Pages: 7 profit.com.pk Tuesday, 03 January, 2012

SHAHAb JAfRy

eCONOMIC experts believethe country’s reserve positionand external balance will bekey determining factors

going into ’12 as fiscal and monetarypolicies failed to stimulate the economyout of stagflation in the outgoing year.“Considering the rate of rupeedecline, we expect a further 6-7 percent depreciation in ’12, closing theyear around the 95-96 level againstthe dollar,” according to Syed Sayemali, country economist for Pakistanand Middle east at StandardChartered Bank. That, combined withthe $4.5 billion debt repayment duethis year, will pressure the reserveposition, he adds.

iNflatiONaRy teNdeNciesa weakening rupee will feed intoinflation. and even though CPI hasjust surprised market watchers bysneaking under 10 per cent presently,the decline will be temporary at best ifthe rupee fall is not controlled.another critical factor is energyreliance on imported oil. “If oil pricesrise, reserves will come under

overwhelming pressure,” says Sayem.Sakina Husain, research analyst atPakistan credit rating agency (pacra)and financial journalist, expects oilprices to remain stable. “Globaldemand is slow, and even the US was anet exporter last season, so I don’texpect price fluctuations,” she says.Weak recovery in the US, sovereigndebt drama in europe and slowdownin China are likely to keep oil pricemuted. But with increasing Iran-specific tension around the Straits ofHormuz, the possibility of an erraticoil price movement cannot be ruledout, even if it has not yet been pricedin by currency and commoditymarkets. There is a notable elementwith regard to food inflation,though, notes Sakina. “Wheatshortage will push up prices to anextent, but otherwise the outlookseems stable enough”.

MONey PRiNtiNgThe government has drawnconsiderable criticism due tounprecedented borrowing fromcentral and scheduled banks. “One ofthe few bright spots in ’11 was aninitial declining trend in government

borrowing. It actually retired someborrowing to the central bank, hencethe slight drop in inflation,” saysSayem. But it seems the borrowingbinge is on again. according to mid-dec data, central bank pressesprinted another rs220 billion, riskingsubsequent rise in inflation. There isalso news of political motivation toreduce the policy rate by another100bps. “With foreign investmentabsent, government borrowing willput pressure on domestic liquidity,”according to Sakina.

eNeRgy cRisisThe energy sector is actually plaguedby a financial crisis in the supplychain. The problem owes more tofinancial resources than energyavailability. But with thegovernment’s fiscal spaceconstrained, there is little likelihoodof sorting out the energy problem in’12. energy shortfall is blamed forlacklusture private sectorperformance in ’11. Yet with heavygovernment borrowing consistentlycrowding out the private sector fromcredit markets, chronic energyshortage only intensified the private

sector dilemma. Banks, for theirpart, have had few problems withrisk-free advances to thegovernment. “energy tariffs haveincreased more than 100 per cent inthe fours years of the presentgovernment,” says Sayem, addingthat the government’s projection ofadditional 30 per cent tariffs willmean reduced growth and output,lower exports, higher unemploymentand declining real wages.

secuRity situatiONWhile the security situation improvedin the last year – fewer terroristattacks and bomb blasts – rollback inmilitary aid means security expenseswill remain a big drain on thenational exchequer. and consideringintense pressure on the reservesituation, observers expect thegovernment to revisit dynamics ofthe army operation in the tribal area.“There is a big question mark oncontinued military presence in thenorth,” notes Sayem. realisticallyspeaking, there are few viablealternatives. The government willneed to keep spending, especially onsocial uplift and development

projects in conflict zones like Swat, tokeep violence from erupting again infuture, he adds.This means the practice of divertingdevelopment funds to non-development heads will continue.

lOw eaRNiNg/fiscal stORyThe government’s fiscal position willalmost definitely remain unenviable.Tax reforms have not materialised,foreign aid has receded, the debtburden is mounting and rs300-400billion in annual PSe loss is goingnowhere in election year. In absenceof meaningful tax revenue generation,the other main earner, exports, is notmuch to write home about either. “International cotton price is at itslowest in two years. With more than50 per cent of the export baskedcomprising cotton and relatedproducts, export competitiveness issure to suffer in ’12,” says Sakina. Failing a game-changer, the ’12narrative is unlikely to be muchdifferent from the preceding year.With earning low and expenditurerising, even minus exogenous shocks,swelling deficits will occupy minds ofpolicy-makers and observers alike.

situatiONeR

Pressure on reserve position, external balance to persist in ’12

KARACHIISMAIL DILAWAR

Federal auditors havefound what they ob-served “unjustifiable”irregularities in admin-

istrative and financial affairs ofthe Karachi Port Trust (KPT)while examining the port opera-tor’s past five years records,Profit has reliably learnt.

auditors, appointed by fed-eral government to audit KPT’sfinancial accounts under Sec-tion 68 of KPT act 1886 for aperiod ranging from 2007 to2011, have grilled the country’slargest port operator on expen-diture of over rs8.24 million onaccount of “irregular” pay andallowances to KPT officers ofdifferent designations.

rear admiral azhar Hayat,general manager operations,Bashir ahmed, manager legal af-fairs, Captain Izhar Baig, dredg-ing engineer, rashid YahyaUsmani, manager marine pollu-tion control department, lt Cdr(rtd) M.a rehman, deputy man-ager enquiry cell, Faisal Masood,atif Iftikhar Naik and rashidIkram Baig are the KPT officialswho, the auditors believed, goteither unauthorised pay and al-lowances or were appointed orpromoted unduly.

auditors made the KPT ac-countable for absorbing thenaval officers on deputationwithout seeking approval ofministry of ports and shipping

and a no-objection certificate(NOC) from their parent depart-ment, Pakistan Navy.

rear admiral azhar Hayat,GM operations, was one of theofficers in uniform who, the au-ditors observed, were absorbedby KPT without advertising thepost as a violation of relevant

rules. according to auditors, theofficial had received overrs0.282 million during his“unauthorized stay” at KPT afterexpiry of his deputation. audi-tors also named Captain IzharBaig as a naval officer who wasappointed by KPT as a dredgingengineer at “TSHd aBUl” with-

out an NOC from naval head-quarters.

KPT in its reply, however,contradicted auditors’ claim re-garding Hayat’s absorption andreferred to Para 2 (b) of JSI-4/85 and its board resolutionnumber 629.

The port operator also came

under fire for the reappointmentof its retired officials and the “ir-regular” extension of the con-tractual ones sans the approvalof federal government.

also, auditors observed thatKPT had paid “unauthorized” al-lowances worth rs201,000 toarmed forces personnel. KPT

was also blasted for permanentlyabsorbing Faisal Masood, atifIftikhar Naik and rashid IkramBaig “without open merit andwithout advertisement of theposts”.

Further, according to audi-tors, KPT had promoted rashidYahya Usmani, manager MarinePollution Control department,to BPS-20 in violation of govern-ment order. “The governmentdisapproved the case howeverthe officer was promoted bytransfer of post,” they claimed.

Other irregularities, federalauditors said KPT had commit-ted during the last five years in-clude violation regional quota,the grant of “unjustified”monthly special house rent al-lowance of rs1000 in additionto hiring facility allowances toemployees/officers, irregularappointments due to incompletespecification of terms and condi-tions in advertisement, appoint-ment of resident MedicalOfficer without conducting awritten test, payment of advanceincrements, etc.

In response to auditors’ ob-servations, KPT contends thatthe trust was a self accountingentity spending out of its ownrevenues and not from that ofthe government funds.

“The expenditure men-tioned in subject cases are in ac-cordance with rules andregulations and duly approvedby the ministry of ports andshipping,” KPT said.

Global economy: fighting for fiscal future Page 2Reinventing economic policies Page 3

Auditors unveil irregularities in KPT affairsg Over Rs8.24m spent on account of ‘irregular’ allowances to officers g Naval officers given millions during ‘unauthorised stay’ g Personnel ondeputation absorbed without approval of ministry, navy g Violation of regional quota, grant of special house rent allowance also noted

Mobile banking can increaseGDP by 3pc Page 7

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debate02Tuesday, 03 January, 2012

fARAKH SHAHzAd

THe marginalisation of world economies,euro zone crisis, global food inflation, in-crease in poverty, poor governance, con-fused fiscal priorities, sharp slowdowns,

growing fuel prices, environmental hazards, frac-turing of social safety nets, destabilising effects ofunemployment, painful consequences of armedconflicts, surging crimes, natural disasters andpandemics have collectively pushed the onceflourishing states to ask their subjects to tightentheir belts. But this sort of forced austerity andspending cuts breed more serious difficulties, in-tensifying the problems rather than finding a so-lution. This is a tantamount to promoting povertyamong the already vulnerable communitieswherein, those living in abject poverty are the firstcausality. It is politically and morally unaccept-able that more than 1 billion people on the planetstill have to survive on less than one euro per day.That figure may well rise as the world’s populationgrows. The world economy faces exceptional –perhaps, even unprecedented uncertainty.

eMPty POcket syNdROMelet us see the inevitable impact of the global crisison the life of developed nations. On this Christ-mas, plenty of americans had to hold back as thelure of flashy ads, tempting bargains and familyexpectations, clashed with realities of the econ-omy under an empty pocket syndrome which hashit even the affluent sections of society. expertsin consumer behavior say that situation can strainthe brain. There was none of the traditional holi-day bustle at the dozens of stalls selling low-costtrinkets. Many retailers extended opening hoursand provided heavy discounts, but of no use.

In Italy, the high-end stores like Prada, Gucci,armani, Bulgari, louis Vuitton, Valentino andFerragamo remained dilapidated in a sense thatsalespeople kept standing idly by the door. Therehas been a yawning emptiness in these shops atChristmas. as Italians look ahead, they see thespecter of a deep recession. The government hasalready imposed new taxes, businesses are clos-ing, and in this holiday season, the prospect ofausterity measures worth, $40 billion, has createda mood of fear and insecurity. CeO of a reputedchain said, “This looks like a postwar economy asthis Christmas season was the worst in 50 years.even my rich clients this year are not spending asthey are scared,” he added.

cONfideNce leVelBusiness confidence in the global economy hasevaporated amid the escalating eurozone crisis,

leaving a prevailing mood of pessimism in manyemerging markets as well as in europe. The loom-ing uncertainty over the global economy hasturned consumers into more value-conscious, mo-bile, experience-hungry, social sharing and greenenthusiasts. add a touch of convenience for a ,and this paints a picture of the new global con-sumer. euromonitor International, a global mar-ket research organization, reviewed the keyconsumer and industry trends that defined 2011,and offers the difficult prospects for 2012.

Retail MaRketThe analysts say that economic woes will seemore consumers looking up to new non-mone-tary forms of status like altruism, connectivity,eco-credentials and acquired skills. The surveysays that less will be more in 2012, as the compa-nies will be helping their customers to consumeless of their products. The retail industry is toldthat in 2012, opportunities to cater to millions oflow-income urban consumers will be the biggestever. The positive side of the retail story is thatbest case scenario will see retailing be worth$13.2 trillion, by the end of 2012. However,macro-economic issues will remain a concern.Cross-border sales through internet stores arelikely to put bricks-and-mortar retailers in allcountries under pressure in the short term. Gro-cery retailers are set to enjoy faster growth thantheir non-grocery peers. Taking a greater share oftheir competitors’ sales will likely aid grocery re-tailers during the year. retailers are going to beincreasingly aware of M-commerce (mobile com-merce) in 2012. With more mouths to feed, retailvolume will continue to outpace retail value sales.

cONsciOus cONsuMPtiONIt is also anticipating that crowd sourced prob-lem-solving will trigger innovation – especially ifparticipation is made simpler. (Crowd sourcing isthe act of sourcing tasks traditionally performedby specific individuals to a group of people orcommunity (crowd) through an open call). em-phasis will be on conscious consumption in 2012as consumers continue their search for a moremeaningful life. economizing on luxuries is a log-ical answer to address the scarcity of resources.

cOst cuttiNg another vital prediction is that collaborativeconsumption, renting goods instead of buyingthem, will be big in 2012. This is a disposableway of fulfilling one’s needs by paying as little as

possible. renting expensive ceremonial cos-tumes for wedding parties is the best example ofcollaborative consumption.

The richest 10 per cent of households in 24major economies account for more than 1/3 oftheir country’s income. The incomes of the richest10 per cent in the USa are 37 times higher thanthose of the poorest. This situation is likely to ra-tionalise the ongoing Occupy Wall Street move-ment which is gaining a fresh momentum withevery passing day.

Unemployment, particularly youth unemploy-ment, will plague advanced economies in the NewYear. For instance, more than half of the peopleaged, 15-24, are without work in Spain and the fig-ures may grow further in future. Underlining thegrowing divide globally in terms of spendingpower, jewelers is expected to be the fastest grow-ing channel in 2012, boosted by emerging mar-kets. asia Pacific is expected to overtake Westerneurope as the biggest regional packaged foodmarket in the coming years.

uNceRtaiNtyThe world economy faces exceptional – perhaps,even unprecedented uncertainty. a growingprevalence of convenience and snacking will makeeating on-the-go, the new “normal” as it enters2012. The rebound in output among developedcountries has proven feeble, yet fiscal austerity,especially in the eurozone. The collective austerityof developed economies will likely bring on one ofthe most severe fiscal contractions in many years.These effects will be partly offset by developingcountries, although growth is moderating asglobal financial conditions deteriorate.

glObal PeRsPectiVeeuromonitor International has forecasted a tur-bulent period ahead. It wrote, “World growth willslow down in 2012 amid ongoing sovereign riskand austerity programme. The by 3.8 per cent inreal terms in 2012, down from 3.9 per cent in 2011and 5.2 per cent in 2010. The slowdown might beattributed to financial instability and fears of sov-ereign risk, which threaten to spread beyond a feweuropean economies. In other developed coun-tries (such as the USa), policy indecision exacer-bates uncertainty. as a result, stimulusprogrammes launched in 2010-2011 are being re-placed by austerity measures.” euromonitor ex-pects developed countries to grow by 1.6 per centin 2012 in real terms. Such an outcome would bebelow historical trends and several economies arelikely to experience sharp slowdowns, notably inthe eurozone, where sovereign risk is high. Collec-

tively, advanced economies will slip into a syn-chronised slowdown as the loss in confidencespreads to consumers, bankers and investors.

deVelOPiNg cOuNtRiesThe economic review anticipated better prospectsfor the developing nations. “The outlook isbrighter for developing countries. external de-mand is weakening, but in most emergingeconomies, domestic demand should propelgrowth until the world economy becomes health-ier. However, the outlook for developing countriesis not risk-free. a few countries with especiallyopen economies and dependence on demand indeveloped markets could struggle. Policy makersin developing countries generally have more flex-ibility than is available in the advanced world,meaning that the possibility of a soft landing ismore likely than a hard one”. In emerging and de-veloping economies, aggregate real growth will be5.9 per cent in 2012 compared with 6.3 per centin 2011. The slowdown can be partly attributed tothe fact that many of these economies depend onexports to the developed world. Nevertheless,gains of income along with the rising middle classand growing trade between developing countrieswill ensure that most of these countries see solidgains in 2012. developing countries will accountfor the bulk of world growth. a few emergingeconomies such as Belarus, egypt, Iran, Pakistan,Venezuela and Vietnam could experience someoverheating, but the underlying reasons will becountry-specific rather than global change.

PakistaNWith rise in crude oil prices and recent deprecia-tion in rupee and keeping in view the fact that gasand electricity prices have already been hiked, thecentral bank is to adopt a cautious approach tocontrol the rising level of inflation especially, thefood inflation. World Bank recent report titled,‘Pakistan Country Partnership Strategy FY2010-2013’, has warned that Pakistan is expected to paya price for leaving the International MonetaryFund (IMF) programme. It pointed out that in thepresence of IMF programme, the GdP growth wasexpected at 4.5 per cent and in the absence of thisprogramme, GdP growth is likely to decline to 3.5per cent to 3.6 per cent for ongoing fiscal year2011-12. In this context, a continued improvementin the macroeconomic situation will remain achallenge. apart from its domestic problems, Pak-istan is likely to have a double impact in a sensethat global trade is projected to remain depressedand unemployment high for coming years in alarge part of the world.

Global economy:fighting for fiscal future

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THere has to be a greater emphasis on thesupply side of the economy. Knowledge, in-novation, productivity are key drivers ofthe supply side economy. Unfortunately,Pakistan is falling behind in all three areas

which have choked growth and slowed the innovationprocess. In the absence of effective competitive environ-ment, Pakistani firms seem uninterested to invest in r& d and business sophistication to improve productivitygains and earn dividends thereafter. Thus domesticmarkets and consumers are faced with the inefficient

goods market syndrome.Protections, subsides andother concessions providedby the government have putboth private firms and pub-lic sector enterprises lazy,and inefficient.

Knowledge refers to thepool of educated/skilledworkforce and technologicalreadiness which can be ef-fectively put to use to im-prove the business

sophistication and productivity. It is said that Pakistan’seconomy must continue to grow at a rate of 6-8 per centif GdP is to be doubled in the next 10 years. The stop-goeconomic performance has suffocated the process of al-leviating poverty and improving the standard of living ofPakistanis and as a consequence, the atmosphere of un-certainty runs deep across the economy.

Now the question is what should we do to take theeconomy out of reverse gear and run it on its smooth pathof recovery? Well, building knowledge economy which isdriven by technology and innovation should be thebroader objective of all the stakeholders. Creative, intel-ligent and wise minds can improve the efficiency and ef-ficacy of the supply side of the economy without puttingextra strain on the resource market. Hence knowledgecreation is the key driver in pulling the economy out ofslow growth rut. To meet this end and improve the labourmarket efficiency, a strong nexus of industry and academ-ics is seriously needed as the technologically advancedcountries have already successfully demonstrated it.

To speak about productivity, Pakistan’s economicgrowth largely comes from the agriculture, manufactur-ing and services sectors. Services sector contributesaround 50 per cent to the GdP now. To drive these sec-tors in top gear, educated and skilled human resource isa must. Unfortunately, the total factor productivity of theabove sectors is painfully low when compared with otherregional countries. among others, low levels of literacy,use of obsolete technology and unskilled labour force areperhaps the leading challenges.

On the demand front, macro drivers are consump-tion, investment, government purchases and next ex-ports. To improve the supply side determinants, keydrivers, as stated above, must grow faster than the supplyside determinants so that besides producers, investorsalso can reap the benefits in real terms. Unfortunately, asper the Household Integrated Survey, food expenditureconstitutes close to half of total expenditure of a majorityof Pakistanis. It is also learnt that a large size of potentialconsumer’s market is believed to be living on dis-savings.Nonetheless, remittances from overseas Pakistanis haverisen sharply recently which has stabilised the consump-tion indicator to some extent yet it is not enough to plowconsumption. In real terms, the indictor operates wellbelow its potential capacity.

real investment, the key driver of creating newemployment opportunities has fallen for the third con-secutive year in FY 11, according to the SBP. also sav-ings which feed into investment have remained low ascompared to world averages. The third component isgovernment spending or purchases, in particular, thePublic Sector development Program (PSdP). Ironi-cally, this has already been cut so badly that it has hitthe socio-economic indicators and the poor perversely.exports on the other hand have done remarkably welldespite of having an energy crisis and deteriorating se-curity situation in the country yet the sector has im-mense potential to grow.

To conclude the above discussion, high growth anda competitive domestic market are pre-requisites to al-leviate poverty and standard of living of Pakistanis.There can be substantial transformation in goods andlabour market if growth is sustained for a longer periodof time and the private sector welcomes the competitiveenvironment including foreign competition. local firmsmust learn to compete domestically before they startlooking outward. as millions of fresh graduates join thelabour force every year it becomes increasingly impor-tant for Pakistan to sustain high economic growth for along period of time and create jobs for the youth. If po-litical will exists then the task of achieving high sustain-able growth can become easy.

The writer is director Szabist, Islamabad. He canbe reached at asad.syedd@yahoo.com.au

WHIle there’s little surprisein the government’s failureto enhance tax earnings inthe year just ended, there isstill reason to rejoice – the

10 per cent year-on-year rise in exports in thelast five months. Optimism must still begreeted with caution, since the economy stooddevastated by floods at the same time lastyear, and a quantum jump in the correspon-ding period, while appreciated, might not beas intrinsic as portrayed by the numbers.

There are good and bad points in bothfindings. The tax debate lay at the centreof the decision to abandon the IMFstandby agreement. Unable to build con-sensus on tax reforms the Fund dubbedcrucial for sustaining the arrangement,the government wrongly banked onmacroeconomic stability to stimulategrowth. Now, with the IMF gone, and USaid held hostage to political/security de-velopments, other multi- and bi-lateraldonors have also backed off from provid-ing fiscal support to Pakistan’s economy.and with tax reforms nowhere in sight,

and the rs300-400 PSe drain goingnowhere in election-time, exports muststrengthen to relieve the intense fiscalchoke hold on the centre.

This is where the country’s finance ma-chinery should concentrate most of its en-ergies, while not foregoing tax initiatives, ofcourse. The trade development authority isvisibly posturing towards diversifying targetmarkets, which is central to a proactive ex-port strategy in a fast-changing interna-tional environment. Our traditional exportmarkets are severely compromised, and eu-ropean and other cross-atlantic sales willnot provide sustainable momentum goingforward. The key lies in regional expansion,followed by a more diverse modification.

It is also essential to reinvent our ex-port base. The current mix is insufficient,especially with the cotton price jump inthe international market no longer pres-ent. If the good news of the 10 per cent in-crease in earning is not followed by betterregional penetration and incorporation ofvalue addition, it too will fizzle out soonerrather than later.

The good and the bad

Real investment, thekey driver for creatingnew employment, hasfallen for the thirdconsecutive year in FY 11

Reinventingeconomic policies

Asad Hussain

E D I T O R I A L

A vista of opportunities

THe year 2011 and its eventshad put up numerous point-ers or signals showing effectsof an economy not properlygoverned. Nevertheless the

year has in its wake the potential and thestrength to brighten the economic out-look for 2012 in many ways. This is pos-sible only if we are prepared to thinkoutside the box to solve troubling issuesof the economy by building a balancedopinion on the real state of the union sit-uation. In the year 2011 there was a phe-

nomenal increase in home remittancesthat helped the local economy to meet itstrade requirements.

In a decade home remittances en-hanced from about one billion US dol-lars to more than 11 billion US dollars inthe last year. The inflow helped bridgethe trade deficit but this also generateda debate on this aspect of the economy.There is a point of view that due to in-flationary factors in the indigenouseconomy the remittances registered anupward trend. But there is also a pointof view that though remittances helpedthe local economy but they also resultedin producing an inflationary trend. Thetruth is obviously somewhere in themiddle of these two opposite views.

There has been some uncertainty inmany international economies as welland this factor in many ways helped tobalance the negative effect. But let us re-member that this opportunity must makeus ponder and plan better for the future.

every year a large percentage of profes-sionals like engineers, doctors and othersmigrate for education or jobs abroad.along with efforts to boost exports it isimportant the planning for provision ofhigher education must take precedence.

No economy in the world can be runwithout a system of thought rooted inthe real lifetime authenticities of its ex-istence. In all likelihood, we are headingtowards an electioneering regime andwe are never really prepared for this.every few years and in any political sys-tem people go to polls to elect a govern-ment. Unfortunately even after morethan six decades of experiencing manymajor upheavals in our development inhistoric and economic terms we do notseem to have learnt much in the way ofconducting our political economy andthe way we do our politicking.

We should be quite clear in our mindthat the whole idea of conducting an elec-tion is to help develop political economy

of the state. There is noreason for the argu-ments or the debate tobe bursting at theseams. election time isa great opportunity forthe nation to stream-line its ideas about thepolitical economy ofthe state. Just as in anyprivate enterprise anannual general meet-ing is always an oppor-tunity for thestakeholders to refresh its thinking andimprove upon the way the enterprisedoes its business. The business of thestate is spread over a large canvass whereit needs to steer the economy and workon managing relations with other coun-tries of the world for the maximum ben-efit of the people living in the country.

For all practical purposes the election-eering time can in fact help the economy to

improve if we are onlyprepared to think thepolitical and economiclinks in terms of work-ings of a modern state.In these fast changingtimes it is imperative wepull up ourselves to dis-cuss socio-economicand political issues inthe spirit of a nation thatcan learn to live decentlywith a variety ofthought. The year 2012

is indeed opening a vista of opportunitiesfor an economy to steer itself out of its trou-ble by following rational planning and tak-ing politicking in its true spirit.

The writer has served as consultant tothe United Nations and other developing

economies on the issues of trade anddevelopment. He can be reached at

amjadriazzz@yahoo.com

Amjad Riaz

For comments, queries and contributions, write to:

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

babuR saghiRCreative Head

haMMad RaZaLayout Designer

shahab JafRyBusiness Editor

ali RiZViNews Editor

MuNeeb eJaZLayout Designer

Tu e s d a y, 0 3 J a n u a r y, 2 0 1 2

No economy inthe world can berun without a systemof thought rootedin the real lifetimeauthenticitiesof its existence

kuNwaR khulduNe shahidSub-Editor

MaheeN syedSub-Editor

Tax revenueThis is with regards to the news re-port titled, “Govt fails in enhancingtax revenue”, published yesterday.Something needs to be done in thisregard. If the political leadership isunder the illusion that economy willimprove at its own, they may thinkagain. The taxation system requires amajor overhaul, but the problem isthose who have the power to do it gethurt. So we are stuck. IMF packagefor Pakistan was a policy suggestionand still there is some time left to fol-low it. Pakistan is part of the globaleconomy and it cannot act at its own;given the resource limitations.

MAxISLAMAbAD

Advertising via jinglesThis is with regards to the article, “Thejingle bells of creativity”, publishedyesterday. The writer has done a greatjob. Jingles play an important role inan advertisement’s recall. I can recallquite a number of famous jingles up tillnow, that keep popping into my mind.The one very popular advertisementthat I can never forget all my life is ofWaves and their catchy slogan, “naamhe kaafi hai”. The slogan was effectiveindeed because advertising is one ofthe most visible aspects of businessand one that can make a crucialdifference to the achievement of anyorganisation's aims.

TEHREEM TARIQLAhoRe

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Tuesday,03 January,2012

04news

standard chartered ceO, Mohsin Nathani

Economic cycles, locally andglobally do come about, butthat does not mean that youleave your customers

Karachi Stock Exchange loses 65points on rupee depreciation fears

KARACHISTAFF RePoRT

FrOM the onset of the new cal-endar year, the benchmark’sperformance remained sub-

dued as the index touched a low of11,194 points. Within a short span oftime market recovered the majorlosses to close at 11,282 points. Themajor economic concerns overshad-owed the attractive valuations. The ex-pected depreciation of PKr versusUSd kept the foreign inventors awayfrom the local market.

KSe 100 index closed at 11282.01levels with the loss of 65.65 points, whileKSe-30 index gained 16.17 points to

close at 10195.20 levels. all Share indexclosed at 7815.14 levels after losing41.68 points. Total 105 scrips advanced103 declined and 119 remain unchangedout of total 327 scrips traded. Bilal asifat HMFS believes that the 2nd Half ofFY12 would be fairly crucial especially

the current account numbers, trade bal-ance and sustainability of remittancesover $12 billion mark, while consideringthe energy related issues and politicaljolts may impact the investor senti-ment. Fertiliser stocks including Fa-tima and FFC bounced back

aggressively while engro and FFBl fol-lowed the sector leaders. With onset ofthe result season we may witness bettervolumes but rising political tempera-ture and economic concerns may con-tinue to overshadow the corporatesector performance, he added.

secP enables automaticverification of e-challansISLAMABAD: Securities and exchange Commission ofPakistan (SeCP) has enabled automatic verification of e-Challans for payment of fee. The new procedure shall beimplemented with effect from January 3, 2012, i.e. todayand is only available for online applications. Previously,at least one day was required in e-Challan verificationafter payment by the depositor at the bank. Under thenew procedure, systems of both SeCP and MCB havebeen linked online and now payments can be verifiedautomatically within a few hours’ time. as soon as theuser makes the payment at the designated bank branchof MCB; the bank branch shall automatically sendintimation to SeCP of receipt of payment, for furtherprocessing. This new procedure is expected to enhancefacilitation to SeCP’s e-services users and substantiallyimprove the turnaround time in disposal of onlineapplications. STAFF RePoRT

lPg industry rejectsclaims of cNg associationLAHORE: lPG association of Pakistan has rejectedclaims made by Ghayas Paracha of CNG associationthat shortage of CNG is being created to benefit thelPG sector. Spokesman for lPG association ofPakistan, Belal Jabbar said lPG is the only fuel thathas never enjoyed a government subsidy. Its price hasremained linked with international benchmark priceof Saudi aramco CP since 2007 and continues toremain volatile. CNG sector on the other hand has foryears thrived on a subsidized rate of natural gas andhas received protection and guaranteed profit marginsby having its price fixed at a discount to petrol. lPGhas had to compete with petrol and other fuels withoutthe benefit of a guaranteed profit margin orprotection. despite efforts by CNG sector to thwartdevelopment of lPG as autogas, lPG industry’srelentless efforts to establish autogas stations havebecome a reality. Four lPG autogas stations arecurrently operational with licenses issued to 24 morethat are in various phases of construction. “There areover 15 million vehicles operating on lPG globally, asopposed to 11 million on CNG. lPG is considered moreenvironment friendly than CNG and is far safer due toits lower operating pressure of 200 psi versus that ofCNG at 3600 psi” said Belal. STAFF RePoRT

fbR bans PVc, ld importLAHORE: Federal Board of revenue (FBr) bannedimport of PVC and ld pushing the stakeholders introuble and causing million of rupees worth of lossesto the importers, Profit learned on Monday. Importersof PVC and ld waste said that FBr did not informthem beforehand and imposed the ban all of a sudden.They said that their orders have been placed and morethan 200 containers were on the way or have reachedKarachi port, but FBr issued the sudden ban andcaused huge problems for them. “I have imported PVCand ld from europe but the custom officials are notreleasing the lot due to ban,” said an importerChaudhry Mubeen adding it is sheer injustice that theimporters are not given time and that the ban wasimposed haphazardly. He alleged that FBr’s decisionis made only to favour a local producer. He saidcurrently around 200 containers are stuck due to theban. He said that FBr is asking for showing healthcarecertificate of import for PVC and ld products. “allthese products are imported under waste and scrapmaterial and no one in europe, USa or anywhere inthe world issue such certificates,” another importerallah Yar Malik said adding that government collectsrs20-25 per kg duty on import of PVC and ld andcollects million of rupees through it. He said becauseof the ban government would miss that revenue. Hesaid if FBr wants to ban these products then at leastgive some time to the importers so that they don’tplace further orders. PVC and ld are used for makingplastic pipes, tables, chairs, sanitary goods, etc and itis expected that the prices of these products would goup with the ban. FBr Chairman Salman Siddiquewhile talking to Profit said the banning of theseproducts is not in his knowledge. “I will ask MemberCustom to look into the matter and give importers afair chance,” FBr chairman added. NAUMAN TASLeeM

banks remain closedKARACHI: State Bank of Pakistan and all offices of SBPBanking Services Corporation, inclusive of Public debtOffices, remained closed for public dealing on the 2ndJanuary, 2012, which has been declared as BankHoliday. all banks/dFIs/MFBs remained closed forpublic dealing on Monday. However, all officers and staffof SBP, SBPBSC, banks, dFIs and MFBs attended theoffice as usual. STAFF RePoRT

Govt to introduce PrivatePublic Partnerships law

ISLAMAbAdSTAFF RePoRT

TO expedite projects onPublic Private Partner-ship (PPP) basis, thegovernment will be in-troducing the Federal

Private Public Partnerships law toestablish function of the federalgovernment and responsibilities ofthe implementing agencies.

This information was providedat a meeting chaired by the Ministerfor Finance dr abdul HafeezShaikh, on the projects in thepipeline under PPP policy beingpursued by Infrastructure Projectdevelopment facility (IdPF).

The law would provide legal pro-tection to all stakeholders, and de-velop clear legal framework forprivate sector involvement in PPP

projects consistent, with existing na-tional and international regulatoryprojects. Sindh has already enactedPPP law and Punjab has also passedit under the realm of planning anddevelopment. The minister stressedto enhance the institutional arrange-ments in the realm of PPP collabora-tion, and develop spontaneous andlong-lasting relationship with all theline ministries and departments in-volved in the development of physi-cal infra-structure in the country.He also instructed IPdF to developclose collaboration with the Plan-ning Commission for the identifica-tion of the projects to be undertakenfor infrastructure development anddevise preliminary business plan forfuture programme.

The meeting was informed thatthe projects under IPdF and PPPinclude in total rs335 billion proj-

ects, including M-9 Karachi Hyder-abad, NHa Habibabad flyover, rail-ways track access, Karachi circularrailway, 500 MW lower spat gah hy-dropower project, revival of Sindhengineering, Karachi CNG bus,PHdeC-NTC cool chain, Caa fuelfarm and hydrant refueling, PIMSdentistry and liver transplant, Com-sats student’s hostel, lahore South-ern bypass, energy efficient streetlights for Islamabad and Faisalabadsolid waste management, and inte-grated slaughter house and hitprime movers manufacturing. Mostof the project’s financial and com-mercial feasibility was completed,IPdF told.

The meeting was briefed in de-tail of the project pipeline develop-ment which centered on proactivemarketing to agencies, organisationsand institutions responsible for de-

veloping infrastructure projects atall level and projects identified byrelevant agencies, organisations andinstitutions. The presentation alsocontained some snapshots of futureprojects which are NHa – MultanNorthern bypass, NHa – construc-tion of link road Tarnol to new Be-nazir Bhutto International airport,small hydel projects, railways stationdevelopment for Pakistan railways,widening of Islamabad highway,widening of IJP road, bus rapid tran-sit system MrT for twin cities, Is-lamabad airport cargo village andCommercial development andTheme parks (PBIT). The meetingwas attended by deputy ChairmanPlanning Commission, Secretary Fi-nance, Secretary railways, formerGovernor State Bank, dr Shamshadakhtar, Chief executive of IPdFand other senior officials.

Lack of data availabilityhampers gas exploration

KARACHIGhULAM AbbAS

laCK of data, aerial surveysand data processing sys-tem is hampering the ex-

ploration of gas in the countrywhere the existing volume of gasis decreasing with every passingday. CNG association in the coun-try has become a mafia and theyare blackmailing both the govern-ment and people to safeguardtheir own interests, this was ex-pressed by dr asim Hussain, fed-eral minister of petroleum andnatural resources during a pressconference here at the head officeof Sui Southern Gas Company(SSGC) on Monday.

He said absence of aerial sur-vey of gas rich lands, especially inBalochistan and Sindh due to se-curity reasons, was one of themajor reasons of gas shortage inthe country as no exploration car-ried out despite increasing de-mand of gas in the country.

There was no data processingunit despite spending around $1

million on the project in thepast. Oil and Gas developmentCompany limited (OGdCl) hasnot bought a single drilling rigsince 1995 to start work on ex-plorations, he said. However, theminister claimed, 12 engineerswere being sent abroad to gettraining besides the requiredmachinery were also being pur-chased to start the work on newgas reserves.

Talking about current gas cri-sis, dr asim said there was 4.2BCFd gas in the country againstthe demand of over 6 BCFd.Shortage of fuel would continueto haunt the people in Januarywith the forecasted shortage ofup to 2.5 billion cubic feet. “I hadearlier said that this winter couldbe worse than the prevailingpower shortfall, requiring majorconservation measures,” he said.

Out of the existing capacity of4.2 BCFd the CNG sector, powercompanies and captive powerplants were being supplied 310MMCFd, 647 MMCFd and 294MMCFd respectively while at

least 307 MMCFd were being lostunder UFG, the minister added.

Production of Balochistan,Sindh, Khyber Pakhtoonkhwa,and Punjab were estimated 17 percent, 69 per cent, 10 per cent andfive per cent respectively with theconsumption of seven per cent,41 percent, seven per cent and 45per cent respectively. Talkingabout the protest of CNG sector,he said, the illiterate interestgroups were holding the CNGoutlets and they were continu-ously blackmailing both the gov-ernment and people, especiallythe transporters, to save theirown interest. replying to a query,dr asim pointed out that peoplein CNG business were makinghuge profits as according to himthey were selling gas at 50 percent higher price as compared tothe purchasing rate. He admittedthat conversion of vehicles intoCNG power was a wrong decisionof the government and the com-mitments made to different sec-tors for supplying required gaswere also unjustified.

aPtMa to hold seriesof protests againstgas supply suspension

LAHORE STAFF RePoRT

all Pakistan Textile Millsassociation (aPTMa)management will hold series

of protests against gas supplysuspension to textile mills by SuiNorthern Gas Pipelines limited(SNGPl) starting Wednesday, 4thJanuary, 2012. Thousands of textileworkers will join hands with the millmanagement to protest against gassupply suspension to textile mills inPunjab at the Manga-raiwind road,said aPTMa spokesman. He furtheradded that top aPTMa leadership isalso likely to attend the protestagainst gas supply suspension forindefinite period by SNGPl. It maybe noted that gas supply to textileindustry has been suspended sincedecember 25 and SNGPlmanagement has informed that it isunlikely that gas supply would berestored in January. aPTMaspokesman said it is impossible forthe industry to continue withproduction plans due to severeenergy crisis, providing job to about10 million textile workers of Punjab.

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05

Tuesday,03 January,2012

news

CORPORATE CORNERZong wins ‘1stbankers t20 tournament’

LAHORE: Zong cricket team won the ‘1st BankersT20 Tournament’ by beating liberty Power by 5wickets. Bating first liberty Power set a mammothtarget of 197 runs in 20 overs. Zong Gladiatorz inreply, achieved the target in 20th over with theloss of 5 wickets. This exciting match waswitnessed by cheerful crowd, who appreciated theefforts being put in by Zong players in winning thetournament. Zong team was unbeaten throughoutthe tournament by outclassing Telenor, ericsson,MOl and Shifa International in the leaguematches. PReSS ReLeASe

samsung galaxy-y smartphone brings smart bid offerLAHORE: Samsung electronics Company ltd hasrecently launched the Samsung Galaxy Y smart-phone (model S5360). To promote this innovativeand affordable smart-phone for the youth,Samsung has launched an online Facebookcampaign called “Smart-Bid”. Through this offer,the participants will get great opportunities to wina brand new Samsung Galaxy smart-phone for aslow as rs1,000. Samsung Pakistan’s Managingdirector, Mr Hee Chang Yee said, “The SamsungSmart-Bid has been instrumental in creating apositive buzz for the Samsung Galaxy ‘Y’. Thisgives us a great platform to launch more attractivecampaigns for the revolutionary Samsungproducts in future.” PReSS ReLeASe

delegation of employees from Punjabmeets advisor to prime ministerISLAMABAD: a delegation of Shaheed BenazirBhutto Women Crisis Centres, from Punjab metwith the advisor to Prime Minister, Mr MustafaNawaz Khokhar, in the latter’s office in ministry ofhuman rights. The delegation requested theadvisor to address the grievances of the womencentres’ employees, who have been seekingregularisation of their jobs for many years. There

has been uncertainty and insecurity among theemployees. The delegation also appreciated theefforts of the advisor for taking notice andresolving their problems. Mr Mustafa assured thedelegation that their issues will be raised at theCouncil of Common Interests in order to reach anagreement with the Punjab government and allpossible steps will be taken for regularisation oftheir jobs. PReSS ReLeASe

brighto Paints receivesan international award

LAHORE: Pakistan’s fastest growing paintmanufacturing company; Brighto Paints (Pvt) ltdhas won an international accolade for its quality,leadership, technology and innovation. Khawaja ejazahmed Sikka, Chairman of the company, receivedthe ‘International Quality Crown award in the GoldCategory’ at the International Quality Convention ofthe Business Initiative directions, an event held inlondon to present awards to 74 leading companiesfrom 56 countries around the world for theirachievement in quality and excellence. BrightoPaints was the only company from Pakistan this yearto brighten up Pakistan’s name in the internationalbusiness market. PReSS ReLeASe

Qatar airways becomes officialairline of exxonMobil Open 2012DOHA: Qatar airways is the official airline of theQatar exxonMobil Open 2012 tennis tournament,taking place in doha from 2nd to 7th January,2012. Widely acclaimed as Qatar’s mostprestigious association of Tennis Professionals(aTP) event, former World No.1 players rafaelNadal and roger Federer will take centre stageand battle it out on the courts of the KhalifaInternational Tennis & Squash Complex in doha.The strong line up of players also include other topnotch players from around the world like theformer defending champion, Nikolay davydenkoof russia. Qatar airways Chief executive Officerakbar al Baker said that the airline is delighted to

bring the world’s best players to doha for what isone of the most prestigious sporting events in thecountry. PReSS ReLeASe

chourdhry akram receivesappreciation on winning electionsLAHORE: Choudhry Mohammad akram fromlabour Union CBa wins the all Pakistan Oil andGas Company (aPOGC) election for year 2011.While addressing on this occasion, Joint SecretaryGhulam Shabbir and Secretary General KalimKhan congratulated the labour Union, especially,Ch Mohammad akram. They further appreciatedthe labour friendly policies of ChoudhryMohammad akram and said, “We will continuesupporting our members in time of need andensure our performance exceed the expectations ofour supporters.” PReSS ReLeASe

ufone to assist citizens foundationin Rahbar mentor progammeISLAMABAD: Taking a step forward to promoteeducation amongst the underprivileged, Ufonevolunteers are assisting in “The CitizensFoundation’s (TCF)” rahbar mentor programme.In continuation of Ufone’s collaboration with TCF,an interactive workshop was arranged for Ufoneemployees in lahore. The workshop was toprepare the volunteers, who are taking part inTCF’s rahbar programme (commencing fromJanuary), and instill in them the knowledge andexpertise to carry out mentorship activities.Moazzam ali Khan, Head of Public relations andCorporate Social responsibility at Ufone, said thatthe volunteers were very keen on sharing theirexperiences with the students at TCF schools. Healso added that the aim was to make a difference,no matter how big or small, in the lives of thesechildren. PReSS ReLeASe

Pakistan Mercantile exchangerepresentation in turkeyKARACHI: Pakistan Mercantile exchange(PMeX) was recently invited to participate andmake a formal presentation in a seminar on“experiences in establishing effectiveCommodity exchanges in IdB memberCountries”. This seminar was held on 15th-16thdecember 2011 in ankara, Turkey and wasorganised by the Islamic development Bank.Participants in the seminar included Commodityexchanges and Chambers of Commerce from IdB

member countries, financial institutions, as wellas international consultants and specialists in thearea of commodity trading, financing andwarehousing. United Nations Conference onTrade and development (UNCTad) and Foodand agriculture Organisation (FaO) were alsorepresented at the seminar through their expertsin these fields. The purpose of the seminar was toshare experiences and learn from representativesof agricultural commodity trade, commodityexchanges, financial institutions and otherindividuals and organisations from developing aswell as developed countries. PReSS ReLeASe

caa extends date ofincrease in airport chargesKARACHI: Caa Pakistan has deferred theimplementation for enhancement of airportcharges to January 16, 2012 instead of January 01,2012. The revised or new charges will not apply onpassengers travelling prior to January 16, 2012.However, tickets issued now/before January 16,2012 with travel on/after January 16, 2012 will besubject to the revised/new charges. PReSS ReLeASe

Pia cuts night coach fareKARACHI: deputy Managing director PIa,Captain Junaid Younus said that as a New Yeargift and the immense response by the travelingpublic within the country, fares of night coachhas been further reduced from rs6,666 tors5,000 (excluding taxes). He said that PIa isoperating night coach flights with full load inorder to facilitate the domestic travel by air asthe rail-road services are not adequate to meetthe traveling demand within the country. SoonPIa would be announcing night coaches forMultan as well. PReSS ReLeASe

The central bank is thebackbone of dealingwith the enemies’pressure

iran President Mahmoud ahmadinejad

LAhoRe: Director General Provincial DisasterManagement Authority, Khalid Sherdil, handling overfirefighting vehicle Turkish Red Crescent to assistantcommissioner Murree. PRESS RELEASE

KunwAR KHuLdunE SHAHId

T He US threw another curveball at their chief nemesisIran, on Saturday, as PresidentObama signed into law a mas-sive defence bill, which in-

cludes strict sanctions on Iran. Thelatest sanctions target Iran’s financialsector, most notably the central bank,which is the hub of Iranian money or-chestrated by the finances generated

by oil trade. The sanctions also en-compass countries and foreign banksthat are involved in doing businesswith Tehran, and the rationale behindthe movie is to curtail Iran’s nuclearmaneuvers. Washington feels that bysmothering Iran’s fiscal nucleus theywould be able to up the ante suffi-ciently and in turn force the nation tobacktrack on its nuclear programme.However, the two missiles tested inthe waters of the Strait of Hormuzyesterday were the metaphoricalGrand Slam homer as Tehran clob-bered Washington’s latest pitch out ofthe Middle eastern ballpark.

Iran pulled out the Hormuz card re-cently, as was expounded in this spacea couple of weeks back. and while theWestern media initially touted it asTehran bluffing in desperation, Iranianhierarchy’s relentless repudiation show-cases the strength of the nation as itsimply refuses to succumb to the USbullying. The missile tests have depicted

Iranian potential when it feels that themenace of being cornered – at any level– is on the horizon. But the US is in con-stant denial and fails to accept the factthat a nation has the mettle to stand upto its skewed policymaking and un-remitting threats. Maybe, just maybe,Washington should accept its defeat intrying to force Iran into chickening outof its uranium enrichment plans andalso start reconsidering its policy in theregion – as a continuum of failures con-tinues to mar american wars on a mul-titude of fronts.

The prudent approach from Wash-ington would be to revert to diplomacy inlieu of war threats, which could have mas-sive ramifications, not only in terms ofblowing oil prices out of proportion; theycould also trigger a globally catastrophicwar. Washington talking about potentialmilitary action in Iran every single daywould only provoke Iran into further re-taliation. If the US genuinely wantsTehran to take the foot of the gas in itsquest for nuclear enhancement, noisesabout militaristic tactics are definitely notthe way to go about it. US needs to explorea new approach towards dealing withIran; for, one doesn’t need this writer’swords to realise the fact that the custom-

ary US stratagem is backfiring on a dailybasis. US government would be wise invying to settle the issue through dialoguesand engagement, or else Tehran wouldleave no stone unturned in its quest tonourish Washington’s paranoia.

Ten days of Iranian naval wargames culminated yesterday as theIranian vessels flaunted a new “tacticalformation”, which can be conjured upwhenever the government decidesupon the closure of the Strait of Hor-muz. Iranian Navy spokesman Com-modore Mahmoud Mousavi also statedthat for the first time, an anti-radarmedium range missile was successfullylaunched during recent naval drills.This signals the fact that Iran’s warningabout the strait’s closure is not a hollowclamour, but a veritable possibility nowthat Iran has paraded its naval prowessin the past week and a half.

The Iranian atomic energy Or-ganisation has also followed suit byannouncing that its scientists havetested the first nuclear rod producedfrom uranium ore deposits inside thecountry. This achievement connotesthat a colossal step towards becominga self-sufficient nuclear nation hasbeen taken by Iran; and that it now

possesses enough technological arse-nal to ward off West’s interference.This is exactly what has blown the lidoff Western apprehensions that Iran’sreal intent – with its development ofthe nuclear programme – is to de-velop a capability to enrich uraniumto the 90 per cent level that is re-quired to synthesize a nuclear bomb.

Following the news of the sanctionson Iran, the Iranian rial plummeted toan all-time low – sliding down to around16,000 to the US dollar. and of coursethat was to be expected as Iran’s fiscallocus has been shrouded by uncertainty.Nevertheless, the economic plunge hasnot dented Iran’s unwavering defiance,as President Mahmoud ahmadinejadreassured one and all that the centralbank was the “backbone of dealing withthe enemies’ pressure.” Characteristi-cally Mr ahmadinejad has rebuffed theWest’s delusion with regards to squeez-ing Iran’s economy by reassuring thecentral bank of its vivacity and by clari-fying that no amount of sanctions cancompel the nation to bring out the whiteflag that the West is hankering after.With Vice President Mohammad rezarahimi vowing recently that “not a dropof oil will pass through the Strait of Hor-muz if more sanctions were imposed”,Iran has unequivocally stated that theyhave scores of pinch hitters if US wantsIran to play ball.

The writer is Sub-Editor,Profit. He can be reached at

khulduneshahid@gmail.com

Distrust, diplomacy and defianceg The more sanctions Washingtonpulls out, the stronger is Tehran’s resilience

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top 5 perForMers sector wisesyMbOl OPeN high lOw cuRReNt chaNge VOluMe syMbOl OPeN high lOw cuRReNt chaNge VOluMe

Food ProducersAdam Sugar 18.72 18.70 18.36 18.38 -0.34 1,725AL-Noor Suger Mills 53.37 51.89 51.89 51.89 -1.48 1,000Bawany Sugar 11.99 12.99 12.99 12.99 1.00 500Chashma Sugar Mills 7.99 8.98 7.99 7.99 0.00 1Clover Pakistan 54.60 57.29 54.60 54.60 0.00 1

Household GoodsAL-Abid Silk Mills 24.50 25.50 24.50 24.50 0.00 1Diamond Ind. 8.20 8.93 8.20 8.20 0.00 1Pak Elektron Ltd. 3.49 3.64 3.35 3.40 -0.09 18,006Singer Pakistan 15.94 15.94 14.94 15.94 0.00 1Tariq Glass Ind. 8.20 8.30 8.01 8.22 0.02 3,417

Personal GoodsAL-Qadir Textile 13.00 13.25 13.00 13.00 0.00 501Amtex Limited 1.20 1.36 1.19 1.29 0.09 278,611Artistic Denim Mills 21.75 22.75 20.75 21.75 0.00 253Aruj Garments 4.50 5.00 4.50 4.50 0.00 1Azam Textile 1.11 1.11 1.11 1.11 0.00 1

Future ContractsAHCL-JAN 26.19 27.25 25.60 26.98 0.79 120,500ATRL-JAN 108.55 109.10 107.05 108.38 -0.17 96,500DGKC-JAN 19.15 19.19 18.90 19.10 -0.05 17,000ENGRO-JAN 93.63 96.50 91.20 95.68 2.05 1,460,500FFBL-JAN 42.70 43.70 41.21 43.43 0.73 1,355,500

Pharma and Bio TechAbbott Laboratories 99.79 101.00 99.00 99.73 -0.06 5,070Ferozsons (Lab) Ltd. 81.99 81.99 77.90 81.99 0.00 293GlaxoSmithKline Pak. 67.08 67.85 67.00 67.34 0.26 2,278IBL HealthCare 16.65 17.65 16.65 17.65 1.00 18,473Searle PakistanXD 45.06 45.06 45.05 45.05 -0.01 550

Fixed Line TelecommunicationP.T.C.L.A 10.39 10.17 10.00 10.09 -0.30 219,504Pak Datacom Ltd 34.50 36.20 34.50 34.50 0.00 1Telecard Limited 0.80 0.84 0.77 0.80 0.00 6Wateen Telecom Ltd 1.79 1.89 1.75 1.82 0.03 60,883WorldCall Telecom 1.00 1.05 0.91 1.00 0.00 410,692

ElectricityGenertech 0.37 0.38 0.30 0.30 -0.07 504Hub Power Co. 34.20 34.50 34.00 34.32 0.12 208,043Japan Power 0.65 0.66 0.61 0.62 -0.03 5,254K.E.S.C. 1.60 1.62 1.58 1.60 0.00 41,015Kohinoor Energy 15.77 16.24 14.80 14.86 -0.91 2,341

BanksAllied Bank Ltd 53.87 54.50 52.00 53.54 -0.33 60,371Askari Bank 10.03 10.14 10.00 10.11 0.08 19,802B.O.Punjab 5.41 5.62 5.27 5.56 0.15 799,088Bank Al-Falah 11.25 11.50 11.25 11.35 0.10 139,838Bank AL-Habib 28.53 28.80 28.11 28.45 -0.08 63,734

Non Life InsuranceAdamjee Ins 46.51 47.75 45.10 46.55 0.04 50,992Atlas Insurance 36.10 37.00 36.99 36.99 0.89 801Century Insurance 7.11 7.11 6.94 7.11 0.00 1EFU General Ins 38.15 38.47 36.51 37.38 -0.77 4,287Habib Insurance 9.85 10.00 9.70 9.91 0.06 1,398

Life InsuranceAmerican Life 14.50 14.50 13.50 14.50 0.00 2East West Life Assur 1.40 2.34 1.40 1.40 0.00 1EFU Life Assur 65.53 68.80 65.53 65.53 0.00 157

Financial ServicesAMZ Ventures A 0.38 0.37 0.32 0.35 -0.03 8,836Arif Habib Investmen 14.36 15.00 13.40 14.36 0.00 36Arif Habib Ltd. 14.18 15.14 13.75 14.28 0.10 5,540Dawood Equities 0.89 0.90 0.89 0.89 0.00 1Escorts Bank 1.50 1.69 1.69 1.69 0.19 1,000

Equity Investment Instruments1st.Fid.Leasing Mod 1.52 1.61 1.61 1.61 0.09 12,001AL-Noor Modar 4.20 4.06 4.06 4.06 -0.14 2,500Allied Rental Mod 22.45 22.45 21.33 22.45 0.00 26Asian Stocks Fund 2.50 3.50 2.50 2.50 0.00 1B.R.R.Guardian 2.53 2.70 2.17 2.26 -0.27 4,711

MiscellaneousPak Paper Prod. 30.76 32.25 31.70 31.96 1.201,500Security Paper 35.40 36.25 36.25 36.25 0.85500Pakistan Cables 32.00 33.58 32.00 32.00 0.00 1P.N.S.C. 12.71 13.00 12.35 12.71 0.00 31Pak IntCon(Pre) 8.99 9.99 8.99 8.99 0.00 10Pak.Int.Con. SD 65.99 69.28 66.00 69.28 3.29 6,344TRG Pakistan Ltd. 1.22 1.24 1.15 1.17 -0.05 476,139Murree Brewery 63.52 64.51 63.50 64.51 0.99 3,788Grays of Cambridge 23.00 24.00 22.05 23.00 0.00 30Shifa Int.Hospitals 26.20 27.51 26.20 26.20 0.00 20Hum Network Ltd. 16.00 16.25 16.25 16.25 0.25 500Dreamworld 527.00 527.00 525.00 527.00 0.00 3P.I.A.C.(A) 1.97 2.03 1.91 1.95 -0.02 15,020Sui North Gas 15.71 15.95 15.41 15.64 -0.07 12,793Sui South Gas 19.29 19.59 19.00 19.18 -0.11 6,345EFU Life Assur 74.80 74.58 71.30 72.98 -1.82 7,687Jubilee Life In 62.39 62.39 59.41 62.39 0.00 101Pace (Pak) Ltd. 1.30 1.40 1.25 1.32 0.02 63,514Netsol Technologies 8.62 8.65 8.01 8.45 -0.172 13,036Pak Telephone 2.18 3.00 2.18 2.18 0.00 1

syMbOl OPeN high lOw cuRReNt chaNge VOluMe

Oil and GasAttock Petroleum 412.50 412.90 408.60 410.84 -1.66 13,856Attock Refinery 107.65 108.58 106.51 107.72 0.07 244,929Burshane LPG 22.52 22.52 21.90 22.52 0.00 300Byco Petroleum 6.57 6.61 6.53 6.60 0.03 135,943Mari Gas Co. 81.00 81.94 80.51 81.45 0.45 7,131

ChemicalsAgritech Limited 15.36 15.99 14.36 14.36 -1.00 1,001Agritech(PREF)(R) 0.01 0.13 0.01 0.01 0.00 100Arif Habib Co SD 25.91 27.15 25.35 26.89 0.98 1,414,035Bawany Air Products 5.00 5.45 5.00 5.00 0.00 1Clariant Pakistan 149.00 152.88 148.01 150.00 1.00 4,060

Industrial metals and MiningCrescent Steel 18.15 18.65 18.00 18.24 0.09 9,008Dost Steels Ltd. 1.15 1.22 1.10 1.10 -0.05 8,097Int. Ind.Ltd. 38.01 38.50 36.11 37.05 -0.96 2,767Inter.Steel Ltd. 11.61 11.61 11.05 11.61 0.00 203Siddiqsons Tin Plate 6.51 6.88 6.51 6.51 0.00 18

Construction and MaterialsAl-Abbas Cement 2.50 2.60 2.40 2.50 0.00 3,008Attock Cement 51.00 51.99 50.50 51.00 0.00 874Bal.Glass 1.78 1.78 1.75 1.78 0.00 20Berger Paints 13.20 13.50 13.00 13.20 0.00 477Buxly Paints 5.61 6.50 5.61 5.61 0.00 1

General IndustrialsCherat Packaging 27.35 27.30 26.71 26.80 -0.55 2,318ECOPACK Ltd 3.66 3.88 3.38 3.45 -0.21 4,313Ghani Glass Ltd 41.03 42.15 40.05 41.03 0.00 16MACPAC Films 7.50 7.30 7.25 7.27 -0.23 500Packages Limited 82.72 83.00 81.00 82.66 -0.06 10,512

Industrial EngineeringAdos Pakistan 5.46 5.70 5.50 5.57 0.11 834AL-Ghazi TractorsXD 192.84 193.00 184.24 191.96 -0.88 231AL-Khair Gadoon 5.10 5.90 5.85 5.90 0.80 504Bolan Casting 28.50 28.99 28.50 28.50 0.00 10Ghandhara Ind. 7.28 6.50 6.30 6.49 -0.79 4,050

Automobile and PartsAgriautos Industries 57.50 57.50 56.50 57.50 0.00 4Atlas Battery Ltd. 161.71 161.80 161.00 161.40 -0.31 167Atlas Engineering 58.00 58.00 58.00 58.00 0.00 31Atlas Honda Ltd. 122.18 122.99 122.18 122.18 0.00 25Bal.Wheels 26.12 27.35 26.12 26.12 0.00 145

BeveragesMurree Brewery Co. 110.49 111.43 109.00 111.18 0.69 1,170Shezan Int’l 150.02 150.00 145.05 145.58 -4.44 203

Mutual Funds

fund Offer Repurchase NaV

Alfalah GHP Cash Fund 501.2900 501.2900 501.2900 Askari Islamic Asset Allocation Fund 114.7196 111.8516 111.8516Askari Islamic Income Fund 103.6501 102.6136 102.6136 Askari Sovereign Cash Fund 100.6900 100.6900 100.6900 Atlas Income Fund 519.3500 514.2100 514.2100 Atlas Islamic Income Fund 519.0900 513.9500 513.9500Atlas Money Market Fund 516.9700 516.9700 516.9700 Atlas Stock Market Fund 453.1500 444.2600 444.2600 Crosby Dragon Fund 82.9800 81.3500 81.3500 Crosby Phoenix Fund 102.5100 102.5100 102.5100 Dawood Islamic Fund 0.0000 0.0000 0.0000Faysal Income & Growth Fund 103.9600 102.9300 102.9300Faysal Islamic Savings Growth Fund 101.4000 101.4000 101.4000 Faysal Money Market Fund 101.1400 101.1400 101.1400Faysal Savings Growth Fund 101.4400 101.4400 101.4400 First Habib Cash Fund 100.8800 100.8800 100.8800 First Habib Income Fund 100.8900 100.8900 100.8900 First Habib Stock Fund 101.4400 99.4500 99.4500 HBL Income Fund 98.8551 98.8551 98.8551 HBL Islamic Money Market Fund 100.2278 100.2278 100.2278 HBL Islamic Stock Fund 105.1082 103.0473 103.0473

fund Offer Repurchase NaV

HBL Money Market Fund 100.2768 100.2768 100.2768 HBL Multi Asset Fund 87.0103 85.3042 85.3042 HBL Stock Fund 97.6745 95.2922 95.2922 IGI Income Fund 101.8987 100.8898 100.8898IGI Stock Fund 112.3545 109.6141 109.6141 JS Principal Secure Fund I 121.5000 111.5200 117.3900 JS Principal Secure Fund II 104.1200 96.5000 101.5800 KASB Cash Fund 0.0000 0.0000 100.1087Lakson Equity Fund 106.3763 103.2779 103.2779 Lakson Income Fund 102.2115 100.7009 100.7009 MCB Cash Management Optimizer Fund 100.5994 100.5994 100.5994MCB Dynamic Cash Fund 103.2259 101.6775 101.6775 MCB Dynamic Stock Fund 83.2931 83.2931 85.4288 NAMCO Income Fund 108.2753 108.2753 108.2753 National Investment Unit Trust 26.55 25.74 25.74PICIC Income Fund 101.3261 101.3261 101.3261 UBL Capital Protected Fund II 106.7800 101.4400 106.7800UBL Islamic Savings Fund 100.4576 100.4576 100.4576 UBL Savings Income Fund 101.9855 100.9757 100.9757

Markets

Tuesday, 03 January, 2012

06

top 10 sectors

49% 01%Construction & Materials

Chemicals Real Estate Investment

03%Electricity

01%02%

Fixed Line Telecommunication

17%Equity Investment Instruments

Financial Services

09%Banks10%Oil & Gas04%Personal Goods04%

International Oil PriceWTICrude Oil

$99.06

BrentCrude Oil

$107.27

STOCK MARKET HIGHLIGHTS

Index Change Volume Market ValueKSE-100 11282.01 -65.65 29,301,396 1,415,804,172LSE-25 2822.49 +28.33 649,399 13,840,663ISE-10 2485.98 -51.46 10,001 453,664

Major Gainers

Company Open High Low Close Change TurnoverFauji Fertilizer 149.54 154.50 147.90 153.95 4.41 1,411,482UniLever Pak Ltd. 5565.80 5570.00 5570.00 5570.00 4.20 39Pak.Int.Con. SD 65.99 69.28 66.00 69.28 3.29 6,344MCB Bank Ltd 134.60 137.85 133.00 137.08 2.48 1,094,024Engro Corporation 92.70 95.70 90.25 94.88 2.18 2,489,071

Major Losers

Nestle PakistanXD 3597.11 3609.77 3443.00 3453.50 -143.61 259Siemens PakSPOT 1056.75 1056.75 1003.92 1004.32 -52.43 66National Refinery 242.69 242.00 235.00 236.15 -6.54 46,622Oil & GasXD 151.62 151.98 147.11 147.74 -3.88 764,997Shahtaj Sugar 89.18 93.40 84.76 86.50 -2.68 1,160

Volume Leaders

Fatima Fert.Co. 22.92 23.94 22.72 23.84 0.92 9,985,940Fauji Fert Bin Qasim 42.43 43.45 41.10 43.22 0.79 3,350,157Engro Corporation 92.70 95.70 90.25 94.88 2.18 2,489,071NIB Bank Limited 1.73 1.77 1.61 1.64 -0.09 1,779,392Arif Habib Co SD 25.91 27.15 25.35 26.89 0.98 1,414,035

Bullion MarketPer Tola (PKR) Per 10 Gm (PKR) Per Ounce US$

Gold 24K 52,735.00 45,259.00 1,565.00Gold 22K 51,608.00 44,245.00 –Silver (Tezabi) 938.00 805.00 35.05Silver (Thobi) 1025.00 880.00 –

Interbank RatesUS Dollar 89.9349UK Pound 138.5807Japanese Yen 1.1590Euro 116.1599

Buy SellUS Dollar 89.50 90.00Euro 115.41 116.89Great Britain Pound 138.61 140.33Japanese Yen 1.1573 1.1712Canadian Dollar 87.32 89.22Hong Kong Dollar 11.35 11.61UAE Dirham 24.30 24.62Saudi Riyal 23.80 24.09Australian Dollar 91.00 92.94

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Tuesday,03 January,2012

analysis

07

I can firmly say that mobilefinancial services will have asignificant impact on the economicand societal growth of countries

President and ceO telenor Jon baksaas

ALI RIzvI

aCCOrdING to the State Bank of Pakistan’sfinancial stability review of the 1st half of2011, pre-tax profits of the banking indus-try rose to an impressive 77.3 billion, the

highest for the period in well over a decade. The re-cently released report further noted that during thehalf year under review, asset base of the bankingsystem witnessed strongest growth since 2007amid robust increase in investment, predomi-nantly in government papers. Therefore, for thebanking industry the incessant government bor-rowings have proved a blessing in disguise. The re-port highlighted that the amount of investment ingovernment papers has more than doubled fromrs1.08 trillion in december 2008 to rs2.62 tril-lion in June 2011. dispelling the impression thatPakistani banks enjoy the highest spread in theworld, the state bank report mentions that Pak-istan ranks 69 out of 122 countries with highspreads. However, what still needs to be under-stood is that the banking industry has fared rela-tively well in the last few years.

lackiNg fiNaNcial iNclusiONWhat seems to be lacking however in the bankingsector is financial inclusion that remains to be quitelow. In a recent study by Boston Consulting Groupfor Telenor titled ‘Shaping our financial future,’ thepercentage of un-banked adults is at a staggering 85per cent. Keeping in mind the strength of Pakistan’sbanking industry, such figures remain alarming tosay the least. This figure implies that 85 per cent ofadults in Pakistan are financially excluded. The sub-stantial growth in the telecom sector of Pakistan hasresulted in an increase in mobile sim penetrationthat according to estimates is approximately 60 percent of the total population. Growing density of mo-bile phone users presents an opportunity to thebanking sector to utilise the platform to bridge thefinancial divide in the country. adoption of branch-less banking therefore is an initiative that promisesgreat dividends for the country.

The fact that 85 per cent of Pakistani’s are fi-nancially excluded implies that they have to rely onoften illegal means to manage their money. The po-tential for the banking industry to further grow ex-ponentially is great. The same research by theBoston Consulting Group reveals that access to mo-bile financial services has the potential to increasePakistan’s GdP by three per cent in the next decade.MFS can potentially allow 27 million people to haveaccess to savings accounts through mobile phones,17 million people will be able to pay their utility billsthrough MFS, 10 million people will have access tocredit and four million people can potentially be in-sured through initiating branchless banking.

bRaNchless baNkiNgTo this effect the State Bank of Pakistan has takensome very good initiatives to promote branchlessbanking in Pakistan and other corporate entitieshave followed suite with the foremost example beingTelenor through their easy paisa scheme and UnitedBank limited with their Omni initiative. What easy

Paisa has done very successfully is that they haveleveraged their mobile phone subscriptions and

their distribution networks along with col-laborating with Tameer bank’s microfi-

nance initiatives to develop a system thatallows the un-banked lower and middleclasses to have access to branchlessbanking. The thing that stands out witheasy Paisa is that it is not only limitedto Telenor subscribers but is a facilitythat can be availed by all mobile phoneusers, a move that expands the domainof the services being offered. “Branch-less banking has the potential to cutdown on logistics, in the present age ofglobalisation of information. It has thepower to develop unprecedented elec-tronic linkages, allowing transactionsto be made with great ease,” said a sen-ior banker in SMe bank.

labORatORy Of iNNOVatiONState Bank data further consolidatesthe argument presented by the officialat SMe bank, noting that branchlessbanking transactions have increasedphenomenally by 27 per cent in July-September, while the volume of trans-actions increased by 43.2 per centduring the period under deliberation.

a research and policy centre at theWorld Bank, ‘Consultative Group to as-sist the Poor’ (CGaP), has said Pakistanis a laboratory of innovation for branch-less banking. With over 180 million peo-ple and a GdP per capita of $2400,according to the CIa world Factbook, thebanking industry of Pakistan after hav-ing enjoyed a year of success need’s todiversify into branchless banking to tapthis important resource. CGaP, con-ducted a survey in Pakistan were 300easy paisa customers were interviewed.The findings were astonishing, sincethey noted that almost 5 per cent of easyPaisa customers lived below $1.25 a day,while almost 40 per cent lived on lessthan $2.5 per day. The estimated furtherrevealed that over 90 per cent of all cus-tomers rated the service as highly effec-tive, with a significant proportion statingthat it had a huge impact on their lives.

It is encouraging to note that otherbanks have also decided to jump in andtap into this promising opportunity,with Habib Bank limited initiatingbranchless banking services in 2012.like UBl, Habib Bank limited has alsodecided to take this journey solo. Withbanking assets growing by an impres-sive 8 per cent in the period under re-view according to the State BankFinancial Stability report,, and the mar-

ket still evolving financial inclusionthrough branchless banking is an area that

promises to pay great dividends to the bank-ing industry in the year 2012.

Mobile banking can increase GDP by 3pc

KARACHISTAFF RePoRT

eVeN though, the recent hikein the prices of gas wouldgenerate additional rev-enues for the government, it

would at the same time impact themajor listed sectors adversely, if thesame was not passed on to the con-sumers, the analysts warned.

The federal government throughissuing two notifications, cumula-tively increased gas prices for variouscategories of consumers by 14 to 207per cent. “Where former reflects theimpact of change in international en-ergy prices, the latter is intended torationalise gas demand by reducingprice anomaly with other alternativefuels,” observed a Topline research

report issued Monday.This, the report said, would help

the government to generate additionalrevenue. The report said under recentgas price revision, gas prices for do-mestic (all categories), commercialand industrial consumers, increasedby 14 per cent while gas prices forWaPda companies and IPPs in-creased by 7-16 per cent. For fertilisersector, which consumes 10-12 per centof total countries gas, OGra increasedboth fuel and feed stock prices (for oldplants) by 14 per cent. On the otherhand, the report said, one time gascess by government of Pakistan wasimposed on industrial consumers (3per cent of existing price), power com-panies (6-19 per cent) transport/CNG(15 per cent) and feed stock for old fer-tiliser plants (193 per cent).

Operating on fixed return for-mula, the increase would not have di-rect bearing on SSGC and SNGPlprofitability, but is expected to easethe strain on individual company’sgas position.With 207 per cent in-crease in feed gas prices for old fer-tiliser, the impact will be negative onFFC, FFBl, engro old, agritech anddawood Hercules. However, the im-pact of gas increase is limited on newplants like engro enven and Fatima,as their feed price increased by only1.8 per cent (exchange rate variation).However, 14 per cent increase in fuelprice is similar for both old and newplants. “according to our estimates,the highest impact will be on FFC(rs350-370 per bag) unless, it ispassed on to the consumers whileminimum impact would be on Fatima

(rs20-25 per bag),” the report said.On engro, the weighted average

impact will be around rs180-200 perbag, since there is no feed impact onthe new plant.

“Similarly, it bodes negative fortextile sector, however, it will beslightly positive in long term as gascess would some how improve gasavailability,” it said. On account ofpass-through nature of fuel compo-nent in the IPP tariff, 35 per cent in-crease due to tariff increase and cessimposition would have no bearing onthe individual company’s profitability.

Furthermore, the report said,with e&P profitability linked to well-head gas prices rather than consumerprices, the aforementioned gas pricerevision would not have any bearingon the sector.

Impact of gas price hike on industryKARACHI

STAFF RePoRT

CONSUMer price index (CPI) inflation in the countryfell to signal digits during the month of december aftera lapse of 24 months to clock at 9.75 per cent as

against 10.19 per cent recorded in the previous month.Moreover, after February 2011 the figure registered a declineof 0.7 per cent on month-on-month (MoM) while average6MFY11 inflation stood at 10.9 per cent. “Though we still awaitthe complete break-up of the number but our initialassessment suggests that the soft number is primarilyattributed to declining prices in the food categorym,” saidNauman Khan of Topline Securities. The analyst said that inline with the historical trend food prices had softened as effectof eid-ul-azha faded away. With these soft numbers, there ishigh probability that current financial year, FY12, would seeaverage inflation falling well below the government’s target of12 percent, Khan added. another market observer, KhurramSchehzad of InvestCap research, opined that the inflation ratefor december was “way lower than the consensus forecast”.

inflation dips to single-digitafter two years

g Pakistan ranks 69/122 countries in terms of high spreads g Mobile density growth presents opportunity for banking sector g 85pc adults in the country financially excluded

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