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A generous basic state pension is the least a civilised society should offer those who have worked hard and saved through their whole lives. — George Osborne

BUSINESS Saturday, 9 February, 2013

iMF applauds steps to bolster indo-pak trade WASHINGTON: The recent Pakistani and Indian steps to bolster bilateral trade will positively affect growth momentum, the International Monetary Fund. However, Laura Papi, Assistant Director, IMF, said the move alone would not be enough to help New Delhi get back on high economic growth track. “It would definitely have some positive effects. But not sufficient by itself to bring India back to 8 percent,” she said. The official noted that some trade between India and Pakistan is probably at the moment intermediated by other countries. “Of course to the extent that it becomes bilateral, the cost of trading will be reduced and will have a positive impact on growth, but it will not be all new trade. Overall definitely it is a positive move,” Papi said, when asked about the likely impact of increased bilateral trade on growth prospects. She was answering a question in the light of 2013 staff report on Indian economic scenario, which recommends a series of steps for India to reclaim its robust growth momentum. According to the Fund, India’s growth is projected at about 5½ percent for 2012/13, but should pick up to 6 percent in 2013/14. The outlook, she explained, is for subdued growth and a fairly modest recovery for this year still accompanied by quite high inflation and elevated current account deficit. “The reason for this subdued outlook is that investment has slowed significantly and we see some supplyside issues such as supply bottlenecks as having played an important part in lower investment growth and because of this we have also revised down our medium-term growth projections, she said of Indian immediate growth prospects. SPEcIAL cORRESPONdENT

tDap, caa ink lease agreement for gems park project KARACHI: The Trade Development Authority of Pakistan (TDAP) signed a “lease deed” of 16 acres of land for Dazzle Park project with the Civil Aviation Authority (CAA) on Friday. The project would be located in the vicinity of Jinnah International Airport. Commerce Minister Makhdoom Amin Fahim was the chief guest in a ceremony attended by TDAP CEO Abid Javed Akbar, CAA DG Air Marshal (r) Khalid Chaudhry, TDAP Secretary Abdul Kabir Kazi, FPCCI President Fazal Kadir Shiran, KCCI President Haroon Agar, Sindh Board of Investment Chairman Zubair Motiwala, All Pakistan Gems Merchant and Jewelers Association Chairman Saeed Mazhar Ali, high government officials and leading private sectors representatives. Currently, Pakistani exports of gems and jewelry are touching $ 1 billion during the year 2011-12. There are huge potential to increase the exports of Pakistan through development of clusters or parks, as is being done in the region. Dazzle Park is designed to be an exclusive safe and bounded zone for conducting multi product and multidimensional activities of trading, commercial, services and manufacturing of colored gems, diamonds, gold and fashion jewelry but also dealing with fashion industry and high value products. STAFF REPORT

DERA GHAZI KHAN: Workers sorting chilies at Ghalla Mandi. ONLINE

policy rate to stay at 9.5 %: sBp KARACHI

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STAFF REPORT

erming macroeconomic conditions in the country as weakening during the first half of FY13, the central bank on Friday decided to keep the discount rate for the next couple of months unchanged at 9.5 percent. The regulator, however, has reduced the interest rate corridor by 50 basis points (bps) from 300 bps to 250 bps. State Bank of Pakistan (SBP) governor Yaseen Anwar revealed this while unveiling the monetary Policy Statement (mPS) after chairing a meeting of the SBP’s Central Board of Directors held on Friday. The decision to reduce the interest rate corridor, he said, was taken with the objective of improving transmission mechanism by minimising short-term volatility in interest rates and to bring more transparency, he added. He said the macroeconomic conditions had weakened during the first half (H1) of FY13 despite improvement in some key indicators. The CPi inflation came down quite sharply till november 2012 but has increased since then, he said, adding that the external current account posted a surplus during H1-FY13 but the foreign exchange reserves have declined, predominantly due to imF repayments. “The non tax revenues of the government received a boost after receiving Coalition Support Fund (CSF) of 0.7 percent of gDP during H1-FY13, yet the fiscal deficit is expected to miss the budgeted target by a wide margin,” Anwar added. responding to a sharply declining inflation and, assigning a higher weight to contracting private investment, he said the SBP lowered its policy rate by a cumulative 450 basis point over the last 18 months. “SBP has also ensured that both money and foreign exchange markets remain stable. it also introduced certain measures to improve liquidity management and financial intermediation aspects of the banking sector,” he said. in the wake of rising risks to macroeconomic stability and in the absence of structural reforms that could have supported price stability and growth in the medium term, it may be difficult to continue with the same monetary policy stance, he said, adding that

the SBP has to be forward looking and take steps to meet the emerging challenges. “The two main challenges, from the point of view of SBP, are managing the balance of payment position and containing the resurgence of inflationary pressures,” Anwar said. The SBP governor said the fundamental weakness in the balance of payments is the continuous decline in the net capital and financial flows. “There has been a net outflow of $539 million in this account during H1-FY13. in addition, the SBP has retired $1.4 billion of imF loans during the first seven months of FY13. Thus, despite an external current account surplus of $250 million in H1-FY13, the foreign exchange reserves of SBP have declined to $8.7 billion as on 31st January 2013 from $10.8 billion at end-June 2012,” he added. Anwar said the surplus in the external current account during H1-FY13 was primarily due to the receipt of $1.8 billion in the CSF and added that marginal improvement in the trade balance and robust growth in workers’ remittances have also helped the external current account balance, mitigating the pressure onm the balance of payments position. “The SBP expects the external current account deficit to remain below 1 percent of gDP for FY13. This is despite little expectation of receiving proceeds of approximately $850 million from the auction of 3g licence,” he added. He observed that in view of the declining trend in financial inflows and a very low probability of receiving the budgeted privatisation inflows of $800 million in FY13, the challenges on the balance of payments position are unlikely to subside. Further payments of $1.6 billion of imF loan in the remaining five months of FY13 and $3.2 billion in FY14 do not help the situation either. While the economy has sufficient reserves to meet its debt obligations, the real challenge is to manage the market driven sentiments, he said. The governor viewed that volatility in the foreign exchange market can have implications for the inflation outlook due to potential feedback from exchange rate changes under prevailing conditions. “This is why the SBP has intervened in the foreign exchange market in a calibrated manner to ensure its smooth functioning. it is important to remember that only a consistent increase in foreign exchange can ensure stability in the market,” he added. Anwar said the CPi inflation has already

risen in the past two months; from 6.9 percent in november 2012 to 8.1 percent in January 2013. The core inflation measures are also inching towards double digit figures again after coming down to single digit. The average inflation for FY13 is projected to remain between 8 and 9 percent; well within the target of 9.5 percent. it is the medium term inflation outlook that needs to be assessed carefully. “The SBP expects m2 growth for FY13 to be close to 16 percent. Similarly, due to a weakening external position and rising debt levels in the economy, anchoring expectations of inflation at low levels would be a challenging task,” he added. He said that the year-on-year growth in m2 was 17.3 percent while that in fiscal borrowings from the scheduled banks was 41.3 percent on 25th January 2013. He said that over the last four years fiscal borrowings from scheduled banks for budgetary support have grown by an average of around 60 percent. The average growth in credit to private businesses, on the other hand, has only been 4 percent during the same period. “The end result is that the domestic debt has risen by 25.6 percent on average while private fixed investment has contracted by 9.4 percent in the economy,” he said. The SBP governor said, “Although the deposits of the banking system show a growth of 17.4 percent, however, given the substantial fiscal requirements, the SBP had to continuously rollover significant amounts of liquidity injections. The average amount of these injections, during 1st July to 7th February FY13 was rs 498 billion and has been the driving force behind a year-onyear growth in reserve money of 15.3 percent. Since inflation had been coming down during H1-FY13, these high-level of injections did not pose an immediate risk. A rising inflationary trend, however, would require containment in budgetary financing and a gradual scale back in the size of these injections”. Anwar said while the fiscal authority retired rs 399 billion in the first quarter of FY13, it borrowed rs 183 billion in the second quarter of FY13 from SBP. “The inability to keep these borrowings at zero within a quarter is a contravention of the SBP Act and an important factor behind an imperfect control over inflation expectations by the SBP,” he observed. Anwar said the growth in credit to pri-

vate businesses has been higher during H1FY13 compared to the corresponding period last year. Private businesses availed rs 154 billion during H1-FY13 as opposed to only rs 85 billion during H1-FY12, he said, adding that this could be because of declining interest rates and moderation in accumulation of non Performing Loans (nPLs). “Since the beginning of FY13, the average lending rate has decreased by 204 basis points to 11.3 percent in December 2012. Similarly, the nPLs to advances ratio has declined to 15.5 percent in September 2012 from 16.7 percent in September 2011,” he said. He said the gDP growth in Pakistan is expected to remain just below 4 percent in FY13. “The fundamental reasons for this likely outcome are the prolonged and severe crisis in the energy sector and worsening law and order conditions in the country,” he added. Anwar noted the main reason for large borrowing requirements from the banking system is the structurally high fiscal deficit and low level of external financing. The estimates from the financing side of fiscal accounts indicate a deficit of 2.7 percent of gDP during H1-FY13. “given a low growth of 8.8 percent in the tax collection of the FBr during the first five months of the current fiscal year, which is substantially below target, and the continuation of subsidies related to the energy sector, the budgeted fiscal deficit target of 4.7 percent of gDP for FY13 is projected to be missed by a wide margin,” he added.


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It is fine to celebrate success but it is more important to heed the lessons of failure. -Bill Gates

pM For Fast exploration oF oil & gas sector APP

rime minister raja Pervez Ashraf on Friday said challenges should be turned into opportunities in order to accelerate exploration efforts for oil and gas in the country. The Pm expressed these views while presiding over a meeting on petroleum issues at the Pm House on Friday. Ashraf was briefed about the exploration projects of Oil and gas Development Corporation Limited (OgDCL) in the oil and gas sector and the incentives provided to attract investments. He directed to make the oil and gas production efficient to meet the growing energy requirements of the economy. He said through joint partnerships, every effort should be put in for the enhanced exploration and drilling of oil and gas so that more energy could become part of the system. The Pm emphasised that locals should also be employed from the areas of exploration activity and the provision of education, health, sports and sanitation facilities should be ensured in the respective areas under the concept of Corporate Social responsibility (CSr) so that the localities get a boost in terms of development and amenities. Ashraf was apprised that in compliance with his directions, fuel supplies to power sector had been enhanced to more than 15,000 mT.

pakistani defence companies to participate in iDex ISLAMABAD: Pakistan’s 10 high profile defence production companies along with 14 auxiliary enterprises will participate in the largest defence exhibition IDEX 2013 in Abu Dhabi being held from February 17 to 21. IDEX is a strategically important triservice defence exhibition and is the only international defence exhibition and conference in the MENA region demonstrating the latest technology across land, sea and air sectors of defence. Ambassador of Pakistan to UAE Jamil Ahmad Khan while briefing media on Pakistan’s participation in IDEX 2013 said that for the first time in the history of IDEX, Pakistan had added a new dimension by displaying indigenously modified and upgraded submarine called “Khalid”. Besides the submarine, a MultiPurpose Auxiliary Craft (MPAC),”Jurrat” created in Pakistan with full integration of weaponry and Destroyer “ShahJahan” modified as per our own requirement and integration of warfare will be on display. APP

BUSINESS B Saturday, 9 February, 2013

Major Gainers OPEN COMPANY Nestle Pakistan Ltd. 4905.00 542.00 Indus Dyeing Sapphire Textile 213.75 Philip Morris Pak. 181.69 140.00 Ismail Industr

TURNOVER 120 300 2,900 11,800 500

HIGH 5150.00 564.90 224.43 190.77 147.00

LOW 4950.00 550.00 215.00 189.75 147.00

CLOSE CHANGE 5000.00 95.00 558.30 16.30 224.40 10.65 190.77 9.08 147.00 7.00

10570.00 341.95 178.46 78.35 633.00

10405.00 331.00 161.50 78.35 625.00

10505.00 331.55 162.53 78.35 627.90

-38.75 -10.46 -7.44 -3.00 -2.31

1,300 1,200 2,800 500 19,200

19.70 18.04 3.70 5.05 8.57

18.82 17.15 3.47 4.63 7.85

19.69 18.04 3.62 4.97 8.42

0.99 1.00 0.07 0.28 0.60

24,577,000 20,238,000 19,844,000 19,497,500 16,933,500

Major Losers UniLever Pak Exide (PAK) Pak Services Tandlianwala Sugar Millat Tractors Ltd.

ISLAMABAD

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10543.75 342.01 169.97 81.35 630.21

Volume Leaders Askari Bank Jah.Sidd. Co. WorldCall Telecom Telecard Limited TRG Pakistan Ltd.

18.70 17.04 3.55 4.69 7.82

Interbank Rates PKR 97.9478 PKR 153.4940 PKR 1.0432 PKR 132.8368

USD GBP JPY EURO

Forex BUY

The Pm directed the ministry of Petroleum to build up stocks of fuel by storing additional supplies in order to ensure smooth supply of electricity during the ensuing months. He directed that regular supply of oil to power sector be ensured and arbitrary variations in the

oil supply be avoided. The meeting was attended by minister for Finance Dr Abdul Hafeez Sheikh, minister for Water and Power Ahmed mukhtar, Advisor to Pm on Petroleum Dr. Asim Hussein and other senior officials of the concerned ministries.

Speakers at symposium stress need for a corporate tribunal KARACHI NNI

The Sindh Judicial Academy and the Securities and exchange Commission of Pakistan (SeCP) on Friday jointly organised a symposium on the ‘role and Jurisdiction of Courts under Laws governing Corporate Sector, Capital market and nonbanking Financial Companies’. The event held on Friday was chaired by Chief Justice of Sindh High Court mushir Alam. The symposium was aimed at providing basis for better institutional interaction and provides much needed feedback, especially from judicial circles on legal matters pertaining to corporate sector. SeCP Chairman muhammad Ali appreciated the Sindh Judicial Academy for giving SeCP an opportunity to share its role and responsibilities with the judiciary and ensured to work together for better protection of the rights of the investing public. He also thanked the Chief Justice Sindh High Court (SHC) for gracing the occasion and for giving his time to the event. He apprised the audience of the role, achievements and challenges of the SeCP, and said the

SeCP was mindful of the Herculean task of revamping the financial sector that lay ahead given the peculiar socio-political and security challenges which exist in the country. He said the SeCP has adopted a cohesive approach to build a legal framework that provides congenial business atmosphere for growth of corporate sector. Ali said, “The SeCP is not only entrusted with the responsibility of being the corporate regulator but it also functions as a facilitator of corporate growth in Pakistan. it also takes measures to ensure transparency in the financial system”. The SeCP chairman informed the audience that being the apex regulator of the corporate sector, the SeCP also heads a special committee that is meant for cooperating and sharing of information among the regulatory bodies and investigation agencies. A high-level committee has been formed to combat financial crimes. it comprises of representatives of the State Bank of Pakistan (SBP), Financial monitoring Unit (FmU), national Accountability Bureau (nAB), Federal investigation Agency (FiA) and senior officers of federal and provincial police departments, he added.

US Dollar Euro Great Britain Pound Japanese Yen Canadian Dollar Hong Kong Dollar UAE Dirham Saudi Riyal

99.10 131.69 155.21 1.0554 97.77 12.56 26.85 26.35

SELL 99.80 133.17 156.91 1.0663 99.49 12.77 27.10 26.54

CORPORATE CORNER

KARACHI: Allied Bank Commercial and Retail Banking chief Khawaja Muhammad Almas shakes hands with PakGulf President Sardar Tanvir Ilyas Khan after signing an agreement to open ABL branch in Centaurus Mall. PR

Bata pakistan gets new MD

132 oil, gas exploration licenses operated by various companies, Senate told ISLAMABAD ONLINE

The Senate was informed on Friday that daily production of raw gas in the country at present is 4,273 million cubic feet per day against the demand (mmCFD) of 5,416 mmCFD. The Senate resumed its session with Chairman Syed nayyar Hussain Bukhari in the chair Advisor for Petroleum and natural resources Dr Asim Hussain told the House during the question hour that currently one hundred and thirty two exploration licenses for exploration of oil and gas reservoirs are being operated by various exploration and production companies. He said sixty blocks for exploration of oil and gas reservoirs have been advertised for award of exploration licenses on competitive terms. For fiscal year 2012-13 forty four exploration wells have been planned for exploration of oil and gas reserves.

Asim Hussain said Council of Common interest (CCi) has approved ‘Tight gas exploration Policy‚ 2011’ which offers forty to fifty percent premium over the respective zonal price of Petroleum Policy 2009. He said economic Coordination Committee (eCC) has approved Low BTU gas Pricing Pol-

icy 2012 wherein additional incentives to the investors have been given to develop Low BTU fields as soon as possible. He further said in offshore, fourteen exploration licenses have been awarded for exploration of oil and gas reservoirs. He said the government is taking a number of steps to overcome the shortage of gas in the country including enhancement of indigenous gas production‚ import of Lng and promotion of LPg air mix. To a question‚ he said it is the Pm’s prerogative to announce the supply of gas to any area. Jahangir Badar presented before the House the Annual report for the year 2011-12 of the Central Board of Directors of State Bank of Pakistan on the state of Pakistan’s economy. Law minister Farooq H naek introduced before the House “The Constitution of islamic republic of Pakistan 24th (Amendment) Bill‚ 2013”. The chair referred the bill to the Standing Committee concerned.

LAHORE: Bata Pakistan Limited, the leader in Pakistan’s footwear industry, announced a change of its executive management team in its recently held Board of Directors’ meeting. Mr. Muhammad Imran Malik, the long-term MD Bata Pakistan, has been transferred as MD Bata Indonesia and Mr. Muhammad Qayyum succeeds as new MD Bata Pakistan. Qayyum has held several senior executive level positions in the whole Bata Shoe Organization including Bata Pakistan, Bata South Africa and Bata Bangladesh. The most recent position he served was MD Bata Bangladesh. Malik demonstrated exceptional leadership during his tenure at Bata Pakistan, taking the company through a period of unprecedented change and growth. We hope that Qayyum, with his leadership experience and business acumen, will continue the legacy of Malik in taking Bata Pakistan to achieve its future milestones. PR


profitepaper pakistantoday 10th February, 2013