Friday, 02 December, 2011Pages: 7 profit.com.pk

UAE companies to make long-terminvestment in Pakistan Page 4Islamic interbank benchmark rate Page 3Can the US afford to bail out Europe? Page 5

ECC approves Rs2.3b gaspipeline to curb shortage

govt mulls over increase in power tariffby four per cent

ISLAMABADAMER SIAL

MiniSTeR for Water and PowerSyed naveed Qamar will chair acrucial meeting that will decide

issue of implementation of 4 per centsurcharge on power tariff from thismonth. an official source said a meetinghas been convened in emergency to sortout difference between ministries offinance, water and power and law overinterpretation of law for notifyingincrease in power tariff. The meeting willbe attended by the secretaries of threeconcerned ministries. Ministry of waterand power (MOWP) is withholdingnotification for imposition of 4 per centsurcharge on power tariff for last severalweeks as law ministry views it to be aviolation of stay orders granted againstthe previous surcharge of 2 per centnotified in May last fiscal year. MOWP isof the view that it can notify the newsurcharge, but law ministry’s argumentis that no surcharge can be imposed tillstay orders were vacated. acting oninstructions of international Financialinstitutions (iFis) government hasnotified imposition of 2 per centsurcharge on electricity bills in april lastfiscal to reduce power tariff differentialsubsidy. However, the notified surchargeof 2 per cent in May was challenged andcourts granted stay order. This haswithheld imposition of surcharge for lastfive months of current fiscal year.Pressed by iFis to increase power tariffto zero the subsidy during current fiscalyear government had made anamendment in regulatory law allowingnePRa to notify monthly fueladjustment charges. This was alsochallenged and stay was granted.Government is losing close to Rs30billion per month due to the subsidy. Thesource said ministries were involved inan unnecessary argument as there was away out by implementing the nePRadetermined new tariff for islamabadelectricity Supply company (ieScO).But government was not ready toimplement it due to political backlash asit will allow double increase in powertariff as compared to planned impositionof 14 per cent surcharge this fiscal year.However, he said finance ministry wasinterested in surcharge as it will godirectly to their coffers while new tariffimplementation will go to powerdistribution companies (DiScOs).

ISLAMABAD AMER SIAL

I n a major policy decision, the economic coor-dination committee of the cabinet on Thursdayapproved diverting of gas available in dormantLatif gas field to nearest gas Sawan processingplant to reduce the natural gas shortages in theshort term. The committee also allowed pro-

curement of 200,000 tonnes of sugar from the localsugar mills. it approved in principle the low BTU gas pol-icy and referred it to the council of common interestsfor approval. it also approved providing of sovereignguarantee of Rs6 billion on Pakistan Steel Mill’s (PSM)behalf, to the national Bank of Pakistan.

Building capacity utilisation Secretary Finance Dr Waqar Masud Khan told Profitthat ecc approved diversion of raw gas from Latiffield to the nearby Sawan processing plant. He saidit would allow injection of 100 mmcfd gas in the sys-tem. He said the state owned gas utility companieswill make an investment of Rs2.3 billion to lay a 50km pipeline to take the raw gas to Sawan plant. Hesaid a sub committee was formed to suggest amend-ments in the Petroleum concession agreement ofLatif field. He said the committee also directed bring-ing other dormant fields online.

oveRcoming gas shoRtfallecc deliberated on the summary proposed by Min-istry of Petroleum which considered laying of a new50 km pipeline from Latif field to Sawan plant wheresurplus capacity is available that can be used for pro-cessing. Foreign operators were reluctant to make ad-ditional investment in the construction of pipelineconnecting Latif field to Sawan plant saying it was noteconomically feasible due to low gas price capped at$2.64 per mmbtu as allowed under Petroleum Policy2001. Since there is acute shortage of gas on the sys-tem of two state owned gas utility companies, it wasdecided to buy raw gas at Latif field gate and take it toSawan plant for processing,

provided the Oil and Gas Regulatory authority allowsthis expenditure as admissible for determination oftheir revenue requirements and will become part ofconsumer gas price. approving the proposal, eccformed a sub committee comprising Deputy chairmanPlanning commission and representatives from min-istries of finance and petroleum and OGRa. The subcommittee will be forwarded their recommendation toecc regarding enabling steps and adjustments withthe petroleum policy. Secretary finance said the meet-ing also approved in principle the low BTU policy thatallows giving incentives for increasing the value of thegas to investors. He said the policy was referred to thecouncil of common interests for approval.

soveReign guaRantee foR steel millsHe said the committee also approved giving sovereignguarantee for a loan of Rs6 billion to PSM. The govern-ment, he said, was engaged in strategic thinking on howto run the entity. The cabinet committee on restructur-ing (ccOR) has already decided that PSM will be keptoperational and for meeting its raw material require-ments a financing facility will be provided to the en-tity. Only the ecc is authorised to providesovereign guarantee. ecc also approved summaryof Ministry of industries for purchasing 200,000tonnes of sugar from local market for strategicsugar reserves and supply to Utility Stores in com-ing months. However the committee directed thatthe sugar should not be purchased at cost higherthan the prevailing market value. it formed a subcommittee comprising of finance, fndustries andcommerce secretaries to formulate a mechanism tonegotiate with the sugar mill owners the purchaseof sugar below market price.

cpi falls to 11%Secretary finance briefedthe committee onthe key economicindicators andsaid inflation has

decreased with overall consumer Price index (cPi) inOctober, 2011 at 11 per cent as compared to previousyear’s value of 15.3 per cent in same month. inflationon food items has decreased from 21.0 per cent to 11.7per cent and non food items from 11.9 per cent to 10.5per cent this year. He informed that there is a suddendownfall in Sensitive Price index (SPi) with a latestvalue of 5.70 per cent. The prices of most food itemswith the exception of rice have decreased, he said.

conceRns oveR falling fdiHe highlighted that Large Scale Manufacturing hasdepicted great performance this year but export maycome under pressure in the coming months due to thecurrent economic crisis in europe and USa. Foreignexchange Reserves stand at $16.90 billion on novem-ber 28, 2011. He also pointed out that the falling For-eign investment can be a matter of concern, but thisdecrease is mainly occurring in portfolio investment.ecc directed the Board of investment and State bankof Pakistan to come up with a presentation on foreigninvestment in the next meeting covering the detailedprocesses of calculating investment, concerns of dif-ferent companies for non-investment, reasons of lowinvestment and their subsequent remedies for revivalof investment. ecc also stressed that this current de-

creasing trend of inflation is not being projectedamong the general public properly. There is a dire

need that this information gap be reduced, sopeople would be informed about all the posi-

tive changes as well. in this regard, mediashould play its role and inform the public

about all positive indicators.

g Sui Companies to make investment in 50km pipeline g Will help injection of 100 mmcfd gas in the system g Procurement of 200,000 tonnes of sugar allowed g Rs 6b financial guarantee for PSM approved g Food inflation falls from 21pc to 11.7 per cent

ISLAMABADJALALUDDIN RUMI

Finance minister abdulHafeez Sheikh admitted thatthe model of runninginstitutions by the state has

failed; as is evident from collapse ofPakistan Railways, Pia, Pakistan SteelMills and other State Owned enterprises(SOes) which were not run oncompetitive basis. Speaking at inauguralsession of the international conference oncompetition enforcement challenges andconsumer welfare in developingcountries, he said government was notinterfering in affairs of regulatoryorganisations to provide a level playingfield and they have performed welloutside government’s influence.Theminister said government is adoptingpublic private partnership to run SOes so

that they could be run on profitable basis.He said government has decided to runtwo trains; Gul train from Lahore toistanbul and Shalimar train from Lahoreto Karachi with private sectorparticipation in operation andmaintenance of cargo and passengertrain services. Giving example of bankingsector that government privatised in lastdecade, he said after privatisationbanking sector has flourished in last tenyears and their capacity to deliver hasgrown. He said growth in country’sprivate sector has given boost toregulatory system of the country. Hepraised performance of competitioncommission of Pakistan and said ithelped introduce the culture ofcompetition in different sectors. He saidchina, indonesia, Korea and india, bychanging their models in last twodecades, have contributed enormously to

growth in their economies. He said due toprudent policies; the country’s economywas showing encouraging signs ofrecovery. He said exports and Foreignexchange Reserves have gone up andcurrent account deficit has declined. Hesaid Federal Board of Revenue (FBR) hascollected Rs640 billion worth of taxduring first five months with 28 per centgrowth in current fiscal year. Latertalking to reporters, the minister said thatincrease in petroleum prices was adifficult decision but said governmenthad to pass on the impact in internationalmarkets to consumers. ccP chairperson,Rahat Kaunain Hassan while touchingupon key areas of competition lawenforcement, advocacy and challengesfaced by ccP in implementingcompetition law said that we lookforward to enrich ourselves by learningabout experiences of developed and other

developing regimes. Speaking aboutperformance of ccP, Rahat said despitebeing in its infancy it has takensignificant enforcementactions. industries thathave been taken on andpenalised includebanks (Rs205 million),cement (Rs6.3 billion),sugar (proposedmaximum penalty), LPG(Rs318 million), poultry(Rs50 million), edible oil(Rs50 million), jute mills(Rs23 million), dredging(Rs200 million),etc.internationalcompetitionconferenceaims toexamine

status of competition enforcement invarious jurisdictions with particularreference to emerging economies suchas Pakistan. Participants of theconference are discussing five themesthat include challenge for competitionagencies to deal with cartels and cartelsin disguise, deceptive marketing andconsumer protection, lessons learnt andsharing of country experiences inadvocacy and enforcement, state aidand distortion in competition, andpublic procurement and collusivebidding affecting consumer welfare.Local panelists include representativesof consumer right associations, businesscommunity, cSF, and government ofPakistan. conference participantsinclude senior management membersof corporate firms, legal community,academia, state-owned enterprises andgovernment of Pakistan.

State unable to run institutions: Dr Sheikh

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debate02NAuMAN TASLeeM

GOveRnMenT shouldfocus on expanding innercity markets, should notallow any developmentscheme to have plots of

over 400 square meters, decrease faresin public transport to support the poor,encourage sub-national government fi-nancing, reduce commercialisation levyand local government be given financialautonomy. These are the few sugges-tions made by Planning commission.The report has addressed certain issueslike urban economy, transport, land re-forms, etc, in detail and gave certainproposals to address these problems.although the report was made someeight months ago, still there is noprogress being made in this regard. De-mographic trends show that the coun-try’s population has been rapidlyurbanising, with an average annual rateof urbanisation exceeding four per cent,since 1951. it is estimated that by theyear 2030, Pakistan will be predomi-nantly urban with 45.6 per cent of itspopulation living in urban areas andabout 12 cities housing more than onemillion people. The urban populationrecorded during the 1998 census wasnearly 43 million and is currently esti-mated at 63.1 million. The tremendouschallenge of absorbing such a massivenumber of people in urban areas andproviding them with shelter, food, em-ployment, healthcare, education, mu-nicipal services and recreation facilitiesis made more difficult given shortage ofurban facilities and resources, skilledmanpower and good governance. De-spite the challenges, urban areasdemonstrate immense economic poten-tial to generate growth in the country.economic activity in urban areas pro-duces at least 78 per cent of the nationalwealth (GDP) of Pakistan and can be in-strumental in enhancing prosperity andincreasing per capita income.

state of uRBanisationin 1981, about 24 million people wereliving in urban areas that represented28 per cent of country’s total popula-tion. in the 1998 census, the urban pop-ulation increased to 43.5 million,constituting 32.5 per cent of the totalpopulation (143 million). The total pop-ulation of the country has now reached173.5 million and the urban population63.1 million, increasing the level of ur-banisation to 36.3 per cent.

uRBan economycities are growing fast and contributingto economic growth. For example,Karachi alone accounts for 60-70 percent of the national revenue and 40 percent of value-added in the manufactur-ing sector. changing structure of theeconomy indicates that manufacturingand the services sector are driven forcein urban economy. informal sector alsoplays a major part in developingeconomies absorbing some 30 to 70 percent of urban labor force, reflecting aninability of the modern formal sector toabsorb the growing urban labour force.Sectors like construction, wholesale andretail trade, transport and communica-tion and, even manufacturing, operatewith high levels of informal employment.Recommendation: There are sub-stantial market potential and marketingopportunities in the inner-city areas.Market intelligence can help cities at-tract investment in often overlookedinner-city areas. The city cluster eco-nomic development process can be use-ful in accelerating economic growth inurban areas through infrastructure de-velopment, provision of financial inputsand creating better environmental con-ditions. The capacity building to im-prove local government management ofurban areas is essential. The local gov-ernments should be given financial au-tonomy and should be encouraged toraise more revenues from local taxes.

uRBan poveRtya high unemployment rate, increase inprices and a deteriorating law and ordersituation in urban areas have increased

the incidence of urban poverty.Recommendation: improve employ-ment opportunities for the poor in keysectors through technical education andprovide quality and affordable health-care infrastructure to combat urbanpoverty. This can be done through thepromotion of affordable insurancecover and through the establishment ofpublic sector utilities subsidised by localgovernment taxes.

uRBan landalmost all cities in the country are facedwith acute shortage of land which hasresulted in extremely high land prices.Land at appropriate scale and price isnot available for industrial and commer-cial enterprises or housing and infra-structure projects. The available land isalso being used inefficiently due to ex-travagant nature of existing land useregulations and planning standards andprevalent informal processes. inabilityof cities to meet the land and housingshortage has led to large scale encroach-ment on public and private land and theproliferation of ‘katchi abadis’.Recommendation: expand land sup-ply in urban areas through renewalprojects in the inner areas and promotedensification in new development proj-ects, reserve state land with metropoli-tan areas for low-income housing anddeliver this land through market mech-anisms and halt the use of the Land ac-quisition act 1894.

Building Bye-laws existing laws, byelaws, zoning regula-tions and policies impede an efficient andeconomical use of land. These laws andregulations are mostly anti-street, anti-pedestrian, anti-mixed land use, anti-high densities and anti-public space.They do not provide sufficient space foramenities such as schools, health facili-ties, parks and playgrounds.

Recommendation: create a governingbody to maintain and monitor standardsand practices among property developers,regulate property dealers and agents andenforce professionally set standards.amend the zoning and building regula-tions and match the market preferences atdifferent locations and zones to supporthigh density, high-rise and mixed land usepatterns. Review byelaws, such as thoselevying commercialisation charges, asthese have become severe constraint ondevelopment of rental premises for resi-dential and commercial purposes. intro-duce certification process for the propertydealers in the formal sector that ensures aminimum knowledge of property law,property transference and the dynamicsof property markets.

physical infRastRuctuRePhysical infrastructure continues to bea serious problem in urban areas. Gen-erally, it is poor in quality and its cover-age limited and inequitable.Underground sources of water supplyare fast depleting due to heavy with-drawal and surface water is threatenedwith municipal sewage and waste waterdischarges and pollution.Recommendation: Divert sewage totreatment plants in large parks so that itcan be used for horticulture purposes.Similarly, in small towns, divert sewagefor use in agriculture to generate rev-enue from its sale. Discontinue buildingopen drains for sewage disposal in smalltowns. Make all sewage flow through anunderground system. install bulk watermetering for specific purposes andareas so that water theft and usage canbe easily monitored. initiate solarpumping for water supply to save onenergy costs and cater to disposal fail-ures during periods of load-shedding.Make pavement construction an inte-gral part of all road construction withintowns. Support all road constructionand street paving through an effective,open and paved drainage system sothat road surfaces are not damaged.

social infRastRuctuReSocio-cultural and entertainment activ-ities in the cities tend to play a leadingrole in economic diversification, en-hancing social integration and engagingthe younger generation in healthier ac-tivities. cities are losing multi-class so-cial, cultural and entertainmentactivities and the infrastructure thatsupport and promote them, such as artgalleries, theatres, cinemas, exhibitionhalls, fair and festival grounds, parksand playing fields, public meetingplaces, city halls, tea and coffee houses,art schools and libraries: all are close toextinction except for the elite.Recommendation: Develop and im-plement guidelines for an aestheticallypleasing, energy efficient, socially re-sponsive architecture, signage and streetfurniture. integrate heritage conserva-tion into the overall cities/towns plan-ning and development process. allocatespace for educational/academic, enter-tainment and recreational activitiesbased on a study of demand. Develop inand around shrines, parks, transportand cargo terminals, sports facilities etc.

housing and Real estateUrban areas are confronted with enor-mous housing deficit, estimated to be2.7 to 3 million units. The supply side isextremely weak, meeting about one-third of the requirements. Public sectorhousing schemes are few and take verylong to develop. Hence the deficit is ag-gravating. in the recent floods nearlyhalf a million housing units have beenaffected in the urban areas making thehousing situation worse.Recommendation: establish HousingPrice index (HPi) and Housing accessindex (Hai) with the assistance of Fed-eral Bureau of Statistics. Subsidize gov-ernment land within metropolitan areasthrough market mechanisms for low in-come housing. Roll back the benefits and

exemptions conferred on urban elites.allow low-income housing on 60 squaremeter plots, long and narrow, width todepth ratio 1:3, with permission to buildground plus 2-1/2 floors. The built-uparea of the plots should be a maximumof 70 per cent and a density of 1,500 to2,500 persons per hectare may beachieved. create independent neighbor-hoods around open spaces rather thanalong streets through planning. Develop(and locate) low-income housing withinthe city through incentives to developersand landowners, and a market based ap-proach for providing subsidies to low in-come groups. Remove restriction onheight of apartments for lower-middleand middle-income groups allowing aminimum density of 1,500 persons perhectare. Plan all commercial and officecomplexes mixed use with 30 per cent ofthe floor area reserved for residentialand recreational purposes. Regulationsfor such areas should be developed as aresult of an urban design exercise spe-cific to the area in which such complexesare to be located.

uRBan tRanspoRtUrban transport is a key factor in im-proving living conditions and loweringthe cost of transportation and of doingbusiness in the cities. Traveling be-tween and within cities have increasedmanifold due to growth of population,increased economic activities and lowdensity haphazard sprawl segregatinghomes from places of work. Due to badtraffic management, roads have becomeexcessively congested.Recommendation: Due to an absenceof affordable, flexible and comfortabletransport, the number of motorbikes asan option is on the increase in Pakistan.The number of motorbikes, for example,in Karachi, has doubled in the last sixyears. The only problem with the promo-tion of motorbike use is that women donot drive motorbikes in Pakistan. This re-striction can be overcome by the promo-tion of new societal values. Segregatevehicular and pedestrian movements toremove congestion. For this, properpedestrian-friendly footpaths are re-quired in addition to car and motorcycleparking arrangements. However, publicmoney should not be employed in build-ing parking infrastructure for the benefitof private automobile owners. instead,local governments should be encouragedto raise parking fees and promotetaxi/public transport services. adopt BusRapid Transport options as opposed torail-based systems on account of lowercost and the flexibility in selection andchange of routes. Replace rolling stockfor bus systems every six to seven yearsas opposed to thirty years for the trainsystem. consider floating of municipalbonds to raise funds for the financing oftransportation systems. Subsidize publictransport fares for the urban poor. Thiscan be done by raising road tax on over1300cc vehicles, adding an insurancesurcharge for vehicles of over 1300cc, re-moving duties on the import of buses,charging for advertising on transport ve-hicles and on bus stops.

uRBan secuRitySecurity of life and property is one ofthe most basic functions of the state.This security is also related to preven-tion of accident through any form (fire,disaster, building collapse, terrorism,etc. Human security in urban areas hasworsened. This is due to a breakdown inlaw and order as well as a result of soci-etal transformation from caste-based toclass-based social structures.Recommendation: Provide a re-sponsive governance system and effi-cient and accountable linedepartments. The creation of such agovernance system and line depart-ments cannot take place without polit-ical will and the creation of requiredand trained manpower, leadership andknowledge of the problems the peopleof Pakistan face in their daily lives. Re-view security arrangements providedto the officials of Pakistan’s establish-ment so as to minimise the socio-eco-nomic disruption and alienation thatthe current procedures are creating.These arrangements cause hardship tourban dwellers, affect their livelihoodsand healthcare systems.

Friday, 02 December, 2011

Urbanisation

Photo cREDIt: Sher Ali

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On november 22, 2011, Thomson Reuterslaunched what it claims to be the world'sfirst islamic finance benchmark rate, de-signed to provide an objective and dedi-cated indicator for the average expected

return on shari’a-compliant short-term interbank fund-ing. The islamic interbank Benchmark Rate (iiBR), asThomson Reuters would like to call it, uses the con-tributed rates of 16 islamic banks and the islamic sectionsof conventional banks to provide a reliable and much-needed alternative for pricing islamic instruments to the

conventional interest-basedbenchmarks used for main-stream finance. This is aninteresting developmentthat needs scrutiny from ashari’a and economic per-spective.

interbank lending andborrowing between conven-

tional banks creates interest-based debt. in the case of is-lamic banks, however, interbank deposits are based on,by and large, what is known as commodity murabaha. al-though commodity murabaha has for some time beenrecognised as a shari’a compliant product, subject tosome strict shari’a guidelines, the fact remains that suchcommodity murabaha based transactions and productsare either priced in terms of LiBOR or a local interest-based benchmark. The question then arises: how will thenewly launched iiBR be different from conventional in-terest rate benchmarks?

My feeling is that the financial behaviour of iiBR willbe positively correlated with the benchmarks used for theparticipating banks' existing products. My suspicion isthat the iiBR will be only marginally different from therespective local interest-based benchmarks and theLiBOR. However, if the proposed iiBR is used by a suffi-cient number of participating banks, the individual banks'portfolios will gradually change in favour of the iiBR-linked products. This in due time will create an islamicbenchmark different from the interest-based bench-marks. This will, however, happen only if islamic banks"borrow" only from within the islamic financial servicesindustry. in other words, if segregation of islamic fundsis maintained on a systemic level and not on just institu-tional level, an islamic benchmark like iiBR will be useful.This basically means that the countries where islamic

banks exist, conventional banks should not be allowed tooffer islamic financial services (similar to what Qatar hasdone recently). My own view is that the practice of com-modity murabaha should be disallowed to "borrow" fromor "lend" to conventional banks. Once, islamic banks startconducting commodity murabaha amongst themselvesonly, a distinct islamic market will emerge, which wouldmaintain a separate benchmark for islamic banks. This"valve" between islamic banks and conventional bankswould decrease the threat of arbitrage, which otherwisewill always emerge if a separate and different islamicbenchmark is introduced in a market where an interest-based benchmark already prevails.

it is interesting to note that the iiBR uses datafrom16 participating banks, which also include some con-ventional banks offering islamic financial servicesthrough islamic windows. inclusion of the conventionalbanks in the list of the founding participating banks, inmy opinion, is the basic flaw of the newly launchedbenchmark. involvement of the conventional banks in de-termining iiBR will necessarily retain conventional think-ing on pricing of islamic financial products. after all, veryshort term lending and borrowing by conventional banksis driven by making money from money, as short-termlending (e.g., overnight deposits) does not lead to any realinvestments, and the lenders get a return on purely finan-cial investments.

a simpler solution is based on qard hasan (or interest-free loans) to borrow and lend on a short-term basis be-tween islamic banks. in a cooperative environment,islamic banks with excess liquidity may decide to lend toother islamic banks in need of short-term liquidity. centralbanks must make it compulsory for islamic banks to offera certain percentage of their excess liquidity in an islamicmoney market that would allow liquidity-deficit islamicbanks to borrow that money on an interest-free basis.

in case of Pakistan, for example, the State Bank of Pak-istan can decide to issue a sukuk on its own buildings byway of selling the real estate assets to an independent fund,which would securitise these assets. The islamic bankswishing to manage their excess liquidity should be allowedto buy such a sukuk to receive rental income. The trade insuch a sukuk may also take place on the Karachi Stock ex-change allowing islamic banks to invest or divest at theirdiscretion. This will also allow islamic banks to earn anycapital gain arising from the secondary market trading. al-ternatively, the islamic banks may like to keep the sukukeither to maturity (which could be 30 to 90 days) or/andany intermediate redemption days, pre-announced by thecentral bank. in this context, the sukuk issued by the gov-ernments of Sudan and Bahrain should be studied to de-velop a comprehensive framework for development of agovernment-supported islamic money market in Pakistan.

The writer is a Shari’a advisor to a numberof banks and financial institutions and can be

contacted at humayon@humayondar.com

THe central bank contradicts itself.First it explains its (obvious)“dilemma” – excessive governmentborrowing has compromisedadvances to the private sector. Then

it expects the incredible – the 200 percentagepoint cut so far this fiscal should translate intoincreased private off-take during the second half.in effect, cutting rate or holding steady, recentdevelopments point towards a different sort ofdilemma, where SBP autonomy is diluted byexogenous events no matter how strongly itpostures to safeguard it.

Strangely, monetary policy has been revolvingaround the current account deficit practically sincethe onset of the ongoing fiscal year. First, inabilityto generate funds fueled excessive borrowing,diluting a tight monetary regime meant to pressureinflationary trends. Borrowing remained high evenas unexpected export windfall swelled reserves.Then when tightening screws did not (obviously)arrest high prices, the policy engine was reversedto stimulate growth and encourage private sectorinvestment. Yet the government remained

excessively present in the money market, feedinginto a risk-averse banking structure reluctant toextend liquidity to private initiatives.

The monetary policy statement fails to noticein as many words that the economic engine hasstopped responding to interest rate toggling. Butperhaps its most penetrating finding is the needfor the government to initiate comprehensive taxreforms. Simply put, the sooner islamabad fallson its own funds to service its running expenses,the sooner banking sector liquidity will bechanneled into investment, employmentgeneration and GDP growth. That the centralbank has been unable to impress this simpleeconomic rule upon the government obviouslydoes not speak well of its prized autonomy. andcommercial banks, too, find it only too convenientto lend to the government as opposed to privateinvestors. Best not indulge in risk managementand turn attention to mounting nPLs again. atsome point the government’s addiction toborrowing will have to stop. Unfortunately itseems that will not happen till hyper-inflation andpublic revolt deliver a stern message.

The SBP dilemma

Should Islamic banksborrow only from otherIslamic banks?

Islamic interbankbenchmark rate

Humayon Dar

GM food necessary to overcome hunger?

The article reads like a thoroughly brainwashed outcome of the Mnc's corporate prop-aganda, without understanding how Biology and agriculture operate, or bothering torefer to independent research on what is wrong with GM – easily available on the inter-net all that has been demonstrated the world over.How can the author, unload such false and dangerous disinformation and marketinghype on the public, especially in islamabad, which city already suffers from excessiveand unwarranted influence from vested interests, both local and foreign?There is a need to check out the updated information on global food security issues.The world already produces enough to feed 11.5 billion people, but it does not reach thehungry in the South, whose fundamental rights to food and livelihoods have been soldout by rights-violating commodification of food, land and other essentials by self-serv-ing governments and politicians to multinational agro-businesses, WTO’s (non-)freetrade, and global financial and food trade speculators. GM technology development isself-contradictory and ultimately suicidal, as it depends on wild biodiversity to obtaingene traits it needs to fiddle with ("modify") to obtain so-called "new" varieties, whichare then patented and also aggressively imposed on small farmers who do not needthem. Yet GM is a continuation of monoculture that has already destroyed most of theworld’s edible biodiversity. if not anything else, the author at least needs to read up onwhat the Un and FaO have to say about what will happen if we do not at the earliest re-turn to traditional, organic, sustainable agriculture, and if the world continues doing in-dustrial agriculture. This has already degraded most of the world’s soils, poisoned itswater bodies, as well as wrecked the health of poverty-stricken peasants and farmerswho work the land, by following the misguided, profit-oriented-for-the-Mncs path.

NAjMA SADequekARAchI

E D I T O R I A L

Stardom of reinventing

HOW strange this mightsound to one’s ears, thetruth remains that theworld we live in has be-come perplexed and

competitive. Masses have become impa-tient and appreciative of only the fin-ished goods and products. The irony isthat no one remembers or cares aboutthe poor guy who came up with the ideain the first place. in the end, it’s allabout perfecting the final product. Sowhat is the image that comes to your

mind when you read the word ‘inven-tor’? Let me tell you what i think of aninventor; a petite skinny nerd wearingglasses, messy hair dressed up in a labcoat, playing with a computer or somegadget. as sad as this picture mightsound, it’s the hard-line truth.

interestingly enough, this hasn’t al-ways been the case for there have beentimes when inventors too were in thelimelight and mattered. They wererevered and regarded as towering, ro-mantic figure geniuses such as LeonardoDa vinci, alexander Bell or Thomas edi-son. But sadly, with the passage of timedynamics have changed and it seems likethe inventors have lost their aura. if youask me how this all happened and howthe inventors lost their charm, then i’dblame the modern day marketers whowith their linguistic charm and skills tomarket and present an idea, stole theshow; analogous to someone stealing acandy from a baby. The most recent and

significant example that comes to mymind is that of Steve Jobs and i do notmean to discredit or take anything awayfrom him. He was a true genius in everyway who went on to revolutionise at leastfour different industries. Jobs had a nat-ural gift which was to perfect other peo-ple’s inventions; he would optimise themand had the nag to buff and polish otherpeople’s ideas in such a manner that theywould turn into gold mines and simply ir-resistible commodities. in a way youcould say that Steve was sort of a conartist or a remix artist. Take for instancethe case of the spectacular graphical userinterface of the Machintosh computer;the idea which Jobs very convenientlyborrowed from Xerox PaRc.

Have you ever thought about or won-dered who in the world invented the firstdigital music player or for that matter, thesmart phone? i don’t know and i am sureyou don’t either. These people never sawany fame come their way or were never on

the cover page ofForbes or Time maga-zine. But we all knowwho came up with theiPad and the iPhone,just because he hasbeen on the cover page over a dozentimes. i mean, Jobs was a true visionaryand when he looked at a smart phone, hesaw a better smart phone. To be a vision-ary, you have to be different and think outof the box. a creative thinker is someonewho would use electricity to put out firesrather than start them, who would look atan ordinary light bulb and see a wirelessdata transmitter that could replace Wi-Fi? These aren’t ordinary thoughts;they’re not even different, rather they’redownright weird. Jobs had the talent toseek out and see through things what theywere actually supposed to do. Take for in-stance, the digital music player – in 1979,a British engineer named Kane Krammerdemonstrated the iXi, a digital audio

player. He wasn’table to turn it into acommercial product,but apple has ac-knowledged the im-portance of Kramer’s

work and came up with iPod. The world we live in today is such

that it has given a downright cheap out-look to the inventors. They have becomea necessary evil, but let’s not even for asecond forget how crucial they are tothe world and how much we need them.a lot of things we see around us aren’tpretty and a rough draft of the future iswaiting for someone, like Jobs to hand-pick them and refine them into some-thing that will change the world.

The writer is Texas A&M Universitygraduate who is currently employed with

Telenor in the Products - CommercialDivision. He can be reached at

syed.jan@gmail.com

Syed Omer Jan

For comments, queries and contributions, write to:

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

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F r i d a y, 0 2 D e c e m b e r, 2 0 1 1

The times, theyare a changing,once upon a time theinventor mattered

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Friday,02 December,2011

04news

ceo unilever pakistan, ehsan a malik

A lot of our volume andvalue growth is a result ofthe evolution in the retailenvironment in Pakistan

trade officers at missionsto be appointed soonISLAMABAD: Ministry of commerce has initiatedthe process of selecting Trade Officers in grade 18,19 and 20 for posting in the Pakistan missionsabroad. Officers of commerce and trade areentrusted with the responsibility of tradepromotion, facilitation, regulation anddevelopment through different organisations andPakistan's commercial missions abroad. Totalnumber of officers in the group is 266. commerceand trade group officers have the role of careercommercial diplomats. They are posted in Pakistancommercial missions abroad (presently 62missions) right from commerce secretary to theposition of trade minister. StAFF REPoRt

pol puts Rs40 billionadditional burden on massesLAHORE: Government has put an additional burdenof Rs40 billion on the masses by increasing petroleumproducts prices. agriculture alone will have to bear thebrunt of Rs16 billion whereas elite will pay merely Rs3billion. agri Forum Pakistan chairman Muhammadibrahim Mughal estimated that farmers were usingaround four billion litres of diesel per annum foragriculture purposes. The steep increase in diesel pricewould put an extra burden of Rs16 billion on poorfarmers, who were already being fleeced through black-marketing of agriculture inputs. He indicated that rabicrops, including wheat, gram, sunflower, canola andvegetables, production could shrink from 10-15 percent due to massive increase of petroleum productsprices. StAFF REPoRt

offices of state Bank of pakistan, Kse toremain closed on monday and tuesday KARACHI: State Bank of Pakistan (SBP) and alloffices of SBP Banking Services corporation, includingPublic Debt Offices, will remain closed on Monday andTuesday, the 5th and 6th December 2011 (9th and 10thMoharram-ul-Harram). Both days are public holidays,declared by the government of Pakistan on the occasionof ashura. also, Karachi Stock exchange notified themembers and other market participants that stockmarket would remain closed on aforementioned daysand that the exchange shall reopen on Wednesday, 7thDecember. StAFF REPoRt

lcci delegation to leave for india todayLAHORE: a hundred-member Lcci delegation, led by itsPresident irfan Qaiser Sheikh, is leaving for india today ona five-day visit to take up non-Tariff Barriers and otherbilateral trade related issues with their counterparts. Onthe first day Lcci President irfan Qaiser Sheikh wouldinaugurate Punjab international Trade exhibition(PiTeX-2011) in the morning while in the eveningdelegation would have a working dinner at PHD chamberof commerce and industry. On 3rd December, delegationwould meet chief Minister Haryana Bhupinder SinghHooda wherein Lcci President would highlight issuescoming in the way of bilateral trade and hand over a set ofproposals to expedite the volume of trade. This would bethe first Lahore chamber delegation that would be givenchief Minister’s protocol and would be hosted by Haryanachief Minister. On 5th December, Lcci delegates wouldhave a meeting with Federation of indian chambers ofcommerce and industry (Ficci) office-bearers andexecutive committee for a threadbare discussion on non-Tariff Barriers. Ficci would be informed of sentiments ofPakistani businessmen regarding MFn status to india. inthe evening of December 5, delegation would attendworking dinner arranged by the World PunjabiOrganisation (WPO). StAFF REPoRt

KSE gains 24pts backed by oil sectorKARACHI

StAFF REPoRt

THe Karachi stock market re-mained positive on Thursdayand gained 24.54 points on the

back of what the analysts observed in-stitutional interest in the blue-chipscrips from oil and banking sectors.

“Positive close was witnessed atKSe on institutional interest in oiland banking sector stocks,” saidahsan Mehanti, director at arifHabib investments. The day wit-nessed the benchmark 100-shareindex closing at 11,557.37 pointsagainst 11,532.83 points of Wednes-day. The intraday high and low was,respectively, recorded at 11,613.24and 11,532.83 points. Whereas thetrading volumes remained as low as27.472 million shares compared to38.491 million shares of the previousday. The trading value, however, setin the red zone and fell to Rs1.259billion against Rs1.546 billion on theprevious day.

Of the total 313 traded scrips, 111

advanced, 108 declined and 94 re-mained unchanged. The market capi-talisation closed static at Rs3.00trillion. The KSe-30 index also gained19.63 points to close at 10,819.87 pointscompared to 10,800.24 points of theprevious day. The intraday high and lowfor the index was recorded at 10,861.89and 10,780.88 points.

The analysts said that the investorsshrugged off the ongoing diplomatictensions in the Pakistan-US ties and theaffects of central bank’s static policyrate at 12 percent on Wednesday.

Jahanigir Siddiqui company main-tained its position as volume leader ofthe day and counted its traded shares at3.319 million with its share price, how-ever, closing lower at Rs5.61 after open-ing at Rs5.83. Other best performersincluded Japan Power, Silkbank Lim-ited, McB Bank Limited, DG Khan ce-ment, Fauji Fertiliser Bin Qasim, engrocorpSPOT, Fatima Fertiliser company,netsol Technologies and Oil and GasDevelopment company Limited. Thecompanies’ traded shares werecounted, respectively, at 2.5 million, 1.7

million, 1.2 million, 1.2 million, 1.2 mil-lion, 1.0 million, 1.0 million, 1.0 millionand 0.920 million shares.

The future market also marked adownward activity and saw the trad-ing turnover decreasing to 2.3 mil-lion shares against 3.3 million sharesof the previous day. The scrips thatgained numbered 45, those cate-gorised as minus were 60 and threeremained unchanged. engro-Deccontinued to lead the companieswith 0.606 million of its sharestraded on the day.

KARACHI StAFF REPoRt

PaKiSTan is a growing market andUnited arab emirates (Uae)based companies operating here

are being touted to make long term strate-gic investment. Uae expo 2011, besidestargeting manufacturing, trade, services,investment and tourism sectors, willstrengthen public and private sector tiesbetween the two countries.

These views were expressed by speakersat “Uae trade and investment conference”

held at Karachi expo centre. The interna-tional conference was held in collaborationwith Federation of Pakistan chambers ofcommerce and industry (FPcci) on the sec-ond day of the expo. Pakistani ambassadorin Uae Jamil ahmed Khan advised Pak-istani businessmen to take full advantage ofopportunities in emirates for re-export busi-ness. He said 40 per cent of exports to Uaeare re-exported to african countries. He saidPakistani exports to Uae can be enhancedfrom 2 per cent of Uae’s global trade to 6 percent with the help of planned efforts. currentbilateral trade between Uae and Pakistan is

over $7 billion. ceO of Karachi electric Sup-ply company (KeSc) Tabish Gauhar saidmanagement of Dubai based firm abraajcapital has already invested almost $500million in the city’s power company whilemany projects have already been completed.The 560-MW combined cycle Power plantwhich would be completed by next year,KeSc has also stuck a deal with a foreignfirm to get power from Thar coal, he added.

President and ceO of Pakistan Telecom-munication company Ltd (PTcL) Walid ir-shaid said that his company will make moreinvestment in Pakistan to fully transform

PTcL into a world class telecom company.“We have transformed PTcL into a mod-

ern company offering all icT products inPakistan and we are here to stay,” he saidwhile sharing the experience of his companyin Pakistan and investment opportunities.

He said Pakistan is a growing marketand we are making long term investment tooffer world class network to local consumerswho are quality conscious. Regional generalmanager asia Pacific north and indian subcontinent etihad airways, Joost den Hartogsaid his airline was doing great in Pakistan.We are running daily flights from Karachi,

islamabad, Lahoreto Uae and twicea week from Pe-shawar. We areplanning to en-hance our oper-ations in Pakistanin future henoted.

ISLAMABADJALALUDDIN RUMI

cOMPeTiTiveneSSSupport Fund (cSF)while expressing its dis-satisfaction over imple-mentation of 18th

constitutional amendment and 7thnFc award; urged government toform a commission with sunset clauseto oversee completion of implementa-tion while managing fiscal implica-tions; enhancing provincial revenuegeneration; rationalising current ex-penses and PSDP.

competitiveness Support Fund(cSF), a joint initiative of ministry offinance, government of Pakistan andUnited States agency for internationalDevelopment (USaiD), made a pres-entation to key institutions responsiblefor economic management of thecountry on a recent study on intergov-ernmental finance.

Research team was led by ShahidJaved Burki, renowned economist andformer finance minister of Pakistan. italso included Dr aisha G Pasha Direc-tor institute of Public Policy of BnU,former Federal Finance Secretaryahmed Waqar and cSF team consist-ing of Shahab Khawaja ceO, imranKhan and Mehr Shah.

in his keynote presentationShahid J Burki briefed participantsabout scope of study and impact ofintergovernmental finance post 18thamendment and 7th national Fi-nance award (nFc) and challenges

and opportunities for federal andprovincial governments. Shahid JBurki in his briefing said "Two ex-tremely important developmentshave taken place in Pakistan recently.The first was the announcement ofthe 7th national Finance commission(nFc) award in november 2009. anunprecedented 56 per cent of revenueconstituting divisible resources hasbeen committed to the provincesunder this award. The second wasparliament's ratification in april 2010of the 18th amendment under which18 ministries have been devolvedfrom the center to the provinces."

He further said together, the twoinitiatives aim at fundamentally re-structuring fiscal and functional equa-tion between central and provincialgovernments in the country. "althoughthe 18th amendment is expansive inscope, the primary purpose of the cSFstudy was to focus on intergovernmen-tal finance aspect of process of devolu-tion. Study results will contribute to abetter understanding of the fiscal im-plications of the 18th amendment inlight of resource shifts from the federalto the provincial governments underthe 7th nFc award,” he added.

Dr nadeem Ul Haque in his re-marks commented that, "study hashighlighted a number of key issueslikely to impact the process of devolu-tion, some of which require immediateattention from both federal as well asprovincial governments."

appreciating cSF's contributionto do the first ever research study

on the 18th amendment and its fis-cal impact on the federal andprovincial governments, he said,"the study has made recommenda-tions on establishment of a commis-sion to oversee implementation of18th amendment, management offiscal implications, strengthening ofhuman resource pool, improvedprovincial budgeting, planning, andpublic finance management, assess-ing the regulatory fallout of theprocess and taking the devolution tothe district level." These are some ofthe most important findings for im-proving governance and harnessingdevelopment and growth in Pak-istan, he further added.

Speaking on the occasion, ShahabKhawaja, chief executive Officer of thecompetitiveness Support Fund said,"the cSF study includes an assessmentof the current public finance manage-ment practices of provincial govern-ments and the human resource andregulatory impact likely to arise out ofthe restructuring exercise.

cSF will also be briefing leadingdevelopment institutions represent-ing asian Development Bank, DFiD,USaiD, the World Bank, UnDP, theagha Khan Foundation, eU delega-tion and ciDa; whereas academicscholars from LUMS, ceRP, cOM-SaTS, PiDe and QaU will also par-ticipate in an interactive discussion.in addition to these, leading thinktanks like center for Social ScienceResearch and SDPi will also be par-ticipating in the conference.

cng stations openafter talks betweenssgc, apcnga

KARACHIGhULAM ABBAS

THe two days gasloadshedding to cnGstations in Karachi ended

after successful talks between SuiSouthern Gas company (SSGc)and all Pakistan cnG association(aPcnGa). But after restoration ofgas supply to cnG stations acrossSindh, sources in SSGc claimedthat domestic consumers of thecompany fear facing gas loadshedding as the gas company wasbearing shortages of 250 to 300MMcFD gas. as some areas of thecity have already reported facinglower pressure of gas, supply tomillions of consumers was likely tobe affected after additional supplyto Karachi electric Supplycompany (KeSc) and restorationof gas to cnG outlets, they said.Supply to cnG stations wasrestored after protesting membersof aPcnGa moved towards SSGchead office where they met themanaging director of the company.Under immense pressure fromcnG sector the supply wasrestored at 6:00 pm in Karachiand other parts of Sindh. cnGstations were allowed to be openedsix hours earlier than thescheduled time. SSGc andrepresentatives of aPcnGa wouldmeet again on Friday to discussthe issue as the shortage of gas wasaffecting many organisationsincluding KeSc, industries andcnG consumers.

UAE FIRMS TO MAKE LONG-TERM INVESTMENT IN PAKISTAN

CSF briefs govt on assetdistribution to provinces

ceo ptcl,walid irshaid

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05

Friday,02 December,2011

news

CORPORATE CORNER

warid telecom helpsdeserving gcu students

KARACHI: in-line with its corporate socialresponsibility, Warid Glow, supported deservingGovernment college University students bydonating Rs800,000 for GcU endowment FundTrust (GcU eFT). Mr amer aman, Warid Head ofSales and Distribution handed over the cheque toGcU vc, Prof Dr Muhammad Khaleeq-ur-Rahmanat a ceremony held at GcU. PRESS RELEASE

Qatar airways launchesflights to chongqingDOHA: Qatar airways has expanded operations inchina with the launch of scheduled flights tochongqing, the airline’s fifth chinese destinationand 15th route start-up this year. Flight QR848arrived at chongqing Jiangbei international airportto an impressive water salute following its non-stopjourney from the airline’s operational hub of Doha.Passengers and operating crew were given a redcarpet arrival by airport officials. PRESS RELEASE

azme alishan launches online pledgefor pakistanis at home and abroad ISLAMABAD: azme alishan, the nation’s newestand fastest growing social movement, haslaunched a new online pledge for calling on

Pakistanis everywhere to sign up as ambassadorsfor ‘real Pakistan’, in a bid to counter some of thenegative perceptions of the country at home andabroad. The pledge hosted on the campaign’swebsite was signed by 10,000 people in its firstfew days. PRESS RELEASE

standard chartered contributes Rs2.4million for underprivileged students

KARACHI: Standard chartered Bank signed aMemorandum of Understanding (MoU) withSargodhian Spirit Trust School (SST), tocontribute Rs2.4 million to supportunderprivileged students for a period of 2 years.The agreement was signed by Mohsin nathani,chief executive, Standard chartered Pakistan andair cdre (R) ershad ahsan, chief executiveOfficer, SST. PRESS RELEASE

president aBfcongratulates sherry RehmanLAHORE: President american Business Forum(aBF), Salim Ghauri congratulated SherryRehman, a human rights campaigner and formerjournalist, for her appointment as newambassador to the United States of america. Hesaid Ms Rehman carries proven credentials as asocial progressive, advocating for women’s and

minority rights, besides having strongrelationships with Pakistan’s political eliteincluding late Benazir Bhutto. PRESS RELEASE

iso embarks upon projectof hRm standardisationISLAMABAD: iSO has embarked upon project ofHRM standardisation with a view to standardise HR.The plenary technical committee meeting was held onnovember 10th 2011, in Washington. HR experts from11 participating countries including US, UK, France,Germany, Sweden, Switzerland, austria, norway,netherland, Portugal and Pakistan attended themeeting. Zahid ali Mubarik GPHR, President SHRMForum Pakistan represented the country in thismeeting. PRESS RELEASE

nBp makes extraarrangements for pensionersKaRacHi: national Bank of Pakistan (nBP) tookextra measures for the convenience of pensioners. inorder to further facilitate old age pensioners, nBPset up additional counters for male and femaleseparately and also made proper arrangements forwater, washrooms and sitting area. The staff servingpensioners at the branches is strictly ordered toprovide best possible service to pensioners andregional heads are also directed to visit thedesignated branches to ensure smooth disbursementof payments to pensioners. PRESS RELEASE

collectibles celebrates 15th anniversaryKARACHI: collectibles celebrated its 15thanniversary with a glittering reception hosted at the

Swiss consulate, Karachi. ceO collectibles, MrRameez Sattar, speaking on the occasion said thatthe collectibles was the result of three generations ofhard work, ensuring integrity and quality followedby superb after sales service which had madecollectibles a familiar name in the country amongthe patrons of luxury watches. PRESS RELEASE

ptcl set to compete for 3g license

KARACHI: ceO and President, PakistanTelecommunication company Limited (PTcL), Walidirshaid, has said that his company is going for 3G andit will be the first to compete for a 3G license inPakistan. “We have no option but to succeed," said Mrirshaid, while addressing Uae Trade and investmentconference 2011. "We are going for 3G and we will bethe first to compete for a 3G license and our deeppassion is to transform PTcL from a state monopolydominating the market to a world-class telecomcompany which is able to favorably compete with 45players on the ground." PRESS RELEASE

LAhoRE: EstablishmentDivision, Governmentof Pakistan hasnotified Major General(r) Malik MuhammadFarooq hilal-e-ImtiazMiltary, as ManagingDirector of UtilityStores corporation ofPakistan. PRESS RELEASE

You (US and Western states) imposesanctions on us, use many meansagainst us and expect us to be ready todiscuss the nuclear program with you?

president of iran, mahmoud ahmadinejad

Can the US afford to bail out Europe?

Ali Rizvi

THe global economic reces-sion has taken its toll onthe West. The growing fis-sures of socio-economicdisparities have sparked

protests that are not only limited toGreece, but have enveloped more than900 cities of the developed world atthe same time. Policy makers andeconomists were arrogant over the in-fallibility of their own self created the-ories. What they failed to take intoaccount was the simple fact that eco-nomic paradigms are formed with theknowledge of the expected and not theunexpected. Therefore most of theirobservations turned out in ways thatweren’t really anticipated and unfor-tunately even today, the unexpected,the blasphemous behaviour of the freemarket will not in reality go on tochange economic paradigms.

The global economic recessioncan be attributed very simply to oneinherent flaw of the developed world.‘Hubris’ or according to the MerriamWebster dictionary ‘exaggeratedpride or self confidence’. at the endof the day, what none of them re-alised is that capitalism is like astruggle between individuals, a tug ofwar, an attempt to gain control overscarce resources. it is like boxing per-haps, or poker, a softer restrainedform of private warfare.

in this context, let us analyse a sur-prising development on the euro front,comprising of a meeting of a few of theworlds most influential centralbankers. To say, that the outcome ofthe meeting was even more surprisingwould be an understatement. in recentdevelopments, it has come to the forethat the US central bank, the FederalReserve has promised to bail out theeuro, from the US tax payers money,

and that too very cheaply. The Fed, haspromised the ecB of an unlimited sup-ply of the american taxpayers money.

What is most surprising though is, atthis crucial juncture where a double diprecession is on the cards, the policy of theFederal Reserve and the Obama admin-istration do not fail to surprise the aver-age Joe. according to Shan Saeed, asenior financial market expert, afteranalysing the 3 month US treasury bills,the investor received a rate of return onthose bills of 0.0 per cent. in otherwords, ‘the US government is perfectlycontent paying investors absolutelynothing for the privilege of taking andusing investor’s money.’ in theory, theactions of the US administration will goon to stimulate the economy, in reality itpunishes those who save. Whoever saidsaving is bad for the economy? US debthas reached alarming levels of almost$15 trillion, add to that the lowered pre-dictions of GDP growth rate of 1.6 to 1.7per cent from the previously anticipatedgrowth rate of 2.7 to 2.9 per cent.

Following the rendezvous, currencymarkets and traders are full of opti-mism about the euro. While such reas-surances are fleeting to say the least, theonly probable loser of such an arrange-ment seems to be the dollar that hasconsiderably weakened compared toother currencies. The reason, for thisweakening of the dollar is more thanapparent. Following an announcement,from the ecB, the Bank of canada, theBank of Japan, Swiss national Bank,the Bank of england and the Fed, it hasbeen learnt that the lions share of theeuropean bail out money will be pro-vided by the US federal reserve.

"The purpose of these actions is toease strains in financial markets andthereby mitigate the effects of suchstrains on the supply of credit tohouseholds and businesses and sohelp foster economic activity," read a

statement following the meeting.after china’s interest in bailing outthe eurozone waned, and there werespeculations floating about a possibil-ity of the Fed bailing out europeanbanks as it did for the american banksfollowing the crisis in 2008. Thisspeculation did meet strong denialfrom the Obama administration, how-ever after the Monday meeting withtop european Officials, europeancouncil President Herman vanRompy and european commissionpresident Jose Manuel Barroso, Pres-ident Obama certainly found a newfound interest in europe with an in-triguing statement, that the europeandebt imbroglio is of ‘huge importance’

for the US and that his administrationwas ready to play its part in keepingeurope afloat.

as is the case with all things amer-ican, no other details were given overwhat he really meant by playing ‘ourpart’ probably because he wouldn’twant to get into trouble with theamerican taxpayers who are increas-ingly unhappy with the way things arebeing governed at the present mo-ment in time. However the Fed an-nounced this deal two days later, why?Because the Fed is everybody’s daddy,they really aren’t accountable to thecongress or anyone else.

What was learnt of the agreementis, that the FeD extends lending to the

ecB, that will transfer money to theilliquid european banks. The lendingis two times cheaper, in effect theamerican taxpayers will be bailing outeurope that too almost free. Details ofthe agreement? Well, the ecB mustpay the Fed a private sector overnightlending rate plus 0.5 per cent pointthat they previously paid in additionto 1 per cent point.

Following this deal, i almost imag-ined the Fed standing on a hill and laugh-ing out loud, chuckling as it said, ‘Heytaxpayers, who’s your daddy now?’

The writer is News Editor, Profit.For comments and queries email at

ali.rizvi7957@ gmail.com

g The Fed has promised the ECB an unlimited supply

of the American taxpayers’ money, that too for free!

Layout Profit 7 pages_Layout 1 12/1/2011 11:37 PM Page 5

top 5 perForMers sector wisesymBol open high low cuRRent change volume symBol open high low cuRRent change volume

Food ProducersDewan Sugar 2.25 2.49 2.20 2.25 0.00 3,000Engro Foods Ltd. 23.95 24.25 23.63 23.98 0.03 19,195Habib Sugar Mills 27.23 27.48 27.25 27.40 0.17 179,447Habib-ADM Ltd. 13.30 13.69 13.15 13.19 -0.11 1,775Ismail Industr 65.00 64.99 62.01 64.97 -0.03 1,504

Household GoodsAL-Abid Silk Mills 23.34 23.60 23.34 23.34 0.00 2Diamond Ind. 8.20 9.03 8.20 8.20 0.00 2Hussain Industries 3.90 3.90 3.80 3.90 0.00 6Pak Elektron Ltd. 4.20 4.40 4.20 4.25 0.05 8,650Tariq GlassXD 8.65 8.89 8.65 8.65 0.00 10

Personal Goods(Colony) Thal 1.40 1.40 1.40 1.40 0.00 511Ali Asghar Textile 0.56 0.55 0.55 0.55 -0.01 500Amtex Limited 1.29 1.33 1.26 1.30 0.01 1,802Artistic Denim Mills 20.10 21.07 20.15 20.98 0.88 13,064Azam Textile 1.35 1.39 1.16 1.35 0.00 52

Future ContractsAHCL-DEC 28.90 28.60 28.00 28.21 -0.69 220,500ANL-DEC 3.50 3.47 3.36 3.46 -0.04 629,500ATRL-DEC 121.61 119.49 116.55 117.30 -4.31 165,000DGKC-DEC 20.25 20.25 19.76 20.09 -0.16 55,000ENGRO-DEC 126.68 123.99 121.00 122.70 -3.98 454,500

Pharma and Bio TechAbbott Laboratories 100.37 101.60 100.00 100.00 -0.37 2,094Ferozsons (Lab) Ltd. 76.20 76.90 75.99 76.31 0.11 1,113GlaxoSmithKline Pak. 67.51 68.00 67.99 68.00 0.49 10,200Highnoon (Lab) 28.20 29.25 28.00 29.25 1.05 7,001IBL HealthCare XD 12.74 12.50 12.00 12.30 -0.44 14,060

Fixed Line TelecommunicationP.T.C.L.A 10.80 10.95 10.70 10.74 -0.06 873,286Pak Datacom LtdXD 34.50 34.50 34.00 34.50 0.00 50Telecard Limited 0.96 1.00 0.89 0.90 -0.06 179,056Wateen Telecom Ltd 1.85 2.00 1.82 1.88 0.03 2,098,153WorldCall Telecom 1.11 1.17 1.05 1.06 -0.05 74,429

ElectricityGenertech 0.28 0.37 0.37 0.37 0.09 9,500Hub Power Co. 36.50 36.55 36.02 36.08 -0.42 851,435Japan Power 0.61 0.67 0.60 0.64 0.03 98,815K.E.S.C. 1.63 1.68 1.62 1.65 0.02 25,551Kot Addu Power 41.70 41.90 41.26 41.30 -0.40 54,238

BanksAllied Bank Ltd 60.24 59.20 59.00 59.00 -1.24 6,927Askari Bank 10.31 10.45 10.20 10.28 -0.03 25,619B.O.Punjab 5.57 5.75 5.46 5.55 -0.02 422,339Bank Al-Falah 11.87 11.98 11.66 11.80 -0.07 805,934Bank AL-Habib 29.53 29.90 29.46 29.50 -0.03 182,086

Non Life InsuranceAdamjee Ins 43.20 43.78 42.12 42.76 -0.44 13,373Ask.Gen.Insurance 8.00 8.50 8.00 8.42 0.42 1,218Atlas Insurance 36.50 36.75 35.99 36.51 0.01 1,993Cres.Star Insurance 2.00 2.20 2.00 2.00 0.00 1,065EFU General Ins 35.80 36.00 34.46 35.96 0.16 747

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 0.30 0.33 0.27 0.32 0.02 12,419Arif Habib Investmen 16.30 16.79 16.30 16.30 0.00 101Arif Habib Ltd. 15.19 15.59 15.00 15.17 -0.02 36,007Dawood Cap.Man XB 1.25 1.00 0.80 1.00 -0.25 5,008Dawood Equities 0.81 0.96 0.70 0.80 -0.01 90,802

Equity Investment Instruments1st.Fid.Leasing Mod 1.63 1.60 1.60 1.60 -0.03 6,000Allied Rental Mod 21.64 21.64 20.90 21.64 0.00 125Atlas Fund of Fund 5.78 5.90 5.78 5.85 0.07 250,001B.R.R.Guardian 2.24 2.32 1.92 2.24 0.00 101Cres. Stand.Mod 0.42 0.44 0.37 0.44 0.02 503

MiscellaneousCentury Paper 13.00 13.20 12.06 13.01 0.01 4,411Pak Paper Prod. 30.75 31.25 30.75 30.75 0.00 6Security Paper 36.00 36.31 36.00 36.00 0.00 530P.N.S.C. 14.48 14.49 14.48 14.48 0.00 2Pak.Int.Con. SD 70.17 69.88 68.00 68.71 -1.46 1,351TRG Pakistan Ltd. 1.42 1.47 1.40 1.42 0.00 104,346Murree Brewery 66.52 66.11 64.00 64.13 -2.39 4,639Shakarganj Food 4.00 3.25 3.25 3.25 -0.75 500Shezan Inter. 115.96 118.49 115.96 115.96 0.00 102Grays of Cambridge 24.00 24.75 24.00 24.00 0.00 190Pak Tobacco Co. 59.69 60.00 59.69 59.69 0.00 50Philip Morris Pak. 140.00 140.00 140.00 140.00 0.00 192Shifa Int.Hospitals 29.40 29.79 29.40 29.40 0.00 8Hum Network Ltd. 16.00 16.00 16.00 16.00 0.00 3,000Media Times Ltd 7.96 8.94 6.96 7.96 0.00 6P.I.A.C.(A) 2.00 2.09 2.00 2.01 0.01 13,642Pak Hotels 28.29 28.29 26.88 28.29 0.00 10Sui North Gas 17.30 17.35 17.15 17.24 -0.06 5,466Sui South Gas 19.12 19.44 19.00 19.22 0.10 6,068EFU Life Assur 68.09 70.50 68.00 69.70 1.61 4,200AKD Capital Ltd. 26.16 27.45 25.01 26.16 0.00 2Pace (Pak) Ltd. 1.51 1.59 1.47 1.47 -0.04 173,855

symBol open high low cuRRent change volume

Oil and GasAttock Petroleum 402.21 409.80 402.00 407.34 5.13 94,034Attock Refinery 115.99 119.90 115.40 119.18 3.19 1,798,600Burshane LPG 22.06 22.06 21.15 22.06 0.00 289Byco Petroleum 6.89 7.00 6.87 6.95 0.06 278,943Mari Gas Co. 90.36 92.00 90.05 90.91 0.55 26,862

ChemicalsArif Habib Co SD 28.05 29.00 28.15 28.87 0.82 1,689,569Biafo Ind. 69.39 69.39 66.50 69.39 0.00 10Clariant Pakistan 153.64 153.64 152.50 153.00 -0.64 1,804Dawood Hercules 35.89 37.50 35.85 36.45 0.56 101,880Descon Chemical 1.49 1.50 1.50 1.50 0.01 2,982

Industrial metals and MiningCrescent Steel 20.00 20.79 20.00 20.00 0.00 1Dost Steels Ltd. 1.40 1.46 1.35 1.35 -0.05 6,507Huffaz Seamless Pipe 8.61 8.79 8.63 8.66 0.05 1,100Int. Ind.Ltd. 30.05 31.00 29.60 30.05 0.00 414Inter.Steel Ltd. 10.24 10.10 10.00 10.00 -0.24 9,012

Construction and MaterialsAl-Abbas Cement 1.80 1.97 1.83 1.83 0.03 3,101Attock Cement 52.69 53.00 51.02 53.00 0.31 64,581Berger Paints 14.27 14.30 13.27 14.13 -0.14 2,536Cherat Cement 7.61 7.98 7.70 7.87 0.26 903D.G.K.Cement 19.94 20.53 19.90 20.44 0.50 1,419,943

General IndustrialsCherat Packaging 25.82 27.10 25.15 25.90 0.08 8,219ECOPACK Ltd 3.60 4.10 3.26 3.90 0.30 151,477Ghani Glass Ltd 40.34 40.50 40.01 40.50 0.16 2,251MACPAC Films 7.70 8.59 7.70 8.43 0.73 3,414Merit Pack 20.50 20.50 19.48 20.50 0.00 125

Industrial EngineeringAdos Pakistan 5.25 5.99 4.60 5.25 0.00 30AL-Ghazi Tractors 161.88 161.99 158.50 158.63 -3.25 730Ghandhara Ind. 7.49 7.95 6.66 6.66 -0.83 2,005Hinopak Motor 78.54 79.95 74.62 74.65 -3.89 809K.S.B.Pumps 26.95 26.95 25.61 26.95 0.00 45

Automobile and PartsAtlas Battery Ltd. 170.00 172.89 169.00 171.50 1.50 2,700Bal.Wheels 23.60 23.70 23.70 23.70 0.10 500Dewan Motors 2.20 2.20 2.05 2.20 0.00 213Exide (PAK) 177.10 178.50 173.00 177.10 0.00 38General Tyre 16.00 16.83 15.71 16.80 0.80 1,313

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

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 100.1087

Markets

Friday, 02 December, 2011

06

top 10 sectors

49% 01%Construction & Materials

Chemicals Real Estate Investments

03%Electricity

01%02%

Fixed Line Telecommunication

17%Equity Investment Instruments

Financial Services

09%Banks10%Oil & Gas04%Personal Goods04%

International Oil PriceWTICrude Oil

$100.50

BrentCrude Oil

$110.52

STOCK MARKET HIGHLIGHTS

Index Change Volume Market ValueKSE-100 1557.37 +24.54 20,924,315 1,238,882,531LSE-25 2952.33 -6.31 1,392,044 21,381,604ISE-10 2612.26 +15.37 2,790 216,690

Major Gainers

Company Open High Low Close Change TurnoverBata (Pak) Ltd. 730.70 765.00 715.00 760.26 29.56 628Attock Petroleum 410.08 419.00 409.50 416.24 6.16 111,533National Foods 62.26 65.37 62.05 65.35 3.09 5,613Packages Limited 70.30 73.81 68.01 73.18 2.88 182,724Pak Suzuki Motor 66.16 69.00 68.00 68.94 2.78 103,383

Major Losers

Rafhan Product 2684.75 2722.99 2551.00 2569.45 -115.30 11Nestle PakistanXD 2755.15 2777.99 2670.00 2689.72 -65.43 26UniLever Pak Ltd. 5528.40 5539.00 5410.01 5474.80 -53.60 8Sapphire FiberXD 105.00 102.25 102.25 102.25 -2.75 421Exide (PAK) 171.78 171.00 169.00 169.09 -2.69 1,885

Volume Leaders

Jah.Sidd. Co. 5.58 5.92 5.51 5.83 0.25 5,815,125Fatima Fert.Co. 22.95 23.57 22.78 23.12 0.17 4,148,594D.G.K.Cement 20.44 21.22 20.49 20.75 0.31 3,153,270PICIC Gro Fund 12.27 12.60 12.30 12.57 0.30 2,673,918Fauji Fert 54.43 54.65 54.00 54.11 -0.32 1,869,805

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

Gold 24K 58,063.00 49,833.00 1,746.00Gold 22K 51,608.00 44,245.00 –Silver (Tezabi) 1,103.00 947.00 35.05Silver (Thobi) 1025.00 880.00 –

Interbank RatesUS Dollar 88.7818UK Pound 139.4407Japanese Yen 1.1426Euro 119.7223

Buy SellUS Dollar 88.40 88.90Euro 118.05 119.77Great Britain Pound 137.60 139.50Japanese Yen 1.1257 1.1379Canadian Dollar 85.60 88.13Hong Kong Dollar 11.16 11.44UAE Dirham 23.92 24.18Saudi Riyal 23.44 23.66Australian Dollar 89.10 91.96

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Friday,02 December,2011

news

07

we offer Korea to establishits economic zone inpakistan to boost trade tiesbetween the two countries

president, asifali Zardari

KARACHIISMAIL DILAWAR

RUPee continues to loseface against US dollar asimporters rush to six-month “forward booking”

of the greenback on rumors that cen-tral bank was purposely letting localcurrency depreciate in line with re-gional trends. Thursday saw green-back appreciating by 5-paisa to 88.80against the rupee compared toWednesday’s Rs88.75 in the inter-bank market.

currency dealers in the openmarket, however, sat back and com-fortably traded dollar at Rs88.60(selling) and Rs88.50 (buying). “Theexchange rate’s difference betweenthe open and inter-bank marketranges to 20 paisa,” a dealer toldProfit. importers’ panic buying, as acurrency dealer dubbed it, led to in-creased demand for dollar on thelocal inter-bank market where, mar-ket sources said, demand for ameri-can currency was at least $50 million.

On the other hand, exporters areadding fuel to the fire by holding backtheir export proceeds ranging from$150 million to $200 million, to getmaximum benefit of the reported,but not officially announced, depre-ciation of rupee. What is the solutionfor ingraining panic in inter-bankmarket then? Market sources said theball is in the court of State Bank ofPakistan (SBP) which should imme-

diately come up with a policy state-ment on the fate of rupee to bringpresent uncertainty to its logical end.

according currency dealers, theimporters, deeply panicked bymedia reports that central bank wasfollowing a regional trend on cur-rency depreciation and was, as amatter of policy, not coming to therescue of rupee which had devaluedby over 2-rupee against dollar dur-ing last month. “The panicked im-porters are doing forward booking ofdollar and the banks, remaining onthe safer side, are giving them an ex-change rate as high as Rs92 for thesix-month bookings,” said MalikBostan, president Forex associationof Pakistan (FaP).

On the other hand, FaP chiefsaid, exporters had held their exportproceeds to the tune of $150 to $200million to capitalise on the “rumours”of rupee depreciation. “Daily demandfor dollar of the inter-bank marketranges between $250 million and$300 million but the ongoing panicbuying had created a gap of about$50 million in the supply and de-mand,” Bostan said. The money ex-changer said foreign exchangecompanies were surrendering almost80 per cent of their daily surplus sup-plies, ranging between $5 and $6million, on the inter-bank market asdemand in open market was standinglow at 20 per cent.

Factors like recent hike in inter-national oil prices, crossing the $100

a barrel against $70 per barrel previ-ously, and increased import of mobilephones had inflated the cost of im-ports to Pakistan. The dollar-hungryPakistan’s import bill, State Bank fig-ures for July-Oct FY12 show,amounted to over $13.4 billion, up 23per cent compared to $10.879 billionof the same period in FY11. Thiswidened the country’s deficit-pronetrade balance to $5.2 billion against$3.7 billion of last year.

“State Bank should officially clar-ify its stance on rupee depreciation.Only if depreciation rumors are clar-ified the current panic buying wouldend,” the FaP chief suggested. How-ever, when contacted SBP chiefspokesman Syed Wasimuddin saidcentral bank would make “no com-ment” on the issue. Bostan went on tosay that importers, fearing furtherdepreciation of rupee, were resortingto forward booking of the greenback.“This has increased demand on theinter-bank,” he added. Further, ana-lysts said, rupee would face addi-tional pressure with the country’sdepleting foreign exchange reserveswhich, State Bank said, had con-tracted to $16.884 billion up to 25thnovember, down by 0.45 per centcompared to the preceding week’s$16.961 billion.

“Forget about foreign financing,only the recovery of embezzledmoney lying in offshore accounts canrid the country of its financial woes,”said economist asfar Bin Shahid.

g exporters hold back export proceeds to benefit reported devaluation g sBp shouldofficially speak on issue, dealers g dollar appreciates to Rs88.80 on inter-bank market

KARACHIISMAIL DILAWAR

nOveMBeR proved to be one of theworst for the country’s equity marketwhich, analysts observed, remainedalmost “inactive” on various accounts

during the previous month. The recentlyconcluded month saw the benchmark, KSe 100-share index, plunging by 4 per cent and averagedaily trading volumes crashing tothe extraordinary 166-month low of45 million shares. according toanalysts the lull period seen lastmonth at local bourse was notobserved since 1998. The reasons,market observers believe, is noneother than capital Gains Tax (cGT)that still keeps investors, mostlyholding black money, away fromstock market due to the fear of theirprevious gains being enquired andtaxed by concerned quarters. “iflast month is any indicator, thenPakistan’s stock market was almostinactive,” said Farhan Mahmood ofTopline Securities. analyst said the lull period thatwas seen during last month at local equity marketwas unprecedented in last 13 years, since 1998.analysts said although trading volumes wereglobally thin over the last few months, the declinein volumes in Pakistan remained extraordinarilyabnormal. Market observers said with risk-averseinvestors not making any money during thiscalendar year as the 100 index was down four percent, seven per cent in dollar terms, all majorplayers preferred to remain on the sideline on theback of uncertainty in global markets, local

political noise and ongoing taxation issues. “Thevolumes crashed in the month of november,” andmaking the once most liquid market of asia sufferfrom extraordinary low volumes. it was madeimpossible for stock market to execute largeorders, said analysts. Last time in January 1998,lowest daily volume was recorded at 39 millionshares, amounting to $31 million, but then,analysts said, market size was also small withaverage market capital of Rs489 billion or $11

billion. However, last month innovember, market saw averagedaily trading declining to 45 millionshares, amounting to $27 million.“This is at 166-month low whilemarket capitalisation is currently atRs3.0 trillion or $35 billion in dollarterms,” said Farhan. Termingterrorism, bad governance, renewedtensions in Pakistan-USrelationship and economicslowdown as key contributingfactors to current low turnover atKarachi market, analysts saidimposition of controversial cGT wasthe major stumbling block. “The

imposition of capital Gain Tax (cGT) from July2010 after a gap of almost three decades remainsthe main culprit,” said Farhan. The analyst saidinvestors had a fear that their wealth, which theyhad accumulated over many years when tax wasexempted, might come under scrutiny and taxauthorities would enquire them about the sourceof their funds. another factor contributing todwindling volumes is absence of investor-friendlyderivative product, Farhan said adding that cashmarket alone could not develop in the absence of avibrant futures options and margin trading.

LAHOReIMRAN ADNAN

GOveRnMenT has finally decided to takea U-turn from its earlier decision ofimposing 16 per cent General Sales Tax(GST) on agriculture tractors. Ministry of

industries has indicated that tax collection throughthis measure would not exceed from Rs3.7 billionagainst the projected target of Rs7-8 billion duringcurrent fiscal. Official documents made available toProfit show that tractor industry paid over Rs5billion on account of taxes last year and it wasestimated that government would collect aroundRs7-8 billion after imposing GST as tractorsproduction was expected to touch 80,000 unitsduring current fiscal year. Ministry of industries inits summary, prepared for economic coordinationcommittee (ecc) of the cabinet, has pointed outthat association of tractors manufacturers andPakistan association of automotive Parts andaccessories Manufacturers(PaaPaM) approached theministry and registered theirprotest against imposition of 16 percent GST on tractors, as it hasaffected the industry adversely,besides putting additional burdenof price on farmers. Summarystates that in accordance with thepolicy laid down vide SRO549(1)/2008, dated June 11, 2008,zero-rating of sales tax onagricultural tractors was providedwith the intent to ensureavailability of tractors to farmers at affordable prices.However, it had been withdrawn in March, 2011,resulting in increase of prices of agricultural tractorsby around Rs90,000 to Rs200,000. Ministryindicates that increase in tractor prices has made itdifficult for farmers to purchase new tractors andconvert traditional farming into mechanical farmingfor higher yields, especially when cost of otheragriculture inputs has gone up substantially. inaddition, Zarai Taraqiati Bank Limited (ZTBL) hasalso not been extending loans for purchase oftractors since april 2010, creating another

impediment for the farmers. Official documents statethat production data maintained by engineeringDevelopment Board (eDB) indicates that productionof tractors since March 2011 has declined drasticallyfrom over 72,000 units to around 20,000 units perannum. economic Survey of Pakistan alsoemphasises that accelerated farm mechanisation isthe only tool to pace-up agriculture growth rate. it

further highlights that availablefarm power is inadequate with only464,000 tractors in operation. Thismeans that per hectare horse power(hp) availability is 0.9hp only, asopposed to the required 1.4hp perhectare, as per Food andagriculture Organisation (FaO)recommendations. Officialdocument states that the primaryobjective of levying GST onagricultural tractors was to enhancerevenues. However due to decline in

production, tax collection will not exceed Rs3.7billion, which means less revenue as compared tolast year. in addition, due to declining trend in theproduction and sale of agricultural tractors from80,000 units per annum to around 20,000 to25,000 units, economy will suffer an additional lossof over 35 billion rupees by reduced sales. Ministryrecommends that for revival of tractor industry andto provide an impetus to agriculture sector, which isthe backbone of the economy with 24 per cent shareof the national GDP, GST zero-rating on agriculturemay be restored or deemed price (25-30 per cent ofactual price) may be fixed for sales tax purposes.

ISLAMABADStAFF REPoRt

PRivaTiSaTiOn of Oil and GasDevelopment company Limited(OGDcL) and Pakistan Petro-leum Limited (PPL) multi million

dollar entities will be finalised by January-February next year. Members of nationalassembly Standing committee on Privati-sation was told in a briefing in a meetingheld under chairmanship of Malik BilalRehman to discuss privatisation of new en-tities and reports of the action taken onrecommendations of the standing sommit-tee in its last meeting.

Secretary Privatisation Shahid HussainRaja informed members of the committeethat council of common interest (cci) hasalready approved of privatisation of threeGencOs and nine DiScOs on 28th april,2011. Standing committee has advised theministry of privatisation to be more carefulbefore the privatisation of said GencOsand DiScOs since government has faced

problems after privatisation of Karachielectricity Supply company (KeSc).

committee was also briefed regardingprivatisation of Pakistan Mineral Develop-ment corporation (PMDc). The privatisa-tion of PMD was postponed due to denialof fresh approval from the privatisationboard. He added cci has already approvedprivatisation of PMDc in May, 1997 andaugust, 2006. However, fresh approval isrequired in this regard. committee was in-formed by federal minister for privatisationabout the release of Rs276 million andRs261 million by ministry of privatisationfor flood relief activities during current fis-cal year and he admitted that Rs261 millionwere spent on advertisement campaign offlood relief activities. committee decided todiscuss the said matter later. Standingcommittee recommended holding a largermeeting to discuss policy of OGDcL pri-vatisation in the next meeting by callingsecretary finance, law and justice and cabi-net division will be called in the next meet-ing of the standing committee.

KARACHStAFF REPoRt

THe country’s liquid foreign ex-change reserves continue theirdownward journey and shrank by0.54 per cent to $16.884 billion

during the week that ended on the 25th oflast month. Last week, the country held$16.961 billion, $77 million more than whatthe country holds now. State Bank reportedthat the review week saw the bank possess-ing $ 13.122 billion against $13.202 billionof last week. This shows a decrease of 0.6per cent or $80 million, central bank said.On the other hand, the commercial banks’

holding of the greenback surged slightly by$4 million or 0.1 per cent to $3.762 billioncompared to previous week’s $3.758 bil-lion. analysts said decline in country’s for-eign reserves were due to import paymentsand retirement of external debts that haveaccumulated to $62 billion. about nominalincrease in the banks’ reserves, analystssaid it was because of increased depositsbacked by the ongoing downing spree ofrupee against the greenback especially oninter-bank market. State bank spokesmanalso attributes such ups and downs in coun-try’s foreign exchange reserves to growth inthe banks’ deposits and withdrawals androutine debt servicing.

ogdcl, ppl privatisation decision to be taken in January

forex reserves down to $16.88 billion

equity market volumes plungeto 166-month low in nov

govt likely towithdraw gst

on tractors

n Trading volumeswere globally thinover last few months

n Nov witnessesaverage daily tradingdecline to 45 millionshares, amounting to$27 million

n Tractor price increasesaround Rs90,000 toRs200,000

n Tractor productiondeclines drastically toaround 20,000 unitsper annum

Rupee depreciates due todollar ‘forward booking’

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