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ISLAMABADAMER SIAL

CHiNa has assured Pakistanthat it will be providingfinancial assistance up to $4billion for 4500 MW Diamer

Bhasha Dam project to be built on indusRiver in Diamer district in gilgit-Baltistan. an official source saidassistance from China will be in theform of project financing for various

components of the $11.2 billion project.He said assurance from China hashelped expedite the project which willhave gross capacity storage of 8.1million acre feet (MaF) of water.

He said construction activities ofmain project will commence from nextfiscal year and will take nine years forcompletion. government has allocatedRs18 billion for land acquisition duringcurrent fiscal year. government has alsoallowed the executing agency, Water

and Power Development authority(WaPDa) to raise funds of Rs20 billionunder the government guarantee frommarket through tFCs or Sukuks. it willbe repaid by WaPDa from its ownresources. asian Development Bank(aDB) had also committed to financethe project and was working onstandard procedures to provide fundingfor the project. Similarly, he said,islamic Development Bank (iDB) hasalso agreed to partially finance the

project. US officials have already saidthat financial matter for the project willbe decided by US Congress. However, hesaid World Bank was non committal onproviding any assistance for the project.

WaPDa, he said was discussingfinancing of the project with Saudi Fundfor Development and Japan Bank ofinternational Cooperation (JBiC). Projectwill help save $2.85 billion in foreignexchange for production of equivalentelectricity on imported oil. live storage of

6.4 MaF of water of the project will helpin supplementing irrigation supplies. itwill help to mitigate downstream floodlosses. avoidance of flood damagescost would be much more than Rs2.3billion per annum. the reservoir willact as silt trap, which will have directeffects on existing and proposedreservoirs on indus downstream ofDiamer Basha Dam Project. it isexpected to enhance potential life oftarbela reservoir by 35 years.

China to provide $4b for Diamer Bhasha dam project

ISLAMABADAMER SIAL

tRagiC loss of life in two recent incidents ofblazed vehicles which were usingcompressed natural gas (CNg) as fuel hasforced government to take some steps but

planned measures are set to fail. Petroleum Ministryhas held only CNg stations responsible for theseincidents and plans to conduct raids to penalise gasstations filling gas in vehicles having substandardCNg kits and cylinders. a meeting held to find root causes of incidents relatedto blazing of vehicles was attended by officials ofPetroleum Ministry, oil and gas Regulatoryauthority (ogRa), Hydrocarbon Developmentinstitute of Pakistan (HDiP), representatives of Chiefinspector of Explosives (CiE). a statement issuedafter the meeting said, while taking serious notice ofrecent incidents of blazed vehicles wherein huge lossof life occurred, Secretary Petroleum Ejaz Chaudhryhas directed to conduct raids on CNg pumps thatprovide gas to vehicles that are installed with sub-standard CNg kits and cylinders. He directed ogRato devise and implement a comprehensiveinspection plan for CNg stations and take strictpunitive action against those CNg pumps whichdid not practice safety measures. it was decidedthat joint teams comprising of representatives of

ministry, ogRa, HDiP and CiE would conductsurprise checking of CNg stations to ensurecompliance of CNg Safety Rules (Production andMarketing), 1992. any CNg station found filling gasto any vehicle that contains sub-standard CNgcylinder or fitting it, would be immediately penalisedand sealed off. Ministry would also communicate toprovincial governments to implement CNg safetyrules. Moreover, concerned departments weredirected to launch public awareness campaign toeducate general masses regarding installation ofquality CNg kits and cylinders from licensed andauthorised vendors and to insist upon publictransport operators to install quality CNg kits and itsregular safety inspection. terming the announcementas an attempt to hoodwink the government andpeople, Chairman all Pakistan CNg association(aPCNga) ghiyas abdullah Paracha said petroleumministry instead of accepting weaknesses in thepolicy, regulations and implementation has tried toevade all its responsibilities by putting all the blame

on CNg stations. He said gas stations have nomechanism to check at the spot the quality ofCNg kits and cylinders. aPCNga, he said,had sought permission from petroleum

ministry five years back to set up CNg kitsand cylinders quality certificationlaboratory that would have providedfree of cost service to people. However,he said for the last many years,

ministry has never bothered to

inform the association on progress on their proposal.He said ministry, ogRa and department ofexplosives under ministry of industries were allinvolved in an internal fight to take control ofproposed CNg kits and cylinders testing lab as it willallow minting of money from the people. He saidunder the rules CNg stations could be inspected buthe was not able understand how a gas station couldbe fined for supplying gas to a vehicle havingsubstandard kit or cylinder when there were no ruleswhich make their checking mandatory after a specificperiod from a certifying lab. it is important tomention that National assembly Standing Committeeon Petroleum was recently informed by ogRaofficials that their investigations show that two CNgcylinders have exploded during gas filling while restof the tragic incident happened due to other reasons.a report of ministry of petroleum submitted to PrimeMinister mentions factors responsible for accidents inCNg fitted public vehicles includes poorly traineddrivers; sub-standard maintenance of vehicles andimproper certification by motor vehicles examiners;installation of sub-standard CNg cylinders and kitsand control equipment by the un-authorisedconversion workshops; increasednumber of cylinders in public servicevehicles without considering designspecifications or axle loading to contour impact ofgas load shedding and non-compliance with safere-fueling procedure at CNg stations.

Friday, 09 December, 2011

Bulls finally return to KSE withcontinued gas supply Page 4

profit.com.pk

g World Bank non committal on providing any assistance for project g Avoidance of flood damage cost to be much more than Rs2.3 billion per annum

NA body asks govtto release Rs80bimmediately tokeep PSO afloat

ISLAMABADSTAFF REPORT

NatioNal assembly StandingCommittee asked governmentto take immediate measures to

resolve issue of circular debt of thePakistan State oil (PSo) and help it inrecovery of Rs80 billion outstandingdues to keep the company afloat. thisdirection was given by the committeein its meeting held in Karachi.Committee was chaired by Sardartalib Hassan Nakai, says a pressrelease of National assemblySecretariat. Committee expressedgrave concern over circular debt andfeared that if the issue was notresolved the state owned strategiccompany would meet with disasterand in turn spreading chaos and

confusionamong thepublic. MDPSo informedthe committeethat circulardebt problemwas resultingdue to delay inpayments bypower sector.However, PSowas bound tomakecontinuoussupplies topower sector in

national interest to avoid power crises.PSo demanded immediate release ofRs80 billon to keep the companyafloat. Committee also constituted asub-committee under convener-ship ofChaudhary Muhammad Barjees tahirto examine the inquiry report and helpPSo to recover the amount frommanagement of Zaqsoft technologieson which a penalty was imposedbecause of supplying low-pricedcomputer accessories to PSo atexorbitant rates. the sub-committeewould also examine cases ofrecruitment made in PSo since 2001to till date. the meeting was attendedby Nawab ali Wasan , Mian abdul Haqalias Mian Mitha, Nawab MuhammadYusuf talpur, Syed anayat ali Shah,Ch. asghar ali Jatt, Sheikh aftabahmed, Ch. Muhammad Barjeestahir, abdul Waseem, Syed Haider aliShah and Muhammad Usmanadvocate and by senior officers ofministry of petroleum and PSo.

MD PSO informedthe committeethat circular debtproblem wasresulting due todelay in paymentsby power sector

Petroleum Ministry toraid CNG stationsg Ministry, OGRA reluctant to grant permission to APCNGA for cylinder and kits testing g 2 CNG cylinders explode recently during gas filling

PRO 09-12-2011_Layout 1 12/8/2011 10:55 PM Page 1

02Friday, 09 December, 2011

debate

WAqAr HAMzA

aFtER cumulative rate cuts of200bps at its previous twomeetings, State Bank of Pakistan(SBP) has struck a note of caution

about the government’s medium-termoutlook, warning that inflationary pressuresare building again. this was anticipated bySayem ali and Nagraj Kulkarni of StandardChartered Bank in their global Researchpreview. at its 30 November meeting, SBPkept policy rates on hold, with the overnightdeposit and lending rates unchanged at 9per cent and 12 per cent, respectively.SBP says macroeconomic risks have increasedsince the october meeting, with inflationremaining high and the Pakistani rupee(PKR) coming under renewed pressure.Headline inflation printed at 11 per cent y/yin october, up from 10.5 per cent inSeptember. according to SBP, inflation willaccelerate in 2012 because of a weaker PKR,rising electricity tariffs, and a higher wheatsupport price (the price at which thegovernment will buy from producers). thereis also a risk that the government will resortto printing money to finance its large deficitas markets demand higher premiums ontreasury bills and Pakistan investment Bonds(PiBs).the global economy has also deteriorated,leading to a sharp slowdown in export growthand capital inflows. the government has hadto shelve plans to tap credit markets, kick-start the privatisation programme and attractinvestment through the auction of 3glicenses.FX reserves declined to USD 13.3bn inNovember from USD 14.8bn in June. PKR hascome under renewed pressure, trading at88.75 to the US dollar on 30 November versusc.86.00 at end-June. it is likely to face moreheadwinds in 2012 because of large externaldebt payments, including repayments to theinternational Monetary Fund (iMF).Markets were pricing in a 50bps cut andyields would likely inch higher in response tosuch a decision by SBP. in our view, the rate-easing cycle has come to an end, with littleroom in the near future to bring rates downfurther. ‘We expect SBP to keep rates on holdin Q1-2012, with a strong possibility thatrising inflation will force it to hike as earlyQ2-2012,’ they added.

GROWth OutlOOk ReMAiNS WeAkthe analysts say that the growth outlookremains weak: iMF projects 3.5 per cent y/ygrowth in FY12, lower than the governmenttarget of 4.2 per cent. the key concern is the

slowdown in export growth owing to a declinein cotton prices and weak credit growth.Despite 200bpsworth of policy rate cuts sinceJuly 2011, private-credit growth had slowed to1.6 per cent y/y by 11 November, from 5.5 percent y/y at the end of 2010. this is primarilybecause of heavy government borrowing frombanks, leading to a crowdingout of private-sector credit.Private-sector investmentspending declined to 8.5 percent of gDP in FY11 (yearending 30 June 2011), from 15per cent in FY08, mainly owingto a debilitating power crisis,political and security concernsand risk aversion by banks.after posting record exportgrowth of 29 per cent y/y inFY11, Pakistan’s exports haveslowed markedly so far in FY12.Export growth fell to 8 per centin october 2011, mostly owingto a decline in commodityprices (exports are heavilyconcentrated in cotton andtextiles) and the weak globaleconomy. the analysts believethat ‘export receipts are likelyto decline to USD 24.2bn inFY12, down 5 per cent y/y fromUSD 25.4bn in FY11. this willimpact manufacturing sectoroutput and lead to lower growth. Hence, in2012, SBP will have to balance inflation risksagainst concerns about weak growth.’

iNflAtiON tO PRiNt hiGheR iN 2012

Headline inflation has declined so far in H2-2011mainly because of the base effect of high inflationin the same period last year, owing to flooddamage to food crops. Changes introduced in thebenchmark consumer price index (CPi) index arealso a factor; these include a reduction in theweightings of food and energy commodities –thekey inflation drivers over the last four years.Headline inflation declined to 10.5 per cent y/y inSeptember 2011, its lowest level in the last twoyears. However, SBP notes that inflation hasremained high, with rising core inflationindicating a build-up of inflationary pressure. inoctober, CPi inflation accelerated to 11 per centy/y from 10.5 per cent in September. SBP is“uncertain” that inflation will come down tosingle digits in 2012, as targeted by thegovernment, and has maintained its FY12inflation forecast at 12 per cent. this implies thatCPi inflation will rise in 2012, driven mainly by aweaker PKR and an expansionary fiscal policy.Decisions such as a 10.5 per cent increase in thewheat support price will add to food inflation.

PkR WeAkNeSS iS the GReAteSt CONCeRN

after a strong H1-2011, PKR has come undersignificant pressure so far in H2 on awidening trade deficit and large external debt

payments. a slowdown inprivate capital flows and aidinflows from the USgovernment and multilateralinstitutions has also increasedpressure on PKR, which hasdepreciated 5 per cent year-to-date to 88.8 (30 November)against the USD, from 84.5 inDecember 2010. ‘We anticipatea further 6per cent correctionin 2012, and forecast USD-PKRat around 94.0 at end-2012.the C/a deficit widened to USD1.6bn during July-october 2011from USD 541mn in the sameperiod last year. this wasmainly caused by a sharp dropin commodity prices, withPakistan’s exports heavilyconcentrated in cotton andtextile products. in FY12, weexpect export receipts todecline by 5 per cent y/y toUSD 24.2bn from USD 25.5bnin FY11,’ they said. However,

expansionary fiscal policy and anaccommodative monetary policyare leading to higher importdemand. the import bill increasedto USD 13.4bn during July-october, up 23 per cent y/y fromUSD 10.9bn in the same periodlast year. Pakistan’s externalvulnerabilities arise mainly fromthe growing demand for energy;the oil bill rose sharply by 55 percent y/y during July-octoberowing to rising prices and growingreliance on oil imports to meetenergy demand. at its 30November meeting, SBP warnedthat the widening C/a deficit ishigher than its earlier forecasts andfinancing it will remain a challenge,owing to a slowdown in FDi andofficial aid inflows. SBP FXreserves declined to USD 13.3bn atend-october from USD 14.8bn in June, andwill also come under pressure in FY12 becauseof higher external debt payments, includingrepayments to the iMF of USD 1.2bn. totaldebt repayments are a hefty USD 4.2bn inFY12, and could rise to USD 5bn in FY13.Pakistan will struggle to both retire the iMFloan and maintain its FX reserve position.

WeAk fiNANCeS POSe iNflAtiON RiSkS

Markets’ main concern is the sharp build-up ofdebt and the government’s inability to meet itsbudget targets. the government is likely toovershoot the FY12 budget target of 4 per centof gDP; we forecast a deficit of at least 6.5 percent if revenue measures do not yield thedesired results. Financing this large deficit willbe a challenge, especially with official aid flowsslowing and the privatisation programmestalled. government borrowing from banksincreased sharply to PKR 631bn (3 per cent ofgDP) from July to 18 November 2011, higherthan PKR 606bn borrowed during FY11. thislevel of borrowing has been possible because ofSBP’s liquidity injection of PKR 304bn (1.5 percent of gDP). However, SBP says this hasdeveloped the “characteristics of a permanentnature”, and will fuel inflation going forward.With rates kept on hold at the 30 Novembermeeting, markets will now demand higherpremiums to hold government paper. thiscould force the government to print money tofinance its large deficits, fuelling inflation.

MARketS diSAPPOiNted

the rates market – which had been expectingmonetary easing to continue –respondednegatively to the policy announcement. the

benchmark 10Y PiB yield spiked byc.60bps and the curve bearsteepened by c.40bps. they say wesee this response as a recalibrationof the rates market’s expectationson the trajectory of policy rates.although the central bank hasswitched its focus to price stability,we do not expect the next rate hikebefore Q2-2012. Until then,concerns about the impact of fiscalslippage on market borrowing willlikely keep the market vigilant. ifthe recent trend of increasedgovernment dependence ondomestic funding sources –particularly envisaged fromcommercial banks – to finance thedeficit slippage continues, then thebanking system will likely demanda further premium to absorb the

additional supply. We note that the bankingsystem’s excess holding of governmentsecurities (beyond mandated) is at a three-year high. We expect yields to remainrange-bound ahead of the next rate hike, asexpectations of continued supply are likely tooffset the implied support generated by thestable policy-rate environment.

Inflation risks back on the radar

Expansionary fiscalpolicy and an

accommodativemonetary policy are

leading to higherimport demand

With rates kept on hold atthe 30 November meeting,markets will now demandhigher premiums to holdgovernment paper. This

could force thegovernment to print

money to finance its largedeficits, fuelling inflation

PRO 09-12-2011_Layout 1 12/8/2011 10:55 PM Page 2

WitH the widespread availability of fi-nancing after the liberalisation of fi-nancial sector, insurance is fastbecoming a necessity in Pakistan. Carfinancing, for example, by banks and

other forms of lending by banks and other financial insti-tutions require the borrowers to buy insurance on theitems purchased through financing. While shari'a compli-ant financing is now widely available from the fully-fledgedislamic banks like Meezan, Dubai islamic, Bank islami andothers and from conventional banks like Muslim Commer-

cial Bank, Bank al Falah etc,the same cannot be said forshari'a compliant insurance,which is still at an initial stageof development. althoughthere are five takaful compa-nies operating in Pakistan,their market share in the in-surance market remains in-significant.

takaful, supposedly ashari'a compliant version ofcooperative or mutual insur-ance, is being provided by asmall number of players in

Pakistan. While takaful is being presented by the propo-nents of islamic insurance, as a mutual or cooperative formof insurance in line with the shari'a requirements, it re-mains a fact that takaful business by and large is not coop-erative in its governance structure and operations. alltakaful operators in Pakistan (five in number) are set up asjoint stock companies and not as mutual organisations.this raises a fundamental question whether takaful busi-ness is actually cooperative and follows principles of mu-tuality.

From shari'a viewpoint, conventional insurance hasproblems because it is interest-based and involves ele-ments of gambling and contractual uncertainty. How?

an insurance arrangement can be defined as a con-tract between two parties whereby one party (the in-sured) pays an amount of money (either in a lump-sumor in easy instalments during a certain time period) toanother party (the insurer) who undertakes to pay cer-

tain amount of money (significantly larger than themoney received from the insured) if and when the in-sured suffers a loss due to happening of an event inwhich the insured has a real interest. thus, a personwho buys car insurance pays a certain amount of moneycalled insurance premium (either in a lump-sum or in-stalments) to an insurance company who undertakes topay a certain amount of money in case the car's valuesuffers a loss due to an accident or fire, or indeed isstolen. Many insurance policies also pay for the thirdparty damages.

this arrangement is in effect exchange of unequalamounts of money between the insured (who pays lessthan what he receives) and the insured (who may actu-ally get all the premia and pay nothing if no valid claimis made or pays a significantly higher sum following avalid claim by the insured). this is by definition a case ofthe prohibited interest or what is known as riba in islam.Similarly, there are elements of gambling in the conven-tional insurance. the very fact that someone may receivea large sum of money by paying a relatively small "entryfee" (premium), dependent upon occurrence of a randomevent in its nature is gambling.

given that insurance is now modern time commer-cial necessity, it was deemed important by the shari'acommunity to agree on a shari'a compliant alternative tothis vital economic institution. thus, cooperative insur-ance was deemed more in line with shari'a than the con-ventional insurance, which is commercial in its natureand practice.

the consequent takaful model that emerged is,however, also commercial in nature. Modern takafulbusinesses have a two-tier structure: a cooperative poolof funds and a commercial entity called takaful opera-tor, which manages the takaful funds. in practice, it isthe takaful operator that takes the lead role in takafulbusiness, and hence controls all aspects of the busi-ness, which makes it more in line with the commercialinsurance than cooperative takaful. in Pakistan, promi-nent shari'a scholars like Mufti taqi Usmani have forlong emphasised on the need for a pure cooperativetakaful business, based on the institution of waqf, butit has yet to emerge as a significant business activity inthe country. given the near failure of islamic banks tocommit themselves meaningfully to social responsibil-ity, is it the right time for takaful companies to developa pure cooperative business model to serve the com-munities rather than profiting from the market forces?if takaful companies fail to take this challenge, it willbe a lost opportunity for which the stakeholders in theindustry may have to regret for a long time to come.

The writer is a Shari’a advisor to a number of banksand financial institutions and can be contacted at

humayon@humayondar.com

THE remarkable 87 per centplunge in bank advances to theprivate sector (during first fivemonths of the ongoing fiscal) isexactly what should happen

when the centre refuses to address itsridiculous addiction to cheap money. Expectthe projected 4.2 per cent gDP growth target,unimpressive to begin with, to becompromised. Expect also increasedunemployment to pressure an alreadydepressed market. it’s the strangest of ironies.Despite being strangely decoupled from thelingering international downturn, we haveachieved low savings, insignificant investmentand high unemployment completely on ourown. Still there are no signs of thegovernment’s borrowing stopping anytimesoon, making a joke of central bank autonomyand letting a precious opportunity to stimulatelocal and lure foreign investment go begging.

the banking sector’s position is no lesspassive. Just when they should have

postured towards unprecedented efficiency,so their examples could lend weight to thePSE-privatisation argument, they have letrisk-aversion have the better of them, at leastfor the time being. instead of tending to theworrying NPl count, they probably figurethe government’s dependence on borrowingcould not have come at a better time for theprivate financial elite. From their point ofview, lending to a hungry governmentobviously makes a lot more sense thanbetraying more fault-lines in their collectiverisk-management credentials. Yet theirdeliberate disconnect from the real economybodes ill not just for eventual growth, butalso for their own future.

Sooner or later, they will have to return toreal lending. and sooner rather than later,private sector investment will have to befacilitated if any manner of growth is to beattained. But should we continue directionless,islamabad will play host to a very differentvariety of politicians after the next poll.

Fruits of central borrowing

Is it the right time fortakaful companies todevelop a purecooperative businessmodel to servecommunities

Insuranceand Shari'a

Hamayon Dar

Weak politics

indian Rupee has depreciated by over 20per cent over the last year. We have to de-preciate Pak rupee vis-a-vis our competitors.We have seen Pakistan's economy sufferworse, like after the nuclear tests and it alsowent through imposition of sanctions there-after. there has never been a default andlikelihood of it is still very low. Yes the pres-ent government has not been able to man-age the economy but the reason is apolitically weak government which is the re-sult of divided mandate and hence so manycompromises. i hope that a politically pow-erful government comes in order to stabliliseeconomy; since weak politics leads toweaker economy.

tArIqLAhORE

Will Pakistan default in 2012?

We have devastated the economy inthe last four years. Starting fromMarch 2007 to date, we have ruinedthe living standard of the commonman in Pakistan. the insight in thearticle and the in depth analysis isworth commending. the analysis isruthless and i agree with you Shanthat our strategic leadership restswith general ashfaq Kiyani who istrying to save this country. Hats offto our military bosses. our economyneeds attention at this point. this isnot the matter of slow decision mak-ing it’s a matter of willingness.Shan, you have raised good points.god bless Pakistan.

USMAn SHAHIDkARAchI

E D I T O R I A L

Leveraging support prices

IN a recent move the govern-ment has announced to in-crease the support price ofwheat crop across the coun-try in a bid to help farmers

ward off inflationary impacts on agri-culture. While most of the farmers doagree to and readily accept the sup-port price, arguments against and infavour need be heard before any suchdecision is made. Pakistan being anagrarian country has high stakes inhow the delicate equation of agrarian

economy is kept afloat. one way or an-other, it has to look after the needs ofits large populace whose major chunkis still reeling under poverty.

Pakistan’s agriculture sectorabounds with problems. they may be asvaried as a lack of trained human re-source to profiteering by the middlemen.But nothing stands out as a worse down-side factor than the totally uneven distri-bution of prime farmland in the country.on one hand, we have landlords withlarge land holdings while on the other,we find only sustenance farmers, owningnot more than 20 acres of land. thishuge difference leverages unjustly to thefarmers with large land tracts.

Complicating the situation, thishuge unbalance creates certain prob-lems that run even deeper. a smalltime farmer is forced to care for hishousehold, his family, his cattle, andpay for the amenities that are at hisdisposal besides his share of income

tax, land revenue, property tax amongother needs of routine life. What com-plicates the situation for him is thefact that he is ultimately sucked in tothe trap of the loan sharks.

Support prices for agriculturalproduce are used all over the worldas a guarantee against the inflation-ary trends, natural disasters, highyield, and as an incentive to lure thefarmers into farming a certain crop,and wean away from certain othercash crops. Beneficial as it may be,there are strong arguments against ittoo as it may make the farmerschoosy about a certain crop, causinga severe dent in the balance of de-mand and supply of crops in themarket. Moreover, it may totally beuseless to sustenance farmers.

to illustrate the above statement,here is a case in point: say a smallfarmer has 10 acres of land in a fertiledistrict of Punjab. He cultivates wheat

as one of the twocrops in a year. Evenwith an average of 40maunds per acreyield (Punjab’s official average isaround 26 maunds per acre), he isonly able to earn 42,000 rupees peracre per year. Experts put the produc-tion cost of wheat crop per acre in be-tween its 60-70 percent of its total saleprice. this leaves him with only13,000-15,000 rupees in savings peracre per year. Multiply it with 10 acresand we get a meager amount of130,000-150,000 per 10 acres peryear, which is in fact nothing less thana slap in his face for the effort.

logically, we are forced to ask asto how he makes it through the year.He is forced to look towards othercrops which are in fact his life support.Come May-June and he will be look-ing forward to grow cash crops such aspotato or corn. With a bit of luck and

no flooding, he canusually save enoughto sustain and moveon with his next

year’s plans. Unsettling as it is, this isbut only half the story. as huge tractsof prime farmland are owned by thebig fish, the ones with thousands ofacres, it is they who benefit the mostfrom government’s support prices forthey can then afford being lethargicand not experiment with gMC orhigh-yield varieties of crops.

Farmer exploitation and farmer dis-crimination takes place in many ways,some not as apparent as this. it is in thisperspective the support price offers aunique incentive to farmers to grow cer-tain crops. But, maybe the governmentneeds to revise its policy of support pricein a more targeted manner.

The writer is sub-editor Op-Ed,Pakistan today

Sajid Khan Lodhy

For comments, queries and contributions, write to:

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

BABuR SAGhiRCreative Head

hAMMAd RAZALayout Designer

ShAhAB JAfRyBusiness Editor

Ali RiZviNews Editor

MuNeeB eJAZLayout Designer

F r i d a y, 0 9 D e c e m b e r, 2 0 1 1

Will increase in supportprice of wheat yieldrequired results?

kuNWAR khulduNe ShAhidSub-Editor

MAheeN SyedSub-Editor

ShARi’A MAtteRS

PRO 09-12-2011_Layout 1 12/8/2011 10:55 PM Page 3

Friday,09 December,2011

04news

Punjab Chief Minister, Shahbaz Sharif

By equipping the young generation withmodern knowledge, we will not only overcomethe problem of unemployment but put thecountry on the road to progress

‘Continued gas supply’ fuelsKarachi Stock Exchange bulls

KarachiStaff report

WitH optimism of contin-ued gas supply to thefertiliser sector through

the rest of December versus the ini-tial reports of a mid month shut-down, sector scripts staged a strongrally as the KSE-100 index gained108 points to close at 11,392 points.Volumes were also on the up-tick as50m shares were traded in today’ssession with fertiliser stocks ac-counting for 13.6m of the total.

the KSE 100 index closed at11392.57 levels with the gain of108.68 points, while total vol-ume stood at 44,005,915 alongwith the total value of2,453,791,067. the KSE 30 index

bagged 173.95 points to close at10618.22 levels, and all Shareindex closed at 7890.19 levelsafter gaining 71.33 points. total121 scrips advanced 90 declinedand 102 remain unchanged outof total 313 scrips traded.

in light of strong Year toDate off-take numbers, the ce-ment sector also joined the win-ners circle as both lUCK andDgKC closed 3 per cent higherthan yesterday’s closing. as therecent beat down driving the

index to the ground, key scriptshave unwittingly seen their valu-ations become highly attractivecreating a prime opportunity forbargain hunters to scoop them upin time for the upcoming yearend results season.

uS embassy discusseseconomy related issues with lCCiLAHORE: Jimmy R Mauldin, Second Secretary, USembassy, called on lCCi President irfan Qaiser Sheikh anddiscussed all economy-related issues with particular focuson trade with india. lCCi Senior Vice President KashifYounis Meher and Commercial officer in US lahoreConsulate Shahid abbas were also present in the meeting.lCCi President gave the US official a detailed briefingabout his recent visit to india. He informed him that boththe governments need to tackle core issues as well toachieve desired results out of MFN status to india. lCCiPresident was of the view that MFN status to india woulddefinitely create a win-win situation for both sides but theindian side would have to address reservations expressedby certain sectors including pharmaceutical, automobile,cooking oil and ghee, etc. lCCi President said a hugeuntapped potential exists in both countries thereforeapprehensions of the business community must beremoved at the earliest. irfan Qaiser Sheikh also said Non-tariff Barriers are the biggest impediment in the way ofbilateral trade between Pakistan and india and they shouldbe dismantled on priority basis. Speaking on the occasion,the US official said that United Sates of america is desirousof a prosperous Pakistan and is ready to take every possiblestep in the regard. STAFF REPORT

Pakistan pitches for trade in firstPakistan-ukraine business forumKARACHI: trade Development authority of Pakistan, incollaboration with Pakistan Embassy in Ukraine, organisedthe first Pakistan-Ukraine Business Forum at Kyiv. Mrtariq Puri, Chief Executive tDaP, who is leading a tradedelegation to Ukraine, highlighted features of bilateraltrade. He stated that our exports to Ukraine have shown asubstantial increase over the last eight years and averageexport during this period is 53 per cent. in 2003,Pakistan’s export to Ukraine was $7.45 million whichreached $66.52 million in 2010. However, the 116 productswhich Pakistan exports to Ukraine have the market share of5.1 per cent of range of products which constitutes 2.2 percent of Ukraine’s total imports worth $61 billion. Hehighlighted that Pakistan could increase its share by addingvalue in its supply chain and product diversifications. Heinformed participants, leading entrepreneurs and investorsof Ukraine, that World Bank’s ‘Ease of Doing Businessindex’ has ranked Pakistan as Number one in South asia.Discussing the agriculture sector, Mr Puri apprised thatPakistan is the second largest buffalo meat producer;second largest buffalo milk producer; third largestcottonseed producer; third largest chilies producer; fourthlargest goat meat producer; fifth largest mango producer;seventh largest wheat producer, but has not been able tooptimise its strengths for capturing a larger share in globalprocessed food market. STAFF REPORT

SeCP registers 248 companies in NovemberISLAMABAD: Securities and Exchange Commission ofPakistan (SECP) registered 248 companies in the monthof November. However, private companies have thebiggest share in new incorporations totaling 210, followedby 27 single-member companies, four non-profitassociation, three foreign companies and public unlistedcompanies each and a trade organisation. according topress note issued by SECP, out of three foreigncompanies, a company belonging to turkey was registeredin lahore while two foreign companies from US and NewZealand each are registered at islamabad. Foreigninvestment by nationals from Cyprus and South Korea wasobserved in two new local companies in engineering andtextile sector each. STAFF REPORT

Brick lining, canalrehabilitation underway LAHORE: Brick lining and rehabilitation of canals isunderway with an amount of Rs9 billion in six districtsof the province under Punjab irrigation Systemimprovement Project. this was informed during annualdevelopment project review meeting of irrigationDepartment chaired by Minister agriculture andirrigation Punjab ahmed ali aulakh. the meeting wastold this project is being completed with the help ofJapan international Cooperation agency (JiCa) inJhang, Hafizabad, Faisalabad, Rajanpur, Dg Khan andBahawalnagar districts. the meeting was also toldrehabilitation of Multan Branch with an amount ofRs127 million, Bhowana Branch Jhang with an amountof Rs272 million and Naugran Flood Bund with a sumof Rs130 million would be completed during currentfiscal year. STAFF REPORT

KSE members vetoSECP-backed move

KArACHISMAIL DILAWAR

aN overwhelming ma-jority of the membersof Karachi Stock Ex-change (KSE) re-jected the idea of

what sources said was partly imple-menting the provisions of Compa-nies ordinance 1984. Voting wasmade as years after the formulationof the exchange’s articles of asso-ciation (aoa) the front and apexregulators at the helm of KSE andSecurities and Exchange Commis-sion of Pakistan (SECP) came toknow that relevant provisions inthe two pieces of legislation were“inconsistent”, especially on thetenure of KSE’s Board of Directors.

it is interesting to note thatwhereas the said ordinance setsthree-year tenure for the compa-

nies’ boards the KSE’s articles pro-vide that the KSE Board would beelected for one year. officials atSECP and KSE board, however,have now sensed discrepancy andare now out to amend the ex-change’s relevant rules. thursdaysaw only 59 of the total 200 KSEmembers attending the Extraordi-nary general Meeting (EogM) tovote for or against SECP-backedmove to extend the board’s one-year term at least for two years.

according to an attendee, anoverwhelming majority of the 59participating members vetoed theproposal saying the one-year elec-tion mode be retained or, what a sen-ior broker said, relevant companylaws be implemented in total. the at-tendee said only four of the membersraised their hands in favour of theproposal with the remaining 55 re-jecting it. to make an amendment in

aoa KSE board requires three-fourth of the total participatingmembers to vote for a resolution.

in total 44 votes were re-quired for the passage of today’sresolution, said a senior brokerwho also opposed the move. “Youcan not implement the companylaw selectively means adoptingthose which suit interests of theregulator,” the broker said. ac-cording to the broker, SECPshould execute the company lawsin full and not partially. “thecompany laws say no nominee di-rectors and chairman at the KSEand that the chairman be electedby the KSE Board,” he said. “Youcan not do cherry picking,” com-mented another broker.

Many of KSE members are stillopposed to the appointment of fournominee directors and a chairmanat KSE board by SECP in the name

of “public interest” that, the brokersaid, was to be determined by judi-cial courts and not the governmentinstitutions. a former electedmember of KSE board said howthose having zero stakes at stockmarket could be expected to priori-tise interest of brokers.

SECP argues that one year wasnot enough for board members tofully comprehend the market af-fairs. But the members don’t buythe argument saying whereas theelected directors needed no extratime to get acquainted with themarket issues, the nominee direc-tors could be appointed by theSECP for another year term. “ithink the one-year tenure isenough as the proposed threeyears would allow the directors,specially the nominee ones, tostretch well and do less,” the ex-KSE member said.

lPGdA approachesPM on fresh price hike

KArACHISTAFF REPORT

FRESH increase inliquefied Petroleum gas(lPg) price by almost Rs5

per kilogram is unjustified asprofiteers in lPg marketingsector have enhanced prices whilesidelining ministry of petroleumand oil and gas Regulatoryauthority (ogRa). little increasein international price of the gas isbeing touted as an excuse. lPgmarketing companies haveenhanced the price by five timesin the country which is highlyunjustified, Muhammad irfanKhokhar Chairman lPgDistributors association (lPgDa)told Profit. Reacting over the freshdevelopment which would causean increase of almost Rs60 in theprice of a domestic cylinderand Rs240 per commercialcylinder, lPgDa has written aletter to Prime Minister ofPakistan to immediately takenotice of the issue.

kSe board oblivious to SeCP ‘concept paper’KARACHI: the oft-referred bureaucratic lethargy shown by the management of Karachi Stock Exchange(KSE) led to, an easily avoidable confusion between the front and apex regulators of the country’s stockmarkets. Wednesday saw the regulators at Securities and Exchange Commission of Pakistan (SECP) rushing tothe KSE to brief its annoyed Board of Directors, the elected ones of course, on what the sources said was a“concept paper” with regard to implementation of the years-old proposed “Broker Registration Regime”.according to well-placed sources, the KSE directors remained ignorant for over a month and a half of theconcept paper sent by the SECP to the Exchange for their review and input in the proposed document. thesources said the Commission had sent the paper to the KSE management back in october but the latter had notbothered to share the same with the board members. “the SECP by end-october had sent the paper to KSEmanagement for fine-tuning, but the management sat on it for over a month instead of taking the Board inconfidence on the document,” a senior broker confided to Profit on thursday. the broker said the KSEdirectors, during their meetings with the SECP officials last month in November, were time and again renderedconfused whenever the SECP officials made a reference to the concept paper. “the KSE directors were thentotally ignorant of what the SECP officials were talking about,” the broker said adding “the KSE directors wereleft confused each time the SECP officials quoted clauses of the concept paper.” When members of the boardwere acquainted with the fact, the broker said, the directors “reacted strongly” and convened an urgent boardmeeting on Friday, December 2, to discuss the happening. the broker tended to agree when asked if he deemedthe KSE management’s lukewarm response towards the SECP’s reforms-based document was a clear show ofthe traditional bureaucratic lethargy in Pakistan. “the KSE management should not have withheld thedocument for so long,” he commented. this, the broker said, made the SECP rush to KSE and brief thedirectors about the proposed plan. the apex regulator, in a joint statement issued Wednesday, stressed theneed for continuing the “consultative process” and adopting a “coordinated approach” in future to ensureimplementation of various market reform measures. “the concept paper was sent to the Exchanges forsoliciting comments and the regime will be finalised after giving due consideration to the concerns andfeedback of the stakeholders,” the statement clarified to the directors. Wednesday’s meeting was told that the“Broker Registration Regime” was designed to improve trading volumes and enhancing retail participation inthe stock market. and that the new regime would help the regulators strengthen the market by allowing only fitand proper brokers to operate. ISMAIL DILAWAR

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Friday,09 December,2011

news

CORPORATE CORNER

dawlance gainsstronghold in foreign marketsKARACHI: Dawlance made its presence felt atthe Big 5 exhibition held in Dubai recently. at theexhibition, Dawlance stood out from the crowd asthe only Pakistani home appliances company thatmanaged to impress a fair number of foreigncountries in the MENa region and other africancountries. Exploring export opportunities in theMiddle East and african region, Dawlanceshowcased its refrigerators and freezers at theexhibition. talking on overseas expansion, MrHasan Jamil, Head of Sales and Marketing,Dawlance said, “We at Dawlance are proud to be aPakistani appliances company operating in Dubaiand are also looking at other gulf countries suchas Saudi arabia, Bahrain, Qatar and different partsof africa and East africa for new businessopportunities.” PRESS RELEASE

AdB mission discusses diamerBasha dam financial plan with WAPdALAHORE: asian Development Bank (aDB)Consultation Mission, headed by the DirectorEnergy Division Rune Stroem, visited WaPDahouse and had a meeting with WaPDa ChairmanShakil Durrani and members of the authority todiscuss the matters relating to financing DiamerBasha Dam Project. Experts from USaiD and theproject consultants were also present. Chairmansaid that WaPDa is implementing several projectsto cope with the increasing demand of water andelectricity in the country. among the projects, hesaid, 4500 MW-Diamer Basha Dam is vital, as thismega project will usher in accelerated socio-economic development in Pakistan. the mission

was also informed that a sum of Rs18 billion hasbeen allocated in PSDP for the project during thecurrent fiscal year. PRESS RELEASE

JS Bank holds successfulCustomer Satisfaction Survey

KARACHI: JS Bank limited has recentlyconducted a comprehensive CustomerSatisfaction Survey (CSS) for the year 2010-2011. the idea of the survey was to engage thecustomers’ satisfaction with the bank’s productand service levels. to ensure that the CSSadhered to the highest levels of integrity and theresults of the survey accurately reflectedcustomer impression of service levels at thebank. JS Bank hired one of the leadingindependent and well-reputed research agenciesworking in Pakistan with a proven track recordof conducting such exercises for a number ofleading banks and financial institutions. as agesture of gratitude towards customers who hadparticipated in the CSS with their valuedfeedback, JS Bank held a lucky draw for achance to win a widescreen lCD tV. the luckydraw was won by Ms Raheela, a customer of thebank’s branch in Moro, Sindh. the prize was

given by Mr Nooruddin Shaikh (area Manager-South iii Region). PRESS RELEASE

Samsung electronics to mass produce‘Optical Sensor in Pixel’ lCd panelsLAHORE: Samsung Electronics Co ltd has recentlybegun mass production of 40-inch ‘optical Sensor inPixel’ lCD panels, which feature highly advancedoptical sensors. the optical Sensor in Pixel lCDpanel detects reflected images of an object on thepanel, using infra-red sensors that are built into thepanel. With optical sensor in each pixel of the panel,it can assess touch sensitivity much more accurately,compared to existing touch panels. this product willtransform the paradigm for massively interactivecommunications, compared to the older one-waycommunications of today’s kiosk touch panels. MDSamsung Pakistan, Mr Hee Chang Yee said, “thisinnovation has overcome the limitations of touchfunctionality that hampered the effectiveness of mostinteractive displays.” PRESS RELEASE

uBl to organise international hardCourt tennis Championship 2011 KARACHI: United Bank ltd (UBl) in associationwith Pakistan tennis Federation (PtF) and Sindhtennis Players association is organising the “UBlinternational Hard Court tennis Championship –2011”. this tournament will be a first of its kind inthe city of Karachi and will comprise of top seededPakistani as well as international tennis players.the championship will be held at the courts ofKarachi gymkhana from 18 to 24 December, 2011.the championship carries one of the highest prizemoney for a hard-court event held in Pakistan. theevents that will be played are men’s singles and

doubles, ladies singles, boys (under 18 and 14)singles, veteran’s and mixed doubles. PRESS RELEASE

Abacus Consulting creates strategicalliance with Oracle Systems Pakistan LAHORE: abacus Consulting has signed astrategic alliance with oracle Systems Pakistan tobecome its Education Reseller Partner for Pakistan.the new venture being abacus learning Serviceswill provide oracle certified training in areas suchas finance, supply chain, customer relationshipmanagement and system administration of oracle’sproprietary ERP system, at its state of the artfacility. abacus learning Services is offering thecertification at highly subsidised rates compared tothe global market to facilitate the local student anddevelop a base of knowledge professionals inPakistan. abbas ali Khan, Senior Partner at abacusConsulting stated, “We believe that this partnershipwill help to create opportunities across the entireecosystem of the industry” PRESS RELEASE

Euro zone's EFSF rescue fundshould remain the main tool tofight bond market contagion,despite the limits of its leverage.

eCB President Mario draghi

LAhORE: Governor Punjab Sardar Muhammed Latifkhan khosa and chairman Evacuee Trust Syed Asifhashmi is laying the foundation of Lawyers’ hospital atDyo Samaaj Road, Lahore. PRESS RELEASE

How does WTO membershipaffect Russia and Europe?

KUnWAr KHULDUne SHAHID

aFtER 18 long years,the Russian bear hasfinally entered theWto cage – or is onthe verge of doing so.

georgia was the last stumblingblock en route to Wto membershipfor Russia as tbilisi insisted on cus-toms control between Russia andabkahazia and also between Russiaand South ossetia. Both the afore-mentioned dominions separatedfrom georgia in august 2008 andMoscow has since gone on to ac-knowledge both of them as sover-eign states as the rest of the world

acknowledged them as veritablepart of georgia. However, with thatparticular thorn plucked out, it haspaved the way for Russian entranceinto Wto; and with the final deci-sion expected in mid-December,some believe that it was about time!

Wto membership is beingtouted as the opening up of Russiato the rest of the world, hence mak-ing things facile for European andamerican hierarchies to amelioratetheir commercial interests in thearea. Kremlin might have conjuredup a political triumph, but there arefears – most notably via the noisethat Prime Minister Vladimir Putinhas been generating – that such a

maneuver would limit Kremlin’shegemony over Russian economy.as things stand Kremlin dictatesmatters pertaining to foreign invest-ment, and moulds it in synchronywith its personal benefits. However,the accession would connote thatthere would be an independentframework of rules and regulationsand hence the government’s stran-glehold over domestic matterswould weaken.

Experts opine that such an ab-sence of foreign exposure and thegovernment’s grip over domesticmatters has ensured that Russianindustries have suffered and moreoften than not their productivityhas stalled for prolonged periods.Energy industry especially isbeing touted to benefit from theWto accession, as competitionfrom foreign market would meanthat the prices would be reducedconsiderably; hence ensuring so-cial stability. Russia has sufferedon a multitude of fronts owing toits isolation from the world mar-ket, and now with the seeminglyinevitable accession on the hori-zon, there is every cause for san-guinity in Moscow; especiallyconsidering the fact that Russia isjoining the Wto on some incredi-bly lenient terms.

if one were to discern the vocal-isations on the European front, onegets the impression that the par-

tially wounded, partly crippled Eu-ropean hunters had been on bearhunt for quite some time; and os-tensibly they have finally hit thebull’s eye. With the European finan-cial quagmire become all the moremenacing day by day, it is under-standable that they’d be clutching atany straws that they could find –not suggesting that this is the casehere, Russia actually does give Eu-rope genuine cause for buoyancy.

it goes without saying that mu-tual cooperation between Europeand Russia would boost with the lat-ter joining Wto, and most of thiswould be the logical corollary of thepresence of a more predictabletrade market in Russia – consider-ing the capricious situation in the fi-nances of most global realms, this isa blessing without any disguisewhatsoever. Russia has synchro-nised its trade laws, with the inter-national laws and hence stableprofit-making is a safe bet in theRussian market. With the trans-parency in the Russian investmentclimate becoming all the more con-spicuous one should expect ablitzkrieg of European investment,as the euro zone vies to dig itself outof the financial fix.

growth of European exports toRussia also insinuates that therewould be a precipitous ascent in jobopportunities in Europe. Consideringthe fact that as many as 10.3 per centof the people in euro zone are beingjettisoned in the bin of unemploy-ment; that’s one huge part of the jig-saw sitting right there in front of us.

The writer is sub-editor,Profit. He can be reached at

khulduneshahid@gmail.com

g If one were to discern the vocalisations on the European front,one gets the impression that the partially wounded, partly crip-pled European hunters had been on bear hunt for quite sometime; and ostensibly they have finally hit the bull’s eye

investors cautious over foreignselling at Pakistan bourseKARACHI: With abnormally low volumes anduncertainties on the local political front, there is agrowing concern amongst investors investing in Pakistanstock about trend of foreign selling. investors’ concern,analysts believe, had turned grimmer especially after hugeselling in emerging and other markets during the monthof November. local investors, they said, seemed cautiousdespite the fact that local stock market was now trading atFY12E PE of 6.1x with an average dividend yield of 10 percent. analysts said foreigners with 29 per cent marketshares in the free float of Karachi exchange were playing akey role. “Currently their shares are worth $2.6 billion,”said Farhan Mahmood of topline Securities. the analystsaid peak holding of offshore investors was $5.1 billion, 27per cent of free float, in april 2008 and the lowest was $1billion, accounting for 17 per cent of free float, in March2009. With prolonged European debt crisis, he said,MSCi asian emerging markets (ex China and Malaysia)saw net outflow of $7.5 billion in the month of Novemberas investors’ fear a possible slowdown in global economyand exports by emerging markets to European Union.During the previous month, Farhan said, the bestperforming asian markets of 2010 and the darling offoreign funds, namely india and thailand, had also seen anet selling of $0.8 billion and $0.4 billion by the offshoreinvestors where other asian emerging markets, liketaiwan and Korea, recorded selling of $1.8 billion and $3billion, respectively. With huge outflow in emergingmarkets, benchmark MSCi EM index, which tracks 21emerging economies, had posted a negative return of 19.4per cent in 2011YtD, the analyst said. He said out of 21markets in MSCi EM index, Egypt remained the worstmarket with negative 43 per cent return followed by indiawith negative return of 30 per cent. “thus with hugeselling in last couple of weeks, emerging markets aretrading at one-year forward PE of 9.2x which is less thanthe four-year average multiple of 12.2x,” the analyst saidciting data compiled by Bloomberg. Compared to hugeselling last month, he said, Pakistan saw net outflow of$4.2 million in the month of November with year-to-date (YtD) net selling of $103 million in 2011 thatincluded $68 million selling in Hubco. interestingly,MSCi Pakistan with negative return of 13.3 per centreturn during 2011YtD was so far the best performingmarket in MSCi asian Frontier markets beating othermarkets with a handsome margin, Farhan said.However, he said, this was posing a concern amongstlocal investors that Pakistan market might de-rate as itwas now trading at 35 per cent discount to emergingmarkets on earnings multiples compared to last 10 yearsaverage of 40 per cent. STAFF REPORT

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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 12.99 12.51 12.99 -0.01 1,525Pak Paper Prod. 32.22 32.10 32.05 32.05 -0.17 1,600Security Paper 36.00 36.65 34.50 35.09 -0.91 7,204Pakistan Cables 32.17 32.00 31.65 31.72 -0.45 520P.N.S.C. 13.57 14.00 13.01 13.19 -0.38 5,204Pak.Int.Con. SD 66.59 69.00 65.00 66.59 0.00 27TRG Pakistan Ltd. 1.37 1.45 1.35 1.43 0.06 97,01Murree Brewery 63.17 64.99 63.00 63.20 0.03 3,818Shakarganj Food 3.25 3.50 3.25 3.50 0.25 1,500Hala Enterprise 6.01 7.00 6.01 6.01 0.00 101Pak Elektron Ltd. 4.06 4.28 3.80 4.08 0.02 18,506Singer Pakistan 12.11 13.08 12.11 13.08 0.97 623Tariq Glass Ind. 8.50 8.48 8.20 8.26 -0.24 702Grays of Cambridge 23.50 23.50 22.36 22.39 -1.11 2,925Pak Tobacco Co. 58.00 58.00 57.00 58.00 0.00 3,071Shifa Int.Hospitals 29.39 29.39 28.00 29.39 0.00 194Hum Network Ltd. 16.45 16.45 15.51 16.45 0.00 10P.I.A.C.(A) 1.94 2.03 1.92 1.94 0.00 19,506P.T.C.L.A 10.38 10.40 10.25 10.34 -0.04 1,398,503Telecard Limited 0.80 0.84 0.73 0.80 0.00 97,466Wateen Telecom Ltd 1.66 1.80 1.50 1.75 0.09 468,336WorldCall Telecom 1.03 1.05 0.98 1.00 -0.03 486,633Sui North Gas 16.87 17.24 16.61 16.94 0.07 13,443Sui South Gas 18.36 18.89 18.15 18.85 0.49 16,217EFU Life Assur 68.02 70.25 68.00 69.99 1.97 3,984

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, 09 December, 2011

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

$100.94

BrentCrude Oil

$109.53

STOCK MARKET HIGHLIGHTS

Index Change Volume Market ValueKSE-100 11392.57 +108.68 44,005,915 2,453,791,067LSE-25 2908.62 +80.76 1,099,351 28,793,991ISE-10 2594.7 +41.33 95,971 2,178,025

Major Gainers

Company Open High Low Close Change TurnoverUniLever Pak Ltd. 5412.84 5475.00 5351.00 5445.00 32.16 27National Refinery 242.06 254.16 241.50 254.15 12.09 361,960Pak Oilfields Ltd. 353.88 368.29 352.90 364.24 10.36 1,321,225Attock Petroleum 402.20 412.00 401.10 410.36 8.16 15,765Attock Refinery 110.95 116.49 109.85 115.68 4.73 1,393,882

Major Losers

Nestle PakistanXD 2566.41 2579.99 2445.01 2452.55 -113.86 128Colgate Palmolive 603.29 580.00 580.00 580.00 -23.29 90Biafo Ind. 69.39 66.00 65.93 65.93 -3.46 144Sanofi-Aventis 141.10 141.25 138.00 139.13 -1.97 1,245Ferozsons (Lab) Ltd. 75.39 76.00 74.10 74.10 -1.29 600

Volume Leaders

Jah.Sidd. Co. 5.25 5.24 5.06 5.12 -0.13 6,369,041Fauji Fert 50.53 52.79 49.75 52.44 1.91 4,386,192D.G.K.Cement 19.75 20.44 19.31 20.34 0.59 3,994,673Fatima Fert.Co. 22.44 23.35 22.15 23.14 0.70 3,608,729Bank Al-Falah 11.53 12.00 11.25 11.87 0.34 3,098,523

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

Gold 24K 58,116.00 49,878.00 2,911.00Gold 22K 51,608.00 44,245.00 –Silver (Tezabi) 1,090.00 936.00 35.05Silver (Thobi) 1025.00 880.00 –

Interbank RatesUS Dollar 89.2847UK Pound 140.4537Japanese Yen 1.1540Euro 119.6325

Buy SellUS Dollar 88.80 89.30Euro 118.04 119.78Great Britain Pound 138.44 140.36Japanese Yen 1.1375 1.1499Canadian Dollar 87.03 89.58Hong Kong Dollar 11.23 11.51UAE Dirham 24.07 24.33Saudi Riyal 23.59 23.81Australian Dollar 90.33 93.21

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Friday,09 December,2011

news

07

Coming two years are going to be a troubledue to energy crisis, particularly fourwinter months from November to februarymust be switched with alternativesdr Asim hussain, federal Minister Petroleum

LAHoreMAhEEn SyED, ALI RIzvI

iN a landmark development, thetobacco Control Cell has com-menced legal proceedings againstcigarette manufacturer PhilipMorris Pakistan limited for vio-

lation of binding stipulations concerningtobacco advertising.

GOOd PReCedeNttalking to Profit, Deputy Project Director ofthe tobacco Control Cell Dr Ziauddin islamsaid, “For the first time ever a police case hasbeen registered and sent to the magistrateagainst any tobacco company on violation oftobacco control laws in Pakistan.” this casehas been registered in Faisalabad and Dr Zi-auddin said it would set a good precedent forfuture cases. However in this case, under sec-tion 11B, the first time offender would be li-able to pay a fine of Rs5,000 with up to threemonths in prison, while subsequent offend-ers will be subjected to a Rs100,000 finealong with the three-month sentence. Unfor-tunately, multi-national companies havetime and again indulged in practices that arein blatant disregard of existing laws andPhilip Morris Pakistan limited (formerlyknown as lakson tobacco Company) hastaken it a step further by openly advertisingtheir cigarette brand, Marlboro, in numer-ous magazines with full page glossy adverts,promoting the brand in gross violation ofSRo 882(i)/2007, issued under Section 7 ofthe Prohibition of Smoking and Protectionof Non-smokers Health ordinance 2002,which states that with effect from May 31,2007, tobacco advertisements will not bemore than one square inch (with 20 per centof this covered by a health warning).

Civil SOCiety ACtiON

it is learnt that the advertisement campaignin question cost Philip Morris approxi-mately Rs50 million, in gross violation oflaw prohibiting just such an act. Yet author-ities did not take appropriate legal measurestill the transgression was reported by civilsociety activists. it is common knowledgethat cigarette companies have been barredfrom indulging in advertising campaigns,something that even the common man isaware of. But despite the action, campaign-ers are dissatisfied with the Rs100,000 fineas “not nearly enough” to discourage suchdiscourse. “this is a ridiculous penalty. it isunlikely to deter the company or set a viableprecedent. the punishment must bestricter,” said an anti-smoking activist whiletalking to Profit. interestingly, the worth ofthe brand being promoted by the companyitself is in millions of rupees. the Directorgeneral of Health Services academy and incharge of tobacco Control Cell, Dr asadHafeez, earlier said he issued notices toPhilip Morris Pakistan for illegally advertis-

ing cigarette print media so that anti-to-bacco ordinance could be implemented.the Prohibition of Smoking in EnclosedPlaces and Protection of Non-SmokersHealth ordinance, 2002, governs multipleareas of tobacco control, including restric-tions on public smoking, sales to minors,and tobacco advertising, promotion andsponsorship. according to the Presidentialordinance, “Notwithstanding anything con-tained in any other law for the time being inforce, no person/company shall advertisetobacco and tobacco products in any media,in any place and any public service vehicle.”this makes the recent promotional adver-tisements by Philip Morris, a clear violationof these rules and regulations.

POOR JuStifiCAtiON

the tobacco Control Cell in an issued state-ment, said, “it is the practice of the M/sPhilip Morris international (PMi), Pakistan,to first violate the tobacco control laws, andthen give poor justification on these viola-tions. this company has already been serveda legal notice on violation of Section 7 of ‘Pro-hibition of Smoking and Protection of Non-Smoker’s Health ordinance, 2002 byoffering free incentives on tobacco products.on this violation, tobacco Control Cell is-sued a legal notice to the company on 22ndJune, 2011. to clarify the guidelines, the mat-ter was again discussed in the tobacco ad-vertisement guidelines Committee. in thismeeting, representative from M/s PMi, Pak-istan (M/s lakson tobacco Company) as-sured to follow the guidelines. this means nomore excuses shall be accepted.” When ques-tioned over the effectiveness of the tobaccoControl Cell, Ziauddin said, “We are merelyconcerned with the legislation aspect, whilethe implementation and enforcement of leg-islations rest with law enforcement authori-ties.” letters have been issued by ProvincialPolice officers of all provinces to ensure theimplementation of tobacco control law in

their respective jurisdiction.

uNCONditiONAl APOlOGyin response to the blatant violation of law,Philip Morris Pakistan deemed it fit to ten-der an unconditional apology to the tobaccoControl Cell, citing that they were unawarethat the law also prohibited the companyfrom publishing adverts in magazines. How-ever, it is clearly mentioned in the Presiden-tial ordinance 2002, that no cigarettemanufacturing company will advertise inany media, in any place or public service ve-hicle. the law also stipulates that “tobaccoadvertising is prohibited in publications in-tended for young people.” Clearly the mag-azines where adverts were published had asignificant youth target market as well. intheir official statement, tobacco Control Cellsaid, “Full page advertisements of Marlborocigarette appeared in the following Newspa-pers: Sunday magazine of Express tribuneon 13th November, 2011, Sunday magazineDaily times on 13th November 2011,Newsweek Pakistan on 11-18th November,2011, Herald November 2011, Sunday mag-azine, Daily times 20th November 2011,and Sunday Magazine Jang, 21st November2011 and Sunday Magazine of Jang 28thNov, 2011.” What is most unfortunate is thatyet again, Philip Morris despite an un-scrupulous violation of law will be allowedto run free, setting a precedent for othercompanies to follow suit.

NeWSPAPeR ReSPONSiBilityWhile talking to a civil rights activist, hesaid “it is the responsibility of newspapersto ensure that such advertisements thatare in blatant violation of the sovereignlaw of Pakistan are discouraged by printmedia.” He added that he was shocked tosee leading stakeholders of the industrynot reacting strongly, or refusing to printadvertisements by Philip Morris.

KArACHIISMAIL DILAWAR

WitH currency expertsforeseeing tough daysahead, Pakistani rupeemainly remained

weaker and during current financialyear cumulatively depreciated by 0.14to 7 per cent against majorinternational currencies. according toofficial data, during last six-monthperiod, ranging from June 2011 up to29th November 2011, exchange ratefor rupee on local currency marketagainst international currencies,particularly US dollar, remaineddown. Data showing rupee’s paritywith US dollar, UK pound sterlingand Japanese Yen depict that localcurrency devalued against thesecurrencies, respectively, by Rs2.27,Rs0.18 or 0.14 per cent and Rs0.06 or5.66 per cent during the period underreview. official data shows that on29th of November rupee was tradedagainst these currencies, respectively,at Rs88.24, Rs137.53 and Rs1.13 asagainst Rs85.97, Rs137.35 and Rs1.07in June this year. Rupee remainedmore volatile against greenback andsaw an accumulative devaluation of2.57 per cent during review period.Even on Kerb market, where tradingtakes place outside official markethours, rupee-dollar parity was in thelatter’s favour at Rs88.20 on 29thNovember compared to Rs86.03 amonth earlier. this marks adepreciation of Rs2.17 or 2.47 inpercentage terms. an annual accountof rupee-dollar parity shows thatduring FY10, FY11 and FY12 rupee hithighs as well as lows of Rs85.58 andRs81.40, Rs86.50 and Rs83.93 andRs88.38 and Rs85.79 against dollar,respectively. Euro, however, was anexception as European currencydepreciated against rupee by 5.63 percent to Rs117.91 compared toRs124.54 in June 2011. DailyNominal Effective Exchange Rate(NEER) of rupee increased to

Rs50.35 against Rs49.75 previouslywith the premium standing lower atRs0.04 from Rs0.06. the month ofNovember proved tougher for localcurrency which depreciated by overRs2 to dollar owing to a wideningcurrent account deficit and a constantcontraction in the dollar-hungrycountry’s foreign exchange reserves.imbalanced by a huge import bill,which inflated by over $3 billion to$13.4 billion during July-oct FY12,Pakistan’s current account balancedeteriorated to $1.5 billion against anegligible $541 million of lastcorresponding period in FY11. thecountry’s holdings of greenback ispersistently going down and hasdepleted to Rs16.88 billion aftertouching the record $18 billion a fewmonths back. “Rupee has weakenedagainst US dollar in November asdemand for dollar increased with thewidening of current account deficit,”observed State Bank in its monetarypolicy information compendiumreleased last month. another reasonfor the rupee depreciation, centralbank cited, is “outflows from financialmarket” that saw a cumulative flightof capital worth $ 37 million and $43.5 million respectively in octoberand November (2011). Currencyexperts believe that rupee wouldcontinue to lose face against USdollar and would dip as low as Rs90by the end of this financial year.Reports that the central bank wasfollowing a regional trend ofdevaluing the local currency to givesome relief to exporters have led topanic buying on inter-bank marketwhere importers are said to haveresorted to forward booking of dollarat a six-month exchange rate of Rs93to further possible losses in case offuture depreciation. open market,however, stands stable with a smoothsupply and demand with moneyexchangers surrendering around $5to $6 million of their daily surplussupplies on the dollar-scarceinterbank market.

Rupee drops by 7 per centagainst major currencies

Tobacco Control Cell registerscase against Philip Morris

ISLAMABADSTAFF REPORT

aN integrated approach forwater quality protection, tomaintain biological integrityand to better address water

pollution in urban environments for asustainable future is essentially needed.Dr Xavier Swami Kannu, US Fulbright-Nehru Environmental leadership Fellow,Central Pollution Control Board, NewDelhi said this while giving a speciallecture on “Sustainability concepts forwater quality protection” at SustainableDevelopment Policy institute (SDPi).

Dr Xavier while talking on ‘Stormwater Runoff Pollution’ which isproduced from a developed landscapeduring storms maintained that itaccumulates and transports much ofcollective waste of urban environmentinto surface water sources and becomesthe primary source of impairment inrivers, lakes, and estuaries. Heexpressed that urban land areas andland development are increasing at arapid pace as urbanisation has alteredhydrological patterns and a radicaldifference has been observed in waterflow regimes after urbanisation. Hecited some implications of urbanisation

on water quality such as loss of water-retaining and evapo-transpiratingfunctions of soil and vegetation inurban landscape.

He also proposed measures for waterquality protection and to better managewater pollution in urban environments.He suggested nonstructural controls suchas better site design, retrofitting,downspout disconnection andconservation of natural areas todramatically reduce the volume of runoffand pollutant loading from a newdevelopment. He emphasised on effortsto control pollution at the source ratherthan to treat regionally. He also urged to

promote aquatic resource conservationdesign during land development tomaintain predevelopment hydrology.During the question-answer session,participants urged Capital Developmentauthority to learn from North americanurban water management experiences.they also questioned the hypothesis ofrelationship between storm pollution andsurface water, relevance of atmosphericpollution with urban storm and surfacewater hypothesis, high concentration ofpersistent pollutants in cotton growingareas of Pakistan and their negativeimplications for populations, over-pumping of water through tube-wells in

indian Punjab and their implications onadjacent Pakistan areas with reference tosaline water of Faisalabad driftingtowards lahore and limited use of arsenicin Pakistan. Dr Xavier Swamikannu, USFulbright-Nehru Environmentalleadership Fellow, Central PollutionControl Board, New Delhi, india is anexpert on regulatory control of urbanwater pollution. He holds a Doctoratedegree in environmental science andengineering from University of Californiaand also served as Chief of the StormWater Program at CaliforniaEnvironmental Protection agency’s(CalEPa) until January 2010.

integrated approach needed for sustainable water quality: expert

dollar reserves shrink further to $16.67bKArACHI

STAFF REPORT

PaKiStaN’S liquid foreign exchange reserves continue to deplete andcontracted by 1.2 per cent up to 2nd December, central bank reported.During the week under review, State Bank said, country’s foreign

exchange reserves fell to $16.678 billion, $206 million down from $16.884billion the country held last week that ended on 25th November. Centralbank’s holdings of the greenback also shrank by $257 million or 1.9 per cent to$12.865 billion against the preceding week’s $13.122 billion. Contrary to it,commercial banks’ liquid foreign exchange reserves witnessed an upwardtrend for the second consecutive week and rose to $3.813 billion compared to$3.762 billion they possessed in the previous week. against last week’s $4million or 0.1 per cent increase, current week saw banks’ reserves registering agrowth of $51 million or 1.3 per cent on the back of, what official and unofficialobservers believe to be, increased deposits. analysts attribute current fall inthe country’s dollar reserves to burgeoning import payments and retirementof external debts that, according to SBP data, have aggregated to $62 billion.

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