Profit 30th December, 2011

Pages: 7 profit.com.pk

Zardari, I love you Page 3Italy seeks biggereuro fund after toughdebt sale Page 5

Fiscal glooms of Annual EconomicReport 2011 Page 2

KARACHI

ISMAIL DILAWAR

AS the internationalfinancial crises, originatingfrom the United States andeurope, question the status

of the dollar as a reliable currency forinternational trade and investment,Pakistan like many other risk-aversecountries of the world has startedlooking for alternative options. Thesigning of Dec 23rd Currency SwapAgreement (CSA) between thecentral banks of Pakistan and China,an emerging economic giant of ourtime, was partly aimed at enhancingrole of Chinese Yuan in internationaltrade and investment.“The principal objective of these swapsis to promote the use of regionalcurrencies for trade settlementpurposes and specifically in the case ofChina, it is to enhance the role of theChinese Yuan in international tradeand investment,” said Governor StateBank of Pakistan (SBP) Yaseen Anwar

in a statement issued Thursday.explaining the features and modusoperandi of CSA, Anwar said theagreement represented a significantachievement for both governments inpromoting and enhancing not onlybilateral trade, but also theopportunity to significantly increaseinvestment in Pakistan going forward.He said CSA is executed for a tenor ofthree years in respective localcurrencies, Rs140 billion and ChineseYuan 10 billion. This is the second CSAthat SBP has signed, the first one beingwith central bank of Turkey onnovember 1 this year. “While these arestrictly bilateral arrangements, theprecise terms and conditions of each ofthese CSAs are confidential betweentwo central banks,” governor SBP said.China’s concurrent Yuan local currencysettlement programme was alsoconsistent with the underlyingcurrency swap objectives. The latestCSA between Pakistan and China alsoreflected similar objectives ofpromoting trade and investment in

bilateral currencies, he said.Objectives and structure of CSA:The objective of the swap is to 1)promote bilateral trade, 2) finance directinvestment between the two countries inthe respective local currencies of the twocountries and 3) any other ‘purpose’ asmutually agreed between the two centralbanks. Since CSA is a bilateral financialtransaction, all terms and conditionsapply equally to both countries and thepricing is based on standard marketbenchmarks, which are widelyacceptable in the respective domesticmarkets of the two countries. Thefollowing are more details on thestructure of the transaction: 1) Both central banks will have theability to draw on the swap line anytime during the tenor of the swap.2) SBP can purchase CnY from PBCagainst its local currency (PkR), andrepurchase its local currency with thesame CnY on a predeterminedmaturity date and exchange rate.Similarly PBC can also purchase PkRagainst CnY. Standard market

pricing will apply on the date ofutilisation. Like any swap, the pricingis linked to interest rates differentialsbetween the two currencies.3) However, drawing under the swapline by either central bank will becontingent on 1) bilateral trade beingdenominated in local currencies, or 2)financing of direct investmentbetween the two countries.SwAp utiliSAtiOn: Theannouncement of the currency swapagreement between the two centralbanks will give a positive signal to themarket on the availability of liquidity ofthe other country’s currency in theonshore market. This means that forexample, SBP will have the ability todraw on the swap line and provideChinese Yuan to banks in Pakistan.Banks will on-lend this liquidity toimporters/exporters involved in tradedenominated in Yuan. At maturity, theimporter/exporter will repay the foreigncurrency to the lending bank; and thebank will repay to the respective centralbank. About the process Governor SBP

said utilisation of CnY in Pakistan onaccount of CnY/PkR swap: SBP willlend CnY to banks which will on-lend to:On the maturity date of the letter ofcredit (LC), importer will pay off theoverseas supplier by borrowing inCnY. Assuming borrowing is for sixmonths, the importer will save on therupee cost and after six months theimporter will buy CnY against PkRand pay off CnY loan. Availability ofonshore CnY financing will encourageimporters to open CnY denominatedLCs. Once the contract is established,the exporter will borrow in CnY, sellCnY against PkR and utilise PkR forits local operations. utiliSAtiOn Of pKR in ChinA: Same concept will apply to PBCdrawing PkR against the swap lineand lending the same to banks inChina. China has significantinvestments in various projects inPakistan and Rupee proceeds of theswap can be channelised to suchlong-term projects in Pakistan viaChinese banks.

CSa with China: Pakistan looking for alternative international currency?

Friday, 30 December, 2011

ISLAMABAD

AMER SIAL

STOPPinG short of recommendingan outright ban on the supply of gasto the industrial and CnG sectorsfor at least two months, the national

Assembly Standing Committee on Petro-leum on Thursday asked the government toimplement in letter and spirit gas supplyagreements with different sectors and takemeasure to reduce massive gas theft.

Officials of the Petroleum Ministry andSui companies wanted the committee togive recommendations for an outright banon gas supply to industrial and CnG sec-tors. However, intervention from JamshedDasti of PPP and Barjees Tahir of PML-nstopped the move as they demanded thatthe committee should be briefed on stepstaken to implement the legal agreementson gas supply with the industrial sector andmeasures to control the rampant gas theft.

Jamshed Dasti wanted to know the rea-sons why Sui northern Gas Company Lim-ited (SnGPL) could not stop gas supply to afactory of Foreign Minister Hina Rabbanikhar even during the current extreme short-age period. He also wanted the officials toname the person who was pressurising

SnGPL to divert gas supply to the industrialsector from the CnG sector. Questioning thecompetence of officials, Barjees Tahir saidthey were all highly educated from interna-tionally renowned universities and were ex-perienced enough to present the requiredsteps to avert the crisis. He said they werenot bringing the complete picture before thecommittee and just wanted a recommenda-tion which they were not bound to follow.He said officials were involved in illegallygranting licenses to 500 CnG stations dur-ing the last four years even though PrimeMinister had imposed a ban on issuing newlicenses due to gas shortages.

Chairman Talib Hassan nakai alsosupported their demand and said thatmore thinking was required on finding thesolution. He also stressed that the ministryshould take steps to create awarenessamong the people about the need for gasconservation in the presence of low supply.Rana Afzal Hussain of PML-n and Shah-naz Shaikh of PML-Q demanded a com-plete ban on the supply of gas to industriesand CnG sector and demanded parity inCnG, petrol and diesel prices. They saidrampant theft in CnG sector was resultingdue to the involvement of the staff of suicompanies. They stressed that the political

parties should dissuade from making it apolitical issue. Petroleum Minister Dr AsimHussain said that time had come to takesome tough decisions to end gas demand.He said they have proposed to the FinanceMinistry that Rs10 per litre petroleum levyon petrol should be reduced as prices ofCnG were set to rise to Rs79 per kg fromnext month. This, he said will facilitate inreaching an equilibrium in supply and de-mand, as it will reduce the demand for gasotherwise there would be no option otherthan curtailing gas supply. He said riots inFaisalabad were uncalled for, as industrieshave supply agreements for only 9 months.They were accommodated by being pro-vided gas supply during the three monthcurtailment period for the last three yearshowever it was not their right.

Secretary Petroleum ejaz Chaudharysaid they faced embarrassment before thecommittee on the slow pace of oil and gasexploration but there were many hin-drances. Giving an example, he said an ex-ploration company wanted to do an aerialsurvey of kharaan block in Balochistan butit was disallowed by the Ministry of Defence.He asked whether the survey could be doneon a donkey in the restive province. He saidthe fertiliser sector was being provided a

cross subsidy of Rs44 billion per annum.MD SnGPL Arif Hameed said that the

gas pressure on the company network re-duced to 750 pound square inch (psi) onDecember 27 and if it had decreased to 730psi then the gas compressors would havebeen tripped and the rehabilitation wouldhave taken two weeks to complete. He saidorders for physical disconnection of 4200industrial units in Punjab were given and2060 were already disconnected, while thatof foreign minister would be disconnectedby this evening. When nazar Gondal ofPPP asked him to control massive theft, hesaid that SnGPL was faced with a theft of 4percent after a reduction of one percentthat helped save the company a loss of Rs2billion. in reality however, both the suicompanies have unaccounted for gas(UFG) loss of 12 per cent that roughlytranslates to Rs24 billion per annum. in-ternationally accepted UFG benchmark forgas utility companies is 5 percent.

He said the company had sacked a GM,5 officers and 18 staff members while inves-tigations were underway against 106 moreemployees. When the members asked fornames he said that he did not have thenames with him but would be submittingthem to the committee secretariat.

Na bodystops short of outrightban

GaS SuPPLy to CNG SeCtoR aND iNDuStRieS

Jamshed Dasti questions SNGPLover continued provision of gas

to factory of Foreign Minister Hina Rabbani Khar

PML N and PML Qparliamentarians demand

complete ban of supply to both sectors

SNGPL MD states gas theft at4pc, whereas actual

unaccounted for gas lossesstand at 12 per cent

Lack of investor-friendlyderivatives plagued capital market in 2011

KARACHI

STAFF REPORT

Like many other markets of theworld, it was a bad year forPakistan’s capital market where

trading volumes nose-dived to 10-yearlow. According to market observers, theoutgoing year saw the local marketposting a negative return of 5 per cent, 9per cent in dollar terms, with one moresession yet to go. “Buying selling ofshares, floating of new companies andfund raising through right shares, allremained depressed in 2011,” saidFarhan Mahmood of Topline Securities.Most importantly, he said, the marketplayers remain concerned about re-introduction of Capital Gain Tax (CGT)after a gap of more than three decades,its understanding and last but not theleast its cumbersome calculations.“Resultantly, individual investorspreferred to remain on the sidelines,”Farhan viewed. The market cap basedbenchmark kSe 100 index fell five percent ($9 per cent) in 2011 while free floatbased kSe 30 index came down by 11per cent ($15 percent). MSCi Pakistanindex was also down 16 per cent in theoutgoing year. The value of karachibourse trimmed down by Rs302 billionor 9 per cent as market capitalisationreached Rs2.97 trillion ($33bn) at theend of 2011. Hence, average daily volumeof 81 million shares was down 34 percent from 2010 and 63 per cent from 10-year average. in terms of value dailybusiness of Rs3.6 billion ($40 million)was lower by 19 per cent from 2010 and77 per cent from last 10-year average.Farhan said another misery in 2011 wasthe limited number of initial PublicOfferings (iPOs). A total of only fouriPOs (iSL, PkGP, eFOODS, TDiL) werewitnessed with total size of Rs1.8 billion,which is far lower from last 20 yearaverage of 16 iPOs a year. Compared tohuge selling in global markets, Pakistanin 2011YTD saw net outflow of US$122million (including US$60 million sellingin Hubco) compared to net buying ofUS$526 million in 2010. interestingly,Pakistan with negative return of 16percent (as measured by MSCi Pakistan)stood as the best Asian Frontier markets;outperforming three other Asian frontiermarkets, Bangladesh, Sri Lanka andVietnam, by 12-29 percent.

PRO 30-12-2011_Layout 1 12/30/2011 12:55 AM Page 1

debate


of Annual Economic

Report 2011

PAkiSTAn was celebrating the 135th birth anniversary of its found-ing father, Quaid-e-Azam Mohammad Ali Jinnah; right after theclock struck 12 am, all the lights went out in many areas of Pak-istan, including ours. Darkness on the eve of 25th December, how-

ever, evoked feeling of despondency, leaving one questioning oneself, asto how did Pakistan become a state of unmanaged people, institutionsand culture? To my query, that i recently posed to one of my scholarfriends, about Pakistan’s survival when practically the entire state ma-chinery has broken down; a brief, but short response to my inquiry was,“foreign aid”. My friend readily drew my attention to the newlyawarded 5.5 billion rupees aid to Pakistan by the World Bank. Aghast,my mind raced forward to the future that looked almost bleak. Al-most simultaneously, i began pondering over the report that waspublished a few days back by the State Bank of Pakistan (SBP), onthe economic performance of the government in the last one year.My heart skipped a few beats, as i recalled trade deficits, declin-ing Foreign Direct investment (FDi), and the macabre of insti-tutional failures, occupying the better part of the report.

tHe FauLt LiNeSYear after year, the economic outlook, published by the SBP,remained sordid in its attempt to explain the reasons as towhy Pakistan has become an economic dwarf. in its recentdisclosures, the central bank, has blamed fiscal problems,domestic debt and crowding out, power outages and gover-nance for the 2.4 per cent GDP that Pakistan bagged in year2011, against the forecasted 4 per cent. As one goes backto review the previous reports to find what ailed the econ-omy earlier, surprisingly, the aforementioned fault linesappear out to be a lingering concern; something that hasalways been there. Still, the report eulogises govern-ment’s effort in gaining 2.4 per cent GDP on the faceof two consecutive floods that inundated most ofPakistan’s agricultural land. The catastrophe thataffected major capital inducing and employmentgenerating sectors such as industry and agricultureraised inflation and unemployment; bringing fu-ture more trouble to the people already sinkingunder the deep waters of poverty.

tHe eCoNoMiC outLooKUnfortunately, the issue in hand is more abouteconomic mismanagement than available oppor-tunities and resources. Digging on the causes offiscal failures, the report exposes the govern-ment for its inability to restructure the PublicSector enterprises, reform General Sales Tax,and broaden tax base, by netting the agricul-ture sector and services, and curtailing bil-lions of rupees of untargeted subsidies. On

the domestic debt, the frontier gov-ernment is living on borrow-

ing.

With 60.9 per cent of GDP to debt ratio, and 32.8 per cent of government’s revenue goinginto interest financing, the ability of the government to bring economic growth throughfiscal policy is further stymied. Money is going into the likes of railways, PiA, and PakistanSteel Mills, as well as on subsidies to energy department. The government’s reserves havealways been empty for other expenditures. Debt financing has been largely taken care ofthrough domestic as well as foreign funding. During FY11, the government borrowedRs1.1 trillion from domestic resources, which accounted for 91.0 per cent of the fiscaldeficit. Disciplining its borrowing habits, government instead of knocking the doors ofthe central bank, had opted to raise money from commercial banks through t-bills thus,crowding out the private sector. Why would commercial bank, finance private sectorwhen it can secure its surplus liquidity by placing it under the wings of government;while also getting away with the trouble of stashing capital for credit risk? As a result,private sector credit only grew by 4 per cent in FY11 and on the flip side, government’sborrowing from commercial banks increased to 74.5 per cent.

iNStitutioNaL FaiLuReS - tHe MotHeR oF aLL eviLS if the business scenario of Pakistan has gone worse, owing to fiscal mismanage-ment, it has wretched up due to energy failure, causing many industries to slowdown or shift their operations to foreign countries, applying further revenue sup-ply shocks to the economy. Textile industry, supposedly the backbone of Pak-istan’s economy, is closed for days in a given week for lack of gas. Smallbusinesses, which largely depend on electricity to operate, remain dormant for

hours, due to long power outages. As the report points out, governmenthas so far taken three steps to reform the energy sector: installation

of Rental Power Plants (RPPs), paying off 120 billion rupees incircular debt, and rising power tariff to secure funds to make upfor the bad debts. RPPs have failed, circular debt has come back

and consumers have filed suits against the government oncharges of fleecing them in the name of

fuel adjustment. According to thepolitical pundits, institutional

failures in Pakistan, have al-lowed this magnanimous mis-management in the economic

affairs. Going by definition ofthe World Bank, an economy’s

governance or the ability of aneconomy’s institution to exer-cise authority depends on sixindicators; voice and account-ability, political stability and

absence of violence, governmenteffectiveness, regulatory quality, rule of law and control of cor-

ruption; if these six indicators are in place, then there is nothingto fear. All these parameters are dismally weak in Pakistan, leaving

our institutions and policies, ineffective and fruitless.

tHe exteRNaL SeCtoR is there any margin for us to look forward to, especially when the world on the

Western hemisphere is drowning in debt crisis? The economy of europe andAmerica has slowed down; they are into a battle that hardly allows trade relation onequal terms. The external sector has many questions posted on it; what would be the

state of Pakistan’s export, especially when it has to pass through dual shocks and in-stable domestic as well as foreign market? The direct effect of this would result on low

FDi that has already registered a relentless dip in FY11 to the tune of 27.7 per cent. Theway forward lies in political will to alter the economic crises.

touGH DeCiSioNS to tuRN tHiNGS aRouND The initial steps required, begin by making the SBP independent in its working. The lender of the last resort should be freeto make monetary policies on its own assessment. it is high time that the State Bank disciplines commercial banks to promotesmall businesses, by lending credit on reasonable terms and conditions. Any development on this front could only be possible

if the government reforms its fiscal obligations and brings in more tax payers to the fold and increases the ratio of directtaxation. Presently, the entire developmental budget is diverted toward the rehabilitation of flood affected areas; itwould have been wise if Benazir income Support Program has been tied to flood rehabilitation activities, so that sus-tainability could have been achieved across the board. it is completely imperative for the government to generate excess

revenue receipts and for that, the State Owned enterprises should start generating funds; the bailout period shouldbe called out. Some strict decision in the line of hiring competent staff, retiring unnecessary employees, lending

a few operations on contract to private entities and getting rid of loss making operations, are urgently required.As Javed Hashmi and all the other political leaders joining PTi bandwagon to bring cleaner and fairer Pakistansaid while standing at the mausoleum of Quaid-e-Azam, on his 135 birth anniversary that, “Unless, we takebold steps now and salvage this country out of the darkness that it has slipped into, because of bad politics,we will not be forgiven by the Quaid and by all those stalwarts for their efforts.”

The writer is a freelance journalist and can be reached at [email protected]

Year after year, the economicoutlook, published by the SBP, remainedsordid in its attempt to explain the reasons asto why Pakistan has become an economic dwarf. Inits recent disclosures, the central bank, has blamed fiscalproblems, domestic debt and crowding out, power outages andgovernance for the 2.4 per cent GDP that Pakistan bagged in year2011, against the forecasted 4 per cent

DURDANA NAJAM

Fiscal glooms02


ISLAMiC banking is not just about conductingfinancial transactions in compliance with shar-i'a. Rather, it is fast becoming part of a new is-lamic financial lifestyle, which in turn is givingrise to a modern islamic lifestyle. While most

observers of islamic banking refer to islamic banking inthe context of an islamic economic system, it is equallyimportant to look into social implications of islamicbanking. What are these social implications?

Firstly, islamic banking is popular amongst mod-ern and moderate Muslims. Mostly, conservative Mus-

lims shy away from islamicbanking because they arenot sufficiently convincedof the shari'a authenticityof islamic banking. Theprofile of a user of islamicbanking services includesthose who are relativelyyoung (up to the age of 30),educated (mostly to a de-gree level)- many of themhaving been educated

overseas and hence exposed to living in a multiculturaland plural society - and professionals or those withbusiness backgrounds. Trading communities, whohappen to be observant Muslims, are perhaps one ex-ception amongst conservative Muslims who prefer topatronise islamic banking.

Secondly, islamic banking provides one of the veryfew credible examples of an application of islamic princi-ples to the modern phenomenon of business activity. An-other notable example of the successful application ofislamic principles to contemporary society is in education(there are several international islamic Universities inMuslim countries, and a large and increasing number ofmodern islamic schools). But islamic banking and financeremains by far the only modern application of shari'a,which has spread all over the world.

Thirdly, islamic banking and finance is serving as acatalyst for rapid developments in islamic juristic think-ing. Continuous search for new tools and innovative useof nominate islamic contracts for product developmenthas initiated a lively debate on "dos and don'ts" in con-temporary islamic jurisprudence. While the principles of

islamic jurisprudence (called usul al-fiqh) remain intactand undisputed, applied islamic jurisprudence is evolvingaccounting for the developments in the financial marketsand islamic banking and finance. A number of madrasas(notably Darul Uloom karachi) have started producinggraduates who are experts in fiqh and finance. Many ofthese graduates now serve as shari'a advisors with islamicbanks and financial institutions - a clear divergence fromthe traditional careers such graduates used to go for in thepast. Consequently, we find graduates of madrasas and is-lamic universities in the fields of economics, banking andinvestment management. This is bringing about new so-cial trends that are in favour of engaging the religious in-telligentsia in the mainstream of business and finance.

in a country like Pakistan where the ethical fabric ofsociety is almost ruptured, there is a need to make islamrelevant to the socio-economic needs of ordinary people.islamic banking can potentially play an important role inthis respect. it can serve as a training academy for ethicalbehaviour and islamic principles of trade and finance. Forexample, there are three fundamental prohibitions in is-lamic banking and finance: riba (interest), gharar (decep-tion and concealment of information), and gambling.These three prohibitions are based on the principle of jus-tice and fairness. interest is prohibited because it allowsone party (eg., lender) to "eat another person's belongingsunjustly." Deception and hiding information is not al-lowed for obvious reasons. Gambling has its own socio-economic implications.

if these three prohibitions are inculcated in the behav-iour of users of islamic financial services, this will lead tothe development of a new ethical code in the society. "De-vouring others' property unduly," deception and fraud, andgambling and taking excessive risks are the types of haz-ards that can not only destroy individual lives but also ruinsocieties. The movement against interest, a "casino model"of banking, and reckless investing by banks and financialinstitutions is gaining momentum in the West. This is per-haps time for Muslim countries to devise a new model offinancial intermediation, which is based on social justice.

Apparently, there is an added emphasis in Pakistanon justice in the wake of the increasing popularity of Pak-istan Tehrik-e-insaf (PTi). islamic banking can certainlyplay an important role in bringing up socio-economic jus-tice to the country. While other parties have by and largefailed to capture the opportunity of using islamic bankingas a tool for socio-economic reforms, it is high time for PTito embrace islamic banking as part of its election mani-festo, and appeal even more to the younger generation inthe country. Let us see if imran khan pays attention to thisimportant phenomenon, in addition to welcoming defect-ing members of other parties into the PTi.

The writer is a Shari’a advisor to a number ofbanks and financial institutions and can be contacted

at [email protected]

WiTH the new year, just daysaway the prediction of thesoothsayers seems to bematerialising now fasterthan ever. ‘2012, will mark

the end of the world’. While the general per-ception regarding the coming of the apoca-lypse might border on skepticism, theprediction might hold true for Pakistan,where policy makers are bent upon pilingmisery on the already strained backs of theproletariat. The latest new Year gift has beenin the form of a decision to raise gas tariffsto sustain profitability of the two state ownedgas utility companies.

The government has decided to utiliserevenue generated from Cess to fund infra-structure projects like the TAPi pipeline andthe iran Pakistan gas project. One cannothelp but praise the government’s concern fordevelopmental projects, but our collectivewisdom fails to comprehend why the samehas to be done by breaking the back bone ofthe little middle class there is left. The im-

pact of raising gas prices will have disastrousconsequences for the economy, as it will ad-versely impact businesses directly associatedwith the consumption of gas. The govern-ment has on the one hand failed to establisha viable public transport network and on theother failed to take stock of the fact that ahike in fares of such vehicles plying the roadswill have a crippling affect on consumerspending power.

While the MBBS doctor Mr Asim Hus-sain, who happens to be our petroleum min-ister disagrees that such a step will haverepercussions for the common man, his viewsseem detached from reality. The hike in gastariff of CnG, industrial, power and fertilisersector will affect people from all segments ofthe economy and fuel cost push inflation, aconnection that a novice in economics caneasily make. Seems like Dr Asim Hussain’sprescription is going to kick start an allergicreaction, one that could take a heavy toll onPPP’s bid for the next elections.

The gas bomb

It is high time for PTIto embrace Islamicbanking as part of itselection manifesto

Islamic banking

and social reforms

Humayon Dar

E D I T O R I A L

Zardari, I love you

BeinG a third world countryhas its own disadvantages forthe politicians that inhabitthese lands. Unfortunately, asfate would have it they were

born in Pakistan, and not in the family ofQueen elizabeth i, royalty they truly deserved.Amongst other things, the cost of living has in-creased tremendously for these parliamentar-ians, the ‘elected’ representatives of the peopleof the country. George Orwell summed upequality in perhaps the most Pakistani con-text. ‘All men are equal, yet some are more

equal than others.’ Clearly, the parliamentar-ians, the ‘chosen ones’ are more equal than therest of the nation and while inflation mighthave taken its toll on the ordinary man, it hashit the parliamentarians harder than anybodyelse. it is therefore unfair to blame the presentregime for doubling the national debt in fouryears – it took us 60 years to borrow 4.8 tril-lion and it now stands at 10.5 trillion – whichincreased by a mere 5.7 trillion.

A man i hold in high regard, FarrukhSaleem, in his recent article mentioned somestaggering statistics that i will mention in thecourse of this article. i feel extremely sorry atthe plight of the parliamentarians. The depre-ciating rupee, the widening trade deficit, thefiscal deficit, the circular debt, the loss makingPSe’s, the cost of financing their humbleabodes are truly taking a toll on our chosen,elected representatives. ‘Democracy is the bestrevenge,’ i heard this somewhere, but i wouldrather push my own self in harms way andallow democracy to take its vengeance on me,than allow it to perturb our honorable parlia-

mentarians. Unfortunately, democracy is tak-ing its revenge from a democratically electedgovernment by subjecting it to problems thatare greater than the peaks of nanga Parbat.

My love for our ‘chosen representatives’cannot be summed up in mere words, nay,i’ll have to dip my pen in blood and even thenit won’t do justice to the greatness of ourdemocratically elected government. So, iwould rather see my child starving thanwatch the children of our representativesbeing denied of their gaming consoles andluxury vehicles. i would rather sleep in freez-ing temperatures than allow gas to be inter-rupted to the highest echelons of power inislamabad. i would rather walk to earn asource of livelihood, than watch our mastersfret over the protests that bring a sweat ontheir brows, and i’m glad they still sleep likea baby at night. i would rather give up whatis rightfully mine, for someone incompetentbecause he is more equal than me. My re-quest to you all, love thy masters.

After all, the political costs of running the

government has now ex-ceeded Rs1 trillion. Thecost of the PM secretariathas increased owing to‘inflation’ by a massive137 per cent, to Rs15 lakha day, 365 days of theyear. With teary eyes, ilook wistfully at the humble abodes of ourmasters. How they must struggle in these dif-ficult times. The cost of the cabinet divisionhas swelled to Rs80 lakh a day, 365 days of theyear. The cost of running the President houseis now Rs13 lakh a day. And yet, despite alltheir troubles, they do not spare a thought andsmile cheerfully back at us. Oh how they carefor us, if only you could see.

The power sector consumes Rs100crores a day, that’s Rs360 billion a year, or2.5 per cent of Pakistan’s GDP. in addition tothe power sector 42 other public sector enti-ties are losing Rs100 crore a day. As for thenational flag carrier, in the third quarter end-ing September 30th, PiA reported a loss of

Rs8.3b or Rs100 milliona day, every day of thatparticular quarter. ‘Atemirates, an airline thatPiA helped build, profitsthis year stand at $1.5b orRs350 million a day, up51.9 per cent’ Dr Farrukh

writes. Well, thankyou for these wonderfulstatistics Dr Sahab. i now understand thehardships being faced by the democrati-cally elected government. They truly de-serve a round of applause. nobel prize forbravery perhaps. i mean, you tell me?How many people do you know who cangrin cheerfully, just when they’ve thrownRs1,000,000,000,000 in the gutters. notmany. i thought so. And this is why, i loveAsif Ali Zardari and the democraticallyelected government.

Writer is News Editor Profit.Comments and queries:

[email protected]

Ali Rizvi

For comments, queries and contributions, write to:

email: [email protected] Ph: 042-36298305-10 Fax: 042-36298302 website: www.pakistantoday.com.pk

BaBuR SaGHiRCreative Head

HaMMaD RaZaLayout Designer

SHaHaB JaFRyBusiness Editor

aLi RiZviNews Editor

MuNeeB eJaZLayout Designer

F r i d a y, 3 0 D e c e m b e r, 2 0 1 1

A pen dipped in my ownblood, will still not dojustice to the sacrificesof the current regime

KuNwaR KHuLDuNe SHaHiDSub-Editor

MaHeeN SyeDSub-Editor

The fallacy of Imran Khan’s economic agenda

This is with regards to the article, ‘iknomics – walking the PTi talk’, publishedyesterday. i found imran khan's views on economy and politics in general, childishand uninformed, to say the least. in one interview, he said that Pakistan should endits alliance with USA and meet its subsequent balance of payments crisis bydeveloping a copper mine somewhere in Pakistan. Well, balance of payments refersto current account and developing mines is in itself a capital expenditure, whichwill take years to materialise when Pakistan may default on its current liabilities.Moreover, if America imposes sanctions on Pakistan, after its withdrawal orPakistan defaults, no financial institution will finance these fancy copper and coalprojects. imran khan’s views on Taliban and peace talks with them are even morechildish and reflect the Pakistan Army's view that all is lost in tribal areas and it isbest to hand over parts of tribal areas to Taliban, which will make them moreambitious. All in all, it is a sheer hopeless situation for Pakistan and Pakistanis’inability to accept that their state and its idea has failed which is what makes themdesperately cling to a mirage called, imran khan. in my opinion, nawaz Sharifwould be a much better bet for Pakistan.

FINANCIAL ANALYST

KARACHI

SHaRi’a MatteRS


Friday,30 December,2011

04news

oMD Pakistan Ceo, Rizwan Merchant

International affiliationshave played a pivotal role inrestructuring the localadvertising industry

Margin Trading System spursbulls at Karachi Stock Exchange

KARACHI

STAFF REPORT

kSe-100 index closed up 83points at 11,456 level with45m shares traded today,

down 3 per cent from yesterday.SeCP announced participation of in-dividual Financiers in the MarginTrading System (MTS) a move thatprovided some much needed impe-tus for locals to join buying spree ledby institutional investors. niB bankstood as volume leader today afterrumors of Tamasek Holding intend-ing to sell their majority stake in thebank to industrial Commercial Bankof China (iCBC). Fii’s activity was

unheard today due to ChristmasHoliday season while locals were ru-moured buyers in fertiliser stocks.

The kSe 100 index closed at11435.67 levels with the gain of83.08 points, while kSe 30 index

bagged 29.96 points to close at10318.16 levels. All Share indexclosed at 7912.96 levels after gain-ing 56.93 points. Total 133 scripsadvanced 87 declined and 98 re-main unchanged out of total 318

scrips traded. The companies thatreflected significant turnover in-cluded niB Bank, Worldcall,FFBL, Dawood Hercules, BoP,HUBCo, SSGC, FATiMA, nBL,and Bank Al-Falah.

Regional trade tobe enhanced in 2012: GovtiSlAMABAD: Promotion of regional trade is thepriority of government and for this purpose governmenthas declared the year 2012 as the “Year of regional tradeand economic connectivity.” Zafar Mehmood, FederalSecretary for trade and commerce said while addressinga seminar on Thursday on “Regional trade andeconomic connectivity” at the ministry. Secretarycommerce, while highlighting the strategic importanceof Pakistan and the role the country can play as aneconomic hub for landlocked Central Asian Republics(CARS), touched upon the trade normalisation processwith india, economic Cooperation Organisation (eCO)and Central Asia Regional economic Cooperation(CAReC). He said this seminar is the first in a series ofseminars which will be organised over the next yearincluding one in February 2012 to develop furthercoordination among stakeholders. Director General ofPakistan institute of Trade and Development gave apresentation on trade performance of Pakistan andregional trade initiatives i.e. SAFTA, eCOTA, ASeAnand GCC. STAFF REPORT

BiSP acting as a bridge for Sino-Paksocial cooperation: Farzana RajaiSlAMABAD: Federal Minister and Chairperson Benazirincome Support Programme (BiSP), Madam Farzana Rajasaid Pakistan and China are all weather friends and thegovernment and people of Pakistan fully acknowledge andappreciate support of China, especially in the social sectorof Pakistan. She said this while talking to His excellency MrLiu Jian, Chinese Ambassador to Pakistan here at BiSPSecretariat Thursday who visited to deliver relief goodsfrom All China Women Federation (ACnF) to the floodaffected beneficiaries of BiSP in Sindh. Madam FarzanaRaja, while appreciating support of ACnF to recent floodaffectees of Sindh said China is always the first to stand byPakistan in the hour of need. it should be remembered thatACnF had also sent relief goods for flood affectees in 2010.Chairperson BiSP said BiSP has emerged as anorganisation which is proving to be a bridge for enhancedPak-China cooperation in the social sector. She addedfurther that BiSP is willing to explore new facets of mutualcooperation with China in the year 2012 as a part of itsresolve to benefit the under privileged segments of society.Chairperson BiSP appraised visiting Chinese ambassadorabout the ongoing initiative to promote vocational andtechnical skills in Pakistan with the collaboration of ChinaFederation for Peace and Development. GNI

SeCP relaxes cash marginsto facilitate MtS market KARAChi: SeCP, the apex regulator has amended theSecurities (Leveraged Markets and Pledging) Rules, 2011, tofacilitate liquidity in the market. The amended rules now givepower to the regulator to set down lenient cash marginrequirements and allow individual investors to participate asfinanciers in the Margin Trading System (MTS). These rulesprovide a big regulatory framework for Margin Financing,Margin Trading, and Securities Lending and Borrowing.Purpose Trading activity at the bourse was at peril due tostringent regulations whereby a lot of cash was required to useMTS but as per broker community’s request the rules havebeen bended. STAFF REPORT

Lahore gas supplies closedlAhORE: SnGPL has suspended gas supplies toLahore industries for an indefinite time, sources toldProfit on Thursday. The decision was made to facilitatedomestic users. Sui northern Gas Pipelines (SnGPL) isfacing 900 million cubic feet (MCF) shortfall, as itsdemand is 2,700 mmcf while its supply is only 1,800mmcf. To overcome shortfall and facilitate domesticconsumers, the company has decided to close gassupplies to all industries in Lahore. SnGPL higher-upshas warned industries to follow the closure and if anyindustry violated the ban then its connections would bedisconnected. STAFF REPORT

LPG prices to increaselAhORE: LPG Association of Pakistan (LPGAP)spokesman Bele Jabbar said LPG prices are expected toincrease in the country due to increase in internationalprices. He said PARCO has reduced supplies in domesticmarket, which resulted in increase in LPG prices inPakistan. The price range of LPG in the country isbetween Rs120 and Rs160 per kg. He said current priceof LPG in international market is $805 per metric tonneand it is expected the price would increase to $845 permetric tonne and it would increase LPG price inPakistan. STAFF REPORT

Cotton prices, gaswoes dominate 2011

KARACHI

STAFF REPORT

PAkiSTAn’S textile in-dustry has endured amixed year, rangingfrom a sharp fall incotton prices from its

all time peak levels to the escalat-ing energy crisis. Cotton pricespeaked in March 2011 resulting inwindfall gains for the textile chainduring 1H2011. However, sincethen prices have tumbled toRs5,400 per maund (down 58 percent from its peak) due to growthin cotton output.

in addition, gas shortage inthe country especially during theongoing winter season has putmore burdens on the sector.

Hence, the textile sector has so farunderperformed the local bourseby a massive 19 per cent.

The 1H2011 witnessed cottonprices rallying to all time peaks interna-tionally and domestically on the back oflimited supply and escalating demand.As a result, the textile chain made wind-fall gains during that period with exor-bitant margins. However, prices havesince then taken a breather and comedown significantly to $0.93 per lbs.

Domestically as well, the priceshave contracted by 58 per cent toRs5,400 per maund from its peak levelof Rs13,000 per maund in March 2011.As evident from 1QFY12 results, we donot see the windfall gains made by theindustry to continue in the future onaccount of improved global cotton pro-duction which is expected to keep

prices at current levels, said BilalQamar at JS. Also, Pakistan’s cottonproduction is expected to reach 12.6million bales, up eight per cent fromlast year. nevertheless, lower cottonprices will somewhat reduce textilemanufacturers’ reliance on short termborrowings which can lead to reducedfinancial charges.

Since the start of the year, thecountry has faced acute gas short-ages resulting in massive produc-tion losses or reliance on expensivealternate fuel such as diesel. For oursample companies, fuel and powercosts contribute 10 per cent towardsthe total cost of goods sold, and afive per cent increase could result ina decline in gross margins by 30-50bps for nML and nCL.

With the decline in cotton prices

and global cotton production ex-pected to surge by 11 per cent to 26.8million tonnes in FY12, the prof-itability of the stand alone spinningunits will be affected the most. Spin-ners will not be able to make wind-fall gains which they had made lastyear on account of continuously ris-ing prices and supply concerns.However, the standalone weavingunits and other value added unitswill benefit due to lower yarn prices.Furthermore, composite units likenML and nCL could somewhatmanage the current situation as theyare elastic in switching focus in-be-tween their segments. Also, we ex-pect additional working capital lines(taken last year due to expensive cot-ton) to decrease resulting in lower fi-nance costs in FY12, he added.

Textile stakeholders agreeon no TCP intervention

LAHORE

STAFF REPORT

Ameeting of textile ministrywas held on December 28with stakeholders of cotton

trade including industry, karachiCotton Association (kCA) and cot-ton exporters to agree on no TCPintervention in free market mech-anism. Trading Corporation ofPakistan (TCP), therefore, is notlikely to intervene, as the ministrywas convinced by participants. itmay be noted that the proposal ofPCGA for lifting their remainingcotton stocks through TCP amidstfalling prices was pending withtextile ministry. Participants of themeeting argued that as of 15th De-cember 2011, as many as 11 millionbales of cotton had arrived, whichwould further increase by 31st De-cember 2011 to around 12.2 millionbales. They pointed out that croplifting data suggests that 95 percent of the cotton crop, estimatedto be 12.58 million bales, would beout of the hands of cotton farmers.Therefore, intervention would not

yield any benefit and if so, it wouldbenefit only cotton hoarders,APTMA Chairman Mohsin Azizsaid. Cotton prices surged abnor-mally to $2.2 per kg last year butAPTMA did not ask for govern-ment intervention for a single dayand instead fought for continuityof free market mechanism, headded. Right now, he furtheradded, fall in cotton prices is aglobal phenomenon and APTMAhas nothing to do with tumblingcotton prices; therefore PCGA'spropaganda of manipulation the

market by APTMA was baseless. itis not manipulation but specula-tion of a few ginners that has cre-ated fuss recently, he said. He saidTCP's intervention, if inevitable inany case, should be broad-basedand APTMA should also be allowedto bid for TCP's tender against 4.5million stocks with industry atpresent. There should be an equalopportunity for every stakeholderto avail the opportunity at the costof exchequer and no discrimina-tion should be made by govern-ment, he added.

PM directs Moitto resolve difficultiesin Zong project

ISLAMABAD

STAFF REPORT

PRiMe Minister SyedYusuf Raza Gilani onThursday directed

Ministry of informationTechnology to take urgent stepsto resolve difficulties being facedby the mobile company Zong inimplementation of theirextension projects. Chiefexecutive Officer of Zong FanYunjun called on Prime Minister.He said Zong, subsidiary of theworld’s largest telecom operator,China Mobile, wants to extendits operations in the country thatwould provide job opportunitiesto youth in various fieldsbenefiting from its futureprojects. He said Zong has madea cumulative investment of $1.5billion during the last four yearsand has contributed Rs26 billionin revenue during the sameperiod. He said Zong was keen toinvest in upcoming 3G licensesauction. He also presented acheque of Rs1 million to the PMfor Flood Relief Fund.

Cotton prices surged abnormallyto $2.2 per Kg last year but aPtMadid not ask for governmentintervention for a single dayand instead fought for continuityof free market mechanism


05


news

CORPORATE CORNERPetroleum minister distributes Benaziremployees’ Scheme certificates

ADhi: Federal Minister for Petroleum andnatural Resources (MPnR) Dr Asim Hussaindistributed Benazir employees Stock OptionScheme (BeSOS) certificates among employees atPakistan Petroleum Limited’s (PPL) Adhi Field(AF). Besides Dr Hussain, the event was attendedby Member national Assembly Raja Parvez Ashraf,Speaker, khyber Pakhtunkhwa Assemblykaramatullah khan Chagermatti, as well as localrepresentatives and media. Dr Hussain highlightedthe technical problems in reaching optimumproduction targets in Plant ii. “Given the currentenergy crisis, i immediately advised PPL’smanagement that all technical bottlenecks shouldbe removed as soon as possible. i am happy tonote that the plant is now functioning at fullproduction capacity.” PRESS RELEASE

Plan Pakistan to rehabilitate391 primary schools MultAn: Plan Pakistan will soon rehabilitate391 government primary schools in the three floodaffected districts of Muzafargarh, Layyah andRanjan Pur. Rashid Javed, the Country Director ofPlan Pakistan, shared this at the end ProjectConvention of the project, “Getting Children Backto School in three districts of Southern Punjab”.The project aims to assists more than 54000primary grade children with a variety of childfriendly interventions and installation of solarpanels for electricity in 250 vulnerable schools withno electricity. The event was attended by a large

gathering representing civil society organisations,local and international nGOs, Un, districtgovernment officials and media. PRESS RELEASE

intel begins shipping ofnew intelR atomtM processorsKARAChi: intel Corporation announced theavailability of the latest mobile intelR AtomTMprocessor-based platform, formerly codenamed"Cedar Trail". Designed to provide small, compact,on-the-go computing with great battery life at anaffordable price, the latest platform adds severalnew features to netbook computers. These deviceswill be available in early 2012. Systems based onthe new intelR AtomTM processors may have upto 10 hours of battery life and weeks of standby,allowing for all-day use between charges.Additionally, intel increased processor and overallsystem performance while reducing powerconsumption up to 20 percent compared to theprevious platform. PRESS RELEASE

Quran Khawani forBenazir at BiSP Secretariat

iSlAMABAD: Quran khawani and prayerceremony in accordance with the 4th Youm-e-Shahadat of Shaheed Mohtarma Benazir Bhuttowas held at Benazir income Support Programme(BiSP) Secretariat. The ceremony was chaired byFederal Minister and Chairperson BiSP MadamFarzana Raja and large number of PPP leaders andworkers participated in the ceremony. On theoccasion, special prayer was offered for Aisal-e-

Sawab to Shaheed Benazir Bhutto. PRESS RELEASE

ufone introducesBlackBerry torch 9810, 9860iSLAMABAD: Ufone expands its BlackBerry profilewith the launch of two extremely stylishsmartphones- BlackBerry Torch 9810 Smartphoneand All-Touch BlackBerry Torch 9860. The newBlackBerry Torch 9810 is faster and fluid withenhanced hardware features. With a fasterprocessor, Liquid Graphics, HD video recording,and 8GB of built in storage, the result is anenhanced multimedia experience in an all-in oneBlackBerry design. Similarly, BlackBerry Torch9860 smartphone also offers BlackBerry 7experience in a stylish new all-touch design andpowerful gaming experiences without compromisingthe real-time collaboration and communicationloved by BlackBerry users. Blackberry torch 9810 ispriced at Rs49,999 and Blackberry Torch 9860 ispriced at Rs45,000. PRESS RELEASE

Sanofi South asian head visits Pakistan

KARAChi: Dr Shailesh Ayyangar, VP SanofiSouth Asia zone and Managing Director of Sanofiindia came on a two-day visit to Pakistan. Arrivingin Lahore through the Wagah border, Dr Ayyangarmet with the Chairman of Sanofi (Pakistan) board,Syed Babar Ali, and discussed expansion ofSanofi’s presence in Pakistan, including thepossibility of enhancing production capacity andincreasing access to medicines for the localpopulation. “Pakistan is an emerging market withrich potential in the pharmaceutical sector”, saidDr Ayyangar. PRESS RELEASE

East Asia is facing new situation after the demiseof top leader of Korea, Kim Jong Il, and it istimely for Japan to exchange views with China,which is the chair of the stalled Six-Party Talks

Chinese Prime Minister, wen Jiabao

LAHORE: Mr Fan Yunju, CEO Zong, presenting acheque of Rs1 million to the Prime Minister SyedYusuf Raza Gilani, for flood affectees at PM house,Islamabad. PRESS RELEASE

KARACHI: Management of Atrium cinemas andAtrium mall, along with guests during the cakecutting ceremony to celebrate their 1stanniversary. PRESS RELEASE

ISLAMABAD: Deputy Chairman NADRA Tariq Malik, MrIshatiaq Ahamad Khan Secretary ECP, Naveed KhalidButt Ufone, Malik Faisal Qayyum Telenor, signing theMoU at NADRA HQs for introducing SMS service tofacilitate citizens to verify their vote registration andparticulars in the list. PRESS RELEASE

I TALiAn Prime MinisterMario Monti sought rein-forcement for the eurozone's bailout fund andpledged new efforts to

boost the economy after a disap-pointing bond auction on Thurs-day underlined the threat to thecountry's shaky public finances.

investors demanded a yield ofnearly 7 per cent on 10-year paperat the auction of medium- andlong-term bonds, down from therecord highs seen last month butstill unsustainable given the 450billion euros ($580 billion) thatitaly needs to raise through debtissuance in 2012.

An unprecedented europeanCentral Bank injection last weekof nearly half a trillion euros ofcheap funding for banks easedpressure at a short-term italiandebt auction on Wednesday, butlonger-dated bonds still pose achallenge. Monti put a brave faceon the auction result, which ana-lysts described as "slightly posi-tive" or "average" at best.

"Auctions held yesterday andtoday went rather well, this is en-couraging but the financial turbu-lence absolutely isn't over," Montisaid during a traditional end-yearpress conference.

italy, the euro zone's third

largest economy, remains at thecentre of the debt crisis thatbegan in Greece two years ago andits borrowing needs could over-whelm the bloc's financial de-fenses if it were forced to seek aninternational bailout.

"A lot of work remains to bedone but from this point on, thiswork has to be done in europeabove all," Monti said. He said theeuropean Financial Stability Fa-cility, the bailout fund set upbyeuro zone governments, needs"significantly greater" resourcesbut refused to quantify how muchmore was required.

Monti promised to outline afirst package of growth measuresto european partners next monthand said the emphasis would beon liberalizing the economy,boosting competition and over-hauling the jobs market, thoughhe did not give details.

The measures will follow a 33billion euro package of cuts andtax hikes aimed at balancing thebudget by 2013 which was passedby parliament last week but whichhas been criticized for weighingtoo heavily on italy's alreadysickly growth prospects.

Monti said he was aware thatthe austerity package had "manydisadvantages" but said budget

discipline was needed to restoreconfidence in italy's public fi-nances. However he added thateuropean policy had to focus in-creasingly on growth.

"All mechanisms for makingthe application of this disciplinemore secure is welcome, providedit is integrated into a comprehen-sive european economic policywhich has more resources to getthe euro zone out of its currentdifficulties and above all pro-motes growth more," he said.

RECESSION

italy's chronically weak econ-omy over the past two decades hasbeen one of the main factors increating a debt burden that nowamounts to around 120 per cent ofgross domestic product, secondonly to Greece in the euro zone.

Rigid labor rules - which givesome workers iron-clad guaran-tees while forcing increasingnumbers of young people to ac-cept short term jobs with fewprospects - an inefficient publicsector, low productivity andchoking red tape have longweighed on the economy.

italy is widely considered to beheading for a severe recession next

year and data on Thursday showedbusiness confidence at its lowest fortwo years, with orders falling and theproduction outlook worsening. Al-though he offered no firm timetable,Monti said the government wouldmove quickly under pressure bothfrom international partners and thebond markets. "The timetable will berapid. We aren't being permitted towork calmly," he said.

Underlining the pressure hefaces, yields on 10-year bonds re-mained locked above 7 per cent

on the secondary market onThursday, near the levels whichforced Greece, ireland and Portu-gal to seek an internationalbailout. italy sold 7 billion euros($9 billion) of bonds at auction inthin holiday markets, just abovethe mid-point of its target range,but the yield on benchmark 10year BTPs was 6.98 per cent, notfar from a euro lifetime record of7.56 per cent a month ago.

"Buying 10-year italianbonds is a leap of faith which in-

vestors are prepared to take onlyat very high interest rates," saidnicholas Spiro of Spiro Sover-eign Strategy. "There are simplytoo many risks and uncertaintiessurrounding italy." its 3-yearbonds sold more easily and theiryield fell more than two per cent-age points at auction to 5.62 percent -- far below the euro erarecord of 7.89 per cent that italypaid to sell the same bond at theend of november. ($1 = 0.7724euros). REUTERS

Italy seeks euro fundafter tough debt sale


top 5 perForMers sector wiseSyMBoL oPeN HiGH Low CuRReNt CHaNGe voLuMe SyMBoL oPeN HiGH Low CuRReNt CHaNGe voLuMe

Food ProducersAdam Sugar 17.90 18.90 18.40 18.90 1.00 10,491AL-Abbas Sugur 92.48 92.49 88.00 92.49 0.01 7AL-Noor Suger Mills 55.99 55.99 53.20 55.99 0.00 26Baba Farid 39.83 39.00 39.00 39.00 -0.83 2,000Bawany Sugar 11.00 11.80 11.00 11.00 0.00 10

Household GoodsAL-Abid Silk Mills 23.34 24.50 24.50 24.50 1.16 500Hala Enterprise 7.00 7.00 6.90 7.00 0.00 111Hussain Industries 3.00 3.00 3.00 3.00 0.00 100Pak Elektron Ltd. 3.55 3.65 3.40 3.59 0.04 38,312Tariq Glass Ind. 8.30 8.49 8.00 8.12 -0.18 4,396

Personal GoodsAmtex Limited 1.20 1.25 1.19 1.24 0.04 103,150Azam Textile 1.11 1.60 1.11 1.11 0.00 1Azgard Nine 3.21 3.26 3.08 3.11 -0.10 314,901Babri Cotton 8.41 8.50 8.41 8.41 0.00 1Bannu Woollen 14.85 14.37 14.26 14.26 -0.59 1,510

Future ContractsAHCL-DEC 27.00 26.92 26.05 26.73 -0.27 88,500AHCL-JAN 27.47 27.10 26.40 26.93 -0.54 94,000ANL-DEC 3.25 3.20 3.11 3.17 -0.08 1,500ATRL-DEC 109.50 109.25 108.30 108.91 -0.59 60,000ATRL-JAN 110.62 110.50 109.31 109.94 -0.68 61,000

Pharma and Bio TechAbbott Laboratories 99.95 100.00 99.50 100.00 0.05 1,361Ferozsons (Lab) Ltd. 75.44 78.00 75.44 75.44 0.00 1GlaxoSmithKline Pak. 66.08 67.00 66.00 66.68 0.60 1,508Highnoon (Lab) 30.23 30.23 29.25 30.23 0.00 20IBL HealthCare 13.76 14.00 13.70 14.00 0.24 5,275

Fixed Line TelecommunicationP.T.C.L.A 10.00 10.10 9.96 10.00 0.00 140,195Pak Datacom Ltd 34.50 34.50 34.00 34.50 0.00 101Telecard Limited 0.80 0.83 0.75 0.80 0.00 42,806Wateen Telecom Ltd 1.75 1.85 1.75 1.75 0.00 26,613WorldCall Telecom 0.85 0.89 0.83 0.84 -0.01 214,669

ElectricityGenertech 0.31 0.34 0.22 0.27 -0.04 30,012Hub Power Co. 34.17 34.33 34.06 34.11 -0.06 417,944Japan Power 0.64 0.68 0.61 0.63 -0.01 47,381K.E.S.C. 1.59 1.59 1.53 1.59 0.00 41,119Kohinoor Energy 15.51 15.51 14.62 15.51 0.00 100

BanksAllied Bank Ltd 56.41 56.50 54.99 55.34 -1.07 16,622Askari Bank 10.01 10.20 9.85 9.92 -0.09 80,549B.O.Punjab 4.86 4.96 4.83 4.93 0.07 331,096Bank Al-Falah 11.20 11.34 11.18 11.20 0.00 102,692Bank AL-Habib 28.10 28.20 27.80 27.88 -0.22 60,345

Non Life InsuranceAdamjee Ins 44.42 45.70 43.30 45.29 0.87 102,889Central Ins Co. 50.02 52.50 50.02 50.02 0.00 50EFU General Ins 36.21 36.05 36.00 36.00 -0.21 1,804Habib Insurance 9.85 10.29 9.85 9.85 0.00 100IGI Insurance Ltd. 43.38 43.50 42.74 43.46 0.08 2,200

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 0.35 0.35 0.30 0.34 -0.01 1,523Arif Habib Investmen 14.90 15.60 13.90 15.17 0.27 6,608Arif Habib Ltd. 13.67 13.60 13.28 13.59 -0.08 12,450Dawood Equities 0.65 0.70 0.70 0.70 0.05 500F. Nat.Equities 2.55 2.75 2.37 2.54 -0.01 4,006

Equity Investment Instruments1st.Fid.Leasing Mod 1.58 1.60 1.58 1.58 0.00 7,490AL-Noor Modar 4.50 4.30 4.10 4.30 -0.20 10,239B.F.Modaraba 4.25 4.00 4.00 4.00 -0.25 1,398B.R.R.Guardian 2.06 2.15 2.06 2.06 0.00 100Cres. Stand.Mod 0.49 0.50 0.42 0.50 0.01 4,815

MiscellaneousCentury Paper 12.77 13.19 12.77 12.77 0.00 1Security Paper 36.33 35.40 35.40 35.40 -0.93 500Pakistan Cables 32.00 33.50 32.00 32.00 0.00 2P.N.S.C. 13.00 13.00 12.75 12.75 -0.25 8,425Pak.Int.Con. SD 64.27 67.00 65.50 66.90 2.63 2,270TRG Pakistan Ltd. 1.13 1.17 1.12 1.14 0.01 448,138Murree Brewery 64.08 64.89 64.00 64.31 0.23 471Shakarganj Food 4.75 4.94 4.16 4.44 -0.31 5,500Grays of Cambridge 23.75 23.00 23.00 23.00 -0.75 1,493Khyber Tobacco 25.37 26.63 25.37 25.37 0.00 100Pak Tobacco Co. 55.50 56.00 55.50 55.50 0.00 50Shifa Int.Hospitals 27.17 28.20 26.01 26.20 -0.97 1,453Hum Network Ltd. 16.00 16.00 16.00 16.00 0.00 500Media Times Ltd 11.41 12.41 10.43 12.41 1.00 2,010P.I.A.C.(A) 1.90 2.19 1.94 2.00 0.10 93,342Pak Hotels 28.80 30.24 28.80 28.80 0.00 200P.T.C.L.A 10.00 10.10 9.95 9.98 -0.02 901,872Telecard Limited 0.81 0.85 0.75 0.83 0.02 90,834Wateen Telecom Ltd 1.75 1.85 1.77 1.80 0.05 33,736WorldCall Telecom 0.86 1.00 0.86 0.97 0.11 4,470,859Sui North Gas 15.75 16.00 15.65 15.99 0.24 37,129Sui South Gas 19.46 19.90 19.36 19.55 0.09 2,088,039EFU Life Assur 74.33 74.74 71.00 74.28 -0.05 3,703Pace (Pak) Ltd. 1.30 1.39 1.22 1.31 0.01 97,630Netsol Technologies 8.90 9.01 8.80 8.91 0.01 40,921

SyMBoL oPeN HiGH Low CuRReNt CHaNGe voLuMe

Oil and GasAttock Petroleum 420.02 420.50 416.00 419.75 -0.27 16,299Attock Refinery 109.17 109.55 108.00 108.56 -0.61 152,085Burshane LPG 22.52 22.80 22.52 22.52 0.00 101Byco Petroleum 6.72 6.78 6.65 6.75 0.03 60,252Mari Gas Co. 83.42 84.74 82.62 82.74 -0.68 4,422

ChemicalsAgritech Limited 15.55 16.50 16.40 16.44 0.89 1,800Agritech(PREF)(R) 1.01 0.85 0.40 0.64 -0.37 16,880Arif Habib Co SD 26.97 27.00 25.95 26.70 -0.27 1,559,547Clariant Pakistan 151.00 151.50 149.00 149.30 -1.70 1,265Dawood Hercules 37.70 39.58 38.00 39.58 1.88 411,564

Industrial metals and MiningCrescent Steel 18.50 18.75 18.15 18.74 0.24 10,566Dost Steels Ltd. 1.13 1.12 1.10 1.10 -0.03 8,000Huffaz Seamless Pipe 8.24 8.43 8.00 8.09 -0.15 4,334Int. Ind.Ltd. 32.91 34.55 31.70 34.46 1.55 173,937Inter.Steel Ltd. 10.49 10.50 10.03 10.47 -0.02 5,502

Construction and MaterialsAl-Abbas Cement 2.54 2.60 2.12 2.32 -0.22 820,325Attock Cement 50.99 51.00 50.99 50.99 0.00 26Cherat Cement 6.75 6.80 6.45 6.75 0.00 1,502D.G.K.Cement 18.82 18.95 18.70 18.83 0.01 419,090Dadabhoy Cement 1.41 1.59 1.41 1.41 0.00 1

General IndustrialsCherat Packaging 27.23 27.85 27.10 27.23 0.00 326ECOPACK Ltd 3.75 3.70 3.60 3.70 -0.05 7,012Ghani Glass Ltd 42.06 43.00 41.30 42.85 0.79 5,515MACPAC Films 6.99 6.99 6.90 6.99 0.00 47Packages Limited 79.81 81.00 80.00 80.74 0.93 2,100

Industrial EngineeringAdos Pakistan 5.28 5.80 4.70 5.31 0.03 3,131AL-Ghazi TractorsXD 176.55 184.75 176.00 180.75 4.20 707Bolan Casting 28.50 29.92 28.50 28.50 0.00 8,600K.S.B.Pumps 24.51 25.73 24.51 24.51 0.00 99Millat Tractors Ltd. 365.22 369.00 364.00 366.04 0.82 4,390

Automobile and PartsAtlas Battery Ltd. 162.00 165.00 163.45 164.45 2.45 1,460Atlas Honda Ltd. 125.98 125.98 125.00 125.98 0.00 5Bal.Wheels 23.70 24.88 23.70 23.70 0.00 300Dewan Motors 1.69 1.68 1.62 1.62 -0.07 27,809Exide (PAK) 159.60 161.30 159.60 159.60 0.00 1

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


06

top 10 sectors

49% 01%Construction & Materials

Chemicals Real Estate Investment

03%Electricity

01%02%

Fixed Line Telecommunication

17%Equity Investment Instruments

Financial Services

09%Banks10%Oil & Gas04%Personal Goods04%

International Oil PriceWTICrude Oil

$99.38

BrentCrude Oil

$107.56

STOCK MARKET HIGHLIGHTS

Index Change Volume Market ValueKSE-100 11435.67 + 83.08 33,842,079 1,135,284,803LSE-25 2837.92 +36.08 1,047,570 17,471,144ISE-10 2553.72 +8.83 4,910 173,985

Major Gainers

Company Open High Low Close Change TurnoverMian Textile 0.15 0.45 0.40 0.44 185.53 1,000Chenab Ltd.(Pref) 0.36 0.99 0.99 0.99 175.00 500NAMCO Bal Fund 4.13 5.13 5.11 5.12 23.97 871Gharibwal Cement 4.39 5.38 4.20 5.24 19.36 29,333Dawood Equities 0.67 0.79 0.71 0.79 17.91 7,498

Major Losers

AL-Abbas Sugur 90.87 92.50 86.35 87.51 -3.36 551J.D.W.Sugar 77.00 77.50 73.15 74.46 -2.54 2,150Salfi Textile 45.58 45.58 43.31 43.34 -2.24 611Fauji Fert Bin Qasim 45.66 46.00 43.82 44.19 -1.47 3,320,379Ibrahim Fibres 28.39 28.39 27.00 27.04 -1.35 8,812

Volume Leaders

NIB Bank Limited 1.49 1.83 1.50 1.72 0.23 8,704,802WorldCall Telecom 0.86 1.00 0.86 0.97 0.11 4,470,859Fauji Fert Bin Qasim 45.66 46.00 43.82 44.19 -1.47 3,320,379Dawood Hercules 41.55 43.62 39.96 42.30 0.75 2,994,681B.O.Punjab 5.20 5.68 5.23 5.56 0.36 2,759,426

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

Gold 24K 51,189.00 43,933.00 1,524.00Gold 22K 51,608.00 44,245.00 –Silver (Tezabi) 884.00 758.00 35.05Silver (Thobi) 1025.00 880.00 –

Interbank RatesUS Dollar 89.9951UK Pound 138.8174Japanese Yen 1.1565Euro 116.2646

Buy SellUS Dollar 89.30 90.30Euro 114.13 116.50Great Britain Pound 136.70 139.19Japanese Yen 1.1391 1.1566Canadian Dollar 86.52 89.34Hong Kong Dollar 11.35 11.65UAE Dirham 24.28 24.62Saudi Riyal 23.79 24.09Australian Dollar 88.96 92.10



news

07

The cellular sector market needs to consolidatethrough merger and acquisition of operatorsbefore launching the 3G technology inPakistan otherwise; this will be a losingproposition for every operator

ISLAMABAD

JALALUDDIN RUMI

BY amending the SolvencyRegime, Securities andexchange Commission ofPakistan (SeCP) board

approved Fit and Proper criteria forthe appointment of Chief executiveOfficer (CeO) and other officials of theinsurance companies’ which requiresprior permission of the commission toappoint senior management includingpublic and private sector insurancecompanies. The SeCP ChairmanMuhammad Ali while addressing apress briefing on amended SolvencyRegime said that Fit and Propercriteria will help in curtailingmismanagement and corruption byonly allowing people with relevantexperience to hold importantpositions in insurance sector.AMEnDED SOlvEnCyREgiME: While informing aboutthe amended Solvency Regime forthe insurance companies he saidthat the amendments willstrengthen the financial position ofinsurers over time and reduce therisk of volatility in the prices ofcertain assets, such as equities andproperties, which threaten theirsolvency. The Policy Board of theSeCP has approved the Solvencyrequirements for insurancecompanies, which would improvethe liquidity position of theinsurance companies andeventually protect the interests ofpolicy holders.Solvency is the ability of a businessto have enough assets to over itsliabilities, and the amendmentscall for insurance companies tomanage their assets with differentpriority. The changes in thesolvency regime calls for non- lifeinsurance companies to increasethe value of their admissible assetsfrom Rs50 million by December2011 to Rs100 million byDecember 2012, Rs125 million byDecember 2013 and by the end ofyear 2014 the net admissible assetshave to be Rs150 million.

liMitAtiOn Of pRiORRulES: The solvency regime forthe insurance industry wasintroduced in the year 2002through SeC (insurance) Rules,2002. it was felt that the rules thenpublished had certain limitationssuch as a detailed solvency regimefor life insurance companies asenvisaged by the insuranceOrdinance, 2000 and theadmissibility of assets introduced in2002 had awfully high limits forcertain assets in the case of non-lifeinsurers, while other assetscommonly invested in, were notcovered at all.Under the current rules the Lifeinsurance companies need to haveadmissible assets of Rs75 million,however after the amendments thecompanies need to have admissibleassets of Rs105 million by the endof 2012, they have to be Rs135million by December 2013 andRs165 million by the end of 2014.The SeCP officials said thatcurrently the total insurance base inthe country is worth Rs107 billionbut the non-life segment wasdominating at Rs59 billion. it isexpected that the new solvencyregime for the insurance companieswill further strengthen the financialposition of insurers over time andreduce the risk of volatility in theprices of certain assets, such asequities and properties, whichthreaten their solvency.Considering these issues, in year2006 a group of experts fromrelevant stakeholders includinginsurance Association of Pakistan,Pakistan Society of Actuaries,Pakistan Banks Association andSeCP as the regulator, engaged inan exercise to analyse theprovisions relating to solvencyrequirements for both life and non-life insurance companies.MAnDAtE Of thECOMMittEE: The mandate ofthis committee was not only torecommend the rational solvencyrequirements, but also to examinethe existing practices and policies of

insurers with respect to theinvestment of their funds.The committee presented itsrecommendation relating toadmissibility of assets, valuation ofassets and liabilities, solvencyrequirements of life insurers,solvency requirements of non-lifeinsurers, minimum valuation basisfor life insurance, reporting onsolvency by insurers andinvestment guidelines. Theserecommendations were approvedby the commission earlier in 2010for publishing in the official gazetteand eliciting public opinion to bereceived in subsequent 30 days.The SeCP thoroughly reviewed thecomments received on the draftamendments and the suggestionsfound to be consistent with theregulatory framework and theenabling provisions of the law,without prejudicing the rights andduties of any stakeholder, weresuggested to be accommodated. ithas been noted with satisfactionthat while preparing these newprovisions of Solvency, the SeCPcomplied with the due process i.e.taking into consideration thestakeholders’ comments, engagingindustry experts in thedeliberations and seeking advicefrom the Legal experts. Accordingly,the amendments in the SeC(insurance) Rules, 2002 related toSolvency provisions were presentedin the SeC Policy Board meetingheld today and the same wasapproved by the Board for finalpromulgation.The more substantive changes areto be implemented in a phasedmanner so as to allow the industryto implement these changes at areasonable pace. The new regime istherefore not anticipated to causeany material difficulties to insurers,although the increases in absoluteamounts and the introduction of lifeinsurance solvency regime is likelyto result in increasing the capitalbase by some new companies. Thereis, however, adequate time allowedfor this increment.

KARACHI

STAFF REPORT

LOW gas pressure is causing planttripping as well as production lossesto industries, complained manufac-turers from Bin Qasim industrial

Zone (BQiZ).“The pressure is getting as low as 3-4psi

causing plant tripping,” said MianMuhammed Ahmed, patron in-chief andfounding president of Bin Qasim Associationof Trade and industry (BQATi), in a letter sentby him to Sui Southern Gas Company onThursday. Mian said complaints about per-sistent low gas pressure were receivedthroughout the week from BQATi’s memberslocated in BQiZ, especially operational zone(Bonded Area) and nWiZ. “Many of our mem-

bers have lodged complaints in this regard,but to no avail,” he lamented.

He said natural gas provided by SSGC wasthe major source of energy for our member in-dustries. Last week on Sunday and this weekon Sunday and Monday, the industrialists haddone their best to respond positively and re-sponsibly to the SSGC’s request for a two-dayshut down. “The situation, unfortunately hasnow exacerbated, deficient gas pressure iscausing further production losses to industrieswhich already observed two days shut down.All this is translating into escalating financiallosses and threatening the survival of manyindustries,” the BQATi chief said.

Mian requested the state gas supplier torestore required gas pressure immediatelyand asked measures to be taken to ensure con-sistent supply to keep the industries running.

New solvency regimefor insurance companiesg Board approves Fit and Proper criteria for appointment of Ceos

KARACHI

ISMAIL DILAWAR

MeMBeRS of karachiStock exchange (kSe)seem to have lost inter-est in the affairs of the

ill-regulated and therefore volumes-starved bourse as turnover for 2012board of directors election declined by19 per cent this year. Last year, some170 members had casted their votesand had elected Zafar Siddiq Moti,Abdid Ali Habib, Haji Ghani HajiUsman, Abdul Majeed Adam, Mo-hammad Sohail, Ashraf Bava, AzharAhmad Batla, Mohammad Azamkhan and Muhammad Qasim Lakhanito the kSe board for 2011. Thursdaysaw only 138 of the total 200 memberstaking part in voting held at kSe onThursday to elect five candidates to di-rectorship of the exchange for calendaryear 2012. Out of a total of seven can-didates, one withdrew his nominationbefore the commencement of ballot-

ing, leaving six candidates to contestthe election. Of total 138 memberswho casted their votes, three ballot pa-pers were declared invalid and 135 bal-lot papers were declared as valid.Based on the results, the five candi-dates who were declared as successful,in order of the votes secured, are:Abdul Majeed Adam (125), Muham-mad Yasin Lakhani (123), YaqoobHabib (122), Saeed Ahmed Butt (104),and Haji Ghani Haji Usman (102).

As per articles of association of theexchange, four non-member directorsare required to be nominated by Secu-rities and exchange Commission ofPakistan (SeCP) for the next termfrom whom the next chairman shall beelected by the board. nadeem naqvi,who is holding the office of managingdirector, is the tenth director on thekSe board. Management of kSe, in astatement, appreciated contributionmade by outgoing directors during theyear 2011 and welcomed the incomingdirectors on the kSe board for next

term. According to market observers,trading volumes at kSe had decreasedto a 10-year low during the outgoing2011 due to controversial levies likeCapital Gains Tax (CGT). “Buying sell-ing of shares, floating of new compa-nies and fund raising through rightshares, all remained depressed in2011,” said Farhan Mahmood, an an-alyst at Topline Securities. He saidmarket players remained concernedabout re-introduction of CGT after agap of more than three decades, its un-derstanding and last but not the leastits cumbersome calculations.

The market cap based bench-mark kSe 100 index fell five percent in 2011 while free float basedkSe 30 index came down by 11 percent. MSCi Pakistan index was alsodown 16 per cent in the outgoingyear. The value of karachi boursetrimmed down by Rs 302 billion or9 percent as market capitalisationreached Rs2.97 trillion ($33bn) atthe end of 2011.

LAHORE

IMRAN ADNAN

FeDeRAL government has reducedwhite refined sugar price by Rs10 perkilogram at utility stores, which is nowavailable at Rs42 per kilogram. After

this announcement, sweetener price in Punjab’slargest wholesale market, Akbari Mandi, has wit-nessed a downward trend. Speaking to Profit,sugar dealers disclosed that due to reduction insugar price at utility stores, wholesalers hadstarted to offload their stocks. They revealed thatjust after the announcement by federal govern-ment sugar prices in the Akbari Mandi droppedby Rs1.25 per kilogram.

They pointed out that a 50-kilogram sugarsack was being quoted at Rs2,562 ex-mill onWednesday evening. But after the announcementof price reduction at utility stores, it touchedRs2,500 per bag or Rs50 per kilogram, while thecommodity was being sold at Rs51 to Rs52 perkilogram at wholesale level.

Speaking to Profit, Pakistan Sugar Mills As-sociation President Javed kayani said that thecountry was expecting a bumper sugarcane crop

of some 60 million tons, of which some 4.7 mil-lion tonnes of white refined sugar production wasexpected. He said that the country would haveover one million tonnes of surplus sugar stocks asthe national requirement was 4.2 million tonnesand the country had some 0.6 million tonnes ofcarryover sweetener stocks. He underscored thatthough the country had favourable circumstancesfor sugar exports but government did not allowsweetener exports. “Sugar price is already hover-ing around bottom and industry has limited out-let due to export ban. The price in domesticmarkets will remain stable,” he maintained.

Responding to a question, he said that in theinternational markets sugar was being quoted at$619 per tonne, which meant that Pakistan couldexport the sweetener around Rs60 per kilogram.Federal minister for industries Chaudhry Pervaizelahi in a press statement said government haddecided to reduce sweetener prices to providemaximum relief to the common man. Govern-ment had reduced sweetener prices from Rs55 toRs42 per kilogram during the last two weeks.earlier, it reduced sugar price by Rs three perkilogram and now it dropped Rs10 per kilogramat utility stores, he pointed out.

Members losing interest involumes-starved KSE election

Government cut sugar priceby Rs10 at Utility Stores

KSe eLeCtioN 2012 SuGaR PRiCeS DRoP

KARACHI

STAFF REPORT

THe country’s liquid foreign exchangereserves remained in the green zonethis week inching up to $16.769 billion,

the central bank reported Thursday.This shows a slight increase of 0.6 per cent

or $111 million over the past week when thecountry possessed $16.658 billion.

This surge is on the back of an across-the-board increase in the dollar reserves of thecentral and commercial banks. During the cur-

rent week, which ended on December 23, theState Bank counted its foreign exchange re-serves higher by 0.3 per cent at $12.806 billionas against $12.757 billion of the precedingweek. Similarly, the commercial banks’ hold-ings of the greenback swelled to $3.962 billion,registering a hike of 1.5 percent compared tolast week’s $3.900 billion. The analysts believethat the current seesawing trend in the coun-try’s dollar reserves was mainly based on thevolume of import payments plus the retire-ment of external debts that, according to SBPdata, have aggregated to $62 billion.

Forex reserves move up to $16.769b

Low gas pressure cause plant tripping

PtCL Ceo and President, walid irshaid


Documents

Profit 30th December, 2011