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ILLIONAIRe Mian Muhammad Mansha said the government elected next month will have to apply austerity measures to secure an international bailout and sell state-run companies to rescue the economy from ruin. Mansha, 66, whose Nishat Group spans finance, textiles and cement-making, said in an interview to Bloomberg that rival politicians will need to unite following May 11 voting to address the country’s economic crisis. “After the elections, it will be very, very tough for people,” Mansha, who oversees MCB Bank Ltd. (MCB), the nation’s largest lender by market value, and is one of the country’s richest men, said. “You will have to go through a severe International Monetary Fund program with severe restructuring.” The government that emerges once ballots are counted will face a set of daunting challenges as power blackouts lasting 18 hours a day curb growth and the budget deficit touches a two- decade high. Security is also worsening with a Taliban insurgency raging on the Afghan border and extremist groups targeting religious minorities. “An IMF bailout will involve power sector reform and taxation reform which would mean higher electricity tariffs and measures to increase the tax base,” said Naveed Vakil, director of research at AKD
Petroleum production increases 11.48% in 8 months ISLAMABAD: Production of petroleum products increased 11.48 percent during the first eight months of the current fiscal year as compared to the same period of last year. On year-on-year basis, the production witnessed increase of 11.53 percent in February 2013 as compared to February 2012, according to the latest data of Pakistan Bureau of Statistics(PBS). The products that contributed in the positive growth of petroleum production during the eight months included Liquefied Petroleum Gas (LPG), production of which increased by 24.43 percent. The other petroleum products that witnessed increase in production included kerosene oil, output of which increased by 8.8 percent and motor spirits, production of which increased by 19.42 percent. Similarly, the production of high speed diesel increased by 12.91 percent and furnace oil by 19 percent. The petroleum products that witnessed negative growth in production included jet fuel oil and diesel oil, production of which decreased by 2.67 percent and 6.81 percent, respectively. Meanwhile, on year-on-year basis, the production of overall petroleum products increased by 11.53 percent in February 2013 as compared to the corresponding month of 2012. The products that witnessed increase in production during the month under review included jet fuel oil, output of which increased by 6.15 percent and kerosene oil, production of which grew by 18.88 percent. Production of motor spirit increased by 23.49 percent, high speed diesel 14.89 percent, diesel oil 3.91 percent and furnace oil by 19.01 percent. The products that witnessed negative growth in production included lubricating oil, output of which decreased by 10.91 percent and jute batching oil which witnessed 10.49 percent decrease in production while the output of solvant Naptha decreased by 13.43 percent and LPG by 2.67 percent. APP
Don't let your ego get too close to your position, so that if your position gets shot down, your ego doesn't go with it. — Colin Powell
Pakistan needs Thatcher Plan after elections: Mansha Securities Ltd. in Karachi. State-owned companies -- especially power generation and transmission firms -- are “bleeding” cash and will need private managers to turn them around, Mansha said. The government took over Rs 391 billion ($3.97 billion) of debt from the books of public sector enterprises in the year ended June 30, according to the State Bank of Pakistan.
ThaTcher SoluTion “They have got so bad now that we need a Maggie Thatcher type of solution,” Mansha said, referring to the 1980s push to sell-off loss-making government companies led by the late British prime minister. “We need to privatise some of these companies.” Pakistan International Airlines Corp. (PIAA), said April 26, its net loss widened to 32.4 billion rupees in the year ended Dec. 31. Pakistan Railways recorded an operating loss of Rs 30.4 billion in the year ended June 30. Caretaker Prime Minister Mir Hazar Khan Khoso formed a committee on April 12 to prepare a plan for the revival of Pakistan Steel Mills Ltd., which has received four bailout packages by the government, state-run Associated Press of Pakistan reported.
BaTTling for VoTeS Creating a viable coalition with a strong majority in parliament will be important to
put an economic reform plan in place, ManMian MuhaMMad Mansha sha said. A March survey by opinion pollster Gallup pointed to defeat for President Asif Ali Zardari’s Pakistan People’s Party whose coalition last month became the first civilian administration to complete a full five-year term. The parties of Zardari’s chief rival, former Premier Nawaz Sharif, Creatinga and ex-cricket superstar Imran Khan are viablecoalition battling for votes withastrong bank. Asked about likely nationwide. domestic appetite for inMansha, majorityin vesting in companies put dressed in a parliamentwillbe up for sale, Mansha dislounge suit and missed any concerns. “If tie, said that importanttoputan you privatise something in whichever party economicreform Waziristan, I will get you an is sworn in will investor,” he said, making his have to move fast. planinplace. point by picking out a remote “A lot of subsidies mountainous region of the country must be eliminated,” he where Taliban guerrillas battle Pakistani said. The country couldn’t afford to continue selling fuels and electricity troops. Foreign direct investment in Pakistan rose 4 percent to $622 million in the nine at prices way below market rates. “We need to go out and fix it now. We months ended March 30, according to the cencan’t wait anymore. That message is clear tral bank. At the heart of Pakistan’s economic woes lies the power crisis, which has shuttered to the people of Pakistan now.” factories, sparked street protests and forces companies to invest in private generation. DomeSTic SuBSiDieS The government spent Rs 556.2 billion on subsidies in the year ended June 12, more than treble the budgeted allocation of 166.4 billion rupees, according to the central
circular DeBT Utilities, besieged by unpaid bills and price controls, have delayed payments to fuel
sBP governor orders Rs 40m bullet proof car MONITORING DESK State Bank of Pakistan (SBP) Governor Anwar Yasin has ordered a Rs.40 million imported bullet proof vehicle for himself, even as the SBP warns citizens against plummeting foreign exchange reserves and burgeoning fiscal deficit. According to local media reports, the order for a SUV model of Lexus was placed citing security concerns and is expected to reach Pakistan in a month or so. The governor was part of a delegation that recently went to Washington to negotiate $7.5 billion bailout package with the IMF as well as with the US treasury secretary for reconciliation of Coalition Support Fund accounts for fresh inflows. Anwar is a Pakistani-American and the fourth Governor appointed in the five-year tenure of PPP government. A spokesman of SBP confirmed the purchase of a bulletproof vehicle saying that proper approval from “competent authorities” has been obtained and there is no irregularity involved. But the identity of the com-
petent authority was not revealed. According to sources, SBP Governor Anwar Yasin initially took up the matter with Salim Mandviwala, the then finance minister, requesting the release of funds for the purchase of bullet proof vehicles who asked him to put up a written application for formal approval. The Governor also demanded approval of his unauthorized travels abroad which were carried out without obtaining a No Objection Certification (NoC) from the government. According to Mandviwala, SBP is an anonymous body and can secure approval for such purchases from its own Board of Directors. “However, such proposals are generally routed through finance ministry to avoid public criticism,” Mandviwala said. He also confirmed that SBP Governor has frequently travelled abroad without securing NoC from the federal government that is otherwise mandatory. The SBP spokesman on the other hand claimed that there was no irregularity involved on both counts. The SBP spokesman further claimed that he was not aware of the exact price but insisted that all formalities must have been fulfilled and market value checked before placing the order. It is pertinent to note here that market estimates of an armed bullet proof Pajero stand around Rs30 million.
suppliers, which in turn owe oil refiners. The dues are known as circular debt-amounting to 450 billion rupees according to Global Securities Ltd. in Karachi-- and have crippled power supplies. Mansha is expanding Nishat Group interests, with construction started on what he says will be the country’s biggest shopping mall a short distance from his home in the Lahore suburb of Gulberg. As Pakistan battles its worst economic crisis in a decade amid extremist-inspired violence, he said designers interested in collaborating in his textiles business have stayed away. Still, he plans to increase his network of textile stores to 200 from 60 given Pakistan’s “consumer class which is much bigger than most people imagined.” Mansha praised Sharif’s Pakistan Muslim League-Nawaz for its governance of Punjab over the last five years. “There has been a huge investment in infrastructure,” the industrialist said. “Lahore looks like a different city.” New flyovers and construction projects dot Pakistan’s cultural capital, a half-hour car journey from the country’s border with nuclear-armed rival India. A dedicated bus lane was built in just 11 months. With a young population, a rich seam of entrepreneurs and the prospect of greater trade ties with India, Mansha said he remained confident of Pakistan’s future. “This country’s problems are very fixable providing we have the politicians with the will to do it,” he said.
Standard Chartered Bank profit dips 10pc in 1Q2012 KARACHI STAFF REPORT
Despite challenging economic and external environment, the Standard Chartered Bank (Pakistan) announced for the first quarter of 2013 a profit after tax of Rs 1.39 billion. This figure shows a decline of 10.3 percent or Rs 16 million in the bank’s quarterly profit when compared with its Rs 1.55 billion earnings in corresponding period of 2012. The analysts attribute this downward trend in the banks’ profits masterly to a continued monetary easing by the central bank which has slashed the discount rate to a single digit, 9.5 percent, in recent months. Resultantly, the bank’s earnings per share in the current quarter also contracted and stood at Rs 0.36 against last year’s Rs 0.40. The bank’s strategy of focused growth, improved cost discipline and prudent credit expansion resulted in a fractional increase in administrative expenses despite inflation, currency depreciation and investment in the franchise. “Net impairments this quarter reduced by 38% in comparison with first quarter last year,” said a statement issued by the bank Tuesday.
Profits of ‘Big 5’ eroded by 16pc in 1Q2013 KARACHI STAFF REPORT
As odds turn unfavorable for the country’s banking sector, top five local banks have reported an erosion of 15.6 percent yearon-year (YoY) and 1.5 percent Quarter-onQuarter (QoQ) earnings in 1Q2013. Continuous monetary easing and requirement of minimum six percent return on saving deposits has affected banking spreads and thus their profits in last quarter. “Our sample includes large commercial banks operating in Pakistan having an extensive branch network,” said the analysts at Topline Research. These banks include ABL, HBL, MCB Bank, NBP and UBL that cover 72 percent of the country’s banking market capitalisation and 57 percent of industry deposit base. In 1Q2013, these big banks reported
after tax profit of Rs20.2 billion versus Rs 23.9 billion in 1Q2012 and Rs 20.5 billion in 4Q2012. “Going forward, we expect pressures to persist on banking profitability on implementation of 6 percent profit on saving deposit on average balances from 2Q2013,” said the analysts. They though attributed low probability of substantial rate reversal this year but any hike in interest rate, amid an IMF programme, carried potential to revive banking spread and profitability. The effects of declining yields on government papers and rising deposits cost had resulted in decline in banking spreads. Lowest since June 2005, the banking spreads averaged 6.21 percent in 1Q2013 versus 7.32 percent in 1Q2012 and 6.66 percent in 4Q2012. Resultantly, the net interest income (NII) of top five banks declined by 8.4 percent YoY and 8.7 percent
cline in non-markup income was QoQ to reach Rs 45.1 billion the other major culprit bein 1Q2013. “Compared to hind reduced profitability the same quarter last Continuous besides lower NII. year, rising provimonetaryeasing However, the impact sions and higher was partially diluted non-markup exandrequirementof by 64 percent lower pense also dampminimumsixpercent provisions and 12.4 ened the percent reduction in profitability,” returnonsaving non-markup exsaid the Topline depositshasaﬀected penses. Though cuanalysts. mulative profits of In 1Q2013, bankingspreadsand these banks fell marthe provisioning thustheirprofits ginally from Dec quarrose by 60 percent to ter, interestingly, the Rs 2.1 billion, whereas inlastquarter MCB and the ABL reported non-markup expenses are increase of 35 percent and 25 up 8 percent to Rs 30.3 bilpercent, respectively, in their bottom lion. However, some support came from five percent increase in non-markup line. “We attribute provisions reversals and controlled non-markup expense to the income to Rs17.2 billion in 1Q2013. On a sequential basis, 16.4 percent de- growth,” the analysts said.
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A budget tells us what we can’t afford, but it doesn't keep us from buying it. — William Feather
(FPCCi’s PRoPosals FoR Budget FY2013-14
Tax reforms necessary for economic revival KARACHI STAFF REPORT
The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) in its proposals for federal budget 2013-14, has prepared a number of tax reforms that the federation believes would broaden the exiting tax net. FPCCI President Zubair Ahmed Malik, while finalising budget proposals, said to pursue more people into the tax net, all taxpayers should be issued a card on the pattern of credit card with the title FBR National Identity Card under which all taxpayers should be given one percent concession on all transactions, government payments, utility bills and government challans while non-taxpayers should be charged one percent additional on all such transactions. Malik said FPCCI would soon submit its budget proposal to the government and FBR. He said the budget proposals submitted by the FPCCI would pave the way for economic and industrial revival in the country and bring more taxpayers into the tax net. Malik said if the proposals prepared by the apex body of the country’s businessmen were not incorporated into the federal budget, the FPCCI would reject the Federal Budget 2013-14. He said FPCCI had declared tea, coffee, tyres, PVC, POL products, electric appliances and machinery, polythene, steel products, cigarettes, sulphuric acid, ceramic tiles, surgical instruments and medical equipment, mobile phones and spices as smuggling prone and should be protected from smuggling. The FPCCI chief said the government should take serious measures to overcome the energy crisis and control deteriorating law and order. The apex body further suggested declaring issuance of cash memo or invoice on all business transactions as mandatory and seller and buyer have to mention NTN on the invoice. This would help a lot to bring more taxpayers into the net.
Pakistan defaults on Rs 6b rebate to banks’ overseas partners
business B Wednesday,1May,2013
MajorGainers CoMPanY Bata (Pak) XD Colgate Palmolive Wyeth Pak Ltd Nestle Pak. XD Rafhan Maize
oPen 2162.18 1852.50 1558.15 6530.00 4375.00
high 2270.28 1945.12 1636.05 6580.00 4590.00
low 2162.18 1945.10 1562.00 6580.00 4200.00
Close Change 2270.28 108.10 1945.12 92.62 1634.46 76.31 6580.00 50.00 4452.54 77.54
tuRnoveR 1,050 350 1,700 20 380
898.27 406.01 333.45 145.00 309.00
813.00 406.01 301.71 137.18 299.00
825.67 406.01 301.71 137.21 301.87
-29.83 -16.09 -15.87 -7.19 -6.63
500 100 3,000 4,500 12,600
8.93 18.45 12.00 19.08 5.44
8.52 17.41 10.82 18.25 5.15
8.86 17.92 10.82 18.54 5.28
0.19 -0.38 -1.00 0.20 0.12
41,006,000 14,872,000 13,525,000 11,535,500 9,261,000
MajorLosers Island Textile Sanofi-Aventis XD Gillette Pak Premium Tex. Indus Motor Co
855.50 422.10 317.58 144.40 308.50
VolumeLeaders Fauji Cement 8.67 P.T.C.L.A 18.30 TRG Pakistan Ltd. 11.82 Maple Leaf Cement 18.34 Wateen Telecom Ltd 5.16
KARACHI ORKeR remittances, the sole strength of the dollar-hungry Pakistan’s Balance of Payment (BoP), is also facing a risk of decline in the days ahead as the government has defaulted on six billion rupees rebate which was to be paid to the country’s banks’ overseas partners. The Pakistanis working overseas, who last year supported the cash-strapped country’s current account by remitting a record Rs 13.186 billion and have remitted $10.354 billion during July-March FY13, are paying extra money in their respective countries to money transfer firms who are applying inflated exchange rates to compensate their losses on account of the rebate Pakistan owes to them. This is again pushing Pakistani expatriates, mostly concentrated in the Middle east doing blue-collar jobs, towards illegal channels of money transfer like hundi and hawala, warned officials from the National Bank of Pakistan (NBP), the country’s largest remittance contributing bank with 0.161 million annual international remittance transactions. The warning came from NBP Global Home Remittance Management Group Head Khalid Bin Shaheen, while briefing media on the bank’s new products to increase the volume of remittances and agriculture financing. Having built over 30 international tieups for NBP during the last three years, Shaheen said the Ministry of Finance was yet to
interbankRates KARACHI: Khalid Bin Shaheen, SEVP/group chief Global Home Remittance management group, addresses a media briefing organised by National Bank of Pakistan at a local hotel. Shaheryar Qaisrani and Syed Ibne Hassan are also present on the occasion. STAFF PHOTO
clear last year’s rebate to local banks’ global money transfer partners. “As a result, they are charging extra money from Pakistani remitters on account of exchange rate,” said Shaheen, warning that if the government did not release the outstanding rebate, Pakistani workers would again be using illegal channels. Shahbaz Ahmed Khan, head of FI global Home Remittances, said the outstanding dues range from Rs 5 to Rs 6 billion. “This is not a huge sum compared to the $13 billion remittances we are receiving annually,” Khan said. Shaheen said the issue was posing a serious threat to the growth of remittance flowing into the funds-starved Pakistan. Moreover, the NBP official said recently promulgated stricter sponsor-related laws in Saudi Arabia, the largest source of remittances for Pakistan, happened to be another setback to the flow of remittances to Pakistan.
USD GBP JPY EURO
PKR 98.4468 PKR 152.6418 PKR 1.0103 PKR 128.7094
Forex UK Pound Sterling Euro Australian Dollar US Dollar Canadian Dollar Japanese Yen UAE Dirham Saudi Riyal China Yuan
153.5 128.75 102.65 99.75 97.5 1.0078 27.15 26.25 15.85
155 130 103.15 99.95 98.5 1.0164 27.4 26.65 16.05
PIA to acquire 12 medium range aircrafts: chairman ISLAMABAD: The national airline will soon acquire twelve medium range aircraft in the PIA fleet. This was stated by PIA Chairman Lt Gen (r) Asif Yasin Mailk at PIA’s two- day Global Marketing Conference which concluded on Tuesday. The PIA chairman said that all employees have to work collectively for the betterment of the airline. He said that PIA has to increase its network to achieve better sales and advised the marketing department to prepare feasibilities on commercial basis for additional destinations while emphasising on increasing frequencies of its existing profitable routes. He said that PIA should look into possibilities of starting flights to the African continent. NNI
CORPORATE CORNER Mahvash and Jahangir Siddiqui Foundation donate ambulance to Al-Azeem Public School
KARACHI: In recognition of the extraordinary achievements and contributions in the field of education, JS Bank and Mahvash & Jahangir Siddiqui Foundation graciously donated a state-ofthe-art ambulance to Al-Azeem public school system along with undertaking other initiatives to support the local community. JS Bank in collaboration with Mahvash & Jahangir Siddiqui Foundation has further pledged to continue its support to Al-Azeem public school system in the field of education and social work in tehsil Kahuta. The ceremony was attended by various dignitaries to support the philanthropic work being done by both the organizations. The Mahvash and Jahangir Siddiqui foundation is a not-for-profit organization that provides grants to healthcare, education and social enterprises with a special focus on women, children and disabled individuals. The Mahvash and Jahangir Siddiqui Foundation and JS Bank have been strong advocates of various philanthropic activities in the past as well, including extensive relief efforts in the 2005 earthquake, 2008 IDP crisis and the recent floods that impacted Pakistan. PRESS RELEASE
PTCL offers double speeds on broadband student package ISLAMABAD: Pakistan Telecommunication Company Limited (PTCL), country’s largest integrated telecommunications company has brought an exciting new offer for its 1 Mbps student package customers. Now students can experience higher speeds of 2Mbps without any additional charges. This new offer will be valid till 30 June 2013, while standard 2 Mbps tariff of Rs. 1,299 per month will be applicable from 1st July 2013. Subscribers, who wish to opt out of this offer can call 1236 or email email@example.com. Aasif Inam, Executive Vice President (EVP) Wire-Line Services commented at the new offer, “Being industry leader, we are firmly committed to deliver excellence
through our innovative products and customized packages. This free upgrade offer will enable our Student Package customers to not only experience faster broadband speeds, but also serves to fulfill their high data appetite without any additional charges”. Through constant innovation, wide range of products and the most economical packages, PTCL Broadband has revolutionized the internet services in the country, servicing over 1.5 million satisfied customers. PRESS RELEASE
HBL launches branchless banking LAHORE: Habib Bank Limited (HBL), Pakistan’s largest bank, launched its branchless banking service ‘HBL Express’. Kazi Abdul Muktadir, Acting Governor State Bank of Pakistan and Nauman Dar, President and CEO, HBL were present at the launch.
Speaking on the occasion, Nauman Dar said, “HBL Express is another step by HBL towards achieving its vision of supporting financial inclusion in the country. It will provide convenient and reliable banking services to the people of Pakistan.” HBL Express will be launched with Domestic Remittances and Utility Bill Payments. The product portfolio will be expanded to include International Remittances, Mobile Wallets, G2P Payments and Corporate Solutions in the near future. To allow its agents to conduct transactions, HBL Express has pioneered in providing its agents with Smartphones equipped with a custom developed mobile application. Addressing the gathering, Kazi Abdul Muktadir expressed, “Pakistan's branchless banking model supported by banks is considered amongst the best in the world. In a country where over 90% of the population is unbanked, HBL Express supported by the bank’s distribution network will help recruit new users to mainstream banking.” PRESS RELEASE
KARACHI: The 8th Consumers Choice Awards 2012 distribution ceremony was held at Pearl Continental Hotel. Provincial Minister for Industries & Commerce Khalid Tawab was the chief guest. The event was presided over by SM Muneer whereas Mian Zahid Hussain, adviser to Sindh CM, Senator Abdul Haseeb Khan, Khawaja Muhammad Yousuf, CEO National Productivity Organisation, and Nazeer Hussain were guests of honour. PR