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From blitzkrieg to geldkrieg: A German tale of power Page 02

Sunday, 18 March, 2012

KARACHISTAFF REPORT

engIneeRIng Develop-ment Board (eDB) is likelyto put forward to financeministry the joint budget

proposal sent by bike manufacturersand vendors through PAMA and PA-PAAM in a meeting called for thepurpose today 16th March.

The assemblers and vendors oftwo and three wheelers in theirbudget proposal have urged the gov-ernment to rationalize tariff in orderto bring down the costs to provide re-lief to the consumers and also allowthe import of machinery, parts andmolds at zero duty rates, sources atManufacturers’ and vendors’ saidtoday. The meeting held in Islamabadunder the Chairmanship of CeO eDBAitezaz niazi discussed the proposalfor the coming budget.

The assemblers have asked eDBto support their proposal enabling theindustry to lower unit price of bikesmade in Pakistan so that better mar-gins could be achieved through ex-ports as well. According to sourcesdespite recession and adverse eco-nomic conditions the bike industry inPakistan has shown tremendousgrowth with total production reachingaround 1.5 million and targeting 1.7million mark for next fiscal year,while it has also started exploring newmarkets in the region for exports.

The industry has already been ex-porting motorcycles to Bangladesh,South Africa and Afghanistan.

The industry has demanded re-duction in CKD rates from 15 percentto 10 percent, while CBU rate shouldalso be reduced from 65 percent to 55

percent. Besides, reduction in sub-as-sembly from 20 to 10 percent and re-duction on duty of components from10 to 7.5 percent have also been pro-posed, sources said. While pointingout an anomaly in the SRO 655 theysaid it provides advantage to non-doc-umented manufacturers becauseprocess materials has substantial costimpact on the manufacturing process,but, unfortunately, the definition ofprocess material is not covered in SRO655(1)/2006. “This is an anomaly asregardless of legislative interpretationthey are a cost component of produc-tion process and are required to betreated as such,’ they added.

‘It is the misuse and improperimplementation of SRO 656 (Manu-facturing (Assy. Rules) in letter andspirit that is creating an unfair ad-vantage in the favor of unorganizedsector in the two/three wheeler sec-tor of the auto industry,’ they added.

They also demanded that thecomponents attracting lower rates ofduty than CKD rate should be al-lowed at statutory rates. Otherbudget proposals aimed at acceleratethe growth, competitiveness and ex-ploiting the export potential of the in-dustry include: Pak II (euro II)complaint parts for 2-3 Wheeler sec-tor should be zero rated as after im-plementation of Pak II (eURO II) thecost of vehicle has gone up. More-over, restoration of issuance of in-come tax exemption certificate atimport stage to manufacturers; with-holding tax on the proceeds of ex-ported good at 01 percent should bereduced to 0.5 percent as recom-mended by the engineering Develop-ment Board (eDB) in the nationalengineering & exports Development

Strategy (neeDS) report in 2010.And to promote the business and

attract the investment corporate taxrate should be brought down from 35percent to 30 percent, 25 percent and20 percent gradually as entities thatcan prove that 90 percent of theirpurchases are from registered suppli-ers get a 2 percent lower corporatetax rate. If the government plans toimplement the RgST, the rate of salestax should be brought down to say 15percent from existing 16 percent be-cause in addition to other advantagesit would make evasion less-attractiveand will help increase the tax net.

Their proposals further suggest thatsection 8-B in the Sales Tax Act, 1990,should be abolished, while the role ofPakistan Automotive Manufacturers As-sociation and & PAAPAM in determin-ing fair value of auto-parts by FederalBoard of Revenue should be institution-alized with active participation of engi-neering Development Board. In order todevelop export markets the governmenthas to support the industry throughfunding for developing distribution net-works and establishment of brand nameexercise. It is also proposed that the Re-search & Development facility shouldagain be made available to the industryof two/three wheelers with proper coverunder the scheme, as it will help the in-dustry to remain competitive at least inthose markets where they have estab-lished their brands.

‘Moreover, listed companiesshould be allowed to spend upto 50percent of their contribution on tech-nical training programs, and alterna-tively the rates of WPPF (WorkersProfit Participation Funds.)& WWF(Workers Welfare Funds) be reducedby 50 percent.

KARACHIGHULAM ABBAS

The small traders and businesscommunity of the country’sfinancial hub have braved over Rs3 billion losses on Saturday amid

their strike call against increasing numberof extortion in the city.As the city’s all markets, shops, retail andwholesale outletsremained closedentirely on March 17,the businessmen haveestimated to facebillions of rupeeslosses which theybeard to launch theirprotest against thealarming situation ofextortion.The strike observedby traders with thesupport oftransporters, andsome political parties,paralyzed the routineand social life ofKarachi on Saturday.The ever increasingincidents of targetkillings, extortion andviolence have, apartfrom the routine life,badly affected the city’s business as thepeople are not ready to take risk ofshopping when their lives are insecure.While the inflation has already cut downthe spending on routine spending, the fearof loss of life and valuables in shoppingcenters, streets and roads the people arereluctant to come out of their houses thusaffecting the traders. Talking to PakistanToday, Atiq Mir, Chairman All Karachi

Tajir Ittehad (traders’ alliance) said thatthe extortion, number of which has beenmultiplied this year, has also forced manymarkets to keep their shops closed as incase of failure to fulfill the demands of theunknown extortionists there was of risk forboth life and valuables.“It seams that the government and lawenforcement agencies have given a freehand to the extortionists as they are openly

doing their illegalpractices across thecity,” he said addingthat how the traders,who have alreadyfaced huge lossesunder the present lawand order situation,could pay hugeamount to thesegroups. The extortionis not confined to thecity’s old and busymarkets but it hasalso spread to thewhole markets,industrial areas of themegapolis. he saidthat traders complain,the extortionist weredistributing the slipsdemanding as per theworth and business ofany shopkeeper

ranging from Rs 20000 to Rs 100000. hesaid the traders have given a 72 hours’ultimatum to government to control thecriminal activities in the city otherwise thetraders would launch a countrywide strike.As traders across the country have assuredto observe the strike with businessmen ofKarachi, a countrywide strike was on thecards if things were not improved duringnext three days.

EDB to forward budget proposal to finance ministryg Bike manufacturers submit proposal to EDB

Traders bear Rs 3bloss over extortion protest

It seams that the govt and lawenforcement agencies have givena free hand to the extortionists as

they are openly doing theirillegal practices across the city

Atiq MirCHAIRMAN ALL KARACHI TAJIR ITTEHAD

g Give 72-hour ultimatum g Countrywide strike on cards

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news02Sunday, 18 March, 2012

KUNWAR KHULDUNE SHAHID

D URIng the late 1930s, leadingup to the first couple of yearsof the World War II, aroundthe time when Adolf hitler

was giving neville Chamberlain, Charlesde gaulle et al a continuum of sleeplessnights, german militaristic wherewithalwas there for all to see, accept and fear.hitler had all the strings of europe firmlyin his grasp, and was possibly a secondthought on his Russian manoeuvre awayfrom fulfilling his desire of cementinggerman hegemony over the continent.There are scores of arguments that can beput forward to try and pinpoint thecauses of hitler’s downfall in the SecondWorld War, but regardless of the ration-ale the fact was that germany had failedin its quest to overpower europe – again– despite having the most daunting mar-tial repertoire in europe.

germany, and Prussia before it, al-ways had the most intimidating warringarsenal in europe, but despite all themenace within its ranks, the nation wasoutdone by its adversaries, and fore-stalled en route to continental su-premacy. What germany had hankeredafter, but failed to realise in 1945, the cur-rent crop has conjured up – with a simi-larly scary cult figure at the helm. AngelaMerkel has those very strings that weresnatched from hitler’s grasps by The Al-lies, but present day germany has notachieved its current position by unrelent-ing warfare, but by diplomacy and fiscalmanagement that the rest of europe canonly envy. While they had failed to winthe battle of blitzkriegs at the time, thegermans are in the driving seat in thegeldkrieg – the money war.

Berlin is now the nerve centre of eu-rope; and the future of the continent liesin german hands – there are no two waysabout either fact. They alone can bailoutgreece, while the rest of the Who’s Whoin the eurozone – including France –have lost their triple-A rating. The newrules that David Cameron vetoed in De-

cember, but could not stop, connote thatgermany would be checking the budgetsof 16 fellow eurozone members – like ‘ateacher marking the homework of stu-dents’. even so, in spite of this rise andthe ever so conspicuous presence at thehelm of european matters, there is nopalpable feel of festivity brimming out ofgermany with regards to this turnaroundin fortunes. Like Jonathan Freedlandpointed out in his column a couple ofdays back, if it would’ve had been nicolasSarkozy in Merkel’s position, we’d neverhear the end of it. And imaginingCameron in a similar scenario is a terri-fying prospect for anyone who has eventhe slightest of acquaintances with theBritish media’s tendency of waxing lyricalcentered round an ever-so-obvious bias,with logic exhaustively thrown out of thewindow. hence, one begs the question:where are the german trumpets?

One possible reason for Berlindownplaying its position could be theimmediate ‘responsibility’ that is thelogical corollary of this dominance –the task of bailing out greece. Consid-ering the fact that the greek economy

is about the volume of hessen, it isquite a manageable exercise. Theother, and the more plausible, reasonfor this relative hush, as expounded byquite a few noises in the country and inthe continent, is the shadow of thegerman past. The history of a nationthat has blown its lead, so to speakthroughout the past, by over-the-topdisplays of might and by showcasingwar as their go-to play whenever theprospect of power looms. The germansmight just have qualms over misusingthis new found clout.

horst Kohler, famously – or infa-mously if you will – had to resign fromthe presidency for a statement, that formany countries is a daily Presidentialhouse rhetoric, when he stated thatsometimes ‘military force is needed toprotect the country’s economic interest’.Similarly a german defence minister’srefusal to use the word ‘war’ for germanexploits in Afghanistan, was anotherawkward manifestation of the nationfrowning upon the possibility of beinglured into aggression. And a domineer-ing position connotes the possibility of

hostility – few nations understand theconcept better than germany.

This wariness regarding its ownmight is what ensures that Berlin is at anintriguing crossroads. The overwhelm-ing popularity of Merkel – a prudent,low-key figure – is the vindication ofwhat the germans want: stability, dura-bility and not an iota of conflict. Theywant a united europe, not merely fortrade reasons or for fiscal prosperity; butthe germans need a european identityto ensure that they steer clear of aggres-

sion of all kith and kin. Maybe it’s bestfor the zone that it’s the country thatneeds continental togetherness themost, which is in the most commandingposition. For it is impossible to know themenace of a powerful germany that doesnot give a rabbit about europe’s unity;and it’s pretty clear that the germansdon’t want to find that out.

The writer is Sub-Editor, PakistanToday. He can be reached atkhulduneshahid@gmail.com

From blitzkrieg to geldkrieg: A German tale of powerHistorically, a powerful Germany scares the daylight out of Europe. However, despite establishing itself as the de facto EU capital, Berlin ostensibly has qualms over its own might

LAHORESTAFF REPORT

The CompetitionCommission of Pakistan(CCP) has earned yetanother international

recognition as it has become the firstregulatory authority from South Asiato be shortlisted by the globalCompetition Review for theenforcement Award in the category‘Agency of the Year – Asia-Pacific,Middle east and Africa’ for 2012.The London-based globalCompetition Review (gCR) is theworld’s leading anti-trust andcompetition law journal that ischiefly consulted by lawyers,competition authorities, economistsand academics to keep abreast withthe latest developments incompetition law. CCP’s nominationfor gCR award has brought a greataccolade to the country, as othernominees in this category are:China’s Ministry of Commerce,Korea’s Fair Trade Commission,China’s national Development &Reform Commission and Australia’sCompetition and ConsumerCommission.‘gCR Awards’ is held annually torecognize achievements of teams andindividuals from private practicefirms, academic organizations andcompetition authorities in thepreceding year. This is only thesecond time these awards are taking

place and it is commendable for theCCP to be considered for the award.The “Agency of the Year’ award forenforcement is based on numerousfactors, such as the creative, strategicand innovative aspect of enforcementtechniques used by the agencies. Forthe Commission, the assessment,thus, will pivot on its enforcementactivities in 2011 during which it hasissued 13 orders, 46 show causenotices, 6 enquiry reports besides 8ongoing enquiries, and 7 search andinspections in important sectors suchas, jute, edible oil, shipping,concession agreements, liquidchemical, entertainment, cable TVservice, electric power, telecom,fertilizer, tea, and pharmaceutical.Moreover, the Commission alsogranted 82 exemptions and issued 76merger nOCs during the year.The gamut of activities undertakenby the Commission in 2011 isindicative of its commitment toexpeditious enforcement albeitwithin the confines of a limitedbudget, thus making its nominationfor the enforcement Award all themore satisfying.The nominations are decided by theinternational competition lawcommunity through a nominationand online poll over a period of threemonths. gCR will announce thewinner on 27th March, 2012.This is the second time CCP has beenapplauded and has been recognizedfor its work by the gCR. In 2011, the

CCP was the only new entrant to begranted a rating of 2½ stars out offive in the gCR “Rating enforcement’for being an effective enforcer in theyear 2010 despite being only threeyears old at that time. It has beenable to shine once again, to becomethe only competition agency fromSouth Asia to be shortlisted for the2nd annual gCR enforcement Awardin 2012, which bears testimony tohow the CCP definitively positioneditself to be a driven and effectiveenforcer in the region.With such a nomination, it can beunequivocally stated that the CCPhas developed into an effectiveworld-class organization, as a resultof the dedication and hard work ofthe Commission’s staff in itsunceasing efforts to rigorouslyenforce the four pillars of the law i.e.,the prohibition on the abuse ofdominance, prohibited agreements,acquisitions & mergers, anddeceptive marketing practice.It is pertinent to mention here thatCCP’s work also received the dueacknowledgement from thegovernment of Pakistan during therecent international conference,“Competition enforcementchallenges and Consumer Welfare inDeveloping Countries” held inIslamabad on 1-2 December 2011 in which the Prime Minister and Federal FinanceMinister appreciated the work beingdone by CCP.

CCP nominated for ‘Agency of the Year’Award by Global Competition review

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news

Sunday, 18 March, 2012

03

KARACHI,STAFF REPORT

The Karachi stocks market re-mained range bound with cor-rective spells during the weekas KSe-100 index lost 56

points week-on-week (WoW) to close at13,297pts.

The investors’ confidence remainedintact as daily average volume stood at400mn shares compared to 355 mnshares last week, increasing by 12.7%WoW, said the analysts at InvestCap.

“In line with previous week mostof the activity was witnessed in lowtier scrips as total traded value de-clined by 11.99% to USD 78.5 million,”viewed hasan Raza.

With the net selling by foreignersduring last two days of the week, FIPIwitnessed an inflow of USD 1.6mn dur-ing the week compared to inflow of

USD 7.5mn in the previous week, theanalyst said. higher oil prices and bet-ter foreign remittances figures fueled,he added. On the fiscal side, he said,figures released related to tax collectionduring 8MFY12 portrayed optimismover govt. financial position as in-crease of 28%YoY to PKR 1,222bn waswitnessed, however during the sameperiod govt. borrowing exceedingwhooping PKR 916bn took the glossaway from the excitement.

The govt. also conducted PIB auc-tion during the week in which PKR25bn were raised against maturity ofPKR 28bn, with upward shift in yieldcurve. Meanwhile, expected decline inwater availability to Rabi crops hasraised concerns over the govt. agricul-ture growth target of 3.4% during FY12.There were also few positives vibes forbanking sector related to increasedpenetration from branchless banking

(growing 15%YoY during 2QFY11) andrecovery of overall nPLs of banks andDFI. The analyst said the market’s openinterest position during the week de-clined by Rs 94mn (down 3.9% WoW)to stand at Rs 2.3bn.

Future volumes followed the samepath as they declined by 10.7% WoW to13.1mn shares. however, futuresspreads went up by 284bps WoW to10.40%. The top-5 scrips at the futurescounter holding 64% of the total openinterest were engRO, nBP, FFC,DgKC and POL.

“With the corrective spell this week,market seems to consolidate at theselevels,” said Raza. The CgT issue, hesaid, will remain a key driver for the in-vestors’ confidence and hence woulddefine the trend in the market. “For thecoming week, we expect market to re-main sensitive to fresh political situa-tion in the country,” he concluded.

ISLAMABAD ONLINE

STRUCTUReS and strategies areneeded to be developed for diversi-fying skill development opportuni-

ties as par with international standards toincrease the rate of remittances inflow,Yassar Sakhi Butt, President, IslamabadChamber of Commerce and Industry(ICCI) said Saturday. he said foreign re-mittances is considered to be an impor-tant part of country’s foreign exchangeearnings, but in Pakistan it have increasedat a much lower rate as compare to othercountries of the region.

“Therefore, government should devicestrategies to initiate various skill develop-ment programs for people to work abroadwhich would ultimately increase the rate ofremittances inflow,

The President ICCI was of the view that73 percent of our local labor force was em-ployed in the informal sectors as they havelower level of skill. government should ad-dress skill development needs of workersand develop programs comprising language

courses and preparatory information re-garding the social and economic structureof the host economy. Yassar Sakhi Butt saidthat remittances could accelerate thegrowth momentum of our fragile economyby maintaining macroeconomic stability ata time when foreign investment was onsteep decline. Thus, training programsshould be in line with international stan-dards because types of skills demanded inthe international job market are alsochanging rapidly, he maintained. ICCIPresident said that the rate of remittancesflow should go up as par the countries ofour region like India with the highest re-mittances-receiving country worth of $58billion followed by China $57 billion. healso called upon the financial institutionsto become more proactive and increase thespeed of remittance transactions for sus-tained growth of the economy. he said thatgovernment should develop its own capac-ity to conduct research and facilitate otherorganizations involved in research relatedto skill development of people which wouldenhance their positions in the national andinternational labor market.

ISLAMABADONLINE

ChAIRMAn national Vocational andTechnical Training Commission(nAVTTeC) Mumtaz Akhtar

Kahloon has said that Korean governmenthas pledge to provide Rs 20 billion to estab-lish Information Technology (IT) centre inthe country.

Talking exclusively with Online here onSaturday, Mumtaz Akhtar said that China,Organization of Islamic Countries (OIC) andIslamic Bank have promised to provide fi-nancial assistance to Pakistan for promotionof technical education in the country. hesaid a local ngO Akhuwat foundation hasalso signed an agreement with nAVTTeCand under this agreement Akhuwat founda-tion would provide fifty thousand rupees tothose students who have completed theirtechnical education.

he said that with this assistance thesestudents would be able to start their busi-

ness in their relevant field of study. Chairman nAVTTeC during last six

years curricula of different technical courseshave been revised while another new eightcurricula have been prepared to providetechnical education to youth in the countryand to make them skilled.

he said that all these curricula are pre-pared according to international educationalstandards therefore these courses are ac-knowledged globally.

Kahloon said that administration hasconstituted five members committees attehsil levels to supervise the business oftechnical centers which have been estab-lished at local levels and providing technicaleducation to people in remote areas of thecountry. he said these committees are alsoresponsible to ensure transparency in theprogress of these local technical centers.Mumtaz Akhtar Kahloon further stated thatdata preparation of student who has passedtheir education is under progress and soonthis process would be finalized.

LAHORESTAFF REPORT

PReSIDenT American BusinessForum (ABF) Salim ghauri hasurged the government to focuson increase in regional trade in

order to come out of economic crisis.According to him, only improved re-

gional cooperation can generate re-quired momentum to the economicactivities, as already different trade re-gions in the world are on the path ofprogress by interlinking their economies.

he said the governments of bothPakistan and India should join handswith private sector of their respectedsides to promote investment and busi-ness activities. he said the non oil pro-ducing countries like Pakistan and Indiaare paying high price of abnormal rise inoil prices. This is the right time to lookfor regional cooperation to avoid nega-

tive impact of high oil prices oneconomies ahead, he added.

Salim said total trade among east-ern europe states has reached to 27percent against South Asia where re-gional trade is not more than one per-cent of total trade.

President ABF said both Pakistanand India should act prudently to tap theregional trade potential by mitigating bi-lateral political and cultural disputes. Itis an irony that the business communityof both countries faces problems in avail-ing travel visas for each side. Particu-larly, he said, adding: There is a generalimpression that procedure for businessvisa is cumbersome due to non-cooper-ative behaviour of officials concerned.

Salim said both India and Pakistancan benefit from each other by promot-ing Joint Ventures in different areas ofeconomy. he said the business commu-nity in Pakistan is in favour of extending

status of Most Favoured national (MFn)to India provided the non Tariff Barriers(nTBs) are removed by India.

According to him, Pakistan has beendemanding market access to the USthroughout last decade while playing therole of frontline state in the war againstterrorism. But the volume of bilateraltrade between Pakistan and US is notmore than $4 billion. Salim said the vol-ume of bilateral trade between Pakistanand India could be many times higherthan rest of the world provided that thepolitical leadership is ready to foregodecades old disputes and ready to workin the larger interest of commoners onboth sides of the border.

President ABF expressed the hopethat sanity would prevail and the polit-ical leadership of both Pakistan andIndia would not let the political dis-putes hamper business interests of theirrespective masses.

Karachi bourse remains rangebound during the week

President ABF touts regionaltrade as economic crisis solution

iCCi says skill development programmes vital for remittances

Korea pledges rs.20b for it center

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