7.63 x 4.82 x 0.41 inches

Dual-core 1 GHz

8GB, 16GB or 32GB, microSD up to 32GB

Android 4 (Ice Cream Sandwich)

Unannounced

3MP rear, VGA front-facing

Wi-Fi, 4G (HSPA+)

ward of the Nobel Prizes is an annual feature since 1901- the year when the prizes in Physics, Chemistry, Physiology or Medicine, Literature and Peace were first awarded. The Nobel Prize is

an international award administered by the Nobel Founda-tion in Stockholm, Sweden in recognition of exceptional achievements in a number of categories in pursuance of the will of the Swedish philanthropist inventor Alfred Nobel. The Nobel Prize is widely regarded as the most prestigious award. Each Nobel laureate is awarded a gold medal, a diploma, and a sum of money which is decided by Nobel Foundation yearly. As of 2012, each prize was worth 8 million SEK (c.US$1.2 million, €0.93 million).

Nobel Prize in Physiology and MedicineThe prestigious Nobel Prize for the year 2012 in Physiology and Medicine was shared by Sir John B. Gurdon and Shinya Yamanaka for their joint contri-butions to a method that reverses adult cells to pluripotent stem cells — cells with differentiating capabilities. In the 1950s, Gurdon discovered that mature cells retain the same genetic informa-tion they had as unspecified pluripotent cells, and in 1962, he demonstrated that a new organism could grow from the nucleus of an adult cell placed in a de-nucleated egg cell. This started the entire revolution of cloning, eventually leading to the cloning of mammals. Gurdon and Yamanaka’s research is profoundly significant in the area of regenerative medicine and the development of patient- specific cells. Though current procedures are efficacious,

there is controversy surrounding the destruction of embryos and fetuses. Because the methods developed by Gurdon and Yamanaka circumvent these controversies, they may very well be the foundation for a therapeutic revolution.

Nobel Prize in PhysicsOn October 9, Serge Haroche and David J. Wineland were declared the winners of the 2012 Nobel Prize in Physics. Haroche and Wineland are recognized for their development of experimental methods to measure and manipulate singular quantum systems. It was widely believed that single particles of matter or light could not be isolated from the environment without losing their quantum proper-ties. Wineland quashed these specula-tions by probing ionic quantum states of beryllium ions, while Haroche trapped and observed photons using microwaves and mirrors. Besides substantiating the claims of theoreti-cal quantum physics, Haroche and Wineland’s research may provide a basis for realizing quan-tum computing, a method of employing quantum proper-ties to represent data. Because quantum particles can be in more than one state simultaneously, a quantum computer could process data simultaneously, enabling ultrafast complex computations. Although Haroche and Wineland have showed that quantum computing is possible by enabling manipulations in a single quantum system, much more research needs to be done before a multisystem quan-tum computer can be produced.

ENTERTAINMENT

Review

Box Office Sep 2012 in US $

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09

10

Argo

Hotel Transylvania

Cloud Atlas

Paranormal Activity 4

Taken 2

Silent Hill: Revelation 3D

Here Comes the Boom

Sinister

Alex Cross

Fun Size

$60.8M

$130M

$9.4M

$42.6M

$117M

$8.0M

$30.6M

$39.5M

$19.4M

$4.1M

$12.3M

$9.5M

$9.4M

$8.7M

$8.0M

$8.0M

$5.5M

$5.1M

$5.1M

$4.1M

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5

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Ranks Movies Weekend Gross Weeks

Based on true events, Argo chronicles the life-or-death covert operation to rescue six Americans, which unfolded behind the scenes of the Iran hostage crisis-the truth of which was unknown by the public for decades. On November 4, 1979, as the Iranian revolution reaches its boiling point, militants storm the U.S. embassy in Tehran, taking 52 Americans hostage. But, in the midst of the chaos, six Americans manage to slip away and find refuge in the home of the Canadian ambassador. Knowing it is only a matter of time before the six are found out and likely killed, a CIA "exfiltration" specialist named Tony Mendez (Ben Affleck) comes up with a risky plan to get them safely out of the country. A plan so incredible, it could only happen in the movies

Paranormal Acticity 4

Taken 2

Cloud Atlas explores how the actions and consequences of individual lives impact one another throughout the past, the present and the future. Action, mystery and romance weave dramatically through the story as one soul is shaped from a killer into a hero and a single act of kindness ripples across centuries to inspire a revolution in the distant future. Each member of the ensemble appears in multiple roles as the stories move through time.

Cloud Atlas Directed byAndy Wachowski, Tom Tykwer

Argo Directed byBen A�eck

Directed byHenry Joost, Ariel Schulman

Directed byOlivier Megaton

Silent Hill: Revelation 3D

Directed byMichael J. Bassett.


Compiled by Ali Siddique Dadi

Nobel Prize in ChemistryOn October 10, Robert J. Lefkowitz and Brian K. Kobilka were declared the winners of the 2012 Nobel Prize in Chemistry for uncovering a family of receptors called G-protein-coupled receptors (GPCRs), which transmit biological messages and regulate most of a cell’s physiological processes. Before the work of Lefkowitz and Kobilka, the mechanisms that permit-ted cells to sense their environment were unknown. In 2011, Kobilka capt- ured an image of one of these recep-tors being activated by a hormone via X-ray crystallography. The discovery has and will continue to provide insight into existing and potential medica-tions, most noticeably in the pharma-ceutical industry, since about half of all medications on the market target GPCRs.

Nobel Prize in Economic SciencesOn October 15, Alvin E. Roth and Lloyd S. Shapley were awarded the Nobel Prize in Economic Sciences for their work on market design and matching theory, which relate to how people and companies find and select one another for business. The research has examined organ exchange and the process of assigning students to schools, including Boston public schools. Mr. Roth’s system helps find the most efficient exchange of organs so that the most patients can be saved with the fewest number of pairs involved in a given trade. The idea is to try to diagnose why resource allocation systems are not working and how they can be engineered to produce effectively.

Nobel Prize in LiteratureOn October 11, Chinese writer Mo Yan was awarded the Nobel Prize in Literature for his literary works which combine “hallucinatory realism” with folk tales, history and contemporary life in China. Mo, who was once so destitute that he ate tree bark and weeds to survive, is the first Chinese national to win the $1.2 million litera-ture prize, awarded by the Swedish Academy. Mo Yan is a pen name which means “Don’t Speak”. His real name is Guan Moye and he was forced to drop out of primary school and herd cattle during China’s Cultural Revolution. Mo is best known in the West for his best seller book “Red Sorghum”, which portrayed the hardships endured by farmers in the early years of communist rule. His titles also include “The Republic of Wine”, a satire which uses cannibalism as a metaphor for Chinese self-destruction. The last Chinese-born winner was Gao Xingjian in 2000, although he was living in France by that time and had taken French citizenship.

Nobel Peace PrizeSurprisingly, the 2012 Nobel Peace Prize didn't go to any individual but to the European Union for promoting peace, democracy and human rights over six decades. Announcing the award in Oslo, Norway, on October 12 the Nobel Committee Chairman, Thorbjoern Jagland said the EU has transformed most of Europe "from a conti-nent of wars to a continent of peace". Over a seventy-year period, Germany and France had fought three wars. Today war between Germany and France is unthinkable. This shows how, through well-aimed efforts and by building up mutual confidence, historical enemies can become close partners. The introduction of democracy is a condition for membership in EU, thereby opening a new era in Euro-pean history. The prize for the EU came as a surprise to many at a time when European solidarity is facing its most daunting challenge in decades amid deep rifts between a south drowning in debt and a wealthier north, led by Germany, only reluctantly coming to the rescue. It was speculated before the announcement that the Malala Yousufzai, Pakistani female education activist, Abdul Sattar Edhi, Pakistani social activist, Maggie Gobran, a Coptic Christian nun who runs a children’s mission in Cairo and Nigerian religious leaders John Onaiyekan and Mohamed Sa’ad Abubakar, who have helped to calm their country’s Christian-Muslim violence this year would be among the most favourite contestants. The EU grew out of the tremendous devastation of World War II - fuelled by the conviction that ever-closer economic ties would make sure that centuries-old enemies never turned on each other again. However, some EU-member countries are accused of having caused the First and Second World Wars, some illegal regime changes in African countries such as Libya and other parts of the world under the auspices of the North Atlantic Treaty Organization. The Nobel Laureates will be occupying the center stage in Stockholm on 10 December when they would receive the Nobel Prize Medal, Nobel Prize Diploma and document confirming the Nobel Prize amount from King Carl XVI Gustaf of Sweden. However, the Nobel Peace Prize will be awarded to the winners in Oslo by the Chairman of the Norwegian Nobel Committee in the presence of King Harald V of Norway. An important part of the ceremony would be the presentation of the Nobel Lectures by the Nobel Laureates.

ENTERTAINMENT

Review

Box Office Earning Sep 2012 in Ind Rs.

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Student Of The Year

Ajab Gazab Love

Chakravyuh

Rush

OMG! Oh My God!

English Vinglish

Aiyyaa

Delhi Safari

Makkhi

Barfi

16.0 cr

4.6 cr

25.0 cr

34.6 cr

35.0 cr

15.0 cr

6.3 cr

116.0 cr

15.2 cr

20.0 cr

16.0 cr4.6 cr

36.5 cr

58.6 cr

55 cr

20.0 cr

9.1 cr

135.0 cr

18.5 cr

27.5 cr

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Ranks Movies Weekend Gross Weeks

This is Karan Johar’s fantasy land on his canvas, the rich douchebag Rohan Nanda (Varun Dhawan) who has daddy issues, being one of the donors for the school, he has a posse of guys who hang on to his every word. While his rich, hot and spoilt girlfriend Shanaya (Alia Bhatt) hankers for his attention, he still keeps wandering to the other hottie Tanya (Sana Saeed). When poor-orphan-with-a-scholarship, Abhimanyu (Sidharth Malhotra) joins the school, he threatens Rohan’s fiefdom. But soon the duo warm up to each other and become good friends. Heck, Abhimanyu even helps Rohan win back Shanaya after she throws a hissy fit, though Abhimanyu loves her!. Then dean Yogendra (Rishi Kapoor) announces the Student Of The Year competition and all hell breaks loose. Friendships are threatened, fistfights follow and there is lots of love lost.

Student Of The Year Directed byKaran Johar

Heir to a billion-dollar automobile empire, Rajveer Grewal has it all, a loving family, riches of the world, and a dream job designing cars. He falls head-over-heels in love with Madhuri, who is a strong advo-cate of social justice and equality. To his dismay, Rajveer learns that she 'hates' all rich people and will have nothing to do with a rich boy like himself. In a sweeping stance of romance, Rajveer decides to give it all up and pretend to be the 'poorest of the poor' in order to win her affection and love. A comedy of errors ensues as Rajveer and his ultra-rich lavish family attempt to play the parts of poor slum- dwellers and in doing so turn into a dysfunctional bunch of over- the-top actors. As this 'riches to rags' story takes one hysterical turn after another, how long will they succeed in keeping up this charade? And is there something Madhuri is hiding from the family herself?

Ajab Gazab Love Directed bySanjay Gadhvi

Chakravyuh

Rush

Directed byPrakash Jha

Directed byShamin Desai

OMG!Oh My God

Directed byUmesh Shukla


A song by British singers Labrinth and Emeli Sandé. Written by Labrinth, Mike Posner and Sandé, it was released as the sixth single from Labrinth's debut album, Electronic Earth, on October 21, 2012. The track peaked at #1 on the UK Singles Chart, selling 108,000 copies in the week of release, to become Labrinth's first ever number one single.

Beneath Your Beautiful

SingerSwedish House Ma�a Ft John Martin

Don’t You Worry Child

Saans which fulfils the dreamy soft romantic track require-ment as per Yash Chopra School of Music. Owner of smooth voices, Mohit Chauhan and Shreya Ghoshal, do the honours in this song which has deep lyrics which would appeal only after you have given it a keen listening. Though it’s a romantic track, a little faster pace would have been helpful since it tends to get monotonous after a while. Later there is also a ‘reprise version’ which is Shreya’s solo.

Saans

SingerCalvin Harris Ft Floraence Welch

Sweet Nothing

SingerRabbi Shergill

Challa

SingerShekhar Ravjiani, Salim Merchant,

Neeti Mohan

Ishq Wala Love

ENTERTAINMENT


Top Ten UK SongsRanks Song Singers Last Week Total Weeks

Beneath Your Beautiful

Don’t You Worry Child

Sweet Nothing

Diamonds

Gangnam Style

Hottest Girl In The World

Adele

One More Night

We Are Never Ever Getting Back

Wonder

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10

Labrinth Ft Emeli Sande

Swedish House Mafia Ft John Martin

Calvin Harris Ft Floraence Welch

Rihanna

PSY

JLS

Skyfall

Maroon 5

Taylor Swift

Nuaghty Boy Ft Emeli Sande

New

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01

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New

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New

New

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10

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Top Ten Music Chart BusterRanks MoviesSong Singers Last Week Total Weeks

01 Saans Jab Tak Hai Jaan 05 03Mohit Chauhan, Shreya Ghoshal

03 Ishq Wala Love Student Of The Year 02 07Shekhar Ravjiani, Salim Merchant, Neeti Mohan

04 The Disco Song Student Of The Year 03 08Benny Dayal , Sunidhi Chauhan, Nazia Hassan

05 Vele Student Of The Year 04 06Shekhar Ravjiani

06 Radha Student Of The Year 06 04Shreya Ghoshal, Vishal-Shekhar, Udit Narayan

07 Rani Tu Mein Raja Son Of Sardar 07 03Mika Singh, Bhavya Pandit, Yo Yo Honey Singh

08 Ratta Maan Student Of The Year 11 03Vishal Dadlani, Shefali Alvares

09 Po Po Son Of Sardar New 01Vikas Bhalla, Aman Trikha

10 Jiya Re Jab Thak Hai Jaan 19 02Neeti Mohan

02 Challa Jab Tak Hai Jaan 01 03Rabbi Shergill

Asian Championship for Ju-Jitsu & Belt Wrestling Sports was held in Iran during 18-22 October. Over 150 players representing Iran, Kyrgyzstan, Thailand, Pakistan, India, Iraq, Vietnam, and Afghanistan participated in this mega event and won laurels for their respective countries. The National team of Pakistan which participated in the event with only 4 players including one girl gave a display of an outstanding performance

and secured 10 Medals, including 01 Gold, 04 Silver and 05 Bronze Medals in different weight categories and disci-plines such as Duo System, Fighting System and Belt Wrestling Classical Style and Free Style events. A young pair of Mohammad Ammar & Abu Hurrerra secured first Gold Medal for Pakistan in Men-Duo System, whereas Abu Hurrera secured Silver Medal in 62 Kg Fighting System, and Bronze Medal in Belt Wrestling Free Style and Bronze in Classic Style. Mohammad Ammar, secured Bronze Medal in 69 Kg Fighting event and also secured Bronze in BW Classic with another Bronze Medal in free style BW event. Mohammad Irfan of Pakistan won Silver medal in 77kg fighting event. The only female participant from Pakistan, Sundas Islam Khan, was awarded Silver medal in 49kg Fight-ing System and another silver Medal in 48 kg event of BW.

November 2012 issue

Documents

Transcript of November 2012 issue