profit.com.pk

Pressures intensify on Europeanleaders Page 02

Monday, 14 May, 2012

KaraChINNI

AGrICULTUre has to be im-posed in the forthcomingbudget for survival of coun-try’s economy; this was

stated by Senator Mustafa Kamal.Addressing a dinner reception

hosted by President All Karachi Indus-trial Alliance, Mian Zahid Hussain andformer Vice President, FPCCI, KhalidTawab to honour him and newlyelected Senators, Nasreen Jalil and DrFarogh Nasim at a local hotel on Sat-urday, Kamal said that if governmentkitty remains empty and did not have

money to buy event buy fuel for run-ning power generating plants it mustenlarge tax net and that could be pos-sible through imposition of income taxon agriculture sector.

“We have to enlarge our tax net andlevying agriculture tax is inevitable”,Kamal said. He said that without em-powering local governments no goodgovernance is possible in Pakistan.

While agreeing with the speakersabout theft in power sector to the tuneof billions of rupees every year he saidthat empower your local governmentcouncilor to collect bills and give himincentive for the job. He said that inorder to overcome energy crisis we

should go for alternate energy re-sources such solar and wind energy.

He cited the example of Bangladeshwhich has successfully overcome its en-ergy shortage through solar energy es-pecially in rural areas. He advised thebusinessmen that though it’s a difficulttime but they should not leave thecountry. “Do not move to Bangladesh,Sri Lanka, Dubai or anywhere else andlet’s put our own house in order”, Ka-mala Advised the business community.He hoped that this difficult would beover and businessmen should stayhome to revamp economy. The Presi-dent, India Pakistan Chamber of Com-merce of Commerce and Industry, S M

Muneer made it clear that there is noway out except imposition of agri-tax inthe forthcoming budget as governmenthas alternative source of revenue.

He said that he repeatedly advisedthe present government to sit togetherwith the stakeholders and find out so-lutions many problems being faced bythe country and the economy is facingworst ever crisis in the history of Pak-istan. He said that industries are clos-ing at a fast pace and he can provide along list of those factories which havebeen shut down already. He warmedthat country would not be able reacheven at the level of $23 billion due tothe pathetic condition and looming cri-

sis of power and gas. He said that insuch a scenario the government haseven stopped the refunds of exportersto further add to their woes.

He condemned the acts of violencein the educational institutions andmeaningless operation by the SindhPolice in Lyari which yielded no re-sults yet the massive resources andprecious lives of police and Lyari peo-ple were lost. Mian Zahid Hussainhoped that the rate of sales tax may bereduced in the forthcoming budgetand in that way the FBr would be ableto enlarge tax base.

He said that economy is in sham-bles and the government would have totake at least one wise step to levy agri-culture tax n the next budget. He saidthat at least there should be some goodsteps in the federal budget 2012-13. Hesaid that country is in bad shape rightnow due to energy crisis despite thatfact that there is no shortage of electric-ity in Pakistan and we have more gen-eration capacity than demand.

He said that the only problem isbad governance. Senator Dr FaroghNasim said that there should befriendly tax regime in the country inorder to revive ailing economy. Heurged upon all the races residing inKarachi to own this city and do not livehere like foreigners.

“Bringing in peace and harmony inKarachi is the key of political and eco-nomic stability in Pakistan”, Nasimsaid. He advised the chambers of com-merce and industry to teach the feudallords and ask them not to oppose agri-culture tax in the National Assemblywhere they are in majority.

Senator Gul Muhammad Lot saidthat despite the fact he belongs to rul-ing party but still he would support levyof agriculture tax in the next budget.Former Chairman, Korangi Associationof Trade and Industry, Masood Naqiappealed the young senators to raisevoice for the business community in thehouse. Khalid Tawab, Senator AbdulHaseeb Khan and Sardar Yasin Malikalso spoke on the occasion.

Shahab Jafry

We’re well into May, wellpast the April 30 deadlinefor russian energy giantGazprom’s final yes or no on

the Iran-Pakistan pipeline, rightly causingserious concern in Islamabad. Pakistan’sfinancing problems have already causedserious delay, constraining its ability tocomplete its part of the pipeline before theagreed Dec ’14 deadline. According to sov-ereign guarantees, Pakistan is liable to pay$1m per day in case of overshooting thescheduled completion date.

And even though the most recent of-ficial response has been the typical “willbe completed on time” (Ijaz Chaudhry),experts are beginning to seriously ques-tion Islamabad’s ability to deliver, espe-cially as American pressuresystematically removes all prudent av-enues of securing finances.GAZPROM GAMBIT: Sources close tothe project speak of a dichotomy in thegovernment’s position.

“One the one hand it (govt) is 100per cent committed to the project, andconfident it will complete constructionaccording to the agreed timeline,” said aconsultant with ILF, the German com-pany responsible for the project, on con-dition of anonymity. “One the other, ithas neither requisite technology nor fi-nances to achieve such an end.”

Speculation about Islamabad’s fi-nances is made worse by the govern-ment’s freeze on payments to ILF, andthe organisation’s Germany based par-

ent body’s decision to suspend resourcesto its Pakistan chapter till cash flow re-sumes. Others see the russian silence asa logical, lengthy analysis of an evolvingsituation that requires extremely pru-dent risk management considering thesize and scale of required investmentsand guarantees.

A senior project consultant, askingnot to be named since he’s not allowedpublic comment, told Pakistan Todaythat expecting an immediate answerfrom the russians was foolish to beginwith. “Seriously, the ICBC pullout wasquite a shock and embarrassment for thegovernment that staked the pipeline as acrucial vote winner in the elections. Thefeeling here has been that it overplayedthe Moscow card since the beginning,”he said. Indeed, Islamabad’s newfoundlikeness for Moscow, especially foreignminister Hina rabbani’s spirited out-reach, indicates something concrete isbeing worked on. But a definitive answercannot be realistically expected beforePresident Putin visits Pakistan later inthe year. For now, the russians willworry about the build-up to Pakistan’sgeneral election, and how different par-ties posture with regard to American andSaudi incentives of breaking away fromanything even remotely Iranian.

“Only and only if the russians areconfident the present dispensation willcontinue, or whichever replaces it willstay committed to the project, will theypledge the monies,” the consultant said.DEADLINES AND DELIVER-

ABLES: Interestingly, even though that

complicates deadlines and deliverables,whether or not ILF-Pak’s maintainingoperations indicates behind-the-sceneshope remains to be seen.

“russia’s backing away will seriouslylimit Pakistan’s options,” according toSalman Shah, former finance ministerand part of Gen Musharraf’s economicteam that negotiated prices with the Ira-nians. “If the russians back out, Pak-istan will not have access to technologylike compressors that are primarily US-made. And even if the question of raisingindigenous finances is settled somehow,the government does not have the polit-ical will to antagonise the Americans atthis point.”

Dr Shah also stresses that the proj-

ect, in its present format, is simply unvi-able. “They will have to renegotiateprices even if construction gets going.This government has agreed to muchhigher prices than we negotiated. TheIranians will have to be more realisticand offer us an affordable deal.”TAPI LIKELIHOOD: American pressureto break from the deal stems from its widersanctioning of forex inflows into Iran – cit-ing concern regarding Tehran’s uraniumenrichment drive – and advocates the alter-nate tapi project. Pakistan remains wearybecause since its inception in the early ‘90s,tapi has been considered unfeasible, owingto 475kms of proposed pipeline throughhostile Afghan territory. Strangely the re-sulting logjam, with Pakistan unable to

leverage either option, may bode ill for en-ergy projection, but does not render theproject completely useless, at least not justyet. “There was never any real likelihood ofthe Iran pipeline coming through,” accord-ing to Syed Sayem Ali, senior economist(MeNA & Pak) with Standard CharteredBank in Karachi. “They’re just using it as abargaining chip with the Americas as dis-cussions regarding nato supplies anddrone attacks near completion”. Sayem’stake will be tested shortly, as negotiationsare indeed almost concluded. If ILF’sfunding suddenly dries and bankruptcyprevents further operations, StanChart’smonthly economy review will indeed meritgreater appreciation.

“This doesn’t even suit the russians.Tapi should interest them more, it’s intheir natural area of influence. And theChinese have a natural interest in assist-ing the Iran pipeline. Yet neither arehappening, an indication of how compli-cated this particular problem has be-come,” Sayem adds.ENDGAME: It would seem that eventhe best case scenario of the russiansagreeing, that too on our terms (still con-tentious), would now not see Pakistanreaching the finish line in time. The Ira-nians have all but built their part of thepipe, while here work has not even begun.

“It’s a non-starter,” says Sayem.“Why do you think even financial andtechnical feasibilities have not beensanctioned?”

jafry.shahab@pakistantoday.com.pk

Hoping against hopeAgri tax is the only solution for economy’ssurvival: Kamal

TAXING TALES

Gazprom backing out of Iran-Pakistan pipeline?

PRO 14-05-2012_Layout 1 5/14/2012 12:04 AM Page 1

LONDONreUTerS

CONFIDeNCe is already inshort supply in financial mar-kets and could evaporate fur-ther in the coming week if

investors judge that europe’s often frac-tious political leaders aren’t mapping outa sustainable path through the currentcrisis. Over the past week investors havebeen rocked by the increased likelihoodof Greece leaving the euro, and an ad-mission by one of the world’s morehighly regarded banks, JPMorgan Chase(JPM.N), of an embarrassing failure inrisk management.

Many in the markets are now look-ing to europe’s political leaders to signala shift in the German-led austerity driveacross europe which they now see asthreatening the fragile recovery under-way in the world economy if cuts are nottempered with some efforts to encouragegrowth. Credit rating agency Fitch putthe whole of the euro zone on notice onFriday that were Greece to leave the cur-rency bloc as a result of its latest crisis,ignited by a voter rebellion againstbailout terms, the remaining countriescould find their sovereign ratings at risk.

“If you want to make sure the grad-ual improvement that you see will con-tinue, you need to improve confidence,”said Patrick Zweifel of Swiss fund man-ager Pictet Asset Management whichmanages around $359 billion of assets.

“Only the politicians can do this -even if they only say that they wouldagree to have some growth measuresgoing forward instead of more austerity.”

The flight to safety by investors overthe past week has taken the dollar to atwo-month high against a basket of cur-rencies .DXY, and pushed German andU.S. Treasury bond yields to new lows.

At the same time the MSCI’s index ofglobal share market performance.MIWD00000PUS has steadily given upmuch of the gains made earlier in theyear and, after falls of over two percentin the past week, was close to levels seenin January. Zweifel, Pictet’s chief econo-mist, says euro zone first quarter GDPdata due out on May 15 will confirm theregion is in recession, but could well bean improvement over the final quarter of2011, pointing the economy in the rightdirection. europe’s weak performancecontrasts with a U.S. economy which isstill seen on track for modest growth andwith signs the slowdown in China’s rapidexpansion has eased.EUROGROUP GATHERS: The euroarea’s finance ministers get the chance tobegin outlining a new growth-oriented

agenda to bolster the global outlookwhen they gather on Monday in Brus-sels, where the crisis in Greece and thebudget problems in Spain will likely topthe agenda.

The talks will be followed by a fullmeeting of finance ministers from acrossthe 27-member european Union onTuesday. Potentially of even more signif-icance to the markets will be Wednes-day’s first talks between the new Frenchpresident Francois Hollande, the Social-ist leader, and Germany’s conservativechancellor Angela Merkel.

The risk keeping investors on edge isthat what emerges from these meetings

could be a new approach that either re-laxes fiscal discipline too far or promotesgrowth measures that simply increasegovernment spending.

“Adding more debt, when some gov-ernments are already rationed, will likelyonly worsen the outlook for euro areasovereigns,” said Vincent Chaigneau,head of rates strategy at French Bank So-ciete Generale. Spain’s experience has ex-emplified the risks. Ten-year bond yieldshave shot up to over six percent sincePrime Minister Mariano rajoy on March2 said his government wouldn’t be meet-ing its deficit goal for this year and re-laxed the goal to 5.3 percent of GDP, upfrom the 4.4 previously pledged.GROWTH WORRIES: Concerns

about europe and its impact on U.S. re-covery won’t be far below the surfacewhen G8 leaders gather at Camp Davidat the end of the week, hosted by Presi-dent Barack Obama who faces an elec-tion in November.

europe’s problems were part of thereason the widely-watched S&P 500index touched two-month lows in thepast week before some positive news onthe jobs market and a sharp rise in U.S.exports for March prompted a slight re-covery. U.S. markets will mull over Aprilretail sales and inflation data on May 15and the minutes of the latest Federal re-serve policy setting meeting, due out on

May 16, for signs of how the central bankmay respond after its current marketsupport measures end in June. <FeD/>

In commodity markets, investors arefocusing on gold which has not gained atall from the safe haven buying that hasdriven up the dollar and major govern-ment bond prices. The gold price peakedat around $1,790 an ounce in early April,but has since slipped to $1,580 an ouncewith investors liquidating their holdingsto cover losses on other markets andmove into cash. “If it does further declinebelow that very important four-yeartrendline support (near $1,580) it opensthe door to a move probably towardseven $1,520 or $1,530,” said AshrafLaidi, chief global strategist City Index.

news02Monday, 14 May, 2012

NEW yOrKreUTerS

SHAreS of U.S. banks slumped onFriday after JPMorgan said it lostbillions of dollars on bad trades, butthe overall market ended only

modestly lower, thanks to gains in technologyshares. JPMorgan Chase & Co (JPM.N), thelargest U.S. bank by assets, dropped 9.3percent on record high volume after itdisclosed losses on derivatives trades. Thenews sparked fears that the problems couldreverberate through the banking sector. TheKBW bank index .BKX fell 1.2 percent.“JPMorgan will become a political issue. Thiswill increase regulations on banks, and theoverhang on large banks will last for awhile,”said Tim Ghriskey, who oversees about $2billion as chief investment officer of SolarisGroup in Bedford Hills, New York.

JPMorgan’s shares fell to $36.96, and tradingvolume was around 216.7 million shares onFriday. Wall Street ended lower for the secondweek in a row, as concerns about europe’sfiscal health resurfaced as political turmoil inGreece again sparked worry that it could exitthe euro and Spain’s ailing banks spurred fearsthe country could need a bailout, while someU.S. economic data raised questions aboutgrowth. But a survey released on Fridayshowed U.S. consumer sentiment rose to amore than four-year high in early May asAmericans remained upbeat about the jobmarket. The survey was a welcome sign amidworries that the economic recovery may beslowing down. The Nasdaq finished higher,outperforming the broader market. Shares ofchip maker Nvidia Corp (NVDA.O) rose 6.4

percent to $13.21 after quarterly results beatexpectations. The stock boosted the Nasdaqand was the S&P 500’s top percentage gainer.Other chip stocks also rose, with thePhiladelphia Semiconductor index .SOX up0.73 percent. Also in the tech sector, shares ofNetflix (NFLX.O) jumped 6.8 percent at$77.38. The Dow Jones industrial average wasdown 34.44 points, or 0.27 percent, at12,820.60. The Standard & Poor’s 500 Indexwas down 4.60 points, or 0.34 percent, at1,353.39. The Nasdaq Composite Index wasup 0.18 points, or 0.01 percent, at 2,933.82.Chesapeake energy Corp (CHK.N) shares fell13.9 percent to $14.80 after the company saidit may delay assets sales in order to preservecash flow needed to comply with requirementsof its corporate credit facility. For the week, theDow fell 1.7 percent, the S&P fell 1.1 percent,and the Nasdaq was off 0.8 percent. MarcPado, a U.S. market strategist at DowBull.comin San Francisco, said traders had helpedsupport the market by closing short positions -bets that stocks will fall - after gains at the startof May. “The trader types see that we camedown to that 1,340 area on the S&P 500,started to bounce, started to see some buying,some bottom fishing, then you got thatconsumer sentiment number, and that wascompelling enough,” he said. The disclosure byJPMorgan came as shocking news by a bankviewed as a strong risk manager. JPMorganestimates the business unit involved in thetrading loss will lose $800 million in thecurrent quarter, excluding private equityresults and litigation expenses. The bank hadpreviously expected the unit to post a profit ofabout $200 million. Jamie Dimon,JPMorgan’s chief executive, cautioned thatlosses could grow by another $1 billion,another hurdle for a sector already besieged bythe sovereign debt crisis in europe and fears ofslowing growth globally. The news weighed onbank shares as investors feared both a greaterrisk of more regulation and the potential formore such losses at other banks. The stocks,however, came off their lows of the morning.Citigroup Inc (C.N) lost 4.2 percent to $29.35and the Financial Select Sector SPDr (XLF.P)was off 1.1 percent at $14.82 and the S&Pfinancial sector .GSPF fell 1.2 percent.Financial stocks have been among the mostvolatile in recent months as investors questionwhat the growth outlook for the United Statesand the european debt crisis will mean for thegroup’s profits. JPMorgan has fallen 14 percentthis month. The CBOe VIX Volatility Index.VIX rose nearly 16 percent for the month in asign of growing caution. Thomsonreuters/University of Michigan’s preliminaryconsumer confidence index for May improvedto a reading of 77.8 from 76.4 in April, toppingforecasts of 76.2. Of the 453 companies in theS&P 500 that have reported earnings to datefor the 2012 first quarter, 66.2 percent havereported earnings above analysts’ expectations,according to Thomson reuters data. Thatcompares with more than 80 percent at thestart of earnings season and is below theaverage for the past 4 quarters of 68 percent.

Banks hit by JPMorgan; WallStreet ends week lower

baNGKOK NoeleeN Heyzer

UNCerTAINTY and volatilityhave quickly become the “newnormal” of the globaleconomy. For several

reasons, this turbulent externalenvironment poses the most significantthreat to Asia-Pacific growth in 2012.One of this environment’s main featuresis the ongoing weakness of majordeveloped economies. The expected V-shaped global recovery, from the depthsof the 2008 financial crisis, proved short-lived. The world economy entered asecond stage of crisis in 2011, owing toeurozone’s sovereign-debt crisis andcontinuing uncertainty about theeconomic outlook for the United States.Mapping the landscape of these threats,forecasting their impact, and presentinga range of policy options to helpcountries to ensure inclusive andsustainable growth despite the

uncertainty, is the focus of the UnitedNations’ 2012 economic and SocialSurvey of Asia and the Pacific. Ourforecast is that persistent headwinds willslow Asia-Pacific economic growth to6.5% this year, down from 7% in 2011.reduced demand for regional exportsand higher costs of capital, combinedwith loose monetary policies and tradeprotectionism in some advancedeconomies, will contribute to theslowdown. Nevertheless, Asia-Pacificgrowth will continue to outpace that ofall other regions, acting as an anchor ofstability and a new pole of dynamism forthe world economy. For example, South-South trade with the Asia-Pacificcountries in 2012 will help otherdeveloping regions, especially Africa andLatin America, to reduce further theirdependence on the low-growth advancedeconomies. Moreover, robust growthfrom the Asian economic powerhouseswill continue in 2012, with China likely togrow at 8.6% and India’s growth

expected to accelerate from 6.9% to 7.5%.The South-east Asian sub-region is likelyto record a slight increase in growth,owing to Thailand’s strong recoveryfollowing the 2011 floods, and annualinflation in the Asia-Pacific region as awhole is projected to fall from 6.1% to4.8%. The greatest risk to the Asia-Pacific economy in 2012 is a disorderlysovereign-debt default in europe, or anunraveling of the eurozone. This worst-case scenario could lead to Asia-Pacificexport losses of up to $390 billion in oneyear, with least-developed andlandlocked developing countries worsthit – losing as much as 10% of their totalexports. Although unlikely, such ascenario could reduce regional growth byas much as 1.3 percentage points, andprevent 22 million people from escaping$2-a-day poverty in 2012. A second keychallenge to Asian regional growth in2012 is commodity price volatility,together with a long-term rising trend.High prices and persistent volatility are

increasingly features of the “newnormal,” and both national and regionaleconomies need to adjust to this reality.The commodity boom that has resultedfrom higher prices presents both risksand opportunities. Price shifts alterincentives, but the less-developedeconomies of Asia and the Pacific mustresist the impulse towards narrowcommodity specialization. The lessonfrom the first round of Westernglobalization was that natural-resourcespecialization, especially in the poorestcountries, can delay industrialization,economic diversification, and thecreation of productive capacity. Anotherkey step in “shock-proofing” Asianeconomies will be to address the problemof jobless growth, unemployment, andrising inequalities. This needs to be agradual process of rebalancing,supporting greater domesticconsumption as an enhanced engine ofgrowth and productivity, job creation,and income equality. Other critical

economic-policy challenges in 2012 willinclude managing the balance betweengrowth and price stability – which willrequire inflation-fighting measuresbeyond monetary policy alone; copingwith capital flows, especially the surge inshort-term debt; dealing with exchange-rate volatility; and addressing the impactof extreme weather and natural disasters.The Asia-Pacific countries are fortunateto face the turbulence and uncertainty ofthe global economy this year from aposition of relative strength. High GDPgrowth rates, significant fiscal room formaneuver, and increasing economiccooperation make the region’s prospectsfor 2012 brighter than almost anywhereelse. Making the right policy choices – tobuild resilience and pursue a sustainablepathway to shared prosperity – willprepare Asia and the Pacific to flourish inthe context of sustained globaluncertainty. That is good news in atroubled and turbulent world.The writer is Under-Secretary-General ofthe United Nations and executiveSecretary of the economic and SocialCommission for Asia and the Pacific.

Courtesy: Project Syndicate

Shock-proofing Asia’s economies

Pressures intensify onEuropean leaders

PRO 14-05-2012_Layout 1 5/14/2012 12:04 AM Page 2

news

Monday, 14 May, 2012

03

NaWEEN a maNGI

IT’S early morning inKarachi, Pakistan’s biggestcity, and MuhammadNasir is outside his

makeshift shelter of palm leaves,rags, and bamboo, washing upafter breakfast. He uses waterstolen from a nearby supply pipethat belongs to the local waterutility. The 17-year-old bidsfarewell to his mother, anunlicensed midwife, and walks tohis tire-repair shop, an open-airstand in a residential area with atable of tools and a woodenbench. He checks to make surethe electricity he’s drawingillegally from the overhead powerline is on so he can run his tirepump. Then he sends 10-year-oldAbid, one of his two employees,along with 12-year-old Irfan, toget tea from a nearby shop.Nasir’s business, his home, hispower and water supply, andeven the cup of tea Abid bringshim don’t exist in Pakistan’sofficial figures. They’re part ofanother economy that doesn’tpay taxes or heed regulations. Itprobably employs more thanthree quarters of the nation’s 54million workers and is worth asmuch as 50 percent of Pakistan’s18 trillion rupee ($200 billion)official gross domestic product.And while the documentedeconomy had its smallestexpansion in a decade at 2.4percent in the year ended June2011, soaring demand for cars,cement for houses, and othergoods shows the undergroundmarket is thriving.“everything from auto parts tosports goods, knitwear, clinics,and beauty salons fall into theinformal economy,” says SayemAli, country economist atStandard Chartered Bank inPakistan. “All these make asignificant contribution toemployment and income, andthat’s one reason why theeconomy is still growing. Butsince Pakistan has one of theworst tax structures in the world,these fall under the radar.”Pakistan’s tax-to-GDP ratio—that’s taxes as a share of grossdomestic product—was 8.6percent in June, one of theworld’s lowest, according toMacroeconomic Insights inIslamabad. Only 25 percent ofthe economy is taxed if theundocumented sector is takeninto account, says Chiefexecutive Officer Sakib Sherani.Developing economies usuallyhave a tax-to-GDP ratio of from13 percent to 18 percent,according to Invest CapitalMarkets, a brokerage in Karachi.Former Finance Minister

Shaukat Tarin said in 2010 thatPakistan loses 800 billion rupeesa year in tax evasion: Thegovernment collected 1.7 trillionrupees in tax last fiscal year.That’s not enough to close thebudget gap, which is 6.3 percentof GDP. Nasir says he pays 200rupees a month to employees ofthe utility company to look theother way, and 400 rupees to thepolice to allow him to run hisunregistered shop. Then thereare the occasional politicalcontributions to local parties—protection money, in otherwords, to keep the parties’criminal components at bay. “Idon’t think paying taxes to thegovernment will do any good tome,” says Nasir. “We are already

paying taxes.”He spends the morning repairingtires and fixing motorbikes,taking payments in cash andnever issuing a receipt. Atlunchtime he sends for salad andyogurt or lentil curry from one ofthe nearby pushcart vendors,none of whom is licensed. Hismother and sister, a maid,supplement the family incomewith jobs in the informal sector.After work, a religious teachercomes to give them lessons onthe Koran at home, charging amonthly fee in cash that isn’treported to the government.Once a month, Nasir pays 300rupees rent to a man whoillegally settled on the land whereNasir’s family dwelling was built.

Only 1.5 million people, less than 1percent of the population, file taxreturns, according to the financeministry. That compares with 3percent in India. “A low tax-to-GDP ratio means we get into avicious cycle of high budget deficitsfinanced by printing money orborrowing, which adds to the debtburden and creates inflationarypressures,” says Asad Sayeed,director of the Collective for SocialScience research in Karachi.Pakistan has the fastest inflation inAsia after Vietnam, and its budgetgap may expand to 7 percent ofGDP in the year ending in June,according to the IMF.

Courtesy: BloombergBusinessweek

The secret strength ofPakistan’s economy

Dr KamIL Tarar

PAKISTAN is under crisesinternally as well asexternally. Acomprehensive solution is

required to bring positive change inour destiny as a nation. Thissituation of uncertainty can only beovercome by collective wisdom andinsights from leaders who have aproven and successful track recordof ensuring top performancethroughout their carriers. Pakistanneeds strong leadership in allsectors, which can make us feelproud of ourselves by helping usachieve our well deserved truestatus and potential. We need rolemodels who can give us strength,courage, confidence and inspire usby showing us the way to come outof shadows. One such high achieverand a leader is SadruddinHashwani who needs littleintroduction. By analyzing hisleadership vision and managementphilosophy we can help define therecipe for rebuilding our greatcountry. As far as Pakistan isconcerned Sadruddin Hashwani’srole in the developmental history ofthis country is undeniable. He is aman of yesterday, today andtomorrow. He is a true corporateleader and patriotic Pakistani. Hehas introduced new meanings tothe excellence in services in thehotel industry. He has alwaysadopted the right course for hispersonal and professional life. Hehas shown strong values and beliefsand effectively puts them intoaction. He was a pioneer of 5 Starstandards in hotels in Pakistandecades ago. Very few people wereaware of 5 Star standards at thattime. Due to Hashwani’s uniquemanagement and leadership style,these standards have not only beenmaintained over the years but arestill shinning bright as always. InPakistan where everything hasdeteriorated over the years, simplysurviving is a formidable task.Many big businesses andconglomerates have disappearedfrom the scene since they failed tomaintain their standards and brandnames. This issue has haunted notonly the private sector but manypublic sector companies have metthe same fate generally. The basicproblem lies in the failure toprovide strong and effectiveleadership, maintaining consistentperformance and investingadequately in human capital. Otherailments include compromisingintegrity, poor corporategovernance, corruption, lack ofadoption of latest management andleadership techniques, ignoringintegration of high end technologyand most importantly not to beflexible and change in a pre-emptive mode with changing times.

The change is happening at abreakneck speed even for adeveloping country like Pakistan.Handling change both internallyand externally with compatiblespeed demands vision, strategicplanning, efficiency and of coursefirm grip on the managementstructure of the organization rightfrom top to bottom. SadruddinHashwani has successfully anddiligently addressed these issues inall his businesses. His strength liesin his swift ability to handle andmanage the strong wave of changeevery day with integrity and dignity.His attention to detail is visible inhis sophisticated personality, choiceof words in his passionate speech,whether related to business or hisbeloved country Pakistan. Hisinfectious patriotism never fails toenthrall people while talking on anysubject about Pakistan. Thedeftness with which the successfulpeople like Hashwani maintain theprecarious balance in life, offers lotsof learning for us. He is anextraordinary person withexceptional courage like a lion,resolve and capability when itcomes to facing tragedies likeMarriott Islamabad’s bombing. Itsrehabilitation was not less than amiracle and all of us have witnessedit firsthand. He empowers hishuman resource that invariablyinstills confidence and sense ofresponsibility. It is evident in theprofessionalism and ease his staffmembers conduct business in hishotels and other organizations.Sadruddin Hashwani has strongfaith in the future of Pakistan andpotential of Pakistanis. He has builtstate of the art hotels in the leastdeveloped and neglected areas likeAzad Kashmir’s capitalMuzaffarabad and Gawadar port inBaluchistan to promote tourismand business as well. Investing inthese least income generating areasat the moment from hotel industryperspective clearly reflect hiscommitment to development visionof Pakistan. People like him aregame changers. His core values andgolden rules of management andleadership are a role model for all ofus. That is why “Hashwani’s 5 StarGold Standards” philosophy can beapplied across the board in allsectors of Pakistan to ensuresuccess and overcome failures inrebuilding Pakistan. This narrativecannot cover every aspect of hismulti dimensional and dynamicpersonality. His vision needs to bepromoted and emulated as this isthe need in these difficult times. Wecan benefit from his wisdom todefine a clear vision not only forover selves but for our corporateand political leaders as well.

The writer is a corporatecommunications analyst

SaIma aLI / ambrEEN raShEED

VISION plays a very vital role inour lives with the help of clearvision we usually sets our dayto day targets. Mr. Winston

Churchill says “The empires of the futureare empires of the mind.” Mr. robertFritz says “If you limit your choices onlyto what seems possible or reasonable,you disconnect yourself from what youtruly want, and all that is left is a com-promise.” Vision is the main aim in a

person’s life or entrepreneur. Vision con-tains the maximum potential that we asentrepreneur how to achieve the goals. Aclear vision is just like to have an anchorin the board and a blurred vision is justlike a board without having an anchor.entrepreneur are also called visionariesbecause they have ability to realize theirown potential of doing work, think out ofthe box ,analysis the business problemsand find out solution of it by having thevision in its mind. The vision start fromentrepreneur and entrepreneur is that

who brings his ideas in market and cre-ates business relationships which makethe vision possible. Vision without actionis day dream and action without vision isnightmare. A vision is not a strategy. Astrategy is the outline of the plan forachieving the vision. entrepreneurs typ-ically have great vision. entrepreneurshave the ability and work toward it eventhey may not be able to express the ob-jectives. entrepreneurs have clear vision.They just see it and are convinced that itis right. entrepreneurs are strong in his

vision. entrepreneurs without a clear vi-sion usually fail, because they make theirfocused on short term gain or to have alittle input but have more and more out-put of it. entrepreneur is a person whosells everything to everyone at the cost oftheir vision. It can be their customers,supplier, and partners. To achieve theentrepreneurial vision, the entrepreneurmust analysis the market gap .It is theprocess of determined that what changesyou should make in your business tofilled out that gap. entrepreneur mustsets targets which should be specific,measureable, attainable, and realisticand can be fulfilled on time. The entre-preneur must be worked smart ratherthan harder and have the capability todeal with the environmental risk as well

as operational risk; they have ability totake right decision on every time. Theyshould be transparence in the decisionwhich means the greater acceptance andhaving more support and the vision be-come fruitions. Goals for the businessshould be SMArT:n Specific _______Clearly defined

by those who have the knowledgen Measurable ____Quantifiably

defined in such a way as todetermine progress

n Achievable ____ Challenging andrewarding, but still within reach

n relevant ______Tied to currenttasks and abilities of the team

n Time-based ____related to anagreed-upon timeline

Entrepreneurial vision

Hashwani’s ‘Five StarGold Standards’ forrebuilding Pakistan

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