Pages: 7 profit.com.pk

IKnomics – walkingthe PTI talk Page 3E-banking transactions mount to Rs12 trillion Page 7

Taking toll of the tradedeficit Page 2

ISLAMABAD

STAFF REPORT

THE meeting of the board ofUniversal Service fund(USf) presided over by thePrime Minister Syed Yusuf

Raza Gilani on Wednesday approvedtwo projects to provide basictelephony and data services inBalochistan and broadband servicesin interior Sindh. The meeting alsodecided to initiate more telecomrelated projects in Balochistan toimprove the telecom services in theprovince. Prime Minister also laidemphasis on initiation of moredevelopmental projects, especially in

Balochistan using technologies likeoptic fiber, microwave, satellite andtelecom excellence centers.Prime Minister also directed toconduct training for people living inun-served areas so that direct andindirect employment opportunitiescan be created for them and digitaldivide can be bridged. He urged thefund to enhance equitable services toall segments of the society and alsoensure that funds are usedeconomically as well as prudently.The meeting was informed that therural telecom project in Mastung Lot,basic telephony and data services willbe provided to a population of 74,831people which reside in 102 muzas.

Mastung Lot consists of Mastung,Nushki and Ziarat districts. In thebroadband project of SouthernTelecom Region-V, the broadbandservices would be provided in 73towns and cities in 10 districtsnamely Ghotki, Jacobabad, KambarShahdadkot, Kashmore, Khairpur,Larkana, Naushahro feroze, ShaheedBenazir Abad (Nawabshah),Shikarpur and Sukkur. The projectaims at provision of 78,000broadband connections in thesedistricts. It was informed that inaddition to this, 206 EducationalBroadband Centers (EBCs) would beestablished in higher-secondaryschools and colleges and 93

Community Broadband Centres(CBCs) for those who cannot afford tohave their own personal computers.The board noted that USf had madeimmense progress under the ruraltelecom programme as USf hasprovided basic telephony and dataservices in more than 3,500 muzas.Broadband services have beenprovided in 256 2nd and 3td tier citiesand towns along with providing almost334,000 broadband connections andestablishing 943 EBCs and 291 CBCs.In the optic fiber programme, around3,960 kms of optic fiber cable hasbeen laid to connect 58 un-servedtehsils and towns. To take broadbandinternet to the villages, USf has

launched another Programme. Thepilot project of that programme isalso under implementation aiming tobring the most modern e-Servicesthrough broadband, down to thevillage level. With theseachievements, USf has created asuccess story for the public-privatepartnership entities nationally andinternationally, the meeting was told.Secretary IT Saeed Ahmad Khan,Chairman-PTA Dr MuhammedYaseen, Member-Telecom Dr. IsmailShah, CEo-ISPAK Azfar Manzoor,Representative of ConsumerAssociation of Pakistan Kaukab Iqbaland CEo-USf Riaz Asher Siddiquiattended the meeting.

Prime Minister approves USF projects in Balochistan and Sindh

ISLAMABAD

AMER SIAL

AfTER learning that the stateowned oil and Gas Develop-ment Company Limited(oGDCL) has incurred $2

billion just on renting rigs and for dataprocessing equipment during the lasttwo decades, petroleum minister hasdirected the company to buy two rigsevery year and purchase its own dataprocessing equipment.

Talking to journalists on Wednes-day, a perturbed Petroleum MinisterDr Asim Hussain said matters ofoGDCL were in complete mess andnot a day passes when some new dis-closure about inefficiency and corrup-tion in the entity is not revealed tohim. The company had incurred $1billion on renting rigs and $1 billionon data processing equipment duringthe last two decades. The minister saidhe was amazed to know that an explo-ration and production company of thesize of oGDCL was not having a poolof rigs and was renting rigs on$32,000 per day from other firms. “Iwas shocked to know that they did noteven have the vital data processingequipment to analyze data,” he added.oGDCL had purchased the last rig in1985 and for the last 25 years theywere renting rigs for drilling, he said,adding that the cost of the rig was notexpensive as they cost between $7 mil-lion and $15 million. “I have directedthem to purchase two rigs every yearand ordered for purchasing data pro-cessing equipment,” he said.

According to a source, the flagshipcompany had a pool of four decadesold eight drilling rigs that was a majorreason for oGDCL not being in a posi-tion to increase indigenous oil and gasexploration and production. The com-pany earns around Rs50 billion inprofit per year, but had not been ableto purchase new rigs in decades. Thiswas resulting in outsourcing of em-ployment opportunities to foreignersat the cost of local people. oGDCL hadto pay rent up to 800 days on drillingfor a depth, which was estimated tocomplete within 330 days. foreigncontractors delay drilling work some-times on perceived threats because ofthe law and order situation, which addto the cost of the company.

About the appointment of the newManaging Director of oGDCL, theminister said the process was underway and would be completed in nexttwo weeks. He said the tenure of newMD would be of three years.

Expressing his complete dissatis-faction over ministry’s technocrat staff,the minister said they have decided tohire a professional as Executive Direc-tor General Hydrocarbons on MP-Igrade to steer the technical directorateof the ministry. Currently, the ministryhas five posts of DGs including petro-leum concessions, petroleum, gas, min-erals and special projects. All theofficials would be reporting to the newEDG. The post has been approved bythe Establishment Division and fed-eral Public Service Commission wasworking on the criteria for the post.

The minister said he had also

amended the rules and in future, 50 percent appointments on the technicalposts would be through promotion; 25per cent on deputation and 25 per centthrough direct induction. He hinted atleast two incumbent DGs would beshown the door on their poor perform-ance and new professionals would behired. “We need professionals for newthinking to come out of the energyquagmire,” the minister said.

Experts have been stressing thatthe ministry of petroleum and min-istry of water and power, lacked com-petent professionals which was oneof the main reasons why the govern-ment completely failed to address theenergy crisis. The government hasalso approved hiring of new profes-sionals in the ministry of water andpower to improve its planning andimplementation.

Petroleum minister said for longterm planning, he had decided to setup a think tank under the Hydrocar-bon Development Institute of Pak-istan, to advice the government onvarious issues and formulate policesfor the future. He said the think tankcould have up to 15 people.

About the finalisation of transit feewith India on TAPI pipeline, the min-ister said he would be visiting India onJanuary 24, 2012, to discuss transitwith his Indian counterpart. Theywould be discussing the transit fee onboth models of volume as well as lengthof the transiting pipeline. The ministryhas already sought permission fromECC to sign the gas sale purchaseagreement with Turkmenistan.

OGDCL inefficiency results in

g Petroleum minister directs OGDCL to get two rigs every year g Professionals to be inductedin petroleum ministry g Minister to visit India on Jan 24 for discussing TAPI transit fee

$2 billion lossISLAMABAD

AMER SIAL

To retain theprofitability ofthe twoinefficient state-

owned gas utilitycompanies and to enable

them to undertake politicallymotivated gas supply

schemes, the government is allset to notify a massive hike of 14 percent in gas tariff and imposition of

gas infrastructuredevelopment cess effective

from January 01, 2011.According to the proposedrevision in gas sale prices,the tariff for domestic andcommercial consumerswill be increased by 14 per

cent while for otherconsumer categories

increase will accompany cess,which the government plansto utilise for infrastructuredevelopment for gas import

projects like LNG, Iran Pakistan(IP) gas pipeline and

Turkmenistan-Afghanistan-Pakistan and India (TAPI)pipeline. The oil and GasRegulatory Authority(oGRA) has alloweduniformed tariff hike forboth the gas utility

companies, even thoughthe demand for increase in

tariff was lower for SuiSouthern Gas Company. Theuniform tariff will generate

Rs1 billion additional revenue duringthe second half of the current

fiscal year which will be givento provinces under the gas

development surcharge.While Cess is estimated togenerate Rs22 billionduring the remaining sixmonths of the currentfiscal year. The tariff for

domestic consumers usingup to 100 cubic meters or 3.5

mmBTU will be increasedfrom Rs107.87 per mmBTU to

122.95 mmBTU. This will increase

Rs448 monthly bill by Rs63 to Rs511 permonth. Tariff for consumers using up to300 units or 10.6 mmBTU will jumpfrom Rs215.74 to Rs245.89 mmBTU. Itwill cause an increase of Rs313 in themonthly bill of Rs2240 to Rs2553 permonth. Tariff of commercial consumerswill be increased 14 per cent fromRs526.59 to Rs600.19 per month.Industrial sector tariff will be increasedby 16.97 per cent from Rs434.17 toRs507.86 mmBTU that will also includeRs13 mmBTU as cess. Power sector tariffof WAPDA and KESC will jump 13.58per cent to Rs507.86 from Rs447.14mmBTU, including cess of Rs27 permmBTU. Tariff for IPPs will increase by34.57 per cent to Rs507.86 fromRs377.39 mmBTU including cess of Rs70mmBTU. Cement sector tariff has beenincreased by 14 per cent from Rs609.09mmBTU to Rs694.22 mmBTU but nocess has been imposed as at present nogas supplies are given to the sector. Tarifffor CNG sector, which is held solelyresponsible for the gas crisis, willincrease by 38.63 per cent in Zone Iconsisting of KPK, Balochistan andPotohar region from Rs571.87 toRs792.80 mmBTU, including a cess ofRs141 mmBTU. While in Zone IIconsisting of Sindh and Punjab tariff willincrease by 27.79 per cent from Rs571.87to Rs730.80 mmBTU including cess ofRs79. Tariff of feed-stock for old fertiliserplants will be jacked up by 207.10 percent from Rs102.01 to Rs313.27 mmBTUincluding a cess of Rs197. While for newfertiliser tariff has been increased only1.81 per cent from Rs59.59 to Rs60.67mmBTU and no cess has been imposed.Gas tariff for direct sales to WAPDAfrom Kandhkot to Guddu will increase17.58 per cent from Rs431.94 toRs507.86 mmBTU including a cess ofRs27. Tariff from Sara and Mari toGuddu will increase 20.89 per centfrom Rs420.09 to Rs507.86 mmBTUincluding a cess of Rs27 mmBTU.Petroleum Minister Dr. AsimHussain has been claiming that theincrease in gas tariff will not impactthe people but increase in gas tariffof CNG, industrial, power andfertiliser sector will be indirectlyimpacting the people and willmassively increase inflation.

Consumersusing 300 unitsto be chargedRs245.89per mmBTU

Tariff for Industryincreased by 17 per cent to Rs 507.86mmBTU

CNG Zone I tariff increasedby 38.6pc to Rs 792.80mmBTU;

CNG Zone IItariff raised by27.7pc to Rs 730.80mmBTU

Govt to dropgas bomb: tariffto rise by 14pc

Thursday, 29 December, 2011

29-12-2011_Layout 1 12/28/2011 11:40 PM Page 1

debate

Thursday, 29 December, 2011

02ISMAt SABIr

DUE to favourable conditions in the inter-national market Pakistan’s external ac-count has shown an unexpectedimprovement during fY11. It provided

some breathing space to the economy. It also indi-cated that domestic business environment has re-mained the same, i.e. no improvements recorded.However, the increase in the demand and prices ofPakistani exports products along with healthy growthin remittances helped to bring about an improvementin country’s external position, said a recently pub-lished SBP report.

Despite good performance of the external sectorno change in the production mix and the destinationof exports has taken place. A continuous decline incapital and financial flows was also alarming. The fi-nancial account surplus declined for the fourth con-secutive year in fY11 and the projections for fY12show that this trend may continue in the future. In-flows of foreign direct investment (fDI), equity secu-rities and loans have remained lower than last year.

The poor macroeconomic conditions and the de-teriorating law and order situation, an improvementin either fDI or equity securities flows may not be pos-sible in the near future, the report indicated. for in-stance, net foreign investment inflows in the countryfell by 59.2 per cent to $305.4 million in first fivemonths of fiscal year 2011-12 compared with $748.7million in the same period last year. out of total foreigninvestment, fDI depicted a decline of 27.1 per cent to$419.80 million as compared to $576.2 million in5MfY11. further, the suspension of the IMf programwill also lower inflows from IfIs. Thus, if the current ac-count deteriorates, support from the financial accountwill not be available, as was the case in 2006-08. In theabsence of foreign inflows, financial account would beunder pressure due to the repayment of the IMf loan.

DURING the last two years, the improvement in thecurrent account continued in fY11 showing a smallsurplus of $0.3 billion, after depicting deficits for sixconsecutive years. The latest figures show that thecurrent account deficit rose three times in the lastfour months, as against the same period last year,indicating difficulties ahead on the external front.The SBP reported that the current account deficit aspercentage of the GDP reached 2 per cent wasrecorded at 0.8 per cent last year.

The bank said that deficits rose to $1.555 billionduring July-october while these were $541 millionduring the same months of the previous year. Theoverall scenario of the external front is depressing, ex-cept remittances that were 24 per cent higher. Tradeand services gap rose to minus $6.227 billion, 32 percent higher than last year, during the four months.The deficit may further affect value of Pakistani rupee,once the central bank stops supporting the local cur-rency. Moreover, higher current account deficit willalso compel SBP to carefully evaluate the interest ratedecision. The central bank has already slashed the in-terest rate twice in the last two monetary policies, de-spite double digit inflation which again rose inoctober. Exports recorded a sharp rise of 28.4 percent during fY11 against 9.1 per cent in fY10. Exportsof $25.3 billion were the highest ever in the history ofthe country. This was achieved on the back of 35.2 percent rise in cotton and textiles related exports.

PAKISTAN’S trade deficit continued narrowingdown for the third consecutive year, in fY11. In 2010a fall in imports caused a reduction in the tradedeficit. There was a sharp increase in exports thisyear that contracted the trade deficit. Although im-ports have also increased by 14.7 per cent, thegrowth in exports outpaced the growth in imports.

Trade deficit was $294 million in 2001-02 thatrose to $1,208 million in next two years, 2003-04,in 2004-05 it further rose to $4,352 million, $8,259million in 2005-06, $9,495 million in 2006-07,$14,970 million in 2007-08 and reduced to $12,492million in 2008-09. The trade deficit during 2009-10 was $11,536 million that further decreased to$10,500 million in 2010-11. The increase in exportswas mainly the result of higher international cot-ton prices and better unit prices of textile prod-ucts. Although the quantum of textile exports rosemarginally, but the price impacted the earning.

The increase in exports was quite encouragingbut energy shortages and law and order situation re-mained a big constraint in the country’s exports andcompetitiveness. In 2010-11 Global Competitivenessreport, Pakistan’s ranking has dropped to 123 from101 last year. In the region, its overall competitivenessranking is lower than that of India’s 51, Bangladesh’s107 and Sri Lanka’s 62. The export earnings were his-toric that increased to $793 million in fY11 as againstto $422 million in fY10. The trade deficit is likely toincrease due to the slowdown in exports particularly,textiles and cotton exports. The overall import billmay also be higher in fY12, due to increase in bothquantum and average prices of petroleum products.According to the SBP figures, commodity pricesstarted rising in fY09, Pakistan’s terms of trade (ToT)have also shown a continuous improvement. This was

due to an increase in the unit value of exports than im-ports. The share of finished goods in total exports wasabout 71 per cent compared to 88 per cent inBangladesh. In India and Sri Lanka it is 67 per cent.

TExTILE exports demonstrated an increase notonly because of higher prices of cotton yarn and cot-ton fabrics that showed an increase of 20 per cent,

but also due to high value added products such asbed wear, towels and readymade garments. More-over, Pakistani exporters are now increasingly tar-geting relatively smaller importers in exportmarkets. This strategy is being applied by India,Bangladesh and Sri Lanka, while China is shifting tosupply established brands. This strategy is quite suc-cessful as orders can be filled by the existing set up.

The food exports growth comprising of wheat, fish,meat, fruits, and vegetables with improved productionand higher prices of these commodities helped earnsubstantial amounts of foreign exchange. In the foodgroup, wheat exports accounted for more than 55 percent growth followed by vegetables 9 per cent, fish 6.7per cent and meat 5.1 per cent. The exceptional rise inwheat exports can be attributed to higher internationalprices due to production losses in Russia, USA andCanada and the availability of an exportable surplusfrom last year’s carryover stocks and strong expecta-tions of a bumper crop in fY12 in Pakistan. It is ex-pected that exports of meat would continue to grow forthe fifth year that has already increased four fold sincefY07. This growth was due to both an increase in quan-tity and in prices. The rise in meat and meat preparationexports is on account of higher demand from Saudi Ara-bia, after the Saudi government banned meat importsfrom some African countries. Realising the potential inthe Halal meat industry, which has worldwide sales ofover $1 trillion, the Sindh Board of Investment (SBI)took a number of initiatives for the promotion of theHalal meat industry in Pakistan at the start of fY11. Theirefforts resulted in higher production and exports ofmeat. The report said, the production of meat and itsexports are likely to rise further in fY12. After declin-ing during fY10, fish and fish preparation exports in-creased to $297 million despite the loss of theEuropean market. Pakistan managed to fetch higherprices for its shrimp exports from Egypt and othermarkets such as China, UAE, Thailand, Korea, SaudiArabia and Indonesia which not only reversed the loss- about $30 to 40 million per annum, of Europe as anexport market but also increased export earnings.overall, fish and related exports rose to 131,700tonnes, worth $297.3 million, as against 106,000tonnes, estimated at $227.0 million last year.

A number of initiatives are under way to furtherincrease the exports of fish and fish preparation,including the expansion of the existing labora-

tory infrastructure to provide testing and certifi-cation facilities acceptable to destination mar-kets; the provision of financial support torevamp fish jetties at Gaddani, Dam, Pasni andJewani; ensuring the provision of facilities suchas landing stations/jetties/ports along theMakran coast in partnership with the provincialgovernment of Balochistan and supporting Ko-rangi seafood processing companies in develop-ing a traceability system for smoked, canned,fresh and frozen fish products.

THE report also pointed out that despite higherprices in the global market, rice exports declineddue to production losses, about 1.7 million tonnesof paddy, caused by the floods. Rice productionwas only 4.82 million tonnes as compared to 6.61million tonnes in fY10. The decline in rice exportswas mainly due to the lower export volume ofnon-basmati rice, whereas basmati rice export in-creased in quantity. Non-food and non-textile ex-ports increased by 16 per cent as compared to 13.3per cent last year. The factors responsible forgrowth were petroleum products, leather raw andmanufactured, footwear, medical and surgical in-struments, chemicals and pharmaceuticals, andengineering goods. There was a fall in the exports of fertiliser, jew-elry, cement and molasses. Chemicals and phar-maceutical exports grew 21.8 per cent duringfY11. other sub-sectors, such as, plastic materi-als earnings were 50.4 per cent and from otherchemicals increased by 20.5 per cent. This risecan be attributed to an increase in import de-mand from India for chemicals like polyethyleneand pure terepthalic acid (PTA). Manufacturedleather exports grew by 17.3 per cent. The maincontributors were leather garments followed byleather gloves. During the year, export offootwear also increased by 16.5 per cent. Amongfootwear products, the exports of leatherfootwear increased 26.4 per cent and that of can-vas footwear by 51.0 per cent. The higher exportwas mainly due to rise in demand in traditionalmarkets and relatively better export prices.

AfTER declining for the last two years, importsgrew by 16.4 per cent in 2011 as against a de-cline of 0.3 per cent last year. The growth wasdue to increase in food, petroleum, textile, agri-cultural and chemicals. The imports of machin-ery, transport goods and metals fell. The factors responsible for the increase in im-ports include increase in international com-modity prices, especially in petroleum products,that rose by 51 per cent after declining by 20.6per cent last year. The quantity wise import ofpetroleum products grew 6.1 per cent.

The reason behind the lower import quantity ofpetroleum products was the increase in domes-tic production of high speed diesel (HSD), fur-nace oil (fo) and motor gasoline (MS).

Palm oil prices also increased. There wereshortage of pulses, sugar and cotton, due tofloods in August 2010, compelling the country toimport these commodities. The prominent factorin inflating the import bill was the rise in theprices of petroleum products, palm oil andsugar. In the food group, the import of palm oil

and sugar was about 72 per cent of overallgrowth in food imports.

The increase in sugar imports was due to do-mestic shortages. However it is expected thatsugar imports would decline in fY12 due to theexpected rise in sugar cane production after thefloods and favourable weather conditions in Pun-jab and Sindh. The rise in the import bill of rawcotton was due to higher prices in the interna-tional market, and a marginal increase in quan-tity. It is expected that the import of raw cottonwill decline in fY12.

Although imports in the machinery groupshows a decline but import of textile machineryrose by 53 per cent in fY11 as against 41.3 percent rise last year. Higher import of textile ma-chinery was due to replacement of old machinerymainly in the weaving sector and imports of newmachinery in spinning and stitching sectors.

The imports of transport group declined by3.9 per cent, however, the import of motor carsand motor cycles increased sharply. Especially,the import of CBU units of cars grew by 41.5 percent compared to 29.5 per cent last year. Thisgrowth was expected after the government’s de-cision to increase the age limit of imported carsfrom 3 to 5 years in December 2010. The importsof CBUs are directly proportional to the agelimit. A major fall was seen in the import of othertransport equipment, wheat, agricultural ma-chinery, fertilizer; construction and mining ma-chinery and power generating machinery.

It was said in the report that Wheat importscontinued to decline for the second consecutiveyear, dropping by 87.3 per cent during fY11. Thefall in wheat imports was the result of better do-mestic crop and carryover stocks from fY10.

The imports of fertilizer significantly de-clined because less quantity was imported as itsunit price increased by 20 per cent. Pakistan hasincreased fertilizer production capacity by 1.4million tonnes in fY11.

The decline in the imports of constructionand mining machinery and iron and steel may bethe result of lower construction activities. In thecase of power generating machinery, inventoriescarried forward from previous years that de-clined imports during the year.

It is to be noted that during the last elevenyears trade deficit has increased 3571 per cent thatdepicted a worrisome phenomenon that should beremedied urgently by increasing exports.

CURRenT ACCOUnT BALAnCe

TRADe DeFICIT

exPORTS

RICe exPORTS

IMPORTS

FISheRIeS exPORTS

Taking toll of the trade deficit

29-12-2011_Layout 1 12/28/2011 11:40 PM Page 2

IMRAN Khan's 'tsunami' has hit the coast ofKarachi and Pakistan's financial hub isbuzzing with excitement. In a space of a cou-ple of months, the Pakistan Teehrik-e-Insaf(PTI) has transformed from a party on the

fringes to an All Star Galácticos – the Real Madrid Cfof Pakistani politics. The influential business commu-nity is watching with great interest and intrigue.

PTI has played its cards smartly and over thelast few months has won over confidence of thebusiness community in a series of organised and

strongly worded gestures.This includes putting for-ward a 100-day plan inJuly 2011 which focusedprimarily on correctivemeasures to pull theeconomy out of thedownward spiral ofrecord high inflation, ris-

ing unemployment, crippling energy crisis and un-sustainable debt burden. The cornerstone of the 100days strategy is to raise tax revenues, curtail expen-ditures and give confidence to expatriate commu-nity to invest more in the future of Pakistan.

In a nutshell, PTI aims to raise tax revenues to 20per cent of GDP within five years from less than 10 percent of GDP today and increase foreign investment to$10 billion annually within five years from $1.5 billiontoday. Even if partially successful these measures willboost growth to above six per cent of GDP and createover five million new job opportunities. Perhaps moreimportantly this growth will not come at the cost ofrecord build up in price pressures.

A stable Pakistani rupee and reduction inmoney printing by the government will help tobring headline inflation below eight per cent, com-pared to 14 per cent in fY11.

This will reduce cost of doing business in Pakistanand encourage higher investments in the economy.PTI’s think-tank believes that if these investments arechannelled into three key projects then the growth tra-jectory of the economy will rise to above 10 per centover the medium term, creating nearly eight millionnew employment opportunities. These projects in-

clude developing the Reko Diq project, the 5th largestcopper and gold deposits in the world. The secondproject targeted is to develop the Thar coal deposit toproduce 5,000 MWs, or 1/5th of the total power gen-eration, and curtail the dependence on oil imports.Last and perhaps most importantly the constructionof the Diamer Basha dam to produce 4,500 MWs andsupport higher agriculture production.

The PTI economic reforms agenda largely re-flected aspirations of the business community and in-ternational financial institutions including theInternational Monetary fund. The proposals on eco-nomic reforms sent by the Pakistan Business Councilto the government ahead of the fY12 budget showsstrong convergence with the steps outlined in the PTI's100-day plan. Similarly, IMf has linked all futurefunding to Pakistan based on progress on tax reformsand energy sector reforms.

However, carrying out these reforms is a Her-culean task even at the best of times and most ex-perts will testify that if somehow PTI does form thenext government in the 2013 elections, they will takeover at a time when the economy will once again beon the verge of a bigger and more painful balance ofpayment crisis than in 2008. The crisis in 2008 ledto a 28 per cent drop in value of the rupee and fu-elled record high inflation. In many ways Pakistanis even more vulnerable to a crisis today than in2008 due to extremely flawed energy policies, withdependence on imported oil rising sharply due to thedeterioration in the energy mix.

No government in the last sixty years has beensuccessful in implementing these politically difficultdecisions and the reasons are obvious. No one winselections on the promise to put more taxes and under-take austerity measures. It didn't work out too well forthe Italian Prime Minister Silvio Berlusconi, it appearsto have hurt President obama chances for a secondterm and Pakistan is no different. Hence all main-stream political parties have shied away from makingtax reforms a part of their political manifesto.

PTI has taken a huge political risk by putting taxand austerity reforms at the centre of its politicalmanifesto but this bold initiative has paid off hand-somely for PTI. It has given them a de facto leader-ship role in representing the demands of the businesscommunity by bringing these demands to the centreof the mainstream political debate. It has also re-moved the myth that putting economics ahead ofpopulist slogans is bad politics. This is obviouswatching the swelling ranks of PTI and growing ap-peal of the PTI reforms agenda amongst the rural andurban youth of Pakistan.

The author is a former World Bank employee andcurrently works with a leading commercial bank

IDENTIfYING rock-bottom stage istricky enterprise, hence age-old wisdomthat “no matter how bad things are, theycan always get worse”. But when a chron-ically stagflated economy’s largest em-

ploying and bread winning segment registers atruly “black year”, collapse is not far. The 35 percent input cost increase coupled with a price dropof approximately 25 per cent (excluding wheat) hasa compound impact on the overall national econ-omy, and merely re-adjusting subsidies and sup-port prices will not correct the domino-effect ofdepressing tendencies set in motion.

Immediately, drop in yields and earnings willpush more people from the periphery to alreadyoverflowing city-centres. Compromising agricul-ture does not just affect produce and earning. Italso harms agri-industry, the life and blood of ourminiscule export economy, pressuring both rev-enue and employment to the downside. That ma-terialises the twin dilemma of reducedconsumerism as well as reined in government fis-cal expansion, both mission critical to Pakistan’s

chances of reverting to sustainable growth. Invari-ably, rising unemployment, especially when fueledby government inefficiency, impacts the social fab-ric in a very negative manner, increasing crime.

It does not help when agri-industry is delib-erately deprived of precocious credit due to thegovernment’s over-imposing presence in the bor-rowing market. That the practice continues de-spite widely debated and published negativeeffects, it is no longer difficult to ascertainwhether the large borrowing constitutes simpledisregard for the wider economy or actually bor-ders on the criminal. The government no doubtrealises by now that its formula for subsidy with-drawal and GSP imposition has not achieved theaim of making the agriculture sector more effi-cient. It has, in fact, achieved exactly the con-trary. With growth slow, employment weak andindustry in obvious decline, the fate of the agri-culture sector ought to be a sobering reminder ofPakistan’s current state of affairs. Incidentally, itis also a good reflection of the government’schances come election time.

‘Black year’

for agriculture

Pakistan Tehreek-e-Insaf postures for aHerculean task

IKnomics – walking

the PTI talk

Syed Sayem Ali

E D I T O R I A L

Wait and watch

THE trend in volumes hasbeen extremely sluggish dayin, day out throughout thelast week. And the KSE-100benchmark has remained

singularly one-dimensional – flat. If therewas a rise it was in single digit, ditto forthe fall, the only exception being Wednes-day when the rise was 40 points plus.

The volumes have been so low that thefirst two sessions this week witnessed just20 million shares traded, while on Wednes-day it jumped to the vicinity of 35 million –

definitely far below the market’s heydays.But this was not unanticipated.

This being the holiday season in Eu-rope and the US, not to mention the farEast, the activity channelled throughthe trading houses from there comes toa standstill. As for the local investors,there is too much uncertainty, and theinspiration provided by gains from div-idend and bonus shares are somewhatfar off to perk them up.

With absolutely nothing driving themarket, mostly jobbers – for the uniniti-ated, speculators who buy at some pointon any given day and offload their pur-chases for a little gain or loss in the samesession – have only been active, and thattoo quite sporadically. This also is under-standable. The jobbers become hyperwhen there is volatility. That is when theysmell profit. No fluctuation means no realopportunity for a quick buck. So, they toowait and watch, listlessly looking at thecomputer screens now and then to keep

abreast of the goings-on, all this whilemonotonously munching on gram and lit-tle sugar pellets that is the staple withwhich brokers entertain them, before fil-ing out around the time of closing.

for the Average Joe Investor, thereare nuggets to learn from in what the bigdaddy amongst the stockbrokers, Mr ArifHabib, chairman and CEo of the groupnamed after him, said on Tuesday at a re-ception in Islamabad. In a nutshell, thisis what he said, “Economy is improvingbut we are faced with a bigger problem ofperception… our capital markets are oneof the best in the world, giving 31 per centreturn on average in the last 10 years butit is also facing the issue of image… Inter-ference in the capital markets hasn’thelped bring improvement… There is noCapital Gains Tax in most countries andthe system is not as frequently altered indeveloped countries.”

Mr Habib is anything but an AverageJoe Broker. He knows his turf better than

a shark would know itspatch in the sea. Indeedthere are some whomay know the marketas well but there arefew who could manipu-late it better than him.In all three pointspicked from his littlespeech, every word isdrenched in depth and wisdom. Seldomare even the best speakers this precise andobjective – hitting the nail on its head un-erringly time after time.

The CGT is an issue that has acted asa bugbear for the market for quite sometime now. And the recent spurt of lobby-ing has come to naught, for the federalfinance minister Hafeez Sheikh has shotthe proposal down with the kind of fi-nality that is not likely to endear himwith the brokers.

The perception part too is critical. Inthese troubled times there are other rea-

sons why foreigntraders have pulled outlarge chunks of invest-ment from our mar-kets, but our muchbattered image too isone serious pickle.

The return of in-vestment part of ArifHabib’s speech has

been talked about too often in this space tobear repeating. But this is something thatshould reinforce the Average Joe In-vestor’s faith in the market.

Last week one had talked about ‘a fewmouth-watering buys in cheap and mid-dle range that one has discovered’. Butagain, the word count is up, and since no-body is in a rush to buy and there is noth-ing to lose in waiting for a week, so untilnext Thursday.

The writer is Sports andMagazines Editor, Pakistan Today

Agha Akbar

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

T h u r s d a y, 2 9 D e c e m b e r, 2 0 1 1

Can the Chinesemodel of success bereplicated by otherdeveloping nationsacross the globe?

KUnwAR KhULDUne ShAhIDSub-Editor

MAheen SyeDSub-Editor

SNGPL questionThis is with regards to the interview, ‘Addressing the gas dilemma’, publishedyesterday. I had the opportunity of reading the interview with MD SNGPL, ArifHameed. The writer has not asked important questions related to corruption andmismanagement in SNGPL, such as theft of gas in connivance with SNGPL lowerstaff and their contractors. Both SNGPL and Sui Sourthern Gas Company arewhite elephants having monopoly in the distribution of natural gas. Their staff isvery rich and owns plazas and other properties. There should be more gascompanies region wise, so that consumers can have the choice of buying gas atcompetitive rates. Why does SNGPL also have to cover the province of KP? Whydoes Balochistan not have a gas company to distribute natural gas in the provincewhen it is the one of the main producer of natural gas? Why are SNGPL andSouthern Gas Company allowed to participate in the installation of CNG stationswhen the federal government policy was to allow one CNG station between fivekilometers from each other? Actually these companies’ staff has made a lot ofillegal money by sanctioning CNG station without any future vision.

S t HuSSAIn

CHIef exeCutIve

COnSuMER AwAREnESS And wELFARE ASSOCIATIOn

AveRAGe JOe InveSTOR

29-12-2011_Layout 1 12/28/2011 11:40 PM Page 3

Thursday,29 December,2011

04news

SBP governor, yaseen Anwar

Business leaders must dealwith the complexities arising inthe ecosystem of any business,both internal and external

Karachi Stock Exchange gains41 points despite lackluster trading

KArACHI

STAFF REPORT

KSE-100 index witnessed aday of lackluster trading inthe absence of any interest

from local as well as foreign in-vestors. As calendar year ap-proaches closure, today’s sessionbeing the last one for clearing inCY12 drew investor’s interest seek-ing to square position. However, in-vestor participation was highlyskewed towards HUBC whichbagged one-third of the 46 millionshares traded.

Despite an ADR of less thanone, an overall advancement atlocal bourse was completely dis-torted by thinly traded ULEVERand NESTLE, a synonymous ploy

for local market. Volumes improved135 per cent from previous sessionwith major interest witnessed inHUBC, owing to its attractive divi-dend yield. oGDC managed to close0.3 per cent higher on the news flowregarding the production flowsfrom NASHPA II. further consoli-dation was witnessed in fertiliserstocks as uncertainty continues toprevail regarding Gas Infrastruc-

ture Development Cess (GIDC).With today’s notification of an

increase in consumer gas pricesfrom 1st Jan 2012, fertiliser stocksfollowed by cement and industriesare poised for reaction in upcomingsession. Given heightened system-atic risks we reiterate investors toremain caution as foreign flowscould dictate the trend ahead, saidSalman Vidhani, Senior Investment

Analyst at HMfS.KSE 100 index closed at

11352.59 levels with the gain of41.21 points, while KSE 30 indexbagged 12.60 points to close at10288.20 levels. All Share indexclosed at 7856.03 levels, after gain-ing 29.37 points. Total 104 scripsadvanced 106 declined and 105 re-main unchanged out of total 315scrips traded.

Senator Raisani strongcontender in FPCCI electionKARACHI: Senator Mir Haji Lashkari Raisani hasobtained a strong position in the forthcoming annualelections of federation of Pakistan Chambers ofCommerce and Industry (fPCCI), via support from all sixchambers of Balochistan to become President of fPCCI.All six chambers commerce of Balochistan includingQuetta, Lasbela, Gawadar, Makran, Chaman and Pasheenhave consensus on a single candidate for the presidentialslot of fPCCI. The last chamber of commerce andindustry of Pasheen, on Wednesday has also joined in ona move to bring an unopposed contestant in the electionfrom Balochistan. The strong candidate, who succeededin getting the vote from all chambers of the province wasSenator Mir Haji Lashkari Raisani, sources told Profit.The position of the third contestant of the election whichis allegedly backed by a strong group of fPCCI hasbecome weaker after the alliance made by chambers anddirective of Sindh High Court to withhold results of thebody’s election. Balochistan High Court has also allowedPasheen Chamber to participate in election of fPCCIafter which the number of supporters to Raisani hasincreased to six. STAFF REPORT

KP chamber of commerceapprehensive about power theftPESHAWAR: President Khyber PakhtunkhwaChamber of Commerce and Industry (KPCCI) Afan Azizsaid Tuesday power theft in rural and urban areas ofPeshawar is bringing bad name to the entire province.Aziz said Peshawar Electric Supply Company (PESCo)would have to take drastic steps to end ‘kunda culture’in the province, causing shifting of investment toPunjab. KPCCI vice presidents Ziaul Haq Sarhadi andAbid Salam, former president Usman Bilour andexecutive committee’s members attended the meetingwhile Ghazanfar Bilour, Muhammad Ishaq, Zulfiqar AliKhan and Amanullah Khan participated in the meetingas observers. The meeting was told about the progressmade so far in releasing Bank of Khyber loans for smalltraders. Afan Aziz said under Article 158 of theconstitution, Khyber Pakhtunkhwa had the sole right togas produced in the province and after meetingdemands of the province, surplus gas would beprovided to other provinces. He underlined the need tosolve gas crisis. STAFF REPORT

Standard Chartered appoints headof consumer banking in PakistanKARACHI: Standard Chartered Bank Pakistan hasannounced the appointment of Naseer Hasan as head ofconsumer banking. He replaces Aalishaan Zaidi, who hasmoved to being the group head of branch management toStandard Chartered Group Distribution in Singapore.Naseer was previously head of distribution in Pakistan. Inthe new role, Naseer will be responsible for strategy,development and management of Standard Chartered’sConsumer Banking operations in Pakistan, underliningBank’s continued commitment to the country and focuson meeting specific needs of its customers in thecountry. Mohsin Nathani, Chief Executive officer ofStandard Chartered Bank Pakistan said, “I am delightedto welcome Naseer as the head of consumer banking. Iam confident that under his leadership, we will continuebuilding on our success in the consumer bankingbusiness in Pakistan. STAFF REPORT

Inland Revenue team visits steel millLAHORE: A six-member team of Directorate GeneralVigilance of Inland Revenue constituted on the instructionsof Member Inland Revenue visited a steel mill near PindiBypass, GT Gujranwala and detected massive evasion ofincome Tax and general sales tax (GST). The teamcomprising Director Vigilance Inland Revenue TanvirAhmad Malik, Addl. Commissioner Safdar Abbasi, Addl.Collector Zulfiqar Hasson, Auditor Sales Tax AsfandyarKhan, Senior Inspector Income Tax Gulfraz Ahmad andInspector Income Abbas Khan spent the day to ascertain thefacts, verify the declared position and the real volume ofbusiness turnover in the case and to ascertain the extent oftax evasion being made. According to the facts, as per therecord available in RTo in Gujranwala two persons namelyArif Bhutta and Azam Bhutta were running the steel furnaceand mainly declaring income from this source. However, inthe scrutiny of the electricity bill, the main raw materialbeing used in the furnace revealed the fact that on theaverage the bill came to around to Rs15 million to 20million per month. on the basis of electricity bill, theproduction declared was far lower than the actualconsumption and they had grossly misused the selfassessment schemes announced by the government over theyears as they had manipulated their accounts to fit in thescheme of assessment. STAFF REPORT

Development of livestocksector essential: CM Punjab

LAHOre

STAFF REPORT

PUNJAB Chief MinisterMuhammad ShahbazSharif has said that thedevelopment of live-stock sector will not

only strengthen the economy butpoverty and unemployment canalso be eliminated by promoting thesector. The Punjab government ispursuing a comprehensive pro-gramme for the uplift of livestocksector and setting up modernslaughter houses; an important steptowards development of the sectorand increasing exports, the chiefminister said. He directed that redtapism should not be allowed tocome in the way of development ofthe livestock sector and the schemes

for promotion of livestock must bepursued vigorously.

He was presiding over 13thmeeting of Board of Directors ofPunjab Agriculture and Meat Com-pany (PAMCo) at Chief Minister’sSecretariat. Provincial Minister forAgriculture Ahmad Ali Aulakh,Members Provincial Assembly RaoKashif Rahim, Arshad Jutt, Chair-man Special Initiatives HaroonKhawaja, Chairman Planning & De-velopment, Senior Member Boardof Revenue, Secretaries of Agricul-ture, Livestock, finance, Law, Com-missioner Lahore and officersconcerned attended the meeting.Chief Executive officer PAMCo Dr.Hamid Jalil gave a detailed briefingregarding the strategy evolved forthe projects of development of thelivestock sector, breeding of ani-

mals and horticulture in theprovince which included makingPothohar the area of olive, Thal thezone of Kinnow and Cholistan thevalley of grapes.

Addressing the meeting,Muhammad Shahbaz Sharif saidthat livestock sector has been neg-lected during the last 64 years. Hadconcrete steps been taken for the im-provement of this sector, our econ-omy would have been strengthenedand the people associated with thissector would have had the opportu-nity to prosper, he said. The ChiefMinister was of the opinion thatample opportunities of developmentof this sector were available in Pak-istan. He said that Punjab govern-ment is taking all out measures forimprovement of this sector andPAMCo, Livestock and Dairy Devel-

opment Board have also been set upfor this purpose. He said that despitethe availability of resources, theshare of Pakistan in the trade ofmeat in international markets isnegligible and a number of countriesare now expressing interest in theimport of meat from the country. Hesaid that for the first time in history,halal meat has been exported toMalaysia and now after the estab-lishment of state-of-the-art slaugh-ter house, the meat will be exportedto Iran and other Gulf countries. Hedirected that a practicable strategybe devised for export of meat anduplift of the livestock sector. He saidthat Cholistan has been declared dis-ease free zone and such a systemshould be evolved for this purpose inwhich incentives be given to the localfarmers for breeding animals.

Farmers criticisegovt over fertiliser policy

LAHOre

STAFF REPORT

fARMERS associations fromall across the province havestrongly criticised govern-

ment’s skewed fertiliser policy,which is helping profiteers in mint-ing money from poor farmers.

Wheat Growers AssociationPresident Chaudhry Hamid Malhi,Livestock farmers and BreedersAssociation Director MohammadAmin Chattha, Punjab WaterCouncil Director farooq Bajwa,farmers Associates of Pakistan Di-rector Rabia Sultan, BasmatiGrowers Association DirectorAman Ullah Chattha, KinnowGrowers Association PresidentHamid Saleem Warraich, MultanMango Growers Chairman Maj(retd) Tariq Khan pointed out thatthe government imported some0.8 million tonnes of urea duringKharif 20011 and imported an-other 0.9 million tonnes for Rabicrop. Government had announcedimported urea price at Rs1,300 per

bag and local urea plants were of-fering Rs1,600, but farmers weregetting urea fertiliser at Rs1,750 orat even higher rate due to absenceof price control.

It seemed, they said, govern-ment was conniving profiteers inminting money from poor farmers.It did not seem mindful of the factthat despite heavily subsidising ureagovernment could not benefit poorfarmers. They suggested that gov-ernment should not sell importedurea at subsidised rate if it could notcontrol prices in domestic markets.

They believe that it would notonly stablise fertilisers prices butalso curb black-marketing, besidessaving Rs5 billion which was beingwasted in wrongly planned sub-sidy. Representatives of a numbersof farmers associations strongly re-jected unnecessary subsidy, whichhad proved counterproductive.

They further demanded inde-pendent inquiry and release ofthe names of all beneficiarieswho got benefited from this ill-planned subsidy.

FERTILISERS PRICES

An exorbitant increase in fer-tilisers’ prices has dramaticallyreduced fertiliser usage by 25-35per cent during current Rabi sea-son. Agri forum Pakistan Presi-dent Muhammad IbrahimMughal has warned that reducedfertiliser usage could easily com-promise Rs100 to Rs150 billionagriculture produce. In a pressstatement issued on Wednesday,Mughal pointed out that ureaand diammonium phosphate(DAP) usage shrank by 25 and 35per cent respectively, in compar-ison to the previous Rabi season.He indicated that farmers usedsome 1.3 million tonnes of ureaand 0.564 million tonnes of DAPfertiliser, which had beendropped to 0.975 million tonnesand 0.363 million tonnes duringcurrent Rabi season, respec-tively. In addition, potassiumfertiliser witnessed a drop ofover 48 per cent during thesame period.

SBP, nBP field officesto remain open

ISLAMABAD

STAFF REPORT

STATE Bank of Pakistan (SBP)has issued necessaryinstructions to SBP, Banking

Services Corporations (BSC) fieldoffices and NBP to remain open forextended hours till 10:00 pm on 30thand 31st December 2011, to facilitatetrade and industry in getting theircargo cleared for imports and exportsand for receiving of returns andpayments of duty and taxes. fBR hasmade the request to SBP to issuenecessary instructions to SBP fieldoffices and NBP to remain open on30th and 31st December 2011. In orderto ensure that all receipts collected on31st December 2011 are credited to thegovernment account on the date, asecond and special clearing at 1:00 pm,31st December 2011 has been arrangedso that all the clearing instrumentsreceived up to 10:00 pm are clearedand credited to the governmentaccount in value date of 31st December2011. It was requested to theconcerned institutions or taxpayersthat it is compulsory to present StateBank cheques in order to ensure thecrediting of amount to the governmentaccount on the same day.

29-12-2011_Layout 1 12/28/2011 11:40 PM Page 4

05

Thursday,29 December,2011

news

CORPORATE CORNERPeL holds prizedistribution ceremony

LAHORE: In a popular family festival, DawnLifestyle, PEL set up a stall that featured funactivities and prizes for the general public. Theprize distribution ceremony was held at PEL'sfactory. on this occasion, GM Sales andMarketing, Mr Amir Ahsan distributed PEL desirerefrigerator among the lucky winners. The winnerswere delighted to receive their prizes and greatlyappreciated and thanked PEL. PRESS RELEASE

University of Managementholds entrepreneurship festival

LAHORE: University of Management andTechnology (UMT) organised an entrepreneurshipprogramme in which MBA and BBA studentspresented their innovative entrepreneurialprojects. Led by UMT faculty members, Daud IlyasButt and Manqoosh ur Rehman, 25 groups ofstudents participated in the festival. Studentspresented and defended their innovative ideas infront of a panel of judges in order to win best idea

pitching and the best sales activity prizes. Thechief guest on the occasion, Kashif Mehr, VicePresident of Lahore Chamber of Commerce andIndustry (LCCI) appreciated the efforts of thestudents and also motivated them to come up withbetter entrepreneur strategies. The event wasattended by a large number of industryrepresentatives, investors and students from otheruniversities. PRESS RELEASE

BOK opens itshyderabad branch

HYDERABAD: The Bank of Khyber (BoK)Hyderabad branch was formally inaugurated atHala Naka Area, Hyderabad by Mr Bilal Mustafa,Managing Director BoK in a graceful ceremony.Speaking at the inaugural function, he said thatBoK over the last few years increased its branchesnetwork across the country to facilitate thebusiness community through proper branchinteraction which will alternatively help inpromoting the economic activities. The inauguralceremony was also attended by BoK ExecutiveDirector Mir Javed Hashmat, Group Head CreditsMr Imran Samad, Head Business Development MrLal Nawaz Khattak, BoK Head Investment andTreasrery Mr Masood Wahidna and HeadMarketing Syed Ali Nawaz Gilani. PRESS RELEASE

visa reveals resultsof survey across Asia PacificLAHORE: one hundred top finance andprocurement officials from central government,city administration and hospital management

agencies across Asia Pacific were surveyed by Visaat the future Gov Asia Pacific Summit 2011. TheVisa poll revealed that the top two challengesfaced by public funds managers were funding cuts(58 per cent) and the need to drive efficiencyimprovements (57 per cent). other issues thisgroup needed to address were tackling latepayments (41 per cent), improving accountabilityfor the management of public funds (39 per cent)and the shadow economy (25 per cent). More thanhalf of those polled (58 per cent) also said theystill rely on cash and checks to pay beneficiariesand businesses. When it comes to managing publicfunds, more than half of the Asia Pacificgovernment agencies polled in a Visa survey saidthey are most challenged to get the job done bybudget cuts, pressure to streamline operations,and late payments. PRESS RELEASE

We are committed to undertake newinitiatives in order to provide our customerswith the best products and financial solutionsin a modern banking environment

Bank Alfalah CeO, Atif Bajwa

RAwALPIndI: Pearl Continental Hotel Rawalpindicelebrated Christmas with zeal and fervour. Pictureshows Mr Sheharyar Mirza, General Manager PC Pindi,along with guests. PRESS RELEASE

KARACHI: Chairman, FPCCI Aviation committee, MrYahya Polani, presenting a souvenir to the CountryManager Pakistan RAK Airways, Syed Moinuddin.Also seen present on the occasion are districtManager, Pakistan International Airline (PIA), AftabSulangi, Kumail Polani, Asif usman, Alama Liaquat,Haroon Kazmi and others. PRESS RELEASE

KARACHI: Vice Chairman diplomatic Committee,north Karachi Association of Trade and Industry(nKATI), Qazi Yasir Ali, along with nKATI’s PresidentAbdul Rashid Fodderwala and former educationminister Qazi Khalid Ali, at a dinner hosted in honourof Martin Loetzer Vice Consul Trade and EconomicAffairs Federal Republic of Germany. PRESS RELEASE

KunwAr KHuLDune SHAHID

A fTER bagging therights to develop the lu-crative Aynak coppermine in 2008, Chinahas completed its

money-spinning one-two punchon the Afghan front by signing a‘$7 billion’ worth oil deal withAfghanistan. The deal will seestate-owned China Natural Petro-leum Corporation develop a trioof oil fields along the Amu DaryaRiver located in the north of thecountry – this area has been con-siderably less jarred by upshots ofthe American war. The ‘$7 billion’amount that has been touted isthe potential gain for the volatileregion – that has been shroudedby war and its aftereffects for along time – over the course of 25years. The contract caters thenortheastern provinces of Sari Puland faryab. Afghanistan will get70 per cent of the total profits andthe Chinese oil leviathan would bepaying 15 per cent corporationtax. So basically, this is a deal that

is going to reap prodigious fiscalbenefits for Afghanistan, while atthe same time it enables China tohaul out resources to stimulate itsever escalating energy needs. Thisis a nailed on win-win situation ifthere ever was one!

Afghanistan sits atop massivemineral wealth and throughoutthe course of history powers havehankered after an entrance intoits rich zones – China might justhave conjured up the key thatother powers have long cravedfor. The poor infrastructure andsecurity issues, that have been thecorollary of the American war inAfghanistan, have warded ofWestern mining companies; butChina seems to be closing in onstriking the proverbial goldmine.

of course, when juxtaposedwith other mammoth oil dealsaround the globe, the deal signedyesterday might seem petite; butwhat it has spelled out is the factthat China is the frontrunner inany forthcoming scramble forAfghan riches. This indeed is aleaf out of Victorian irony; for,

US has consumed epochs,splurged out gazillions and hasbeen at the receiving end ofglobal antagonism just so it couldbe at the head of the queue innosediving into opulent Afghanimines. And now when matters inAfghanistan are approachingsomething bordering on stability,especially in the concernedprovince – even if de facto stabil-ity might be half a light year away– it is China that is on the brinkof forestalling US at the head ofthe pack in this ‘great game’.Americans are already scepticalabout those at the helm; nowwatching China pick up the ben-efits of their ‘war on terror’ couldresult in a massive backlash.

It is indeed intriguing to notethat after having endured threeglobal monsters vying to over-power the nation and usurp theirnatural resources over the pastforty years, Afghanistan seems tohave identified the country that ittrusts with its development.While the historical ‘superpowers’expounded their intention of ac-cessing the reservoirs via intimi-dation, the Asian giant that hastriumphed has done so by show-casing its constructive intentsaround the globe, contrary to therelentless destruction of others.

China is – in its emblematically

reticent manner – intent on ensur-ing that US’s ‘silk road’ aspirationsdo not materialise. And owing tothis deal in Afghanistan, the Asianpowerhouse has also flaunted itsunparalleled wherewithal when itcomes to matters pertaining to en-ergy and resources. Experts alsoopine that there is a distinct possi-bility that after the rise of Koreaand China into the upper echelonsof geopolitical matters, Russiamight follow the Asian upsurgeand be more assertive in global

matters. Russia has quite a few Eu-ropean strings tied to its belt cour-tesy its hegemony over natural gasin that particular neck of thewoods; and now with US on a pre-cipitous descent, Russian ascentmight be on the horizon.

This deal is another massivewallop that the US has had to en-dure during its involvement inAfghanistan and it might find it dif-ficult to further prolong its pres-ence in Afghanistan. This might bethe first of many such maneuvers

from the Chinese hierarchy tostrengthen its grip in Afghanistanby flexing its economic muscle, asUS clings on to its few remainingdynamites. The US war inAfghanistan might not have had thecliché of ‘winner takes all’ bulgingout from every iota; but as thingsstand, it is China that is on theverge of winning most – if not all.

The writer is Sub-Editor,Profit. He can be reached at

khulduneshahid@gmail.com

The Chinese flavour inUS brewed Afghan soup

KARACHI: CEO wi-tribe Pakistan, Mustafa Peracha anddirector Marketing, Ali Fahd present with wi-tribeShahsawars at the Lahore Polo Club. PRESS RELEASE

g While the US mulls over clearing outits mess in Afghanistan, China has conjuredup the key to unlock rich Afghan resources

KARACHI: Meezan Bank and Linde Pakistan haveentered in a diminishing Musharakh Agreement.Picture shows Mr Yousuf Husain Mirza (ChiefExecutive- Linde Pakistan) and Mr Ariful Islam (COO-Meezan Bank) signing the agreement. PRESS RELEASE

29-12-2011_Layout 1 12/28/2011 11:40 PM Page 5

top 5 perForMers sector wiseSyMBOL OPen hIGh LOw CURRenT ChAnGe vOLUMe SyMBOL OPen hIGh LOw CURRenT ChAnGe vOLUMe

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

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

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

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

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

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

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

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

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

Life InsuranceAmerican Life 14.50 14.50 13.50 14.50 0.00 2East West Life Assur 1.40 2.34 1.40 1.40 0.00 1EFU Life Assur 65.53 68.80 65.53 65.53 0.00 157

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

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

MiscellaneousCentury Paper 13.02 13.20 12.77 12.77 -0.25 3,892Pak Paper Prod. 31.00 31.50 31.00 31.00 0.00 1,600Security Paper 35.88 36.34 36.33 36.33 0.45 570P.N.S.C. 13.00 13.00 12.97 13.00 0.00 274Pak.Int.Con. SD 61.23 64.28 61.00 64.27 3.04 3,484TRG Pakistan Ltd. 1.15 1.17 1.12 1.13 -0.02 485,705Murree Brewery 64.08 64.99 64.08 64.08 0.00 25Shakarganj Food 4.50 4.75 4.75 4.75 0.25 500AL-Abid Silk Mills 24.50 25.69 24.50 24.50 0.00 15Pak Elektron Ltd. 3.59 3.59 3.42 3.50 -0.09 12,505Singer Pakistan 15.94 15.94 14.94 15.94 0.00 1Tariq Glass Ind. 8.12 8.90 8.29 8.30 0.18 532Grays of Cambridge 23.75 23.75 23.00 23.75 0.00 19Shifa Int.Hospitals 28.58 28.39 27.17 27.17 -1.41 1,198Media Times Ltd 10.41 11.41 10.89 11.41 1.00 6,042P.I.A.C.(A) 1.84 2.00 1.83 1.90 0.06 17,682P.T.C.L.A 10.00 10.09 9.95 10.00 0.00 236,375Telecard Limited 0.80 0.82 0.75 0.81 0.01 54,991Wateen Telecom Ltd 1.75 1.80 1.75 1.75 0.00 68,275WorldCall Telecom 0.84 0.89 0.83 0.86 0.02 370,630Sui North Gas 15.75 16.30 15.68 15.75 0.00 26,015Sui South Gas 19.45 19.64 19.00 19.46 0.01 2,026,362American Life 14.00 14.75 14.00 14.00 0.00 80East West Life Assur 1.70 1.80 1.70 1.70 0.00 50EFU Life Assur 73.82 74.97 70.13 74.33 0.51 17,220AKD Capital Ltd. 25.01 23.80 23.76 23.78 -1.23 1,096Pace (Pak) Ltd. 1.25 1.33 1.25 1.30 0.05 64,670Netsol Technologies 8.96 9.08 8.90 8.90 -0.06 65,371Pak Telephone 2.18 3.05 2.18 2.18 0.00 1

SyMBOL OPen hIGh LOw CURRenT ChAnGe vOLUMe

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

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

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

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

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

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

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

BeveragesMurree Brewery Co. 110.49 111.43 109.00 111.18 0.69 1,170Shezan Int’l 150.02 150.00 145.05 145.58 -4.44 203

Mutual Funds

Fund Offer Repurchase nAv

Alfalah GHP Cash Fund 501.2900 501.2900 501.2900 Askari Islamic Asset Allocation Fund 114.7196 111.8516 111.8516Askari Islamic Income Fund 103.6501 102.6136 102.6136 Askari Sovereign Cash Fund 100.6900 100.6900 100.6900 Atlas Income Fund 519.3500 514.2100 514.2100 Atlas Islamic Income Fund 519.0900 513.9500 513.9500Atlas Money Market Fund 516.9700 516.9700 516.9700 Atlas Stock Market Fund 453.1500 444.2600 444.2600 Crosby Dragon Fund 82.9800 81.3500 81.3500

Fund Offer Repurchase nAv

HBL Money Market Fund 100.2768 100.2768 100.2768 HBL Multi Asset Fund 87.0103 85.3042 85.3042 HBL Stock Fund 97.6745 95.2922 95.2922 IGI Income Fund 101.8987 100.8898 100.8898IGI Stock Fund 112.3545 109.6141 109.6141 JS Principal Secure Fund I 121.5000 111.5200 117.3900 JS Principal Secure Fund II 104.1200 96.5000 101.5800 KASB Cash Fund 0.0000 0.0000 100.1087

Markets

Thursday, 29 December, 2011

06

top 10 sectors

24% 01%Construction & Materials

Chemicals General Industrials

07%Electricity

02%03%

Fixed Line Telecommunication

01%Equity Investment Instruments

Financial Services

09%Banks35%Oil & Gas10%Personal Goods08%

International Oil PriceWTICrude Oil

$100.78

BrentCrude Oil

$109.27

STOCK MARKET HIGHLIGHTS

Index Change Volume Market ValueKSE-100 11352.59 +41.21 36,785,803 1,469,803,525LSE-25 2809.17 -6.28 1,054,616 16,186,684ISE-10 2544.89 -8.44 69,500 2,061,070

Major Gainers

Company Open High Low Close Change TurnoverNestle PakistanXD 2969.91 3118.40 3099.00 3118.40 148.49 360UniLever Pak Ltd. 5502.82 5700.00 5555.00 5649.62 146.80 891Siemens Pak 932.53 979.15 945.00 979.15 46.62 620Unilever Pak Foods 1670.00 1712.00 1705.00 1708.18 38.18 57Wyeth Pak Limited 760.39 798.40 749.99 786.32 25.93 515

Major Losers

Rafhan Product 2540.00 2494.97 2450.00 2464.17 -75.83 22Tri-Pack Films 167.65 166.00 162.10 164.83 -2.82 2,710P.S.O. 232.01 231.80 229.10 230.19 -1.82 74,913Faisal Spinning 45.80 44.00 44.00 44.00 -1.80 500Clariant Pakistan 151.00 151.50 149.00 149.30 -1.70 1,265

Volume Leaders

Fatima Fert.Co. 23.12 23.20 22.82 22.96 -0.16 3,304,155Arif Habib Co SD 26.97 27.00 25.95 26.70 -0.27 1,559,547Pak Reinsurance 14.50 14.73 14.38 14.56 0.06 1,029,249Engro Foods Ltd. 23.00 23.00 22.80 23.00 0.00 1,005,190Jah.Sidd. Co. 4.12 4.17 4.03 4.07 -0.05 937,415

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

Gold 24K 53,517.00 45,931.00 1,587.00Gold 22K 51,608.00 44,245.00 –Silver (Tezabi) 964.00 828.00 35.05Silver (Thobi) 1025.00 880.00 –

Interbank RatesUS Dollar 89.9797UK Pound 140.9622Japanese Yen 1.1573Euro 117.5944

Buy SellUS Dollar 89.30 90.30Euro 116.11 118.26Great Britain Pound 139.45 141.68Japanese Yen 1.1420 1.1569Canadian Dollar 87.09 89.77Hong Kong Dollar 11.37 11.65UAE Dirham 24.33 24.62Saudi Riyal 23.84 24.09Australian Dollar 90.10 93.05

29-12-2011_Layout 1 12/28/2011 11:42 PM Page 6

Thursday,29 December,2011

news

07

With 50,000 tonnes of surplusKinnow as a result of the sanctions,there is an urgent need to explore newmarkets and avoid such unwantedlosses to the national exchequer

harvest Tradings CeO, Ahmad Jawad

KArACHI

STAFF REPORT

THE value of e-Banking transac-tions aggregated to Rs12 tril-lion during the second half offY11 showing an increase of

19.0 per cent as compared to the firsthalf of the year, says State Bank of Pak-istan’s Payment Systems Half Yearly Re-view released on Wednesday.

The volume of such transactions dur-ing the period under review reached 125.9million depicting an increase of 15.5 percent as compared to the first half of fY11,the Review said, adding that the paymentsystem infrastructure in Pakistan hasmaintained an overall growth trend forthe second half of fY11. The AutomatedTeller Machines (ATMs), which are thelargest channel of e-Banking transac-tions, showed a 16.5 per cent increase innumber of transactions and 19.0 per centincrease in value, raising the share ofATM transactions in total e-Bankingtransactions to 58.8 per cent and 5.4 percent respectively, the review said. It fur-ther noted that the number of Real-Timeonline Branches (RToB) transactionsgrew by 14.7 per cent and the value oftransactions increased by 18.8 per cent ascompared to first half of fY11. ‘Thesetransactions contributed 31.6 per cent intotal volume of e-Banking and 93.2 percent in the value of such transactions re-

spectively,’ the Review observed.According to the Review, as many as

466 more Automated Teller Machineswere added in the system bringing thetotal number of ATMs in the country to5,200 while 380 more bank brancheswere converted into Real Time onlineBranches (RToBs). ‘A total of 7,416bank branches (78%) are now offeringreal time online banking out of a total of9,541 branches in the country. The num-ber of plastic cards at 14 million alsoregistered an increase of 6.2 per centduring the period under review as com-pared to the numbers during the preced-ing half year,’ the review added. It saidthat the total number of PoS terminalsat 37,232 depicted a decline of 16 percent as compared to 44,383 terminals inthe first half of fY11. ‘This decline in thenumber of PoS terminals is due to busi-ness considerations in terms ofwhich investment inATMs was considereda more viable strate-gic option. The vol-ume of PoStransactions in thecountry during thesecond half of fY11,however, reached 7.2million showing an in-crease of 2.8 per cent.The value of PoS trans-actions at Rs33.9 billionregistered a 4.4 percent decrease ascompared to thefirst half offY11, the re-v i e wadded.

The overall increasing trend inpayment system infrastructure wasalso witnessed in the large value pay-ments settled through Pakistan Real-time Interbank Settlement Mechanism(PRISM), which increased by 14.8 percent in volume and 21.9 per cent interms of value as compared to the firsthalf of fY11. The report further notedthat the major portion of PRISMtransactions, in terms of value was ofsettlements against securities whichaccounted for 46 per cent of the totaltransactions followed by Interbankfunds Transfers at 37 per cent and set-tlement of retail cheques through mul-tilateral clearing at 15 per cent. Thereview said that the volume and valueof paper-based retail payments duringthe second half of fY11 were recordedat 177.3 million and Rs84.6 trillion re-spectively indicating an increase of 3.5

per cent in the volume of transac-tions. ‘The value of transac-

tions has increased by 13.3per cent as compared to thefirst half of fY11. The contri-bution of paper-based pay-ments in total retail paymenttransactions was 58.5 per

cent in terms of volume and87.5 per cent in terms of

value,’ it added.KArACHI

STAFF REPORT

THRoUGH its Waste Heat Recovery(WHR) Project, - a power generationunit that does not require anyexternal fed fuel to operate and uses

the wasted heat from the system as its fuel,Lucky Cement has managed to substantiallyreduce carbon emissions. Due to thisinnovative and environment-friendlyapproach, the company qualified for the CleanDevelopment Mechanism (CDM) under theKyoto Protocol of United Nations and earneditself precious carbon credits. Estimatedannual carbon dioxide reduction by virtue ofWHR plant at its Pezu Plant is 29,918 metrictonnes and by WHR at Karachi Plant is 50,000metric tonnes. Clean Development Mechanism(CDM) allows emission-reduction projects indeveloping countries to earn CertifiedEmission Reduction (CER) credits. TheseCERs or carbon credits can be traded and soldand are used by developing nations to finance

their industrial projects. one allowance or CERis equivalent to one metric tonne of carbondioxide emissions. These allowances can besold privately or in the international market atthe prevailing market prices. These trade andsettle internationally and hence allow thosecredits to be transferred between countries.Each international transfer is validated byUnited Nations framework Convention onClimate Change (UNfCCC). Lucky Cement’spioneering innovation is thus preservingenvironment, curtailing its energy needs andsaving cost in a unique way. Lucky Cement isalso an ISo 14001:2004 certified company,which is a certification awarded to companiesthat meet all the international environmentalstandards and have environment friendlypractices and processes. Lucky Cement,Pakistan’s largest cement producer withproduction capacity of 7.75 million tonnes perannum is playing an active role in addressingissues of environmental degradation. Thecompany has invested in many projects thatare ecologically friendly and energy efficient.

LAHOre

STAFF REPORT

PUNJAB government has givenapproval to the sale of half-million tonnes of wheat at Rs950per maund, during January. It

was disclosed that through the sale ofwheat present in godowns, which waspurchased in 2009-10, furtherexpenditure of Rs3 billion to be incurredon its protection can be saved. This wasstated by Senior Advisor to Chief MinisterPunjab Sirdar Zulfiqar Ali Khan Khosa,while presiding over a meeting at 90-

Shahrah-e-Quaid-e-Azam. ProvincialMinister for Law Rana Sanaullah,Provincial Minister for Agriculture AhmadAli Aulakh, Chief Secretary Punjab,Chairman Planning and DevelopmentBoard and Secretaries of finance, foodand Agriculture Departments, attendedthe meeting. The meeting was told that atpresent, 4.3 million tonnes wheat isavailable with the food department ingodowns of various districts, whereas only0.7 million tonnes wheat have been soldso far. The meeting was told that thiswheat would be sold at the export rate ofRs1036 per maund.

Lucky Cement earns carbon credits

500K TOnneS wheAT TO Be SOLD AT

RS950 PeR MAUnD

E-banking transactionsmount to Rs12 trilliong Transactions depict increase of 19 per cent in second half of Fy11

KArACHI

STAFF REPORT

Agrowth of 3.54 per cent YoY in cementvolumes during 5MfY12 may not getthe investors too excited. However, 38-39 per cent YoY jump in net retention

prices in fY12 (YTD) and an approximate eight tonine per cent QoQ rise in 2QfY12 is a comfortingfactor for the sector. Interestingly, and contraryto general expectations, high cement prices havemaintained their level in the winter season aswell. Another silver lining for the sector has beenrecent correction in coal prices (down 10 per centsince September 30, 2011) which is likely to helploosen cost pressures, thus boosting margins.CEmEnt PRICES REfuSE tO gIvE An

InCH: Despite the winter chills setting in wehave not seen cement prices nudge southwards.In the past, owing to slowdown in constructionactivity in winters, stronger competition tendsto emerge within the sector which hadconsequently led to a dip in cement prices.However, during this year (2QfY12) and lastyear (2QfY11), the trend has reversed andprices have risen in order to counter the weakdemand. Considering this weak demand outlook(JS estimates five to six per cent YoY growth infY12), we believe prices are likely to stay

relatively strong to sustain profitability of thesector, said furqan Ayub at JS.SHORt tERm WEAKnESS In COAL

PRICES: Since September 30, 2011, coal priceshave plunged 10 per cent to foB $102.2 pertonne (Richards Bay Index). This is unusual,since historically coal prices have surged in thewinters due to increased demand. This timethough, the deteriorating economic conditions inEurope and US coupled with retrenchingdeveloping market growth has led to a slide incoal prices. Nonetheless, due to supply tightness,increased reliance on thermal power generationand strong industrial growth in China, thegeneral consensus amongst the internationalanalyst community is for coal to remain firm withan upward bias in the long run.However, this short term weakness in coalbodes well for the domestic cement sector. Inthe table below, we have done a sensitivityanalysis for both LUCK and DGKC’s earnings tocoal prices, he added.OutLOOK: He further said that we believehigh cement prices and contained coal pricesare triggers that have gone somewhatunnoticed amid the weak sentiment prevailingin the market. Even if coal prices take a U-turnfrom here, cement prices are firm enough tosustain healthy margins.

LAHOre

STAFF REPORT

CHAIRMAN All Pakistan Textile MillsAssociation (APTMA) has expresseddeep concerns over alarming decline intextile exports during November 2011

due to energy shortage and high interest rate. Hesaid five major sectors of textile industry,including cotton yarn, cotton cloth, knitwear, bedwear and towel have registered a steep fall inquantity terms during November 2011.Chairman APTMA said textile exports of cottonyarn have declined by 11 per cent in November2011 against corresponding period, followed by22 per cent drop in cotton cloth, 38 per cent inknitwear, 40 per cent bed wear and 20 per cent intowel in quantity terms.He said decline is worsening with every passingmonth since the start of new fiscal year, whichmeans there is less production for exports in thecountry due to obvious reasons.According to him, APTMA has been crying overthe situation since day one and latest report ofSBP annual report has corroborated theAPTMA concerns. The SBP annual report has

pointed out that the manufacturing sector hassuffered a serious setback. The industrialgrowth was negative 0.1 per cent in financialyear 2011 due to prolonged power outages andreduction in gas supplies.However, he said, the SBP report must alsomention that high interest rate has also playedhavoc with the industrial growth besides energyshortage. He said cost of credit has beenunbearable for industry and it was only thegovernment having benefited from the creditavailable in the country.Mohsin said APTMA has been pointing out timeand again that non-availability of credit wasputting textile industry growth in limbo and alldemands of bringing it to a single digit level werefalling on deaf ears. According to him, constantclosure of textile mills was enough to prove thefact that sustainability of textile industry wasdoubtful in present situation. NPLs are thereforepiling up fast, he added.Chairman APTMA has urged government to takestock of the situation and engage stakeholders tosupport the stumbling exports as Pakistan’sindustrial growth was poor when juxtaposed withother South Asian states.

Cement prices continue to soar Chairman APTMA concernedover textile export decline

29-12-2011_Layout 1 12/28/2011 11:42 PM Page 7