1,658 1,259 5.51
433 357 17.50
NIT SEF ** Capital Gains Dividend Income Earnings Per Unit (Rs.) NIT EMOF ** Capital Gains Dividend Income Earnings Per Unit (Rs.) NIT GBF Net Income Earnings Per Unit (Rs.) NIT IF Net Income Earnings Per Unit (Rs.)
92 15 41
32 (6) (55)
70 25 (12)
^ ^ ^
All redemptions from July 01, 2011 to June 30, 2012 were paid from fund’s own resources without any borrowing from the banks.
1,439 2,421 4.13
NI(U)T Capital Gains Dividend Income Earnings Per Unit (Rs.)
FY12 Rs. in Mn
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Volume - 2 Issue - XVI August - 2012 Price: PKR -150
65. ‘Direct action day’ and the birth of Pakistan
24-25. The ‘Longest War’: overcoming lies and indifference
29. Global drought and its impact on food prices
17-21 The resolve that has been dissolved Fair basis for quoting yardstick interest rates Sovereign risk rating: the slide gains speed London Olympics: the challenges they pose Of the coalition’s full term in office
31-33. Gas Outages in Pakistan
23-27 Techno-war: the deadly invention The ‘Longest War’: overcoming lies and indifference Contempt of Court Bill-2012: an attempt to silence the judiciary?
51-52. Granting residential security for the marginalized: issues and constraints
29-33 Global drought and its impact on food prices The economy: where is it headed? Gas Outages in Pakistan
TRADE & INDUSTRY 47-49. Productivity potential of main crops in Pakistan
CONTRIBUTORS Ms Kathy Kelly Mr Tariq Iqbal Khan Mr Iftikhar Mobeen Mr Farhan Anwar Mr Ferozeali Hussaini Mr Mubarik Ahmed Ms Raeda Latif Mr Ayub H. Ansari Dr Aameer Mian
35-37 Auto spare-parts industry: is it being sidelined? 38-42 A shameless refusal to learn lessons Systemic risk: why it must be contained? Bank security: prudence of out-sourcing it Biotechnology and its impact
47-49 Productivity potential of main crops in Pakistan
HEALTH & ENVIRONMENT
51-52 Granting residential security for the marginalized: issues and constraints
SOCIAL ISSUES Crime Against Humanity
EDUCATION & TRAINING
Innovation- the key to success
41-42. Bank security: prudence of out-sourcing it
11-14 15-16 46 55 56 59-61 62-63 64 65 66-68 69 70 73-74
Global & National Briefs Voice of Industry - In brief Regulatory Compliance Monthly Stock Market Review Monthly Commodity Review Events Science & Technology Discovery History Sports Art & Literature Quotes Your Horoscope - July 2012
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Editor’s note 66th Independence Day of Pakistan On 14th August this year we shall be celebrating the 66th year of Pakistan’s emergence on the world map as a sovereign, independent nation on 14th August 1947. Value Chain wishes its readers a Very Happy Independence Day. The struggle for Pakistan and its ultimate achievement is the very story of great human ideals. In the beginning of the independence movement, the Muslims, Hindus and other religious groups had gelled together and acted jointly to turn back the yoke of the British rule. It was, however, later realized that the Muslims and the Hindus were two different and distinct identities based on nationality, religion, way of life, customs, traditions, culture and historical conditions. Therefore, in the early 20th century, the Muslims began to pursue a separate homeland for themselves. The cherished dream came true as the culmination of decades long struggle and sacrifices of our freedom fighters under the dynamic leadership of the Father of the Nation, Quaid-e-Azam Muhammad Ali Jinnah. The Muslims had to pay a heavy price for the freedom achieved; they had to leave their homes and hearths and suffer persecution of an unimaginable magnitude. So, while celebrating the independence day our thoughts must go back to the relentless struggle launched and sacrifices offered for achieving Pakistan as a country where people could live freely in peace, practice their faith without fear of insecurity and enjoy respect for the full range of their human rights, irrespective of their caste or creed as categorically pronounced by the Quaid-e-Azam, a few days prior to the Partition of the Sub-continent. The birth of Pakistan devolves on its inhabitants enormous responsibilities. In his message to the nation on the occasion of inauguration of Pakistan Broadcasting Services on 15th August 1947, the Quaid-e-Azam had said, “the creation of the new state has placed tremendous responsibility on the citizens of Pakistan. It gives them the opportunity to demonstrate to the world how a nation, containing many elements, can live in peace and amity and work for the betterment of all, irrespective of caste or creed. Our object should be peace within and peace without.” Sadly, these wise words of the Father of the Nation have not been heeded to. The Quaid-e-Azam stood for democracy, rule of law, tolerance and corruptionfree society. In his historic address to the first Constituent Assembly of Pakistan he identified the first duty of the government as the maintenance of law and order. What we witness today is lawlessness, death and destruction, sectarianism, loot and arson, kidnapping, target killing. Corruption has permeated in all segments of our society infecting every aspect of our political, social and economic activity. Social injustice and poverty are destroying the society’s cohesion and stability. The writ of the state is nowhere to be seen. Karachi, about which the Quaid-e-Azam had said, “Let us strive to make this beautiful town a great metropolis....” has become hostage to the vested interests and plunged into one of darkness and intolerance. If the Quaid’s dream of Pakistan has to be realized, the political leadership, especially the government, will have to rise to ensure the maintenance of law and order and become a role model of integrity and selfless devotion to the cause of serving the masses, strengthen the institutions of accountability for dispensation of justice and fair play. At the same time, we as a nation must also reaffirm and resolve to devote our time and energy in the service of the country. This calls for sacrifice, self-restraint, self-discipline, patience, sympathy for fellowmen and the spirit of self-actualization.
L etters to the Editor
Yusuf Raza Gilani: is he really out? Sir, this is with reference to Mr Abdullah Zahir’s letter (Value Chain July Ed) wherein he rightly welcomed Gilani’s exit from the PM office but the fact that, reportedly, he resides in the Presidency, belies the fact that he has really been ousted. The way he used the state power and funds to ensure that his son won the election to the seat he was forced to vacate proves that he is still very much in power. That’s the way the PPP wants to show the judiciary the limits to its powers. What we still have is a government that is seen as credible by just 21% of the Pakistanis and one-third of them think they must leave. Shahid Saleem Karachi Sir, I agree with Mr A. Shahid view (Value Chain July Ed) about the way the British PM went about ‘certifying’ the conduct of Yusuf Raza Gilani in ‘consolidating’ what we now have in Pakistan in the name of democracy. But that was not unexpected; look at Davis Cameron’s own conduct in Britain. Isn’t it shocking that Cameron’s press aid was accused of an act like phone hacking? Doesn’t it prove the fact that his defence of his role in contacting highly questionable characters in the media was doubtful? The British PM’s praise for Gilani proved the saying “birds of the same feather fly together.” Abdullah Jan Peshawar Misery without an end Sir, it is a fact that in the name of democracy Pakistanis are being virtually held hostage to a governance system that has repeatedly failed to deliver. As long as two-third of country’s electorate remains enslaved to its landed aristocracy, and hence obliged to vote for the landlords,
Pakistan could go from bad to worse because its parliament will always be dominated by landlords. This class has a birth defect–zero, or very limited vision–that doesn’t extend beyond serving their self-interests. That this is true is proved each time democracy descends on Pakistan, be it of the PPP or the PML-N brand. These fellows know zilch about the real needs of the common Pakistanis, macroeconomics, global economic trends, and how to avoid their negative effects. Zahid Ali Karachi Sir, the Supreme Court has yet again given the PM more time to comply with court instructions about writing to the Swiss courts to reopen money laundering cases against President Asif Ali Zardari. While the vast majority stands with the Supreme Court, the view slowly gaining credibility is that the Supreme Court isn’t acting as it would want to, because it is not sure about the support of the other pillars of the state if it takes a final drastic but needed and nation-saving action. Consequently, Pakistan is being made to die a slow death in the name of defence of democracy that cannot deliver until it is ensured that people vote of their own choice, not that of their landlords–a task no caretaker regime with a 90-day man-date can deliver because the filth needing clearance is far too strongly rooted. Jehangir Khan Lahore Sir, it is odd that the PPP’s sole concern is completing its term, wherein all it did was to disable even the systems that were working. Saleem Khawjah (Value Chain July Ed) is right in predicting that much before the elections power shortfall will cause the downfall of this regime. With Raja Rental now in charge, things could only go from bad to worse. Jafar Khan Faisalabad Sir, the coalition regime’s planned attack (Contempt of Court Bill) on judiciary’s right to hold key state officeholders account-able for their conduct admits the fact that the regime can’t do anything within the parameters of the law. Also, that the state officeholders don’t want constitutionality to bar them from law-breaking. S Jaffery Hyderabad Depreciation of the Rupee Sir, the slide in the Pak Rupee’s exchange rate is most worrisome. I agree with the view of Saghir Bhai (Value Chain July Ed) that Governor SBP was silenced; it seems right given rumours about bad relations between the Finance Minister and the SBP Governor. This is most unfortunate
because Governor SBP is at least trying to forewarn about the coming economic collapse. Ahmed Ali Karachi Drought and its consequences Sir, it is now clear that 2012 will be the worst drought-stricken year in decades in India, the US, China and Pakistan. Wheat prices are rising. With Pakistan’s reserves bound to dwindle, will there be enough to repay its external debt and also import the food crop that we will run short of? M.A. Khan Islamabad POA-PSB controversy Sir, the tussle between Pakistan Olympic Association and Pakistan Sports Board, that threatened to force Pakistan out of the 2012 London Olympics was another example of how state interference hurts rather than support any activity. As per the governing rules of the International Olympic Committee, governments can’t interfere in the affairs of their national Olympic Committees. The fact that this interference reached serious proportions reflects on Pakistan Sports Board’s sense of responsibility and must be investigated to identify the culprits. Masroos Ahmed Sialkot NATO’s supplies Sir, isn’t it shocking that, despite the US apology on the Salala affair not being an apology but expression of ‘sorrow’ over Pakistan’s loss, our government agreed to resume NATO’s supplies through Pakistan? It was simple submission to the ‘Master’s’ will. By not apologizing for its raid on Salala, the US has proved that it does as it pleases. Rumour has it that Pakistan was threatened with a full-fledged attack if it refused to resume NATO supplies– a character in line with that of a ‘strategic ally’ of Pakistan that the US claims it is. Jamal Karimi Karachi “Value Chain” welcomes the views of its valued readers. Please send us your views on the address below: Fatima Khalid Publications (Pvt) Ltd. Room No. 612, Clifton Centre, Block 5, Clifton, Karachi Email: email@example.com The Editor reserves the right to edit your letters for making it brief or for any linguistic flaws therein.
G lobal Briefs Global events President’s impeachment in Romania: Romania’s parliament on July 6 voted to impeach President Traian Basescu in a spiraling political crisis that has raised warnings in the West that the country’s democracy is under threat.
Revolt in Japan’s ruling party: Japanese political heavyweight Ichiro Ozawa and dozens of other lawmakers quit the ruling party on July 2 over a plan to increase the sales tax, but the government will retain its majority in the lower house of parliament. Tunisian minister’s resignation: Tunishia’s anti-corruption minister has quit, accusing the government of failing to do enough to overhaul the public sector and root out corruption.
Japan eyes political shake-up: Japanese political veteran Ichiro Ozawa and dozens of other lawmakers who quit the ruling party over a tax hike plan launched a new party on July 11 in a bid to challenge the government, possibly heralding an era of political shake-up. Syria denies Treimsa massacre: Syria has denied its armed forces carried out a massacre in Treimsa but said 37 gunmen and two civilians were killed in clashes there with rebels. Iran issues new oil blockade warning: A naval chief of Iran said on July 14 that Iran could prevent even “a single drop of oil” passing through the Strait of Hormuz if its security is threatened.
Turkey scraps conspiracy courts: The Turkish parliament has approved a reform abolishing the special courts used in coup conspiracy cases, without touching on existing prosecutions of hundreds of military officers that have drawn wide criticism. Philippines-China dispute: Philippine President Beningno Aquino said on July 2 he may ask the United States to deploy spy planes over the South China Sea to help monitor the disputed waters, a move that could worsen ten- sions with China. Iran readies ballistic missile drill: Iran on July 2 said it was readying ballistic missile war games simulating a counterattack against US or Israeli targets in the region in the event of air strikes on its nuclear facilities. Police raid Sarkozy’s home in Paris: Police raided the home and offices of former French President Nicolas Sarkozy on July 3 as part of a judicial inquiry into financial relations between his political camp and the richest woman in France L’Oreal accused of having funded Sarkozy’s 2007 election campaign. Barclays CEO, COO quit: Barclay’s chief executive Bob Diamond resigned on July 3, followed a few hours later by the bank’s chief operating officer on charges of rigging of a key global interest rate.
March against nuclear power in Tokyo: More than 100,000 anti-nuclear protesters marched through central Tokyo on July 16 to voice their opposition to atomic power. Microsoft breaks from NBC to launch own news portal: Software giant Microsoft has parted company with NBC News, pulling out of their joint venture MSNBC to launch its own online news service. Pak-China Friendship Industrial Park in Donggang: China has offered to set up a Pakistan-China Friendship Industrial Park in Donggang city in China’s north-east Liaonning province. Brawls in Egyptian court: Brawls broke out in an Egyptian courtroom as judges tried to debate rulings on July 17 that could either bolster the country’s new Islamist President Mohamed Mursi, or undermine him in his power struggle with the military.
Mukherjee elected new Indian President: Former finance minister Pranab Mukherjee was elected Indian president on July 22. Iraq warns Turkey against airspace violation: On July 17, Iraq warned Turkey against violating its airspace and territory and said it planned to protest to the UN Security Council after its radars had repeatedly detected Turkish warplanes. US missile defence station in Qatar: The US is building a missile defence radar station at a covert location in Qatar. The site will be part of a system intended to defend the interests of the United States and its allies against Iranian rockets. China, Russia veto Syria sanctions resolution at UN: China and Russia vetoed on July 19 a UN resolution that could have imposed sanctions on the Syrian government angering the West as hundreds fled an army offensive against rebel districts of Damascus. Syria assaults Damascus: Syrian forces launched an all-out assault on opposition strongholds in Damascus on July 20. The army has reportedly decided to use all the weapons in its possession to finish the terrorists off. Indonesian woman arrested for Japan tsunami fraud: South Korean police said on July 23 they had arrested an Indonesian woman for a scam related to Japan’s earthquake and tsunami disaster in March last year. Syria threatens use of chemical arms: On July 23, Syria acknowledged that it had chemical and biological weapons and said it could use them if foreign countries intervened. Syria threatens use of chemical arms: On july 23, Syria acknowledged that it had chemical and biological weapons and said it could use them if foreign countries intervened. August 2012
G lobal Briefs Global economy IMF warns US against cutting deficit too fast: The International Monetary Fund (IMF) on July 3 pared its growth forecast for the US economy and warned that the Obama administration could be slicing the deficit too fast for the weak economy. IMF estimated 2012 US economic growth at a “repit” 2.0 percent, down from April’s forecast of 2.1 percent, and said even that outlook was at risk from both domestic and international threats.
for rises of 0.4 and 1.2 percent respectively. According to the economists, the increases were in part a correction after last month’s dismal data. Austerity measures in Spain: Yielding to EU pressure to try to avoid a full state bailout, recession-plagued Spain on July 11 unveiled new austerity measures designed to slash 65 billion euros from the public deficit by 2014.
$16bn aid to Afghanistan pledged: On July 8, major donors at Tokyo conference pledged to give Afghanistan $16 billion in development aid through 2015 as they try to prevent it from sliding back into chaos when foreign troops leave, but demanded reforms to fight widespread corruption. Visa, MasterCard, banks in $7.25bn retail settlement: Visa, MasterCard Inc and banks that issue their credit cards have agreed to a $7.25 billion settlement with US retailers in a lawsuit over the fixing of credit and debit card fees in what could be the largest antitrust settlement in US history. The proposed settlement involves a payment to a class of stores of $6 billion from Visa, MasterCard and more than a dozen of the country’s largest banks who issue the companies’ cards. Chinese economy under pressure: Chinese Premier Wen Jiabao said on July 8 that the country’s economy faces downward pressure calling for more aggressive moves to keep growth on track. German exports, imports rebound: German exports rose a seasonally adjusted 3.9 percent while imports surged6.3 percent, far outperforming expectations
IMF cuts global growth forecast: IMF on July 16 cut its global growth forecast and warned that the outlook could dim further if policymakers in Europe do not act with enough force and speed to quell their region’s debt crisis. Iraq initials oil block deal with Kuwaitled group: On July 16, Iraq initialed an oil block exploration and development contract with a consortium led by Kuwait Energy as part of its drive to attract more foreign investment.
Recession in Europe’s big economies: According to business surveys, all of Europe’s biggest economies are in recession or heading there and there is little sign things will improve soon. BoE injects Pound 50bn to haul Britain out of recession: The Bank of England decided on July 5 to pump out another Pound 50 billion of stimulus cash, in a bid to haul Britain out of recession and ward off contagion from the euro zone sovereign debt crisis.
Saudi development fund to lend Tunisia $ 220 million: The Saudi Fund for Development will extend as total of about $220 million to Tunisia in low-interest loans repayable over 20 years at 2 percent interest.
EU watchdog warns banks of challenges ahead: The European Banking Authority Chairman Andrea Enria has said there remained significant challenges ahead for Europe’s banks after they successfully met new requirements to bolster their core capital buffers. 27 banks had hiked their combined capital by 94.4 billion euros ($116 billion) to meet the expectations of the watchdog and fill a 76 billion euros shortfall to make them strong enough to withstand the euro zone debt crisis.
Spanish banks aid approved: Germany’s parliament approved on July 19 a European aid package for crisis-wracked Spanish banks that aims to prevent Spain’s whole economy being dragged deeper into the mire. Chinese loans to African countries: Chinese President Hu Jintao on July 19 offered $20 billion in loans to African countries over the next three years, boosting a relationship that has been criticized by the West and given Beijing growing access to the resource-rich continent.
London, Singapore Stock Exchange Cooperation: The London and Singapore stock exchanges announced on July 11 an agreement to facilitate the crosstrading of the most actively-traded stocks of their respective member firms. Global economic slowdown and oil prices: The International Energy Agency (IEA) said on July 12 that global economic slowdown could put a lid on oil prices but there is a risk “nasty supply surprises” could reignite a market rally. Eurozone crisis and Asia’s growth: According to new figures released by Asian Development Bank, Developing Asia’s 2012 growth prospects are being hit by the worsening eurozone crisis and a sluggish recovery in the United States. The Bank revised its 2012 growth forecasts for the US and Europe, projecting US economic growth of 1.9 percent, down from 2.0 percent, and saying it expects the eurozone economy to contract 0.7 percent, up from 0.5 percent previously.
Goldman’s quarterly profit falls: Goldman Sachs Group Inc’s quarterly profit fell 12 percent as investment income plunged, reflecting the pressure the bank faces as demand for its services remains tepid and markets fluctuate. Goldman plans to reduce annual costs by another $500 million, in addition to its previously planned $1.4 billion of annual expense reductions. Britain may need more credit-easing to boost growth: The IMF on July 19 said that recession-hit Britain may need to implement additional measures to help unblock credit markets and stimulate economic growth. The Fund lauded the Bank of England for its recent decision to pump out another Pound 50 billion ($ 79 billion) of new cash. August 2012
N ational Briefs Pak politics Millions of rupees paid to lawyers for defence of govt. cases in SC: Law Minister Farooq H. Naek on July 6 reportedly told the National Assembly that a total of Rs. 24.2 million was paid to Senator Babar Awan, Rs. 7.6 million to Hafeez Pirzada and Rs. 5.9 million to Waseem Sajjad for taking up government cases at the highest judicial forum.
Imran Khan demands action against NAB Chief: Pakistan Tehreek-e-Insaaf Chief Imran Khan has demanded immediate resignation of NAB Chairman Fasih Bukhari over an alleged statement regarding cases against Sharif brothers. He also urged the Chief Justice Iftikhar Muhammad Chaudhry to take suo muto action against him. Cases against Sharif brothers in process: NAB has clarified that it has not closed even a single case against Sharif brothers and that the proceedings of cases against them are under process as per provisions of National Accountability Ordinance 1999.
No new agreement with Pakistan on NATO supply routes: Deputy Chief of Mission of the US Embassy Richard Hoagland said on July 6 that there was no new agreement with Pakistan regarding the reopening of the NATO supply routes. He said, the relations were resumed from the point where they had been left in November last year. Pakistan to scan NATO supply containers: Customs authorities reportedly said on July 6 that all containers passing through Pakistan to supply NATO troops in Afghanistan will be scanned to ensure they do not contain lethal supplies.
NATO truckers demand security: NATO truckers on July 3 welcomed Pakistan’s decision to reopen supply lines into Afghanistan but said that they feared Taliban attacks, and demanded security guarantees before the resumption. Malik Riaz tenders unconditional apology: Real estate tycoon Mlik Riaz Hussain on July 4 told Supreme Court that his controversial press conference had nothing to do with the Chief Justice of Pakistan; it aimed at unveiling corruption of Chief Justice’s son Dr. Arsalan Iftikhar. Addressing the court, the counsel for Malik Riaz also said that if that press conference had created any hurdle in dispensation of justice, his client offered an unconditional apology.
Senate passes Contempt of Court Bill: Despite resistance from top PPP stalwarts and opposition parties walk out in protest, the Senate on July 11 passed the Contempt of Court Bill 2012. Taliban urged to enter dialogue: In a joint statement US Secretary of State Hillary Clinton, Afghan Foreign Minister Zalmai Rassoul and Pakistan’s Foreign Minister Hina Rabbani Khar reiterated on July 8 their call for Taliban to abandon violence and enter a dialogue with Afghan government.
Afghanistan, Pakistan clash over border violence: Pakistani officials have accused up to 60 Afghan soldiers on July 2 crossed into Pakistani territory sparking clashes that killed two tribesmen. Reopening ground lines of communication for NATO troops: Pakistan on July 3 conveyed to United States that it was reopening the ground lines of communications free of charge into Afghanistan, after the US issued an apology for the November killing of 24 Pakistani troops in a Nato air strike.
Afghanistan warns Pakistan: Afghanistan on July 22 warned Pakistan that any further cross-border shelling could significantly harm relations between the two countries. According to reports, more than 300 heavy artillery shells and rockets were fired from Pakistan into Dangam district of eastern Kunar province on July 20 and 21 killing at least four people.
US-Pakistan relationship: US Secretary of State Hillary Clinton said on July 8 that the US-Pakistan relationship remains challenging for both despite the reopening of land routes to re-supply US troops in Afghanistan. Private sector role in economy: Talking to the office-bearers of Islamabad Chambers of Commerce and Industry on July 8 in Islamabad, Prime Minister Raja Pervez Ashraf has said that private sector is the engine of growth and he would like to see it play a leading role in the country’s economy. SC powers under Article 8: Speaking at Roll-Signing Ceremony of 16 newly enrolled advocates for the Supreme Court on July 7 at SC’s Karachi Registry, Chief Justice of Pakistan Iftikhar Muhammad Chaudhry said that Article 8 of the Constitution empowers the Supreme Court to strike down any legislation which encroaches upon the basic rights of citizens.
Alleged secret deal: In an alleged secret deal, Britain has reportedly offered to revive British nationality of the interior minister and other dual nation Pakistani parliamentarians in return for implementation of their long-standing demand of repealing the death penalty. The British government could deport tens of thousands of undesirable Pakistani migrants if death penalty is abolished in Pakistan. Musharraf for elections under military: Pakistan’s former President Gen (r) Pervez Musharruf has said that general elections should be held in the country under military supervision so that sincere and clean representatives of masses could be elected. CEC appointment challenged in SC: A petition was filed in the Supreme Court on July 16 with a plea to declare the appointment of Fakhruddin G Ebrahimm as chief election commissioner against the provisions of the constitution. August 2012
N ational Briefs Pak economy Sales tax reduced to Rs 7 per unit: The Federal Board of Revenue has reduced sales tax from Rs. 8 to Rs. 7 per unit of electricity consumed by the steel-melters and steel-rerolling units.
Ministries asked to import power, LNG from India: The Federal Cabinet has directed concerned Ministries to seriously consider importing electricity and Liquefied Natural Gas from India to deal with energy crisis. Legal protection to investors under SEZ Bill 2012: Addressing a press conference on July 14, Board of Investment Chairman Saleem Mandviwalla said that newly approved Special Economic Zone Bill 2012 provides guarantee to foreign and local investors that incentives once granted would not be withdrawn due to conflict of interest.
Trade package for Pakistan: European Parliament is likely to approve trade package for Pakistan in September 2012 as the EUâ€™s committee for International Trade has cleared the package meant for flood affectees of 2010. WB-FBR meeting on new revenue mobilization project: A World Bank mission has initiated meetings with the Federal Board of Revenue high-ups for launching a new revenue mobilization project for continuation of tax reforms to raise revenue collection by improving effectiveness, accountability and transparency of tax machinery through institutional changes in the FBR. Pakistan earns $ 425mn from cotton export: Pakistan has reportedly earned $ 425 million from export of cotton while $ 320 million was spent on improving the commodity during fiscal 2011-12. Remittances cross $13 billion: Remittances by overseas Pakistanis crossed $ 13 billion mark during the last fiscal year (2011-12). They remitted $ 13.187 billion during the year ended 30th June 2012, showing an impressive growth of 17.73 percent as compared to $ 11.201 billion received during FY 2011. Romania offers gateway to EU market: Talking to a delegation of FPCCI, Ambassador of Romania to Pakistan Emilian Ion said that Romania will introduce Pakistani goods in the EU, giving the business community of Pakistan an opportunity to exploit the situation created after opening of borders to Europe. He said that Pakistani businessmen can export their products specially textile, garments, leather etc to Romania and also to other EU countries through Bucharest.
WHT to be brought down to 0.2pc: To facilitate business community, the Federal Board of Revenue (FBR) has reportedly decided to reduce the rate of the 0.5 percent withholding tax under Section 153A of the Income Tax Ordinance, 2001 to 0.3 or 0.2 percent for those sectors paying lower rate of turnover tax below 0.5 percent.
Korea to invest in Pakistan: Ambassador of Republic of Korea, Choi Choong Joo has said his country would be eager to invest in and enhance trade relations with Pakistan. Decline in FDI: For the fourth consecutive year, Foreign Direct Investment has posted a massive decline mainly due to energy crisis, adverse law and order situation, lack of infrastructure and instability in the economic policies. Energy crisis as key impediment to FDI: Addressing Pakistan-Japan joint business meeting on July 16, Japanese Ambassador to Pakistan, Heroshi Oe said that energy crisis and deteriorating law and order situation in Pakistan were the key impediments to foreign direct investment. EXIM Bank loans for dams projects: The EXIM Bank of China has agreed to provide $700 million at relatively low interest rate for damsâ€™ projects being executed by WAPDA to enhance water storage capacity and generate more power
Financing Iran-Pakistan gas pipeline project: Italy, Russia and China have shown interest in financing the construction of Iran-Pakistan Gas Pipeline Project. The project is likely to cost $ 1.25 billion, and will initially bring around 750 million cubic feet per day (mmcfd) of gas, which will be gradually increased to over 1.5 billion cubic feet per day. President Zardari invites Japanese business to invest in Pakistan: Addrssing Pakistan-Japan Business Roundtable Meeting , Pressident Asif Ali Zardari on July 16 invited Japanese businessmen to take advantage of natural resource potential, trained and hard working work force and geographic location of Pakistan and invest in various sectors for mutual benefit of the two countries. C/A deficit: According to State Bank of Pakistan, the financial year, which started with surplus current account, has ended ukp with a huge deficit of $4.5 billion due to heavy payments on imports of goods and services with declining inflows of earnings. $1.5bn CSF by Dec.2012: Pakistan will reportedly receive $1.5 billion of Coalition Support Fund by Decembere 2012 after the government resumed NATO supplies following apology from the US on Salala check post incident. APTMA sets up sustainable production centre: To cope with the energy crisis faced by the textile industry, APTMA has initiated sustainable energy management system implementation programme. Contton exports: According to exporters Pakistan exported a record number of 1.5 million cotton bales in July to June 2011- 12, which is 50 percent more compared with 1.0 million bales exported in July to June 2011. August 2012
V oice of Industry Trade & Industry briefs Reduction in POL prices: Rawalpindi Chamber of Commerce and Industry (RCCI) has hailed government decision of reducing petroleum prices which he said would help reduce hike and inflation and promote business activities in the country. LCCI demands withdrawal of increase in gas tariff: Lahore Chamber of Commerce and Industry (LCCI) on July 2 welcomed the decrease in POL prices but urged the government to withdraw 10 percent increase in gas tariff for industries that is bound to hit the export sector.
First Trade Delegation from Afghanistan visited Pakistan: President PAJCCI, Mr. M. Zubair Motiwala welcomed the delegation at the Membership Kiosk of PAJCCI at “My Karachi” event and led the networking activity of the delegation at the Expo Centre. The delegation visited other stalls at the exhibition and was enthralled with the response shown by business community of Pakistan at the Membership kiosk of PAJCCI. Only 30% small-scale units operational in Karachi: Traders said on July 12 that nearly 70 percent of cottage industry units have closed down in the past 10 years, primarily because of the rising cost of electricity and the dumping of cheap Chinese products in the local markets. They blamed the government for not introducing pro-industry policies. Calls for focus on improving competitiveness: President, Islamabad Chamber of Commerce and Industry (ICCI), Yassar Sakhi has suggested that the new trade policy should focus on improving the competitiveness of export-oriented industries to improve products quality and enhance country’s exports. He said despite having a potential demographic dividend, industries in Pakistan were facing shortage of skilled labour. He suggested that skills upgradation programmes should be conducted through chambers of commerce and industry to provide skilled manpower to industries.
Value-added textile sector seeks role in SBP initiatives: On July 6, value added textile sector expressed concern over lack of its representation in the State Bank of Pakistan’s support programme for textile sector boost. According to Chief Coordinator, Pakistan Readymade Garments Manufacturers and Exporters Association, Ijaz A. Khokhar, value-added textile sector provides huge employment besides having a $4 billion export share in the country’s total economy through export and should not be ignored by SBP in its any support initiative to the entire sector. APTMA urges cut in GIDC: All Pakistan Textile Mills Association (APTMA) Chairman Mohsin Aziz has urged the government to immediately cut the Gas Infrastructure Cess(GIDC) to Rs. 50 per million British Thermal Unit (mmbtu) as the industry is unable to pay Rs. 100 per mmbtu under the prevailing adverse business environment for the industry.
Sindh CM visits KCCI: KCCI President Mian Abrar Ahmad in his meeting with Sindh Chief Minister Syed Qaim Ali Shah underlined the need of executing concrete safety and security measures to help revive the commercial and industrial activities in Sindh province in general and in Karachi in particular. He also apprised the Chief Minister about KCCI delegation’s visit to the USA and meetings with important dignitaries of US State Department and other organizations including officials of the USAID to enhance Pak-US bilateral trade. He said the delegation also dispelled the biased perception of Pakistan being depicted by some foreign media and portrayed real and true image of Pakistan. Viewpoints were also given on energy, Pak Iran gas pipeline and signing of Pak-US Bilateral Investment.
SCCI demands completion of devolution process: Sarhad Chamber of Commerce & Industry has demanded of the federal government to complete devolution process of Gems and Mineral affairs to provinces in the light of 18th constitutional amendments.
KCCI urges US to bridge gap of trust deficit: President of Karachi Chamber of Commerce and Industry (KCCI), Mian Abrar Ahmad has urged the US government to bridge the gap of US-Pakistan trust deficit through trade. Talking to Shannon Grewer, Counsel, Locke Lord LLP, USA, in Karachi on July 5, he said that 40 American companies were successfully operating in Pakistan since last many decades and not a single company was closed down. Hence, he said , more US companies should come and invest in Pakistan and capture the markets of three trading blocks of which Pakistan is located in the centre. He said that US companies may establish industries in Pakistan and export to countries of ECO Block, SAARC block and the Central Asian countries. Reciprocating, Counsel Shannon Grewer said that investors want to invest in Pakistan but hesitate and do not know from where to initiate. New TDAP chief: Pakistan Bedwear Exporters Association has welcomed the removal of Tariq Iqbal Puri as Chief Executive of Trade Development Authority of Pakistan (TDAP) and demanded appointment of “a committed professional” to head the body. SCCI and RCCI sign MoU for industrial cooperation: The Sarhad Chamber of Commerce and Industry (SCCI) and Rawalpindi Chamaber of Commerce and Industry (RCCI) formally signed an MoU for boosting mutual relations, information sharing and extending cooperation in industrial and commercial sector. August 2012
V oice of Industry Trade & Industry briefs Traders criticize new hike in power tariffs: The business community and industrialists have criticized government for making another Rs. 1.60 per unit increase in the power tariff and demanded of the government to immediately withdraw the unjustified decision. They said that while the industry is already struggling hard to survive due to frequent increases in utilities and POL prices and imposition of other levies and surcharges, the government has allowed another bombshell to kill the industry.
KCCI urges govt to check rising prices: Senior Vice President of Karachi Chamber of Commerce and Industry, Younis Bashir on July 14 expressed dismay over 25 percent increase in prices of items consumed during Ramazan and urged the government to take appropriate measures to control price hike and take strict action against hoarders. PFMA alleges illegal tax collection from trucks carrying flour to Afghanistan: In his meeting with Minister of State for Food Security, Pakistan Flour Mills Association Chairman Mohammad Naeem Butt has alleged collection of illegal tax from Afghanistan bound trucks carrying flour to Afghanistan. He also called for bringing the support price of wheat to a certain level or allow the industry to import cheap commodity from foreign markets and after grinding export on profitable rate.
Sweden keen to invest in energy sector: Talking to Chairman, Federation of Pakistan Chamber of Commerce & Industry Standing Committee on Diplomatic Affairs on July 10, Ambassador of Sweden to Pakistan Lars-Hjalmar Wide said that his country has shown keen interest to invest in energy and transport sectors of Pakistan. He also said that Sweden could prove a good market for Pakistani fruits, vegetables, meat, leather, sports goods and textiles if full potential is exploited.
Indian business leader for joint research centre: Speaking at a meeting of Karachi Chamber of Commerce and Industry (KCCI) in Karachi on July 11, leader of Indian trade delegation and former President of Bombay Chamber of Commerce and Industry, Ashok Kumar Barat called for establishing Pakistan, India Joint Research Centre to help develop business, companiesâ€™ details and other beneficial information, which will help boost two-way trade. He suggested to the business communities of both the countries to approach their regulators and governments to formulate joint business policies. LCCI asks for draft of trade policy: Lahore Chamber of Commerce and Industry (LCCI) President, Irfan Qaiser Sheikh has urged the Federal Secretary Commerce to share the draft of the upcoming trade policy with the chambers of commerce and sectorspecific associations to make it more meaningful. Traders concern on extortion incidents: Traders on July 23 expressed grave concern over the increasing number of extortion activities, robberies, targeted killings and said if the government cannot provide security to the taxpayers it should resign.
APTMA asks for exemption from loadshedding: All Pakistan Textile Mills Association (APTMA) has urged the government to exempt from loadshedding the textile mills on independent feeders and save workers from redundancy and industryâ€™s viability from erosion.
FPCCI urges rationalizing gas allocation: Federation of Pakistan Chambers of Commerce and Industry (FPCCI) Vice President Azhar Majeed Sheikh has urged the government to rationalize the allocation of natural gas to minimize the gas shortage impact on the industry in the coming winter. He said the government should devise an effective policy to save the industry across the country which uses 15 percent of the total production.
Businessmenâ€™s concern on law & order: Business and industrial community have expressed concerns over the poor law and order situation in Karachi and demanded immediate intervention of government to provide safety and security to general public, business and industrial community.
APTMA protests against loadshedding: APTMA Chairman Mohsin Aziz, in his meeting with the Prime Minister on July 25, strongly protested against increase in loadshedding to textile industry in a situation when power shortfall had reduced substantially. He urged the government to resolve power loadshedding to textile industry.
Mufti Irshad Ahmed visited Korangi Association of Trade & Industry office. In picture, Chairman KATI, Ehtesham Uddin is seen presenting a flower bouquete to Mufti Irshad Ahmed. Govt. urged to facilitate ailing cottage industry: The Lahore Chamber of Commerce and Industry has urged the government to facilitate the ailing cottage industry to offset the financial losses it has been suffering because of unprecedented and unscheduled electricity loadshedding and intervention by various provincial departments. Political parties urged to share economic agenda: Lahore Chamber of Commerce and Industry on July 30 urged all political parties to share their respective economic agenda with the private sector for much needed industrial and economic revolution. Steep fall in bedwear export: Pakistan Bedwear Exporters Association Chairman, Shabir Ahmed said on July 30 that export of bedwear experienced a steep fall of about $ 600 million from $2.1 billion to $1.49 billion compared to last year while a number of bedwear units have closed down but unfortunately the Trade Development Authority (TDAP) and the textile ministry have turned a blind eye and have shown no concern whatsoever to arrest this declining trend. He suggested a roundtable conference of all the stakeholders along with representatives from ministries of finance, power, commerce, and textile besides TDAP, FBR and State Bank of Pakistan to find out the way out to arrest the declining trend. August 2012
E ditorial The resolve that has been dissolved
sector, sidelining even basic education, let alone imparting of industry-specific vocational training, expansion and up-grading of public transport sector (particularly the railways), and the criminal neglect of basic health services despite a rapid rise in Pakistan’s population. Over the years what we developed were economic disparities that kept escalating because the leadership remained focused on serving vested interests, largely ethnic in nature. It was a process wherein the middle class unwittingly took a share by keeping quiet assuming that ‘the decent’ are obliged to quietly shun the corrupt, not raise their voice against this lot. None of them seems to have realized the fact that unwittingly, this was how they strengthened the corrupt. ‘Unity’–the core principle enunciated by the Quaid–is now to be found only in the books of history; in practice, it is a near redundant value. Proof thereof is the rising number of ethnic political parties, which is the clear manifestation of a refusal to believe in ‘unity’, or in the concept of ‘one-nation’–the single biggest failure of the Pakistanis as a whole. The present government is fuelling this suicidal tendency by legislating what it calls ‘devolution’ of power to the provinces, and its commitment to create more provinces on linguistic and ethnic bases. Indeed there is need for re-organizing the administrative capacity of the state in view of the worrisome rise in Pakistan’s population, but should this re-organization be based on ethnicity, or on administrative logic? As for the devolution of power that has taken place thus far, the common view is that it has been a failure because it was illogical. Devolution could deliver if the federation made the requisite preparations–transfer one federally administered department at a time, reorganize it to help it deliver even better, and then monitor its performance to ensure the success of this grand experiment. The pre-condition therefor was to prepare the provincial administrations for conscientious and optimal use of their new authority, but because devolution was implemented without this preparation it empowered those un-prepared for delivering. Despite the failure of this experiment, the regime is hell bent on expanding it. Not only that, it is creating more provinces on lingual and ethnic bases. This aspect of the regime’s initiative strengthens the argument that the idea is not to assure better governance but destabilizing the state by fuelling ethnicity. A bigger tragedy is that this disaster is the gift of a ‘democratically’ elected regime claiming to hold the mandate of ‘180 million’ Pakistanis–a claim that became suspect after the revelations by the Election Commission about the authenticity of voting in the 2008 general elections. Pakistan confronts a variety of threats and challenges to its existence but, undeniably, it also has the potential to override them. To do so, it needs to adopt and assertively practice the golden principles–unity, faith and discipline– legacy left behind by its creator. Ethnicity becomes a curse if it begins to over-ride other civilized values. Unless we pledge to uphold merit, we won’t let the best among us administer every sphere of life, and thus deprive the nation of the benefits such an order could offer. By insisting on completing its term, the regime is forcing the people’s miseries to reach explosive dimensions.
n August 14, 1947 under the leadership of Quaid-eAzam the new-born Pakistani nation resolved to make Pakistan one of the greatest nations on earth by upholding justice, shunning religious and ethnic divides, optimizing the output of the national resources, prioritizing merit, and so making Pakistan an exemplary Islamic welfare state. The Father of the Nation wanted us to imbibe and practice all these golden values. As the nation celebrates its 66th independence day, it is worth assessing to what extent we succeeded in fulfilling the solemn commitments that we made to ourselves 65 years ago; an honest reckoning shows that none of them was met. Over the years, we sidelined these values, the biggest tragedy being our gradual disintegration into splinter groups. This malaise (continuing to-date) was fuelled by state-created inequalities on ethnic bases that developed in the early days of Pakistan. The driving force therefor (till today) has been that democracy empowers the corrupt aristocracy– the Rajas, Nawabs, Khan Bahadurs (a title conferred by British rulers), Sardars and Chaudhuries. Being inflicted by eternal political short-sightedness, this lot with small, indecent, self-serving ambitions again adopted its pre-partition culture of cronyism and buried the principles of social equality, economic justice, above all, merit, while assigning key state and administrative offices to individuals. Not surprisingly, these manifestly unfair policies denied East Pakistan its fair share in national resources, especially in the proceeds of jute exports–the East Pakistani crop that was then the only commodity exported in a sizeable quantity to earn badly needed foreign exchange. Wholly unfairly, bulk of the export proceeds was used to build an industrial base in West Pakistan. What added to this was the fact that, despite forming 56% of Pakistan’s population, East Pakistanis were forced to agree to being counted as 50% of the population. How this gross injustice bore fruit, was proved by the events of 1971. Within 24 years of its birth, Pakistan was reduced to half its size; the other half opted to become Bangladesh–an independent republic. In the process, Pakistan suffered its most humiliating military defeat, but the worst part was the ethnic strife that went on for a year wherein thousands of innocent lives were lost for which many still blame Pakistan although the victims were Pakistanis from both provinces. Besides this unforgettable failure, there were others whose aftereffects continue to bleed Pakistan–its participation in the ‘Jihad-eAfghanistan’, failure to reach a fair division of the Indus water with India, neglect of building water reservoirs and generating hydroelectricity therefrom, equally criminal neglect of exploring energy resources to achieve ever-higher levels of self-sufficiency in this
E ditorial Fair basis for quoting yardstick interest rates
However, that isn’t the case, which reflects negatively on the regulators. The banks being investigated in the Libor affair are accused of not quoting ‘representative interest rates’. This requires re-defining the term ‘representative rate’ and the key question to be addressed is: what should be basis for a bank to quote its rates for any currency, while acting as a member of the panel that fixes yardstick rates, and how will regulators cross check a quoted rate being ‘representative’. The fault in Barclays’ Libor quotations was that they weren’t high enough to reflect Barclays’ own reality i.e. cost of funds. That being the argument, the basis for quoting such rates has to be reflective of not just the cost of funds of a bank and its operating expenses, but also inclusive of that bank’s targeted return on equity. The only element that should be excluded is the risk fact because the rate has to be a zero-risk rate. The formula for calculating the rate has to be defined clearly, and its calculation accordingly made mandatory for all the banks participating in the yardstick rate determination process. This is, theoretically, the logical way of going about resolving the yardstick rate controversy but it has its pitfalls because of the operational limitations of large banks in developing states. The formula implies that, the worked-out interest rate should reflect a relationship between the sum total of the annualized weighted average cost of deposits (excluding the earnings on investment in statutory reserves), annualized operating costs and the targeted return on equity as the numerator, and that bank’s deposits (excluding non-earning cash reserves lying in the central bank and average cash holding in the branch net-work) as the denominator. The rate so worked out would be truly representative of a bank’s reality, which could thereafter be converted into rates for various time periods by injecting therein the perceived market risk in those time periods. But the big issue is the capacity of a bank to know on a daily basis its cost of deposits that could be annualized for being used in the formula. Besides, there has to be a realistic basis for estimating the annualized operating costs of a bank. The next issue is the methodology and frequency with which the regulator must cross check the accuracy of the figures used by a bank to calculate its rate quotation. At present, in states like Pakistan, it is a tough ask of both banks and regulators. But every task remains impossible until an attempt is made to undertake it, even if in parts, to begin with. Setting a fair yardstick interest rate requires that this beginning is made. Regulators must not overlook the fact that, at present, many distortions reflect the unfairness of the yardstick rates. For instance, the amazingly high spreads–reported by none other than the State Bank of Pakistan–being earned by banks show that banks are not quoting realistic rates for determining the Kibor. While we keep pointing to the ‘high cost of doing business’ as the impediment to growth in every sector, we don’t realize that high interest rates are a part of those high costs. Stake-holders must re-think the mechanics of setting the Kibor.
he Libor bombshell that exploded in early July was the end result of a year-long inquest by Financial Services Authority (FSA) of the UK, and Department of Justice of the US. This investigation was a tightly kept secret for understandable reasons–it could destabilize the confidence in Libor–but its eventual disclosure had the same effect. The worrying aspect of this debate is that, instead of correcting their errors, banks and their regulators are focused in the wrong direction. On their part, governments are overly focused on punishing the wrongdoers, not as much on quickly repairing the system to revive market confidence, which is essential for what they all want to achieve–economic revival. This reaction is partly triggered by their own secret involvement in what the banks were doing. But yardstick market-rates can’t be under clouds for too long if economies are to be revived to register higher growth, employment and social uplift. Nor can a bank with global network be excluded from the processes of yardstick rate determination just because some of its executives erred in meeting their obligations cleanly; including such banks in the rate determination process is imperative for working out truly representative market rates. Every day, dozens of yardstick interest rates are set in major financial centres across the globe for a range of currencies–a participatory discipline ensured by purposeoriented bodies–but the rates set in London and Brussels are by far the most influential. Rates set in Tokyo are called Tibor, those in Hong Kong the Hibor, and those in Brussels the Euribor. For banks, being part of the rate determining panels was once deemed a prestigious task, but now it is tainted by growing suspicion of manipulation. "Any bank that wasn't thinking about it would be foolish," said a banker whose bank is a part of the Libor-setting panel in London. He was hinting at getting out of the rate-setting panel–a very irresponsible response to a scenario that requires acting twice as responsibly. For the moment, key officeholders in regulatory outfits are focused on defending their roles in this gaffe; they all worry about their own future prospects. There are even hints about rivalries for rising to the next high post in their central banks that are enticing them to undercut each other in the on-going inquiry. Doing so, they overlook the fact that, in some cases disclosures about their being prodded into influencing rate quotations by the participating banks had to do with advices from abroad than with voluntary action. It shows how little they knew about what went on in the banks they supervised. While questions will continue to arise about the infallibility of the mechanisms in use for determining Libor (and similar yardstick rates in other financial centres) until now, the more urgent issue is revamping and revising this mechanism since, in the present era, when ‘floating’ rates of interest are applied on loans of every type, availability of yardstick interest rates is imperative. This exercise should have begun along with the investigations into the existing practices.
E ditorial Sovereign risk rating: the slide gains speed
he latest shocker for the Pakistanis is a further downgrade of the country’s sovereign risk rating. From B3 until mid-July it has come down to Caa1, the short-term rating remains at ‘Not-Prime’, and the ‘Outlook’ is negative. As part of the rating downgrade, Moody's also revised Pakistan's country ceilings. Foreign-currency country ceiling was lowered to B3 from B1 while the foreign-currency deposit ceiling was downgraded to Caa2 from B3, and both local-currency bond and deposit ceilings too dropped to B1 from the earlier Baa2 and Ba2. According to Moody’s latest report on Pakistan downgrading Pakistan’s risk rating, it was forced to take this action due to: • Deterioration in Pakistan's balance of payments in 2011-12 • Large repayments to be made to the IMF until 2014 • Pakistan’s dwindling ‘official’ foreign-exchange reserves • Institutional weakness stemming from political instability and constrained public financial resources Coming from a non-partisan entity, this assessment of state governance can’t be rubbished as the biased view of political adversaries–the regime’s usual response to anyone who faults it for its flawed style of governance. In Moody’s indictment of the regime, the downgrade of the local-currency sovereign risk rating ceiling (reflecting down-grade of the Institutional Strength to 'Very Low' from 'Low') has significant implications for even the domestic lenders–banks–that have, so far, kept the wheel of the state moving despite massive and largely visible waste of the borrowed funds by the government. A well-experienced banking sector analyst went as far as asking “will the government repay the banks, and on time?” Rumours are that the fiscal deficit may actually end up close to 8% of the GDP (compared to 3.7% of the GDP, as being claimed by the regime) once the FBR finally ends up adding together the many components of the tax revenue collected in 2011-12. As for the Current Account, during 2011-12, it registered a deficit of $4.517 billion compared to a surplus of $214 million in 2010-11. Against its budgetary target of 0.6% of the GDP, trade deficit has been a huge 2% of the GDP. From the stand point of external debt servicing, the shocker has been the 2011-12 trade deficit; at $21.801 billion, it is the highest-ever in the Pakistan’s 64-year history because power shortfalls caused huge damage to the entire economy. Every sector suffered, but the worst was the fate of the industrial sector. Because of a substantial decline in its output, not only did exports register a fall, more manufactured goods had to be imported pushing up imports to their highest-ever level of over $44 billion. How pervasive was the impact of the power-load shedding is reflected in the fact that trade deficit in the goods sector was up over 40%. With an increase of 55 percent or $1.07 billion, deficit of services sector reached $3 billion from $1.9 billion. In external incomes sector while inflows amounted
to $820 million, outflows amounted to $4.227 billion. This negative mix reflects on the competence as well as the vision of the regime that insists on completing its term, come what may. The only state office that foresaw the build up of the trade deficit, though not as accurately as it should have done was the State Bank of Pakistan that had predicted that the deficit in 2011-12 could be between 1.5 to 2.5% of GDP. It seems that these projections were set aside by the Finance Ministry because no remedial action was initiated to contain the trade deficit and its fallout, perhaps, because the regime doesn’t a chance of its re-election in 2013. The trade deficit in June 2012 has been $586 million. Were it to continue building up at this pace, its year-end figure could jump to $6 billion, or more. The big question is: where are we headed? Is it towards a default by the sovereign? Moody’s cites the strained state of Pakistan's public and public-sector finances and weak institutional arrangements that resulted in a technical default (in May 2012) by the state-owned central power purchasing agency on payment of arrears to private power producers–the payments that were guaranteed by the state. At June end, SBP’s gross international liquidity, including its SDR holdings, had fallen to just $12.4 billion (foreign-exchange reserves alone were $10.8 billion at the end of June). The aggregate of repayments due only to the IMF in 2013-14 equal almost half the current SBP reserve holdings. Impliedly, unless the reserves are re-built, there is a possibility that either Pakistan may cripple its economy by stopping even essential imports like oil to repay its external on time, or default on its foreign debt repayment commitments. In the next two years, there is little hope of increasing export trade at a healthy pace i.e. 20 to 30% rise annually, given the fact that Pakistan’s export sector wasn’t encouraged to enter the less recession-stricken Second World countries. With its continuing slump, European market won’t grow quickly. The option that may help is to shift exports to new markets, such as India, but what is crucially important is attracting foreign direct investment to significantly increase foreign inflows. There was a time when Pakistan could attract investment up to $8 billion in a year but by 2011-12 its level fell to just $866 million. Undoubtedly, these flows were expected to drop due to the global recession but not as much if Pakistan was being governed well in terms of sustained power and energy supply at a reasonable cost, law and order chaos didn’t interrupt any economic activity, and market regulation improved to assure foreign investors a secure environment, at least at par with, say, India, Sri Lanka and Bangladesh, if not better. None of these key drivers of the economy was a priority of the in-power regime from day-1. This quality of focus could lead to no better results except downgrade of sovereign risk; for the in-power regime, it is too late to strive for a reversal of its indictment. A change alone could restore confidence.
E ditorial London Olympics: the challenges they pose
fter a four-year preparatory effort, Olympic Games began in London on July 27. During this period, a huge amount of resources went into building a variety of stadia for the many events of the Olympics. Prime Minister David Cameron had earlier hinted that the three-week long Olympics were going to be a $20 billion bonanza, but (according to The Economist) in the decades beginning 1960, Olympics proved financially unproductive for the host countries due to cost overruns and the present Olympics in Britain (that Joined the US and Nato in several controversial invasions of Muslim states in the last two decades) also face a serious security threat. Yet, until virtually the last minute, the security arrangements remained a question mark because of the confusion created by the private security agency that was hired by the British Olympic Committee. The security agency G4S, said it can’t provide the full security force of 10,400 guards at the games venues forcing the British Defence Ministry to mobilize an extra 3,500 soldiers and raised the contribution of the armed forces to 17,000. Days before the games actually began a looming possibility was, that if the security firm failed to recruit a minimum of 7,000 multi-national and multi-lingual security guards, 2,000 more troops may be required. Despite this confusion Culture Secretary Jeremy Hunt reiterated government assurances that the games would be safe in London, where civil disturbances last winter had paralyzed life for days. While he was promis-ing safety not just to Londoners but to thousands of visitors from abroad, came another shocker; on July 19, Aslef, union of the railway workers, announced that 450 of its members in central England would walk out between August 6 and 8 in protest over a dispute concerning their pensions. Along with the threat by Aslef, came the announcement by the border officials to go strike on July 26, a day before the start of the Games. This threat held the potential of delaying thousands of visitors arriving for from abroad. The unusually wet weather also threatens to dampen the spirits of the event organizers as well as the potential audience. The wet weather has earned the Olympics the nickname of “Soggy Olympics”. This was hardly the kind of setting that could encourage the foreigners–the source of huge financial inflows into Britain from their stay in London to watch the Olympics. The attack on Israeli tourists in Burges on July 18, while travelling to the city’s airport, served to revive the memories of the July 2005 suicide attacks on London’s transport system by terrorists in which 52 people were killed. But Hunt was sure that Britain’s “extremely competent intelligence services” were capable of responding to any such threat. Let’s hope he is right. The developing scenario also revived the memories of the 1972 Munich Olympics. Then, the Palestinian group ‘Black September’ had attacked Israeli athletes participating in those Olympics. On September 5, 1972 terrorists from this group, armed with Kalashnikov rifles and hand grenades, stormed the quarters of the Israeli squad killing two squad members
and taking hostage another nine. The terrorists then sought the release of Arab prisoners and their own safe escort back to an Arab state–Libya. Later, all the nine hostages and their five captors were killed when the German police carried out a botched rescue operation. These developments scared the British Premier who was on a visit to Afghanistan. While he did not refer to the looming security threat, he called the strike threat by railway workers unjustified and said that “I would strongly counsel the union thinking of disrupting this very important period. I think they (the unions) would lose huge amounts of public support if they really tried to do this.” He also said that it’s a moment when Britain should show its best face to the world, and that is what the vast majority of the public wants. Indeed that is what the British civil workers should be doing but the after effects of the recessions have made their lives pretty difficult forcing them to seek better terms of service. In a period of pervasive frustration caused by rising layoffs, and consequent unemployment, events that encourage huge public gatherings are prone to becoming forums for express-ing popular dissent, which can become violent–a reality that we experience everyday in Europe. The ‘Occupy’ movement that began in the West is the outcome of this state of affairs. London Olympics may afford the opportunity this popular movement needs, to express the frustrations of the masses over the way governments have managed their economies in the past decade heralding the ongoing economic recession. A section of the British media is also expressing its doubts about the Olympics being economically productive in terms of generating a surplus over the public funds invested in the infrastructure created for the Olympics. That London is now one of the most expensive cities in the world is a grim reality. Besides security fears, London’s being expensive is another restraint for the foreigners at a time when savings have gone down globally; travelling to London to watch the Olympics doesn’t seem an attractive idea to many even in the much less recession-stricken East Asian countries. Holding the Olympics at the present time is a challenge for any state that is involved in military actions that are seen to be part of the highly discredited ‘war on terror’ and partisan direct (in Libya, Iraq and Afghanistan) and indirect (in Syria) military action in the Middle East. It is no wonder that travel agents and hotel and motels in London have not received the response they were expecting from the foreigners in terms of travel and hotel bookings. Put together, these aren’t the signs the organizers of the Olympics anticipated. But Olympics are the venue for the world’s sportsmen and women to assemble in one place and exhibit the best of their talents; it mustn’t be marred by man-made tragedies because it is an opportunity for all the nations to forget, at least for a while, their political rivalries and join hands for a good cause.
E ditorial Of the coalition’s full term in office
What none in the coalition parties seems to realize is the fact that one more year in power (unless it is used to prepare for escaping abroad with the wealth amassed while in power) is by no means enough time to make amends for the coalition parties’ gross misconduct during their tenure in office. They have done irreparable damage to the country’s economy and its unity, courtesy the so-called devolution of power, which is a mere deception if the state can’t muster the resources that would be needed by the provinces to deliver results. Not a day passes without the media reporting waste of state resources, their being embezzled or being pocketed by a state functionary. The sums involved in these cases over the past four-and-a-half years add up to trillions, which is reflected in the fact that public debt more than doubled during the term of the coalition government. If one asks what those funds did because nothing improved, the regime’s pet response is “don’t you know the world is in a recession?” The regime’s over-optimism about the masses’ lack of know-ledge about what goes on has been its biggest blunder, since the media is far more alert and informative than in the 1970s or the 1990s. People may not know precisely how national wealth was squandered away but they know that that’s what the regime did. What makes the regime’s case worse is the fact that it always tries to balance supply shortfalls by price hikes without any concern about is impact on the ordinary. Until now, Pakistani history was devoid of instances of price rises with retrospective effect. It is a common practice now – one that lacks both legality and morality but does not bother the government. In fact, such increases in the power generation sector have government sanction although, in a scenario of rampant inflation, retrospective price increases imply that people pay out of savings that they no longer have. Yet, the regime claims that it is a peoples’ regime and has their mandate-it is a sick joke that brings tears to your eyes. That democracy never delivered results in Pakistan is now an undeniable reality. The reason is that has it always elevated to power the corrupt landed aristocracy of Pakistan. This class has petty, self-serving ambitions, not a desire to do anything memorable for the benefit of the country. That it is the case is proved by the fact that (except a few in the pre-partition times) no landlord ever thought of setting up even a primary school from his resources, let alone do anything memorable in this context–set up a college or hospital;. Contrary, thereto the latest is that 8,000 ghost schools exist on official records. Each time democracy descends on Pakistan, two-thirds of its suppressed electorate is forced to vote the landlord class into power. This class rips the country, and when it is threatened with expulsion, its stalwarts complain that they weren’t given enough time to put things right. Well, the incumbent regime is close to completing its term, but what did it do? Didn’t it make this country worse off in every way including its image abroad? Didn’t it do that more recklessly than ever before?
ever before in Pakistan’s 65-year history did you witness the kind of executive-judiciary confrontation being witnessed now. The President, Prime Minister, federal and provincial ministers, and parliamentarians of the coalition parties, have set new records of defying the judiciary. All this goes on in the name of supremacy of ‘democracy’ and ‘unquestionable’ mandate of the parliament. Effectively, the parliament is now claiming a ‘divine’ status, since it considers itself beyond any accountability. Ridiculous as it is, this stand could have a shade of legitimacy had the parliament delivered on any of its promises in reality, instead of spending four-and-a-half years only on amending the constitution. That initiative only escalated the chaos, not deliver practical results since requisite administrative changes in these setups in the provinces (that could ensure delivering better results) were not envisaged while devolving power to the provinces. Other than the controversial amendments to the constitution that devolved power to the provinces and forbid state office-holders’ accountability by the judiciary, there is little that the regime in power can cite as its achievements. Power shortfall has virtually paralyzed the country’s economy, street protests are making it worse, and the non-existent enforcement of the law is manifested by the daily target killings that go on day in, day out. While the Supreme Court has given the new Prime Minister until August 8, to write to the Swiss Courts to re-open the money-laundering cases pending against the President, what is highly likely is that, like his predecessor, the Prime Minister will refuse to comply with the court instructions and create another legal crisis of the ultimate magnitude. If, however, he decides not to become another Yusuf Raza Gilani, he could request the court to wait until the next elections – an option that the court had given the previous Prime Minister. While it would be odd to accept this response to the court’s instructions (that effectively amounts to contempt of court), the court may accept this plea, provided the Prime Minister also commits to call early elections. But rumour has it that coalition partners are busy discussing another amendment to the constitution whereby the term of the sitting parliament could be extended by a year. Reportedly, the inspiration for this amendment comes from the fact that, in 2013, the Chief Justice of the Supreme Court and the Chief of Army Staff are due for retirement. It would be no surprise if the sitting parliament does legislate to extend the term of the sitting parliament; with the almost reckless majority the coalition enjoys, it can do anything, as it has proved thus far. The coalition partners know very well that given the way they have administered the state in the last four-and-a-half years, they need the security provided by the state because without it, they could be taken to task by over 80% of the population, and that too in a ruthless manner.
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is Pakistan based Coal trading entity which was incorporated in the year 2002. The company started its operation as an importing company and for the last two years it has also started supplying domestic coal (Pakistan coal). So far the company has imported and supplied 5 million tons of coal, from South Africa and Indonesia, to the cement factories. This opportunity of supplying coal to cement factories was created due to their (Cement factories) shift from furnace oil to coal as the main energy fuel. Since then the company has been sincerely committed in its mission of
supplying coal to factories as a source of energy. What you sell is important! So we source our Coal from best suppliers around the world. Developing longterm relationships has been the hallmark of our company. Our promise that â€œwe deliver, no matter what the situationâ€? has earned us, the confidence of our buyers. The success of our trading can be gauged from the fact that we are now importing 21 vessels (1 million ton) of coal in a year which as resulted in 30% market-share for Awan Trading Co and hopefully the share will increase in the coming years.
P olitics Techno-war: the deadly invention critical nodes devoid of all moral values that can be defeated simply by identifying and physically destroying them– is the doctrine that has been evolving and becoming more extreme since the development of ‘daylight precision’ US Airforce pilot controlling drone that is evolving and turning more ruthless since the ‘strategic’ bombardment doctrine was evolved by the US Army Corps during WW-II. Now, in Pakistan, the critical nodes are Taliban and al Qaeda leadership–both creation of the US. The center of the theory of techno-war is a comforting idea that precision bombing (in WWII, via technical wizardry of the Norden ‘bombsight’ and the ‘blind’ bombing systems like the H2X radars), could enable America precisely attack ‘military targets’ deep inside hostile territory, and avoiding destruction of civilian lives and property. In fact, its proponents claim, absurdly as it turned out, that daylight precision bombing can save lives by obviating the need for a land invasion. Drones, coupled with precision guided weapons have helped evolve this mentality into a new level of recklessness because its gripping effect on American psyche further disconnects the killer (sitting thousands of miles away) from the outcome of the killer’s actions. The killer’s clinical detachment creates an illusion– that war is cleaner and easier to wage and civilian casualties become morally acceptable as the good intentioned accidents. The term ‘collateral damage’ says it all. The report by Cloud ended by listing American apologies, and financial payoffs to the survivors of the civilians inadvertently killed – although, given the emptiness of the ‘dialogue’ he revealed, Cloud’s idea that deaths are collateral damage by a ‘precision’ killing machine sounds bizarre. The illusion of techno-war is soothing to generalissimos like Clinton, Bush, and Obama, and accompanying video games provide a distraction to the Americans being impoverished by government policies that re-distribute wealth to the super rich. Besides, by making war at a distance easier to prosecute and painless for Americans (at least, for now), the fallacies of techno-war set the stage for America’s remaining in a state of perpetual war. Continuous wars, or threat thereof, help prop up the sclerotic military-industrial-Congressional complex built during the cold-war era, and create unending demands for high-tech, war-winning products–without that America can’t sustain its clout as the lone ‘super power’. Besides, it also helps redistribute wealth to the war-machine backing rich class. That’s why, every time the techno strategy fails to deliver, as it often did–Korea, Vietnam, the two Iraq wars, Kosovo, Afghanistan, and then in Libya–the focus is not on the ‘lessons learned’; it is on recommending a higher outlay on devising more destructive war technology–sensors, guidance gadgetry, command, control, communications, and intelligence systems.
Following is the summarized version of an article authored in April 2011, by Franklin “Chuck” Spinney, a former military analyst for the Pentagon. The facts he has collected are both amazing and frightening. The part that is shocking is that techno-war – devoid of any moral sense – has had the blessings of the White House residents, one after the other since WW-II.
ast year, on April 22, US Defense Secretary Robert Gates announced that President Obama had approved initiation of drone strikes in Libya. Vice Chairman of the Joint Chiefs of Staff, Gen. James Cartwright later claimed that drones were ‘uniquely’ suited for attacks in urban areas because they can fly lower and get better visibility of targets compared to a pilot's eyeballs. Gates went on to claim that drone strikes in Libya would be carried out for ‘humanitarian’ reasons. In effect, they sold Barack Obama the idea of Pakistanizing the Libyan War i.e. pursuing a military strategy of relying on drone attacks to destroy an adversary hiding in the environ- mental backdrop. The astonishing fact was that Obama fell into the trap despite the fact that, 12 days earlier, a report in the Los Angeles Times by David Cloud illustrated yet again the absurdity of the claims made by Cartwright and Gates. Cloud's report is worth reading. Quoting actual transcripts of conversations among drone operators, Cloud revealed the sinister psychological effects the so-called techno-war has on American soldiers. Their sterile dialogue vividly showed how the idea of precision techno-wars fought from a safe distance desensitizes the American ‘warriors’ to the bloody physical effects of their actions on the people they are maiming and killing and the assets they are destroying. There is no bravery, soldierly honor or a spirit of self-sacrifice among the drone operators safely ensconced in Nevada; they are just cogs in a dysfunctional dehumanizing machine. This is revealed by the total absence in their dialogue of a psychological appreciation of their ‘adversary’. Consider, for example, the emptiness in the following dialogue reported by Cloud: While the drone operators in Nevada guided a drone to hit a reported bunch of terrorist somewhere in Afghanistan, those Afghans were unfolding what looked like blankets, and then kneeled in prayer. "They're praying. They are praying," said the predator's camera operator, seated near the pilot. By then [that is after clearly seeing that the Afghans were praying] the predator crew was sure that the men were Taliban. "This is definitely it, this is their force" said the cameraman. "Praying? I mean, seriously, that's what they do [i.e. carry out terrorism in prayer]. [Now] they're gonna do something nefarious," the crew's intelligence coordinator chimed in. Lack of inquisitiveness into the mind of the enemy is in stark contrast to Pentagon's subtle psychological appreciation of its domestic adversaries, which has been hugely successful in waging and winning its budget battles to extract money from the American people. Extreme psychological one-sidedness on America’s side is nothing new in its military operations. It has been the central feature of the American way of technowar for a long time. Indeed, the theory about the adversary being merely a physical set of targets – a dehumanized set of
P olitics The ‘Longest War’: overcoming lies and indifference
by Kathy Kelly
Kathy Kelly n April of 2003, I returned from Iraq after having lived is the Co-coordinator of the Chicago-based there during the US ‘Shock and Awe’ bombing and the Voices for Creative Nonviolence, a movement initial weeks of the invasion. Before the bombing I had dedicated to ridding the world of wars as the route to travelled to Iraq about two dozen times and had helped resolving disputes organize 70 trips to Iraq, aiming to cast light on a brutal sanctions regime, with the ‘Voices in the Wilderness’ campaign. following Shock and Awe, the war and its effects had killed As the bombing approached, we had given our all to help- upwards of 660,000 Iraqis. This credible report, backed by ing organize a remarkable worldwide peace movement prestigious academic institutions, had been ignored by the effort, one which may have come closer than any before it, government, and thus also by the media, allowing a disinterto stopping a war before it started. But, just as, before the ested public to avoid learning information they'd mostly been war, we'd failed to lift the vicious and lethally punitive careful not to ask for. In his book, Tirman was now trying to economic sanctions against Iraq, we also failed to stop the understand how the U.S. public could have been so indifferent. war, and the devastating civil war that it created. His eventual explanation focuses on how hard U.S. war So it was April and I'd returned home, planners (and war profiteers) have devastated at our failure. My mother ‘Voices for Creative Non- worked to overcome “the Vietnam possessed ample reserves of Irish charm, violence’ tries to assist in Syndrome,” which is to say the healthy motherly wisdom, and, for purposes of democratic rejection of the Vietnam educating the general political analyses, a political analysis War, which authorities across the consistent with that of Fox News Chan- public about people who liberal-to-conservative spectrum have bear the brunt of our nel. She knew I was distraught and, tended to see as a sort of disease to be aiming to comfort me, she said the wars – so we travel to eliminated. The inoculation campaign following in her soft, lilting voice. “Kathy, war zones and live along- had been very effective: By creating an dear, what you don't understand is that all-volunteer army, by carefully regimentside ordinary people, the people of Iraq could have gotten rid ing and ‘embedding' reporters and of Saddam Hussein a long time ago, and trying, upon our return, to relentlessly emphasizing “humanitarthey ought to have done so, and they get their stories through ian” goals to be achieved by any exercise didn't. So we went in there and did it for to ordinary people in the of our power overseas, the US militarythem.” She clearly hoped I could share industrial complex has been able to US. We hope that by her relief that the US could lend a assure that the majority of US people helping hand in that part of the world. doing so we can eventu- won't rise up in protest of our wars. If “And they ought to be grateful, and ally help motivate civil the public can be persuaded that a war they're not.” is essentially humanitarian, Tirman society into action to believes their indifference can be counted My mother, then in her eighties, was oppose these wars.’ on, in spite of the number of US actually quite anti-war, but she was also against evil dictators, and the governance of any country soldiers killed or maimed or psychologically disabled by their where she was consistently told we might need to invade. If a wartime experiences, regardless of the drain on US econowar could be packaged as necessary to achieving humanitar- mies, however stricken or depressed, and without any apparent ian goals, then my mother would almost certainly join the concern for or even awareness of the horrendous consemajority of US people, over the past decade or so, in tolerat- quences borne by the communities overseas that are the ing wars or at least enduring them with a general indifference targets of our massively armed humanitarianism. Adding to a to any accounts of the human suffering the wars might cause. predisposition on behalf of saving people from evil dictaAlthough the war in Afghanistan is often referred to as the tors, the US population and that of many western allies longest war in U.S. history, the multistage war in Iraq, begin- face declining availability of jobs. Available jobs are ning in 1991 and inclusive of 13 years of continual bom- increasingly controlled by either the military-industrial bardment and nightmarish, generation-wasting economic complex or the prison (criminal justice) industrial complex. warfare waged through military-enforced sanctions, consti- A few years ago, many people disenchanted with the Iraq tutes the longest war, one which in real terms is of course and Afghan wars placed hopes in Obama as someone who would uphold the rule of law, including the international ongoing. laws, ratified by US congresses past, against international John Tirman, of the Massachusetts Institute of Technology, aggression and war crime, ending those abuses by the US attempted, in his book The Deaths of Others, (Oxford Univer- military, its private-sector contractors, and the CIA, which sity Press, 2011), to understand how US people could be so have contributed so to worldwide hostility against the US indifferent to the suffering caused by US military actions. and have arguably so greatly lessened our security. But the He was following up on his seminal study of Iraq war Obama administration, in its de facto continuation of both casualties, released by John Hopkins and printed in The wars, in its massive escalation of targeted assassinations worldLancet, which had concluded that in the three and a half years wide and its secrecy about drone warfare against Pakistan,
P olitics discussing, in all manner of public discussions, the fundamental unfairness of systems designed to benefit small elites at the expense of vast majorities; and the OWS movement welcomed anyone and everyone into solidarity in building towards more humane, more just, and more democratic communities. The peace movement should participate in and encourage this remarkable network, and similar organizations that will spring up to complement it, not only to demand more jobs and better wages but also to stipulate what kinds of jobs we want and what kinds of products we want those jobs devoted to creating. We must campaign for jobs that build our society instead of converting it into junk – that produce constructive and necessary goods and services and above all not the weapons that we employ in prisons and battlefields at home and abroad. We must think hard about ways to democratize our country, and reverse the “unwarranted influence” over our society which, half a century ago, a Republican president was warning us already belonged to the military industrial complex. Enormous sums of money, along with human ingenuity and resources, are now being poured into developing drone warfare and surveillance to be used abroad and increasingly at home, but the more intelligence our leaders collect, the less we, the led, have access to. The drones aren't there to help us understand the Afghan people – how they huddle together on the brink of starvation, dared to survive the capricious and uncivilized behaviour of a nation gone mad on war. Have we any means of imposing civilization, not on desperate people around the world, but on those who lack it - the elites that control our military, our economy, and our government? And honestly, I couldn't persuade my own mother. I should admit here to a recent conversation with my sisters, the oldest of whom recently shared, “We weren't sure whether or not to tell you, but mom really did hope you were working for the CIA.” We never know how we will influence others and what unexpected developments might happen. The destiny of a world of seven billion people should never be shaped by a few activists – as it currently is shaped by a remarkably few activists occupying the US Pentagon, our business centres, and the White House. We're not supposed to make any change we can securely claim credit for – we're supposed to do good for the world – to speak truth to it, to resist its oppressors, to surprise it with decency, love, and an implacability for justice; and trust it to surprise us in turn. With eyes wide open, willing to look in the mirror, (I'm drawing from the titles of two extraordinarily impressive campaigns designed by the American Friends Service Committee), we must persist with the tasks of education and outreach, looking for nonviolent means to take risks commensurate to the crimes being committed, all the while growing ever more open to links with popular movements and respectful alliances well outside our choir. We must civilize the world by examples of clear-sightedness and courage. We're supposed to do what anyone is supposed to do; live as full humans, as best we can, in a world whose destiny we can never predict, and whose astonishingly precious inhabitants could never be given enough justice, or love, or time.
has repeatedly shown our government's unshakeable allegiance, to militarists and those radically right-wing advocates of corporate power we're often now asked to call “centrists”. I think, we, in the peace and antiwar movements, find ourselves stalemated. Groups are outspent and out-manoeuvred by military and corporate institutions with power to undercut whatever “clout” our movements might have developed because these two complexes have now arrogated so much antidemocratic control over the media and the economy. Nonetheless, grassroots groups persist with arduous and often heroic efforts to continue educating their constituencies and reminding ordinary people that the defence industry is not providing them with any of the security that it assuredly isn't providing for people trapped in our war zones. What direction should the peace and antiwar movements pursue now? Now, when it seems difficult to point toward substantial possible gains? Now, as the US continues to wage multiple wars and build on a weapons stockpile that already exceeds the combined arsenals of the next most militarized eighteen countries on Earth? In advance or in retreat, we have to keep resisting. Surely, we must continue basic “maintenance” tasks of outreach and education. ‘Voices for Creative Nonviolence’ tries to assist in educating the general public about people who bear the brunt of our wars – so we travel to war zones and live alongside ordinary people, trying, upon our return, to get their stories through to ordinary people in the US. We hope that by doing so we can eventually help motivate civil society into action to oppose these wars. But while working to preserve the heart of the society, its civilization in the best meaning of that term, we know we must always organize for and participate in campaigns designed to have the greatest possible impact on policymakers now, and through them on those whose lives are so desperately at stake. That commitment in turn is part of our message to our neighbours to reclaim their humanity through action. It's not just each other's hearts, but also each other's minds that citizens of a democracy are called upon to exercise. We must constantly appeal to the rationality of the general public, engaging in humble dialogue so they can appeal to ours, helping people see that US war making does not make people safer here or abroad, that in fact we are jeopardized as well – if only by the intense anger and frustration caused by policies like targeted assassination, night raids, and aerial bombings of civilians. We should celebrate the tremendous accomplishment of Occupy Wall Street. In just twelve weeks the “99 and 1” logos reintroduced people, worldwide, to the normalness of
P olitics Contempt of Court Bill-2012: an attempt to silence the judiciary?
he five-member bench of the Supreme Court, headed by the Chief Justice of Pakistan, Justice Iftikhar Muhammad Chaudhry, has annulled the new Contempt of Court Law 2012 which, as generally perceived, aimed at immunizing the ‘public office holders’ from judicial scrutiny, and, as the apex court held in its 21-page short order, it was clearly ‘an attempt to reduce the powers of the court.’ After hearing 27petitions on the subject for ten days, the apex court observed that the judiciary had never claimed supremacy over other organs of the state but it had a duty to interpret the constitution and the law. The court noted that by enacting the Contempt of Court Law 2012 in pursuance of Clause (3) of Article 204, read with Entry 55 of the Fourth Schedule to the constitution, an attempt had been made to reduce the powers of the court. The court, therefore, declared the law as unconstitutional and void. The Court also revived the Contempt of Court Ordinance 2003 w.e.f. July 12, the day when the new law was enforced. The Parliament had passed the new law last month following conviction of the former Prime Minister Yousuf Raza Gilani for refusing to obey the Supreme Court’s orders to write letter to the Swiss authorities to reopen corruption cases against President Asif Ali Zardari. The Supreme Court’s verdict striking down the new law was not something unexpected. The way the law was got through gave an indication that it would be struck down by the court. ‘This law was destined to be declared void the moment it was assented to by the president,’ commented Advocate Rana Waqar who authored one of the 27 petitions that challenged the new law. The government had succeeded in having the controversial “Contempt of Court Bill-2012” passed by the National Assembly on July 9, endorsed by the Senate just two days thereafter, and signed into law by the President the same evening, despite the opposition’s protests, walkFair comments out and warnings that the new on the general legislation would be ‘shot down’ working of by the court. Surprisingly, courts made in though, the top leadership of the opposition, especially of good faith in PML-N, was conspicuous by the public absence from the National interest and in its Assembly session on this imptemperate ortant occasion lending strength language shall to the perception about them not come under being the ‘friendly opposition.’ the contempt Laws, all over the world, are of court. made for the overall good of the people, not for the benefit of ‘certain individuals’; in the latter case, the laws lose their credibility. Interestingly, however, the Contempt of Court Bill-2012 was generally considered as a calculated person-specific move of the treasury benches since it sought to exempt the holders of public office from trial and prosecution for contempt of court in ‘exercise of powers and performance of functions of their respective offices’. According to the new law, the president, the prime minister, provincial governors and the chief ministers, federal and provincial ministers, and ministers of states were not to be held answerable
by Jauhar Ali
to any court for the exercise of powers and performance of functions of their respective offices under clause (1) of Article 248 of the constitution, for any act done or purported to be done in the exercise of those powers and performance of those functions. Surprisingly, the bill was reportedly claimed to have been adopted “unanimously” although there was no mention of the exact number of parliamentarians who supported or opposed the move. But two PPP stalwarts, Senators Aitzaz Ahsan and Mian Raza Rabbani had openly expressed their reservations against the contempt law, pointed out its flaws, and said that the Supreme Court could partially strike it down. The leader of the opposition in the Senate, Senator Muhammad Ishaq Dar called the Bill ‘the result of mala fide intention and a slap on the face of parliamentarians’. He alleged that the House was being bulldozed by the government in total disregard to rules and procedures. In particular, Babar Awan made a severe dig on the Law Minister, Farooq H. Naek when he said that the contempt law had been prepared by the same “munshi” who had authored the NRO, which could not stand the judicial scrutiny. An interesting clause incorporated in the bill was that ‘fair’ comments about the general working of courts made in ‘good faith’ in the public interest and in ‘temperate language’ would not come under the contempt of court. Also, a true averment made in good faith and in temperate language for initiation of actions or in the course of disciplinary proceedings against a judge before the chief justice of a high court, the Chief Justice of Pakistan, the Supreme Judicial Council, the federal government or a provincial government would not amount to commission of contempt of court. There was no mention, however, as to who would judge the actions being “fair” or “in good faith?” The question remained un answered. Having been legislated at a time when the cases of the PPP leadership about contempt of court were being heard in the Supreme Court, the new law was increasingly being perceived as a black law, a direct aggression on the judiciary, a move that could intensify tension and confrontation between the government and the superior judiciary, an attempt to create a privileged class of leaders exempt from answerability to any court, and, more importantly, an apparent design to save the new Prime Minister Raja Pervez Ashraf from meeting the fate of his predecessor Syed Yousuf Raza Gilani. “It is a black day in the history of the parliament as the bill is direct aggression against the superior judiciary,’ said PML-N leaders Khawaja Saad Rafique and Khurram Dastgir.
P olitics Observance of the rule of law is the key to progress. This perception has world-wide recognition. The problems confronting different nations in Africa, The Constitution Asia, and the emerging demoempowers the cracies are far from identical. Supreme Court However, it is generally acceptto strike down ed that, if progress is to be achieved, it is necessary to any law which improve the observance of encroaches the rule of law. Seen in this upon the context, the bill that sought to constitutionally create a class which was above the law, could only be perceived guaranteed regrettable especially at a basic rights of as time when the Supreme Court the citizens had already sought the prime minister’s response on implementation of the NRO case requiring him to write to the Swiss authorities to reopen graft cases against President Asif Ali Zardari. The Law Minister had said that the government respected the judiciary and that there was nothing in the Bill to offend the apex court or infringe upon its authority. That being so, it is not understandable as to what else was the rationale for framing and promulgating the new law which, according to the Chief Justice of Pakistan, was a replica of the Contempt of Court Act 1976, barring a few clauses. The haste with which the bill was legislated and the assertions made in defence thereof apparently pointed to the underlying intentions and lent strength to the view that the move was an attempt to tie the hands of the judiciary, disgrace it and clip its independence. This Bill also conveyed a message that defiance of the law by the top state officeholders was no longer to be considered as an offence, and encouraged them to run the state regime without any fear of accountability. This could clearly be seen through the tirade of two PPP parliamentarians, Noor Alam Khan and
Jamshid Dasti, on the role of the judiciary, just a day after the passage of the new law by the National Assembly. They came out hard on the role of the judiciary, questioned the impartiality of the Chief Justice of Pakistan, and asked why the apex court had not taken suo moto notice of the several casualties in Punjab in the wake of the strike by young doctors. Recently, addressing a ceremony of newly-enrolled advocates for the Supreme Court at the Karachi registry, the Chief Justice of Pakistan had spoken his mind. He said that the apex court was empowered to strike down any law which was in conflict with the Constitution. “The Constitution embodies the will of the people and empowers the Supreme Court under Article 8 to strike down any law which encroaches upon the constitutionally-guaranteed basic rights of the citizens”, the Chief Justice observed while referring to the misconception regarding the supremacy of the parliament. The message was loud and clear, at least to most legal experts who were of the view that the Supreme Court would not look at the overhauled contempt of court law favorably. It is to be seen as to what is going to be the next move of the government now that the Supreme Court has declared the whole law as ‘unconstitutional, void and non est.’ All that has come forth so far is that the heads of allied parties, in their meeting held following the verdict of the apex court, expressed the resolve that the right of the parliament would be upheld and this right would not be allowed to be compromised, no matter what the odds and the cost. This apparently points to a possible trend of confrontation between the executive and the judiciary. It would be only unfortunate if that happens. Given the internal and external challenges facing Pakistan, there is need to have political-judicial restraint. It is high time the politicians, the judiciary and everybody else must sit together, think coolly and jointly evolve some sort of a formula that could take the country out of the impasse.
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E conomy Global drought and its impact on food prices
eather pundits of Pakistan are now reversing their forecast about higher rain this monsoon compared to the 2011 monsoon; they say that rainfall could be far less compared to last year. This trend now seems universal because the same is the case with the US. In fact, in the US, 2012 could be driest year in the last five decades. Same is the case in India, China and Russia. Despite the massive damage rain has caused in recent weeks in Beijing’s mountainous Fangshan region and south western Sichuan province, rain was welcomed in a drought-prone northern China which suffered from a lack of rain over the last decade. According to Xinhua, in Fangshan district, it rained for over 14 hours – the longest spell since records began in 1951. In Beijing, some areas experienced 18 inches of rain and on the capital’s central second ring road flooding was up to 3 metres (10 feet). Rescue workers were repairing damage caused to the city’s infrastructure and had to drain over a million cubic metres (35 million cubic feet) of water from the city’s sewer system. The rainstorms–most severe after 60 years–led to the evacuation of more than 50,000 people in the capital, mostly from Beijing’s outlying mountainous districts, and resulted in the deaths of 37 residents. But the fact that more rain has been forecast in the northeast and southwest of China was a relief for China’s government because it could result in higher crops and help bring down the food inflation that has soared to worrisome heights. The fact, however, is that China may still be short on food supply because rains have been late, and the predictions about rains in the next few weeks may not materialize because this year that is the trend in many countries, the worst hit among all of them being the US, which is the world’s largest producer of food crops. In the US, the world’s biggest producer of corn and soybean, according to Agriculture Secretary Tom Vilsack, 78% of corn and 11% of soybean crops have been hit by the drought, and the situation is far worse than in 1988 when the drought cut production by 20%. This shortfall will cause a major increase in the price of corn. Since early June, the price of a bushel of corn has risen 38%, and of a bushel of beans by 24%. This is because 61% of the country is affected, which is a far larger area than was the case in 1988; areas designated as drought disaster zones now add up to 1,297 counties spread over 29 out of the 52 states of the US. According to America’s National Drought Mitigation Centre in Lincoln, Nebraska, the drought was as tough as the worst experienced in the 1930s and 1950s, and its timing has been particularly devastating because it came just at the peak of the growing season over the central US farm belt east of the Rocky Mountains all the way to the Atlantic coast. Farmers are now looking to cut their losses by chopping down crops of half-mature, earless corn to feed the stalks to cattle, which is bound to cut corn availability during 2012.
Since June, temperatures have stayed over 100 F, for days at a stretch in many parts of central United States; this has been unusual and does not bode well for many sectors besides the agriculture sector but the prospects of food shortfall (and the consequent rise in food prices) during a period of escalating unemployment and poverty levels are threatening prospects. President Obama therefore ordered that the interest rates on emergency loans for farmers should be reduced, and drought affected zones should be opened for livestock grazing. This is a well thought out step because while crop yields may drop, adequate animal feed availability would not cut the output of the meat sector. But crop shortages are a definite trend that will impact food prices across the world for the simple reason that, instead of being one of the big exporters of food grain, the US will be an importer in 2012. If the weather does not improve in India, China and Russia as well, food crisis is likely to attain a global character. The World Bank is watching how the drought impacts global food supplies after sharp hikes in global food prices during 2008 and 2010 dealt harsh financial blows to the poor, foodimporting nations. According to Marc Sadler, team leader for the bank’s Agricultural Finance and Risk Management Unit, while it’s too early to be overly concerned, the bank is closely monitoring the developing scenario, for its possible impact on the bank’s clients. “Global stocks in most of the tradable grains are lower now than they have been historically...... We don’t have as much in the larder as we used to.” This adds to the worries of the food-importing countries. Traditionally, Pakistan has not been a regular food-importing state but weather conditions this year are proving worrisome. In the depressing global backdrop, forecasts of low rainfall materializing in Pakistan could make things very difficult at a time when Pakistan’s exchange reserves are already falling as it repays its maturing external debt liabilities. In this stressful period, importing food at prices that may rise not only due to crop shortages but also because of the brokers’ jugglery at global commodity exchanges (especially in the US); it could make things difficult and create room for frauds in the state’s purchase of food crops, as seen during the past four years of the present regime. With the regime’s focus fixed on ‘completing’ its term rather than doing anything in that term, we are headed for tougher times. As it is, consumer inflation has risen to levels that are beyond the common man’s ability to coup with. What seems likely in the near future is that further increase in food prices could add to the chaos on the streets, and disrupt whatever economic activity is there. But food price hike also offers the regime a chance to do something good for the common man by entering into forward food import contracts before prices go up. But, going by its track record (not buying oil forward in Feb 2009 when it was $36 a barrel) the regime may waste this opportunity as well to its own disadvantage.
E conomy The economy: where is it headed?
its first priority, given the fact that it took power immediately after the current economic recession unfolded on the global scene with full force. Instead, in the name of democracy the regime indulged in sustained mismanagement of the state. In the last four years, the government has doubled the public debt that accumulated over 61 years until 2008, while GDP growth kept sliding. Some show of competence in governance it is! Flawed governance led to waste of resources, and a sustained decline in Pakistan’s exchange reserves because power load- shedding broke the back of Pakistan’s manufacturing sector as a whole. Besides reducing exports, it led to higher import of otherwise locally manufactured goods causing in the trade and current account deficits to rise rapidly. Not surprisingly, what finally prodded Moody’s into downgrading Pakistan’s sovereign risk rating was the fact that the repayments due to the IMF in 2013 and 2014 alone equal half of SBP’s current reserve holdings. This has serious implications for the Pak Rupee’s exchange rate and inflation, which already seems beyond control. This trend is likely to worsen in the coming months because the impending drought will cut growth of the agriculture sector and force the import of basic items like wheat, rice, pulses, and sugar at prices that will be much higher because of the drought in the US, India and China. As wheat price crossed $300 a ton in global markets, the price in Pakistan increased by Rs 1,250 a ton, as exporters went into a mad buying spree fuelling fears that, by depleting its stocks and lower growth in the next season, in the coming months, Pakistan could end up importing wheat at much inflated global prices. To add to this is a disclosure by the Petroleum Ministry that Pakistan will face severe shortage of natural gas this winter. To face this gap, the Minister proposed to shut all the CNG stations in a 2-year period as if CNG demand will vanish into thin air. With exchange reserves falling rapidly, can Pakistan import more oil as the alternative, or can the demand for fuel be wished away? The regime’ standard response to resource shortfalls has been price hikes portraying its ignorance of the concept of price elasticity of demand. It does not know that demand for essential goods isn’t price-elastic i.e. demand for these goods can’t be cut by increasing their prices. It calls for reducing import of nonessentials to preserving resources for subsidizing the essentials, not programmes like BISP. The long-term solution lies in increasing self-sufficiency to reduce reliance on imports. For four long years relying on expensive rental power instead of increasing self-sufficiency in this vital sector is the biggest failure of this regime, which brought the economy to the verge of a total collapse. Yet, all its visibly self-serving policy decisions were justified in the name of democracy and the regime’s ‘public mandate’.
esponding to journalists’ questions over the big differences between the estimates of the economic indicators released by Ministry of Finance, and those by the State Bank of Pakistan (SBP), after delivering his keynote address at a seminar on ‘Poverty and inequity’ organized by the World Bank on July 24 in Islamabad the Finance Minister said, precise projections were the reason why Governor Yasin Anwar was heading the SBP. How appropriate was the Minister’s response, and did it undo the impression that the media has, is for the readers to decide. The latest statistics released by Pakistan Bureau of Statistics (PBS) indicated that, in FY11-12, Pakistan's trade deficit had gone up 36.3% to $21.271 billion over its 2010-11 level of $15.604 billion because, while imports went up by 11.13%, exports fell by 4.7%. But, subsequent estimates of decline in exports exceeded 11% over last year. What the PBS did not point to was the fact that $21.271 billion was the largest-ever annual trade deficit in Pakistan’s 65-year history. The focus was on the fact that compared to 2010-11 foreign inward remittances went up by $1.986 billion. The fact that the rise in trade deficit was $5.661 billion was not highlighted. This trade deficit is dangerous because in 2012-13, external debt servicing would be the highest, as foretold by the IMF in April. The question, which seems to bother none in either in the government or the bureaucracy, is “will Pakistan repay its maturing external liabilities, or is there a possibility of its defaulting on those commitments?” An indication of such an eventuality was that on July 13, Moody's Investors Service downgraded the sovereign’s foreign and local-currency bond ratings from B3 to Caa1, while its short-term rating remained unchanged at ‘notprime’, and the overall economic outlook as ‘negative’. This development will make it difficult for Pakistan to go to the global markets to float fresh debt to raise funds to retire its maturing external debt, which is what it has been doing for the past four years to repay its maturing domestic debt. Worse still, this scenario signals that Pakistan may default on its domestic debt repayment commitments and its sufferers would be Pakistani banks. The fact that FBR has accepted the reality that tax revenue collection has fallen short of the target by Rs 37 billion strengthens the chances of a default. The NAB accusation against five telecom companies of not paying Rs 47 billion as sales tax (which could partly cover up the tax revenue shortfall) is losing its credibility as the facts relating to that questionable levy are surfacing. Estimates of fiscal deficit now making the rounds suggest that, against its target of 3.67% of the GDP, it is already over 6% of the GDP and, in 2012-13, the government has no option, but to borrow more than what it did last year–over Rs 825 billion. The question is: “where will funds of this size come from?” Having suffered rating downgrade due to overlending to the state, banks would now be reluctant to lend. This state of affairs is not unexpected; from day-1 the regime was overly focused on politicking, not on rehabilitating and restructuring the economy, which should have been
E conomy Gas Outages in Pakistan
by Tariq Iqbal Khan
akistan is at present deficient in energy resources. Since it does not produce sufficient crude oil, it needs some other resource to meet its energy requirements. During the 60’s, Pakistan had much better energy mix as hydroelectric power was the major source of electricity. Due to political expediencies, no further progress could be made for additional hydro electric resource generation. After discovery of gas reserves, gas was also used for generating electricity. In 1973, PPL being the major producer of natural gas, would charge 84 paisas per MCFD (it was measured in cubic feet at that time). The natural gas supply side remained strong up to 2004. Whereafter there was a gradual decline. The estimate was that from 2008 onward, the Sui field of PPL would supply negligible natural gas. This proved to be correct. The main users of natural gas are: Industrial • General Industries • Power generation by CNG Vehicles WAPDA and IPP’s Commercial consumers • Fertiliser Domestic consumers • Cement The WAPDA power plants were installed in the 60’s and at that time the supply side was quite strong, but transmission lines did not have sufficient capacity to transport that quantity. Some of the IPP’s are on gas and some are on fossil fuels. The IPP’s on gas planned during the 1990’s was not a very good idea as the shortage of gas was very obvious. Fertilisers. It is generally said, perhaps due to lack of awareness, that we should stop the production of fertilisers and the gas thus saved may be allocated to other industries and power production. The first plant on the main grid of the gas pipeline was installed in the early 60’s viz NGFF (Natural Gas Fertilizer Factory) Multan. Subsequently it was expanded and the name was also changed to Pak Arab Fertilisers Ltd. The next plant was Dawood Hercules Chemicals installed near Lahore. Susequent plants installed on the main source of PPL were: 3. Pak China Fertilisers 1. Daudkhel 4. Hazara Phosphate 2. Lyallpur Chemicals 5. Fauji Fertiliser Bin Qasim and Fertilisers The recent new plant of Engro (Plant No.3) is also based on supply from the National Grid. The following plants are based on Marri Gas Field. 1. Engro – Plant No.1 & 2 2. Fauji Fertiliser Plant No.1, 2 & 3 3. Fatima Fertilisers Marri Gas Field was developed by ESSO Standard Eastern Inc., and the same company was the owner of Exxon (which subsequently became Engro Chemicals upon divestment by ESSO and Exxon). ESSO also disinvested their holding in Marri Gas field. Natural gas derived from Marri Gas is low BTU gas and cannot be used for general industry. Major
fertiliser industry was developed and installed on this low BTU gas which was not otherwise usable except for specially-designed industries or consumers. Two power generating plants (designed specifically on low BTU) of WAPDA were also installed on this field. When Fatima Fertiliser was being planned, the sponsors took care that they would get the allocation from this field which is a dedicated field, as this gas cannot be pumped into the system of the National Grid since, due to this act, the average BTU would go down and generate lower heat energy. The sponsors no doubt had to pay for the cost of the pipeline from Marri Gas Fields to Rahim Yar Khan but due to this additional cost on a separate pipeline, this fertiliser plant would not face gas shortages in the winter. The biggest failure of the policy makers was that they could not understand the long-term implications of getting the allocation of gas from the National Grid. (For Engro, it can be termed as greed also, because at that time they could use their political clout to get this allocation sanctioned from Qadirpur field and did not, or for that matter could not, visualise the long-term implications). This additional allocation from Qadirpur field for this expansion of Engro would have an adverse effect on gas availability to the general consumers and Engro as well, because the depleting gas resources would be detrimental to the general consumers and Engro. Now this third plant of Engro remains closed for 90 days each winter and in the coming years its elosure duration may be even longer. Had this plant been planned on Marri Gas, the gas being allocated to Engro would have been used by the general industry. According to Ministry of Petroleum, 65% of the Fertiliser Industry is based on Marri Gas, hence the argument to close down the fertiliser industry is flawed. It is possible that 35% of the fertiliser industry may be closed down and gas thus saved be the made available to the general industry. Another alternative could be that for the fertiliser industry based on the National Grid, gas required for their raw material purposes (known as Feed Gas) may be allocated from the National Grid and for gas required for heating purposes, they may shift to fossil fuels. This can save further 17% of the gas used by the fertiliser industry, as approximately half of the gas consumed by fertilisers is for raw material.
E conomy Urea and other carbon components of fertiliser are obtained from natural gas (methane) for which there can be no other substitute except Naphtha which could be used with modification in the plant that entails a sizeable capital outlay. CEMENT: The cement industry has already shifted to coal for quite some time and as coal is cheaper than furnace oil they are surviving in the competitive market. CNG: This gas is used in vehicles as substitute for motor gasoline and diesel. Major investments were made by the stakeholders in this sector. While vehicles run on Natural Gas are environment friendly, there was tremendous distortion between the cost of running a vehicle on gas and other fuels. Slowly, existing vehicles were converted to CNG and imports of factory-fitted vehicles started pouring in. In 2006/07, motor gasoline produced by Pakistan refining sector became surplus and the excess motor gasoline which was not required by the transporters and vehicle owners was converted to Naphtha, a lower value-added product, which was another national loss. The Advisor to the Prime Minister on Petroleum has announced that during the next two years, CNG in Pakistan would be phased out. This would result in loss of all the investment by the general public on CNG stations and the CNG equipment installed in vehicles. All the motor vehicles running on CNG would have to be converted to motor gasoline which would cause additional expenditure to users while the Government would also be required to pay for the additional foreign exchange on such import.
c. Aging infrastructure and old pipelines. d. Bad workmanship while connecting the distribution line to the consumers. e. Theft Generally speaking, transmission losses are negligible or less than 1% of the gas sold. Sometimes there are even negligible transmission gains. The companies need to invest a lot on the replacement of old pipelines, infrastructure and metering. The biggest distribution losses have been experienced in Bahawalpur and Multan regions where the distribution system was installed just in the beginning, even before Lahore and Faisalabad. The UFG in Bahawalpur region crosses 40%. Segregation of distribution sectors is therefore important so that the distribution loss could be localized and controlled through better administrative efforts. The old distribution lines, meters and regulators also need to be replaced or repaired. This would however need additional capital outlay. The gas distribution companies are short of cash resources. This shortage can be attributed to an inefficient collection system, circular debt, UFG and bad development plan implemented by the government. The biggest contribution to UFG is theft. Up to 2007, the UFG was generally between 7-8% of the total gas sold. This has increased to 13% by 2012. The political system has contributed an additional loss of around 5% of the total gas sold. Increased UFG The governments should have adopted appropriate policies in the area of energy to ensure uninterrupted supply as well as efficient use of available resources. One of the Gas losses is termed ‘Unaccounted-for gas shortage’ (UFG) which is defined as the difference between the total volume of the metered gas received by a gas utility during a period of time, and the volume of gas metered as having been delivered to the entity’s consumers. In 2005, the government headed by President Pervez Musharraf adopted the ‘Natural Gas Allocation Management Policy’ which identified the priority users during periods of critical shortages. Domestic and commercial sectors were placed at the top followed by the fertilizer industry. The fertilizer industry, except for the 3rd plant of Engro Chemicals, was planned much before this allocation. The third priority was assigned to the independent power producers, or IPPs which had firm gas purchase agreements. The policy did not help in overcoming the problem. The winter of 2011-12 witnessed severe gas load-shedding which led to also very low pressure for the household sector. the closure of several industries and CNG stations. There was As a consequence, rioting broke out in several cities. Corruption within the system as well as several built-in inefficiencies further aggravated the problem. UFG is usually one to two per cent in well managed systems; in Pakistan it was recorded at 12 per cent. This was equivalent to a loss of $470 million in 2011. There are a number of factors that contribute to high UFGs. These include dilapidated pipelines; meter-tampering resulting in gas theft; leakages because of the system operating at higher than required pressure; and poor quality of meters. According to a study by the World Bank, UFG in Pakistan remained unchanged for decades but there was an upswing by about one
CNG Fitted Motor Vehicles Worldwide Top ten countries with most CNG vehicles-2011 (millions)
Iran Pakistan Argentina Brazil India Italy People's Republic of China Colombia Uzbekistan Thailand World Total
2.86 2.85 2.07 1.7 1.1 0.78 0.61 0.36 0.31 0.30 14.8
Iran, Pakistan, Argentina, Brazil and India have the highest number of CNG run vehicles in the world.
Pakistan today is ranked second in the list of ten countries using gas-fitted vehicles. Commercial consumers: Use of gas for making tea, samosas, jalebis and other sweets, is sheer waste of this precious resource. Domestic Consumers: These consumers also waste this resource through inefficient usage in heating and burning. Unaccounted for Gas (UFG) One major factor of wastage of this precious resource is the phenomenon of UFG. This includes the following broad heads: i. Transmission loss. ii. Distribution loss. a. Leakages b. Faulty and old meters.
E conomy percentage point a year in 2009 to 2011. Taking note of this change, the Oil and Gas Regulatory Agency (OGRA) announced a regulatory regime that allowed it to impose large fines on the gas utilities for excessive UFG. The OGRA planned to move back to the original trajectory and was prepared to allow about 4.5% of UFG in 2012. In 2012, the World Bank was invited by the government to get engaged with the Sui Southern Gas Limited to reduce the UFG. The bank agreed to provide a loan of $100 million for this purpose. According to the bank’s loan document “the reduction in UFG would mean that more gas is potentially available for power generation and could displace expensive petroleum products being used for the same purpose.” The regulation does not improve the Gas supply into the system. The UFG penalty results in enhancement of Gas Development Surcharge (GDS). It is commonly believed that the consumer is required to pay for this inefficiency. This is against the fact, as while determining the tariff certain adjustments are made inclusive of UFG losses. The entire system needs to be cleaned. Better management and regulation must accompany increased investments. While vacating a stay order against gas price determination by the Oil and Gas Regulatory Authority recently, Justice Ayesha Malik of Lahore High Court re-articulated an old adage ‘justice delayed is justice denied’. She observed that gas companies cannot be run on stay orders for years by undermining the regulator and compromising their own efficiency. The fact, however, remains that the two utilities – SNGPL and SSGCL have been denying their consumers the benefit of fair gas pricing for three years on the basis of stay orders granted by different high courts. Justice Malik decided to club together three different cases and conduct detailed hearing on gas SNGPL pricing during three financial years – 2010-11, 2011-12 and 2012-13 – on August 28. This year the OGRA had determined reduction of Rs. 47.5 per MMBTU (Million British Thermal Units) by reducing the line loss limit from 7% to 4.5% for the two utilities. Both the companies were able to secure stay orders against the OGRA determination separately in the Lahore High Court and Sindh High Court. The previous stay orders for the last two financial years are also to be decided yet. On account of the failure to achieve loss reduction targets, the consumers/shareholders are estimated to have lost Rs. 38 billion in two years and Rs.70 billion in three years. The UFG is an issue which needs to be addressed properly. But more than the loss to consumers in the form of tariff, the two gas utilities, according to a Planning Commission estimate, are causing a cumulative annual loss of about Rs.350 billion to economy as higher gas system losses result in utilization of expensive alternate fuel that, in most of the cases, is furnace oil. These system losses are almost five times larger than the WAPDA’s combined distribution losses. The transmission and distribution losses of the two utilities that went up to 13% were resulting in wasteful consumption of 350 million cubic feet per day (MMCFD). Given the fact that furnace oil
is used as replacement fuel for power generation and industrial use,every million British Thermal Unit costs the economy an additional burden of $20 per MMBTU. As such, the daily additional cost on import of furnace oil comes to about $7000, translating into annual additional burden of $2.55 billion. Likewise, the domestic geysers are described as gas guzzlers whose efficiency could be increased by 20% by putting in a small conical baffle costing Rs.500 per piece in every geyser while the gas efficiency could be further improved up to 45% by installing instant geysers. The Gas Company supplies it on request; the cost is recovered through easy installment and is included in Gas bill under a separate head. These two measures alone could provide another saving of 250 MMCFD, reducing import bill by $450 million in three winter months. OGRA had arbitrarily fixed the gas distribution losses to 4.5% through mandatory 1% loss reduction every year until 2008 but the previous OGRA chairman raised the benchmark to about 11% in one year. After his sacking the original scheme was reintroduced. From the Companies’ point of view, 1% system loss translates into direct loss of 45 MMCFD per day or about Rs. 5 billion per annum. But economic loss in the value chain is higher than Rs. 300 billion MMCFD based on value addition theory. Over time, natural gas has become a vital energy source for Pakistan. In 2009-10, the country consumed about 1.5 trillion cubic feet of gas. All of this was produced from domestic fields. At the current output forecasts, the country is at or near its peak production. Remaining gas reserves in 2010 were estimated at 27.5 TCF which means that, at the present rate of consumption, they will be exhausted in about 18 years. The sector already faces a supply gap, of 0.5 TCF by 2015 which may increase to 2.0 TCF by 2025. However, additional supplies could be generated by tapping what the industry calls ‘tight reservoirs’. They are more costly but if exploited, domestic reserves could almost double. The pattern of consumption that evolved over the years was largely the consequence of government’s priorities and policies. By 2010, the electricity sector with 29% of the share in consumption was the largest consumer followed by general industry at 25%, preferred industries (fertilizer, cement and steel) at 18%, households at 17% and transport at 8%. But this pattern began to change as a result of the Government policies formulated in recent years. Over the six year period to 2010 although gas consumption increased at the rate of 2% a year, about half the rate of increase in the gross domestic product, there were significant differences among different users. Consumption by industry increased by 9% a year. It grew by 5% annually for domestic users, and at more than 30% for the transport sector. The last increase was the result of the government’s policy to switch automobiles from the use of diesel and gasoline to compressed natural gas, or CNG. Severe shortages of natural gas caused almost as much damage to the national economy and as much discomfort to the citizenry as the shortage of electricity. In both cases it was the failure of public policy that caused these shortages to occur.
T rade & Industry Auto spare-parts industry: is it being sidelined?
akistan’s automotive industry has been an active and growing field for a long time, though not as well-established to figure in the prominent list of the top auto producers. Despite significant production volumes, transfer of technology and localization of vehicle components remains low, although automotive industry has invested about Rs 92 billion over the years in manufacturing facilities, and contributed Rs 71 billion to the national exchequer last year. According to Ministry of Industries, Pakistan produced its first vehicle in 1953, at the National Motors Limited, established in Karachi to ass- emble Bedford Trucks. Subsequently buses, light trucks and cars were assembled in the same plant. Later, major Japanese manufacturers entered the market creating some competition in this sector. Assemblers of HINO Trucks, and Suzuki Cars (1984), Mazda Trucks, Toyota (1993) and Honda (1994) entered the local industry. Assembly of Daihatsu and Hyundai cars (1999), and various brands of LCVs and range of mini-trucks, commenced recently. The production of all sorts of vehicles, including motorcycles, cars, trucks, etc., manifested rapid growth in last decade. According to available data, motorcycle production in Pakistan has increased by leaps and bounds in the past 12 years. It has increased from a mere 100,000 units at the start of the 21st century to around two million this fiscal. No other industrial sector has shown such a high and sustained growth over the past decade. Similarly, the car industry of Pakistan also witnessed growth in production rate. Production of light commercial vehicles (LCV) and Jeeps, which rose to 179,000 units, represents an increase of 22% over FY11. Industry sales soared to the highest figure in four years with sales of LCVs and pickups soaring 15% month-on-month to 19,156 units, abetted by pre-buying by consumers in anticipation of the price hikes expected as a result of Euro-II compliance by manufacturers. Amid stiff competition from exports and the steep depreciation of the local currency, statistics released by PAMA establish that the major players in the industry managed to achieve massive growth during FY12. Pak Suzuki mustered a hefty 40% year-onyear growth as a result of the Government of Punjab’s Taxi Subsidy scheme with year-end sales standing at 112,157 units compared to 79,941 units sold during FY11. Indus Motors also recorded a 9% growth over last year aided by a steady demand for their sedans throughout the year. Indus Motor’s newly launched Vigo Champ, which gained 156% growth in sales from April to June 12, was another factor that led to increased sales volume for the manufacturer. Recently, in the month of July 2012, Honda Pakistan celebrated the 200,000th vehicle (City Aspire).
by Syed Asif Ali
According to auto market sources, one of the important reasons for increase in auto sales is the considerable increase in remittances which rose to $13.2 billion during the year to boost the sector’s profitability. However, in the absence of the sales boost as a result of govern- ment subsidy schemes ex- perienced this year, growth is expected to decline to 6% in FY13. Moreover, the sector’s profitability and productivity will also remain heavily sensitive to any structural changes in the tax regime as well as margin-eroding currency depreciations. In this regard, the entire industry’s focus remains riveted on the announcement of the long-term Auto Industry Development Program (dubbed AIDP-II) which will prove to be a critical factor in the industry’s growth going forward. AIDP approved in 2008 expired in June 2012. Terms of the new AIDP are yet being discussed with the stakeholders, and are expected to be approved in mid-August 2012 as Ministry of Commerce has sought some more time to examine the industry proposals. The industry’s stakeholders are of the view that the proposed AIDP will put adverse impact on flourishing industrial sector; hence they are opposing this program. The officials of Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM) and Pakistan Auto Manufacturers Association (PAMA) claim that the new AIDP was prepared without consulting the local industry and is a deliberate attempt to provide extraordinary benefits to a foreign auto group. According to them, the new AIDP should be based on a consistent policy of solid commitment to the local industry. According to the proposed AIDP, any new entrant in the Pakistan’s auto sector having production capacity of 100,000 units per year would be allowed to import 100% completely knocked- down units (CKD) at a levied customs duty for three years. Local auto and spare parts manufacturers are showing great concerns on this strategy of importing 100% CKD units as they have invested huge capital in local assembly and manufacturing plants. These changes in auto policy would adversely affect the motorbike sector. The Board of Investment’s initiatives to incentivize a Japanese motorcycle manufacturer’s re-entry into Pakistani market at a zero tariff rate has shaken the confidence of investors and local manufacturers. Allowing a new investor to import all motorcycle parts at zero duty would make a big dent in the local vending industry which has progressed through technology transfer and currently produces 95% parts locally, giving employment, and generating revenues through several hundreds of small- and medium-sized vendor units.
T rade & Industry During his visit to Japan on 21-23 Feb, 2011 President Asif Ali Zardari also held a meeting with Yamaha officials and reportedly assured them that his government has framed friendly rules and procedures for foreign investors in the auto sector. The delegation offered a proposal to manufacture Yamaha motorcycles in Pakistan. Yamaha now plans to invest $150 Million to establish a manufacturing facility of world renowned Yamaha Motorcycles in National Industrial Park, Bin Qasim, Karachi by acquiring 50 acres of land. In August 2011, a meeting was held in the Presidency to review progress on building of the Yamaha motorcycle plant in Karachi. The meeting, presided over by President Asif Ali Zardari, was attended by Senior Minister for Industries Ch. Pervaiz Ilahi, Secretary General to the President M. Salman Faruqui, Chairman BOI Saleem H. Mandviwala, Secretary Industries Aziz Ahmed Bilour, and Spokesperson of the President Farhatullah Babar. Later, briefing the media, Farhatullah Babar said that during the President’s visit to Japan and his meeting with Japanese investors and manufacturers, Yamaha Motorcycle Company had shown interest in setting up a motorcycle manufacturing plant in Pakistan. He said that during the meeting, it was informed that a team of Yamaha executives had already visited Pakistan to firm up plans and proposals for manufacturing motorcycles in Karachi. The President called for encouraging foreign investments in the country and to extend all possible facilities to the foreign investors to take advantage of investment opportunities in the country. The President said that motorbike was an economical means of transport for low income people and directed that all bottlenecks in the way of Yamaha’s investment and setting up of its manufacturing plant in Pakistan should be removed on priority basis and the process should be stepped up. BOI has also proposed to set up a new Japan Specific Special Economic Zone in Sindh Economic Zone with broad features offering one million acres of government land in the proposed area to provide direct access to Port Qasim. Yamaha is hoping to start production in Pakistan from early 2013. Much progress has been made in the project and land has been earmarked near port Qasim. If the government sets customs tariff at zero percent the payout period of Yamaha’s investment could be just five years. According to sources, Yamaha’s principal was hesitant to invest in Pakistan at 10% duty. Finally, however, Yamaha has agreed to invest in Pakistan and the company will introduce new models every year. The motorcycles will have EFI engine, Automatic Transmission, Water Cool & Environment Friendly Exhaust Systems meeting European standards. Yamaha will not only meet the demand of Pakistan’s market, but will also export its models to various CIS countries. Yamaha’s investment in Pakistan will create 45,000 jobs, and with the transfer of technology in manufacturing of motorcycles, vendor skills and capability and capacity will also be developed with exclusive training institutes run by the company. Local industry demanded that BOI should be neutral in policies and treat all stakeholders equally. On condition of anonymity, a senior official of PAAPAM said that the logic offered by one OEM, Yamaha, is particularly worrisome and against the interests of the country and future industrialization. Their local lobbyists are none other than advisers employed directly in the
BOI to serve their interests. Local industry is against the government decision of waiving off the import duties for new entrants in the auto sector. Pakistan undoubtedly needs foreign investment, but the country should not be so desperate in attracting investment as to cater to unit-specific investment proposals, and destroy its most vibrant sectors where locals and foreigners are already investing. Stakeholders say that a sad reality is that the BOI has not been able to succeed in attracting foreign investment because of genuine reasons such as local law and order situation and global financial crisis. Genuine foreign and domestic investors don't seek special incentives but seek long-term consistency in policy. He further added that the projection of Yamaha as a new investor by BOI conveniently ignores the fact that the same brand was being produced and marketed for decades in Pakistan, and was forced to wind up after its failure to compete with other brands, especially the Chinese bikes. Stakeholders strongly believe that any policy misstep at this stage will send a wrong signal and crowd out local motorcycle vending base that has been developed after decades of hard work and investment. Syed Nabeel Hashmi, Chairman PAAPAM, said that he and his association have no objection to arrival of new investors. He personally thinks that new entrants would bring new technology, which is good for the industry. The association is looking forward to develop contacts with international manufacturers, besides analyzing the possibility of joint ventures with them. However, the special concessions the new entrants are demanding are totally unjust. “The plan to allow a new investor to import all motorcycle parts at zero duty will negate previous policies, and will encourage producers to bypass local vendors and manufacturers. This policy u-turn is worrisome and against the interests of the country and future industrialization”, he said. He was of the view that Yamaha Company is maintaining strict confidentiality in its trade agreement which is creating doubts in the local industry. Local industry would definitely encourage new entrants if they maintain good trade relations. According to him, the government is trying to hide the facts by propagating that Yamaha would make investment of more than $150 million. First of all, Yamaha is not a new entrant in Pakistani auto sector; their bikes were selling for decades in local market but they rolled back their operations due to the cut-throat competition created by Chinese bikes. Now they are coming again in the Pakistani market without entering into a joint venture with a local company. They are interested in importing Japanese parts, and according to market sources, they are more interested in launching 125CC, 150CC and sports bikes like Yamaha R1, R6 and Fazer. They will use the extremely beneficent geographical location of Pakistan as they are more interested in export of bikes to the CIS countries. He said that the government claims that new investment will introduce new technology to the country are mere eyewash, as existing players have introduced the latest Euro-II engines in their products without any special incentives. Current players are even willing to import hybrid and EFI-based engines without special incentives. This development has made Pakistan an attractive country for the foreign auto manufacturers. It is learnt from the market that another leading Japanese bikes manufacturer KAWASAKI, which had rolled back its production from Pakistan, is also making the feasibility reports to re-enter in the Pakistani market.
T rade & Industry Besides the bikes sector, foreign OEMs are also eyeing the auto industry of Pakistan because of these relaxations. On July 13, Advisor on Industries Muhammad Basharat Raja told the National Assembly during question hour that the government is considering giving more incentives for investment in manufacturing of cars in the country to meet local requirements. He said that negotiations were held with delegations of a Korean Company and General Motors, and hoped for positive results. Pakistan is manufacturing around 150,000 cars locally and more than 50,000 cars were imported last year. These numbers are insufficient to meet the local demands. It is worth mentioning that Pakistan is a country with the least vehicles per capita (13 vehicles per 1000 people). Pakistan ranks 134th in the list while India ranks 132nd with 18 vehicles per capita. These figures clearly indicate the future potential of the auto industry of the South East Asia. On the question of demand and supply ratio and soaring prices of auto vehicles in Pakistan as compared to the regional countries, Syed Nabeel Hashmi replied that prices of the vehicles will drop when the local industry manufactures cars by availing economies of scale. Cars in India are cheap because of the large scale production. In Pakistan, the production level should be raised to 500,000 units per year to bring the prices down. It has been noted that the local manufacturers are neglecting safety standards such as air bags and automatic braking system. 80% of the road accidents around the world occur in the developing countries including Pakistan where 75% of the world’s population lives. According to World Health Organization (WHO), 1.3 million people died every year due to road accidents. Pakistan ranks the 10th in the world with most Road Traffic Accidents (RTA). RTAs are also the 12th most common reason for the deaths in Pakistan. In the last decade, 99,932 RTAs occurred in Pakistan killing 52,039 people. In 2011, more than 1,100 persons lost their lives in RTAs in–Karachi alone. According to the data retrieved by Rescue 1122 service, road accidents claimed 40% of the fatal 160,000 deaths in Punjab in 2011. It has been estimated that 30% of the deaths in RTAs in Pakistan were caused by low safety vehicles. The data indicates the importance of safety regulations in Pakistan. It has been proved that the number of fatalities can drop by improving the safety standards of the vehicles. For instance, Taiwan witnessed a 14% decline in the motorcycle RTAs fatalities and a 22% reduction in head injury fatalities with strict imposition of helmet law and increasing safety standards of the bikes. Here in Pakistan, there is a huge responsibility imposed on the local manufacturers to install safety devices in their vehicles. According to a senior official of the Pakistan Standards and Quality Control Authority (PSQCA), local manufacturers and assemblers don’t follow the regulations. PSQCA’s engineers have made regulations after thorough research and described in complete detail things like air bags, engine kinetics, braking systems, etc., but the assemblers didn’t follow PSQCA regulations. He accepted the fact that Pakistan’s industrial sector is still in the development phase, hence safety rules need to be improved “but it is the responsibility of local auto assemblers to adopt the safety standards. PSQCA is a standards making authority but cannot force the standards because PSQCA does not have any regulatory powers. Government regulators should enforce the safety and quality standards and black list those manufacturers and assemblers
who are not complying with them” and added that “EURO-II” engines would be in the Pakistani market this year. It is worth mentioning here that other countries always tend to improve their safety and quality standards and they are now working on ‘side’ air bags while Pakistani-assembled cars still lack the primary air bags. There are regulations for everything in Pakistan; solution lies in the implementation thereof. Assemblers quote an entirely different opinion on the quality and safety regulations in Pakistani vehicles. They are of the view that they provide the best quality and safety devices in their vehicles. Additional safety requirements would definitely result in a hike in vehicle prices. They further claim that the PSQCA and EDB need to formulate a mandatory quality and safety policy which should be imposed on all assemblers and manufacturers. Only then, the safety standards of the Pakistani vehicles would be effective and be at par with international standards. Government of Pakistan sees this scenario differently. EDB convened a meeting of Auto Industry Development Committee (AIDC) on July 17, 2012 which was attended by representatives of PAMA and PAPAAM to discuss AIDP with special focus on new investment in auto sector. Parliamentarians, EDB and Industries Ministry are of the firm opinion that three local car assemblers have formulated a cartel which explains why they are charging higher prices and ‘own money’ (premium on car prices) on different models. Kashmala Tariq, MNA, Hamid Yar Hiraj, Qudsia Arshad, Khawaja Mansoor Sohail and a number of senators have criticized local car assemblers for charging extra money. On condition of anonymity, sources in the Ministry of Commerce revealed that the local auto vendors play to the whims of this cartel because they have to sell their products to them. All institutions and stakeholders need to own responsibilities on their part and play their role in the betterment of the economy. Safety and quality institutions should make uniform and consumer friendly safety and quality standards for all types of vehicles and government regulators need to impose it as mandatory. Similarly, auto manufacturers, whether local or foreign, need to understand that they can grab a larger proportion of the market if they provide quality on reasonable prices. Local industry should not be afraid of new entrants in the market. They would not only survive, but could expand their customer base if they upgrade their quality standards and provide a better option to the consumer. Japanese vehicles are also sold out in European countries but their local industry has no complaints as they are giving far superior quality and safety features to their customer. This is why, a BMW lover would never switch to Toyota Lexus. Local auto industry should not be afraid of competition; they can win the match by upgrading their standards.
B anking & Finance A shameless refusal to learn lessons
or the past four years, the global financial services sector is constantly being shaken up by disclosures about malpractices that continued in spite of the events that should have served as warning bells. Sub-prime lending, relying on risk hedging contracts sold by entities over-burdened with risks, suicidal assetdeposit ratios, hostile takeovers, asset marketing targets driven by greed, and weak internal controls; this was the mix that caused the recession that now bleeds the world. OPEC members made this scenario worse by pushing the oil price to killing heights. Despite all this, indications are that market players continued fraudulent practices, quoting interest rates that weren’t based on their realities and therefore distorted the yardstick market rates used globally to price all contracts ranging from student loans to mortgages, forward exchange rates, option contracts and derivatives. This malpractice by troubled global banks to stir positive sentiments about their health–was unforgivable, given the fact that the too-big-to-fail institutions involved in these activities were already ‘bailed’ out by their governments at a huge cost. What they should have done was to redefine business philosophies and reorganize, by injecting rationality therein, not use tactics to distort the yardstick interest rates. The first bank to admit to the US Department of Justice on June 23, that it committed this fraud, was Barclay’s, and paid a hefty fine of US$453mn be shared with the British government. The other banks in this loop were Lloyd’s, RBS, and Hong Kong & Shanghai Banking Corp. But what Barclay’s deserves credit for is the fact that it accepted the truth and its top brass–the CEO, Chief Operating Officer, and Chairman of the bank’s Board of Directors–accepted the onus for what happened by stepping down, which wasn’t how other banks responded to this tragedy. As this saga came to light, the British government reacted to it very vociferously. During his weekly question and answer session in parliament on July 4, British Prime Minister David Cameron branded as "appalling" the LIBOR-fixing involving Barclay’s Bank, and asked CEO Bob Diamond to quit. "It is outrageous, frankly, that homeowners may have paid ‘higher’ mortgage rates and small businesses may have paid ‘higher’ interest rates, because of skivvy and probably illegal activity." While he backed a parliamentary inquest into the scandal that has tarnished the image of London as the world’s most trusted financial centre, Labour Party called for a judicial inquiry into the scandal along the lines of the investigation into the phonehacking affair at the News Corp. David Cameron still favours a parliamentary inquiry because it would take much less time. Whatever the parliament finally agrees on, the fact is that his repeated reference to ‘higher’ interest rates is not backed up by facts that subsequently came to light; the more likely possibility is that borrowers paid a bit less than the fair interest rates because banks under-quoted the interest rate. What should worry him is his government’s role in the affair.
On July 4, by when it’s Chairman, CEO and COO had quit, Barclays’ gave its first in-depth explanation of the scandal by posting on its website the 9-page document it later presented to the British lawmakers; that document regretted that events causing it to pay the highest-ever fine for a settlement with regulators "should never have taken place". Also, that part of the rigging was due to traders trying to fix the rate for their own gain, and that traders who manipulated Libor had been sacked and those who did stay behind, had been punished. That document went on to disclose that Barclays’ conducted an exhaustive internal investigation involving re-examination of 22 million documents from over 200 custodians, a million audio files, and 75 interviews that took over three years. This long exercise revealed that on “occasions the bank submitted a lower rate so it didn’t appear to have higher funding costs” and “it believed that banks contributing to the Libor survey were deliberately reporting lower borrowing costs than they were actually paying” i.e. several banks were part of the rate-fixing casting doubts over creditworthiness of many global banks that participate in determining Libor. This again shook confidence in the financial services sector. The more worrying part was that the document involved the Bank of England (BoE), because Barclay’s hinted at receiving soft advice of the BoE on rates to be quoted to British Bankers’ Association for calculating the average Libor based on banks’ composite rates. Bob Diamond, Barclays’ CEO until he quit on July 4, said that Paul Tucker, now The Deputy Governor of BoE, called him in October 2008, to communicate concerns ‘within the government’ about the level of Barclays' funding costs. The document says Diamond ‘thought’ he had been told by BoE that Barclays’ should not submit Libor quotations at the high levels as it had been doing after Lehman Brothers collapse when borrowing costs of most banks were rising. On July 9, deposing before a Parliamentary Committee, Paul Tucker vehemently denied conveying this impression, which is amazing because Bob Diamond couldn’t have said what he said without evidence thereof. Should that happen, it would establish that Tucker wasn’t conveying just a BoE view point but also government concerns and the erstwhile Secretary of the Treasury too got involved in this affair; the now exposed letter from the then US Secretary of Treasury advocating the same (lowering of the Libor) could make things worse. The right of the government to contain any harmful trend in the country’s markets can’t be faulted. But what makes any such move lose its authority is its being restricted secretively to one or a few market players because it creates inequalities among market players. In fact, the government becomes part of rate-fixing scandals. Democracies can’t indulge in creating inequalities in the markets; they do so yet claim not doing so and courtesy their agents in the media, have gradually pushed democracy to the brink. That this is going on in the ‘developed’ democracies is shocking.
B anking & Finance Systemic risk: why it must be contained?
By A.B. Shahid
institutions could touch such high leveraging levels without being punished by their regulators later became the subject of a debate in the US legislature. But, while this exuberance was in full swing, regulatory action was withheld assuming that “free markets had the prudence to self-regulate”, that proved overoptimistic, and economists later had to admit that greed can dilute markets’ self-regulatory obligations. This was not the first time economists and regulators failed to visualize the consequences of over-optimism. Until 1961, James J. Saxon, Comptroller of Currency, thought that bank supervision implied far more than ensuring bank soundness, but he also thought that the diverse services offered by non-bank intermediaries were threatening the competitiveness of banks. However, constraining banks could cost more than the cost of permitting banks to fail in a less constrained set up. It was therefore not surprising that gaping holes in bank supervision began appearing in the 1970s i.e. the post-bank de-regulation era and led to many risks to crystallize causing a chain of global crises starting with the 1973 oil price hike. By 2007, institutions were again highly over-leveraged; they assumed that by buying risk-hedging contracts, they could prevent liquidity stress, and its disabling consequences. The reason that rendered this concept flawed was that the hedge contracts buyers overlooked the excessive risks the contract sellers were booking, vulnerabilities created by globalization, the events that could trigger a global crisis and the resultant contraction in trade flows, and inability of markets globally to meet their commitments. None, including the regulators, tracked the build-up of risk portfolios, especially those that reflected sale-purchase of Credit Default Swaps (CDSs). The forgotten lesson of de-regulating banking in emerging markets in the 1990s was that compromises on supervisory norms in an environment of volatile exchange and interest rate regimes can prove lethal. Prudent de-regulation requires changes in the supervisory profile to reduce its dependence on traditional checks that can prove ineffective in liberalized environments; it calls for a quantum change in the way it is perceived and imposed, and requisite upgrading of the skills of the regulators. Above all, it necessitates restricting lever- age to safe limits i.e. setting stiff liquidity yardsticks. At that time, Robert R. Bench, a banking sector expert, had stated that “financial liberalization and innovation mandates that the supervisors review their traditional attitudes toward measurement of liquidity; while supervisors may continue to insist on some survival stock of liquid assets, marketization of risk requires supervisors to view liquidity as a ‘dynamic’ phenomenon...its supervision needs to go beyond stock and flow concepts, to dynamic considerations i.e. overall balance sheet symmetry, variety and sensitivity of funding sources, asset-credit concentrations, assets that could be securitized, but above all else he pointed to the “market perception of a bank’s current and future asset quality, and [its] present and future earning capacity.”
vents beginning late 2007 proved once again that systemic risk crystallizes as the consequence of distress in the inter-connected sectors of the financial system, and intensifies or subsides as fortunes of the effected sectors change. After 1973, when currencies were placed on freefloat, chances of frequent distress became stronger but the emergence of risk hedging contracts bucked risk-taking that otherwise seemed unmanageable. But what rendered the system vulnerable yet again was banks’ greed-driven approaches to risk-taking on the assumption that risk could conveniently be passed on to other market players–a view that encouraged imprudence in risk selection, made worse by imprudence in selecting the hedging contract sellers. By end 2007, the year the financial bubble eventually burst, financial institutions had become money-minting machines. In the US, they were earning over 40% of total corporate profits. Risk hedging products, including the new variety of contracts that even CEOs and Boards of Directors couldn’t grasp, became the drivers of American economy. Mortgage industry became the dominant sector of this over-expanded system by providing loans that formed the raw material for Asset-backed Securities (ABS), and the Wall Street became the route for re-packaging ABS, and their onward sale to banks and financial institutions around the globe. With the sort of profits it was earning until 2007, the Wall Street was generating wealth not seen since the debt-fuelled 1980s. But neither the market players nor market regulators bothered to recall the global market crash of 1987. In 2007, employees in the US financial services earned a baffling sum of $53bn in salaries; Goldman Sachs–the biggest of the five big brokerages at the onset of the crisis–accounted for $20bn of this astounding amount that worked out to over $661,000 per employee, and its CEO alone got $68mn. Without any supporting documentation, any property buyer could claim to be the recipient of six-figure salary and could obtain a $500,000 mortgage loan. That wasn’t all; a month later, that borrower could also obtain a home equity line of credit. As a result, house prices skyrocketed and the citizens turned speculators in real estate, trading homes and tapping ever-larger home equity lines to buy more houses. This setup explains why sub-prime mortgages shot up to $2trn out of the total US mortgage market of $14trn. This was a clear sign of systemic risk skyrocketing, limiting which should be the aim of good regulation; regulation has to set the pace of competition and direction of risk-taking. The key issue is determining the safe levels of risk sharing between institutions but deregulation triggered competitive pressures that lured banks into un-conventional risk-taking, though lending to sub-prime borrowers was bound to cause market distress if such borrowers failed to make productive use of the borrowed funds for their timely repayment–this outcome wasn’t visualized despite earlier precedents. More worrying dimensions of this amazing growth were the week survival bases of institutions; debt-equity ratios of the Wall Street firms were as high as 32 to 1. The mere fact that
B anking & Finance This implies that Central banks must prepare and constantly up-date their contingency plans. Containing damage once a calamity hits the markets may prove futile and bad publicity would come as an unwanted extra. Although Central Bank supervision has improved, it is neither sufficiently proactive nor meets the challenging demands of the changed market complexion. Central Banks keep demanding excessive paper work in the name of reporting requirements a lot of which serves no good purpose. What they still lack is focusing on the crucial information rather than the size of it, which, in many cases, could be too unwieldy for expeditious scrutiny and prompt remedial steps. For containing systemic risk, the critical aim of regulation should be to deal with the effect of the externalities, when private and social interests (desired flexibilities and returns) diverge considerably. For the financial system, its concern for sustaining systemic stability in the event of a contagious run should form the thrust of regulation. The major issue being debated these days is deciding on the institution, and the mechanisms that institution should use to prevent this eventuality. Some of the areas that this institution should focus on are: - Since systemic risk is rooted in various sectors of the economy, as its regulator, what should the Central Bank monitor and supervise? Banks, DFIs, Leasing Companies, Modarbas, Musharikas, Discount Houses, trading houses, etc.? This is obviously too large a canvas for any Central Bank. - What’s the market complexion in terms of number of the participants, their sizes, operating weaknesses and strong points, and does regulation impact them uniformly? - What is the current strength of the regulator in terms of its financial resources and expertise infrastructure to fight speculative attacks on liquidity and interest and exchange rates that may push systemic risk to unmanageable levels for the smaller market participants? - Are payment & settlement systems functioning smoothly? If not, what does evidence provided by the instances of its partial failures indicate? Is the problem only due to the operating systems’ malfunction, or does this indicate that breakdowns are caused by frequent market or individual bank illiquidity, malpractice by the market participants, or other reasons? Could a severe market breakdown cause a domino effect? - Is the regulatory system, that monitors market distress, correctly focused and does it automatically trigger needed remedial action, followed by in-depth investigation that is fully documented? - What has been the record in the context of handling bank failures? What was the regulator’s level of preparedness? Are such instances documented and, based on them, are workable rescue strategies prepared? - Have the strategies been drafted in understandable terms so that those implementing them clearly know what they are to do, and when? - Who must ultimately pay for the rescue of a failed bank? If the operation is conceived as an initiative to secure the interests of the citizens (i.e. taxpayers), shouldn’t it be the State or will the Central Bank foot the bill? The first view obviously assumes that Central Banks no longer have the responsibility of safeguarding the interests of depositors and borrowers.
- The cost of regulation is ultimately borne by depositors and borrowers. How much regulation and supervision is considered enough at a specific cost that is acceptable to both banks and their customers? - What is the quantum of regulation and supervision (based on the market’s profile) that could contain systemic risk? Should depositors and borrowers alone bear this cost? Shouldn’t others, whose interests will be secured against a systemic failure, also pay for it? - The current trend favours insuring smaller deposits. This introduces another controversial aspect. Will the focus on assuring micro-level stability of the system impact Central Bank’s conduct at the macro level? Aside from this on-going controversy the other major issue is the dismal role of insurers almost everywhere. Despite these issues, the question to be addressed is “whether a deposit insurance arrangement is in existence, and if so, what is the level of its preparedness for paying claims if one of the major banks were to fail?” Market deregulation and the fierce global competition in its wake, caused a slide in the effectiveness of Central Banks to manage and control systemic risk since there was a visible diminution in Central Banks’ willingness to apply mutual surveillance, and reluctance to inject Central Bank funds to rescue troubled foreign banks operating in their countries. While these are issues on which multilateral dialogue (under BIS auspices) is on, the ground reality is that consequences of any large bank’s failure (besides the domino effect) can be pervasive. For instance, - Sudden freezing of a bank’s operations can cause wholly unnecessary hardship for its good borrowers in the sense that, besides being unable to borrow from the bank, they can’t obtain release of their collateral quickly enough to switchover to another bank. - Distress selling or auction of a bank’s assets results in a sharp decline in market values of similar assets held by other banks as collateral, thereby suddenly inflating their effective uncovered exposures. - This impacts not just banks but other businesses holding similar assets and (even though temporarily) shrinks their balance sheets, and thus their capacity to borrow. - A market distress generated contraction in the borrowing capacity of businesses could cause domino effect in nonfinancial sectors of the economy; in financial terminology these possible outcomes have been referred to as herding, cascading, and mimetic contagions.
B anking & Finance Bank security: prudence of out-sourcing it
he corner stone of globalization of trade was to allow for distributing economic activity world-wide in a way that every activity was performed by those with maximum comparative advantage. The logic was that this will ensure that the activity was performed at the lowest cost to benefit its beneficiaries. This logic triggered out-sourcing because it made economic sense and the hope was that it will cut operating costs and let the owners and customers of an enterprise share its benefit. But before organizations decide to out-source some of their activities, they had to examine whether making these changes could give rise to new risks and, if so, how could those risks be mitigated effectively, so that out-sourcing activities didn’t escalate the overall risk of the organization because it is also the area wherein organizations could end up making errors. Banks, as we all know, are expected to be extra careful while taking risks because they deal in other peoples’ money, which they hold in trust on behalf of their depositors. Thus, in the context of out-sourcing they have to be more selective than any other business. Banks must make a distinction between their core and non-core activities to decide on what they can out-source without adding to risk. Over-ambitious bankers are often lured by the economies that out-sourcing appears to offer. That’s why, at times, they unwittingly over-estimate the economies that out-sourcing offers, either by overlooking or consciously down-playing the risks involved. It is this tendency that needs curbing, not out`sourcing. To prevent banks exceeding safety limits, prudent regulators forbid out-sourcing of activities that may endanger customer funds. In out-sourcing, it is relatively easy to ensure that loss of customer confidentiality does not materialize but ensuring that depositor funds aren’t put at risk poses a huge challenge since it involves decision-making and risk-taking. Regulators therefore insist that all such activities – banks’ core functions – mustn’t be out-sourced. Having said that, it is as important to point out that out-sourcing some services is mandatory; law and bank regulations require it to eliminate any conflict of interest between banks and their customers. Services such as asset valuation, credit referencing and rating, and establishing financial value of losses caused by tragedies must be left to independent agents that are licensed (usually by a designated office of the state) to provide these services. On the other extreme are services such as premises and non-IT asset up-keep, advertising, etc., that do not involve risking depositor funds, or pose serious risks to a bank’s reputation, can be out-sourced at the discretion of their management. Between these two extremes are services that involve risks, and so may be out-sourced only after careful assessments of service-providers’ capabilities, antecedents and their capacity for uninterrupted delivery thereof since out-sourcing always involves risks. The mere fact that some of these risks may appear remote does not justify their being ignored; they must be mitigated conclusively, or their financial or reputational costs factored in. One of the services outsourcing which is progressively proving imprudent is bank security. Since the 1990s, almost every bank opted to out-source this vital function–a key
prudent because incidents of service providers’ staff being involved in robberies have escalated at an alarming pace suggesting that, perhaps, banks should have continued with their own security set ups. How well security service providers are equipped and prepared to perform this delicate service was partly covered in the July issue of Value Chain. The mere fact that this sector is virtually un-regulated, and thus exempt from any binding legal obligations to ensure that security guards are carefully selected, trained, armed, and not forced to over-work, seriously handicaps this sector. In 2011, bank robberies country-wide had averaged below two-a-month but in the seven months of 2012, this average is on the rise and close to three-a-month–a highly worrisome trend. In some of these incidents, the CCTV facility wasn’t working either because of power load-shedding or because it was out of order. But what was worse was the fact that there were cases wherein it was switched off–a clear indication that the on-duty guards were in league with the robbers. While the incidents caused by guards joining hands with the robbers are tragedies caused by a policy flaw those caused by the security systems being dysfunctional courtesy supervisory neglect are unpardonable. Banks cannot pass the blame on to anyone else for this failure. Such incidents call for a revamp of the security supervisory system and imposition of clearly defined rules for both branch personnel and head office staff responsible for ensuring bank premises security. One hopes that neglect in this area had nothing to do with cost-cutting–the policy that is driven by a desire to sustain profitability in a recession and is being prioritized over other considerations. That said, the vulnerabilities created by out-sourcing of this crucial service are the debatable issue. Should banks go for economizing in this area, and should the regulator have overlooked this critical change in management of banks as it did? Experience shows that it wasn’t advisable given the sustained Out-sourcing of slide in poverty levels and security proved rising crime rates since the disastrous. 1990s. Should banks Coupled with weak security go for econosupervision in banks, this has mizing in this proved a serious lapse. While area, and the state-provided security is should inadequate, banks must place regulators security supervision at a high overlook this priority based on the lapses recorded thus far. critical change? The lesson therein points to the need for often unannounced verification of the state of security system’s alertness during,
B anking & Finance but more often after, working hours, by qualified bank staff, to raise consciousness about the bank’s stake in this critical function. Emerging trends in bank robberies warrant the use of human and technological arrangements inside and outside bank premises to watch those entering the premises with the intent of committing a crime, but can’t be spotted. This is the failure of both security skills as well as technology, which is compounded by the after-effects of unannounced power-load shedding that disables the detection gadgetry. Bank security is a sacred obligation that can’t be left to those who are largely incapable of delivering on this promise. The rising incidents of bank robberies manifestly indicate that the security agencies are not the ‘specialists’ – the logic for giving them this job to economize on this cost. Secondly, it is only prudent to accept the fact that, ultimately, obligations are owed to employers and, in the present circumstances, security agencies and not banks are the employers. Security guards’ loyalty is to security agencies, which is a weak arrangement for the banks to rely on in this crucial area. security arrangeIt is therefore Historically, ments that worked very well not unlikely consisted of security guards that a bunch in who were banks’ permanent this workforce employees with high stakes could contrive in banks (salaries and benefits) and, to secure their future, ways of compensating (i.e. provident fund, pension) itself by criminal they all performed very well. means–aiding Working for security agencies that are un-regulated bank robbers and not monitored for followfor a share of ing basic ethical employment the loot practices – requisite training and provision of relevant defence gadgetry, fair compensation and rational working hours, job security, and a future secured by provident fund and pensions–makes the security guards hate the job they do. It was therefore not unlikely that a bunch in this workforce would contrive ways of compensating itself (in one go) by criminal means–aiding bank robbers for a share of the loot. Given the declining capacities of the law enforcers–an amply demonstrated reality–it would be pretty unrealistic to assume that they will catch the bank robbers. The rising incidents of target killings, general lawlessness on the streets courtesy the failure of the in-power regime to deliver even the essentials like water, electricity and sewerage cleaning and maintenance, but, above all the frustration created by rising unemployment keeps thousands of violent protesters on the streets all over the country; controlling them not only consumes the entire energy of the law enforcers but tires them to a killing extent. This scenario began developing after the assassination of Ms Benazir Bhutto. The scenes witnessed during the last week of December 2007 showed the power of PPP’s Sindh Card, and foretold the future given the limitations of the law enforcers’ –a distortion that kept developing over decades unnoticed by the successive regimes as well as the citizens, but especially by the business community that is now suffering the most.
According to the January 5, 2008 State Bank of Pakistan Weaknesses in press release, in the country- law enforcement emerged over wide street violence for just 4 days after the tragic demise the decades, Ms Benazir Bhutto, 699 bank courtesy sleepy branches (10% of the national regimes, and network) got hit, 290 of them neglect by the getting damaged extensively. business Of the total 699 branches, 521 community that were located in Sindh, 164 in Punjab, and 7 each in Khyber is now suffering the most Pukhtunkhaw and Baluchistan. In addition, 148 ATMs were also destroyed. Over the years, the security scenario has deteriorated because law enforcers have plenty to take care of besides the routine street unrest; terrorism is now a much bigger threat than it was until 2005. Organized crime is now a thriving business; ‘bhatta’ collectors now operate everywhere and localities like Layari are ‘their’ territory. In this scenario, expecting that the law enforcers will be able to recover stolen bank assets, and bring bank robbers to justice is expecting far too much. Can banks afford it? What all this proves is that security can no longer be left in its entirety to the security agents; it has to be effectively over-seen by banks. The failure that is leading to this conclusion is banking sector’s continued neglect of the need for regulation of the security services sector–prudent and tough criteria for qualifying as security agent, detailed description of duties and obligations, character checks for employment of individuals as security guards, employment and training practices and the key aspects to be covered while reporting robbery incidents. In spite of the fact that these regulatory requirements are not there if banks must continue to rely on out-sourcing security, they should thoroughly supervise this activity. This implies making up for the huge gaps in the capacities of the security agencies that banks will still depend on. But do banks have the requisite mechanism–security experts with proven record and up-dated security gadgetry? Developing these capacities is a tough challenge but one that must be accepted. Banks must have in-house expertise to continually check and verify that security arrangements are trustworthy as well as adequate, keeping in view the emerging trends in crime. This requires expertise, unannounced branch visits by the banks’ security experts to verifying the presence of branch-specific on-duty security guards and their alertness, security gadgetry in working condition, and taking immediate corrective steps if any of these elements is not in a state of readiness. This entire drill must be defined in the bank’s security manual and should be present in every branch and all the staff members should be familiar with the emergency procedures. To ensure that, there must be frequent emergency drills. Finally, these checks should be carried out more often after the branch’s working hours. Finally, bankers must realize that while the basics of the security systems could be out-sourced, security remains banks’ own obligatio. What has yet to be observed is the reflection of this awareness; we see little in terms of change in the current approach to bank security.
R esearch & Development Biotechnology and its impact
by Mubarik Ahmed
4. Bioarchaeology, Anthropology, Evolution, and Human Migration • Study evolution through germline mutations in lineages • Study migration of different population groups based on female genetic inheritance • Study mutations on the Y chromosome to trace lineage and migration of males • Compare breakpoints in the evolution of mutations with ages of populations and historical events 5. DNA Forensics (Identification) • Identify potential suspects whose DNA may match evidence left at crime scenes • Exonerate persons wrongly accused of crimes • Identify crime and catastrophe victims • Establish paternity and other family relationships • Identify endangered and protected species as an aid to wildlife officials (could be used for prosecuting poachers) • Detect bacteria and other organisms that may pollute air, water, soil, and food • Match organ donors with recipients in transplant programs • Determine pedigree for seed or livestock breeds • Authenticate consumables such as caviar and wine 6. Agriculture, Livestock Breeding, and Bioprocessing • Disease, insect, and drought-resistant crops • Healthier, more productive, disease-resistant farm animals • More nutritious produce • Biopesticides • Edible vaccines incorporated into food products • New environmental cleanup uses for plants like tobacco Genetic engineering is turning out to be more difficult and more expensive than early proponents expected. In the early 1980s biotechnology was touted as a miracle technology that was going to usher in a new era of agricultural abundance with minimal harm to the environment. Some of the most important commercial applications of biotechnology are discussed below. 7. Engineered Crops The most widespread application of genetic engineering in agriculture is in engineered crops. Thousands of such products have been field tested and over a dozen have been approved for commercial use. The traits most commonly introduced into crops are herbicide tolerance, insect tolerance, and virus tolerance.
iotechnology is defined as the use of biological processes for the development of products such as foods, enzymes, drugs, and vaccines. Biotechnology is the new label for a process that humans have used for thousands of years to ferment foods such as beer, wine, bread, and cheese. In these cases, biological processes are used to alter raw food products to produce more stable food. Presently, the term biotechnology is used to describe genetically engineered food that contain genes modified by modern technologies. Biotechnology is at the intersection of science and ethics. Many see this technology as a significant force in improving the quality of people’s lives in the 21st century. There are many sub-branches of biotechnology including genetic engineering, food bio technology, agricultural bio technology, animal and plant tissue culture, molecular biology, fermentation technology, proteomics etc. Rapid progress in genome science and a glimpse into its potential applications have spurred observers to predict that biotechnology and genomics will be the foremost science of the 21st century.
Some current and potential applications of genome research include 1. Molecular Medicine • Improved diagnosis of disease • Earlier detection of genetic predispositions to disease • Rational drug design • Gene therapy and control systems for drugs • Pharmacogenomics "custom drugs" 2. Energy and Environmental Applications • Use of microbial genomics research to create new energy sources (biofuels) • Use of microbial genomics research to develop environmental monitoring techniques to detect pollutants • Use of microbial genomics research for safe, efficient environmental remediation • Use of microbial genomics research for carbon sequestration 3. Risk Assessment • Assessment of health damage and risks caused by radiation exposure, including low-dose exposures • Assessment of health damage and risks caused by exposure to mutagenic chemicals and cancer-causing toxins • Reduce the likelihood of heritable mutations
R esearch & Development systems. Some low level of research activities may still be underway. Pigs have been engineered with roundworm genes to produce their own omega-3 fatty acids, but have not been commercialized. Animals Engineered as Drug-Production Facilities Status: Goats and sheep have been engineered to secrete bioactive molecules into their blood, urine, or milk. Companies are in the process of developing commercial enterprises based on these animals. So far, none of the drugs is in the market. It is likely that producers will want to slaughter the animals for food after they are no longer useful for drug production. Animals Engineered as Sources of Transplant Organs Status: Commercial entities are engineering pigs so that their organs will not be rejected by human transplant recipients. So far, the organs are not commercially available. It is likely that producers will want to use the carcasses of donor pigs as food. Animals Engineered for Disease Resistance Status: Chickens and turkeys have been engineered to resist avian diseases, but not commercialized. 9. Genetically Engineered Fish and Shellfish Fish and shellfish have been engineered to cause changes in hormones that accelerate growth in several laboratories, but so far not commercialized. 10. Genetically Engineered Plants Eaten Whole as Food Many plants have been commercialized, including tomatoes and squash and commodity crops like corn and soybeans. Most have been engineered for one of three traits: herbicide tolerance, insect resistance, or virus tolerance. 11. Genetically Engineered Fiber Plants Genetically engineered cotton has been approved for commercial use. 12. Engineered Insects Used in Agricultural Systems No engineered insects have been approved for commercial use. An engineered predatory mite has been field tested in Florida. Researchers have engineered honeybees and other beneficial insects to tolerate pesticides. 13. Engineered Micro-organisms Used as Pesticides Several bacteria engineered to enhance their ability to kill or repel pests have been approved for commercial use. These products are used as pesticides in agricultural fields and gardens. 14. Food Processing Aids Made from Engineered Bacteria Bacteria have been genetically engineered to produce rennet, an enzyme important in making cheese. Genetically engineered rennet (chymosin) is approved for commercial use and widely used by U.S. cheese processors.
Herbicide Tolerance Case Study: Soybeans Herbicide tolerance allows crops to withstand otherwise lethal doses of herbicides, which are chemicals that kill plants. Some herbicides kill virtually all plants and cannot be used on crops. By offering crops tolerant to herbicides, chemical companies can expand the market for their products. Indeed, the major developers of herbicide-tolerant plants are companies that sell herbicides. The current set of commercially available herbicide-tolerant crops is tolerant to three herbicides based on three active ingredients: bromoxynil, glyphosate, and glufosinate. Insect Tolerance All of the commercially available insect-tolerant plants contain a version of the toxin Bacillus thuringiensis (Bt), which is found in nature in soil bacteria. Bt toxins are highly effective for many pest organisms, like beetles and moth larva, but not toxic to mammals and most other nontarget organisms. A major concern among farmers and environmentalists is that wide use of Bt crops will lead to the rapid development (over the course of perhaps as few as three to five years) of resistance to the toxin. If resistance develops, the Bt toxin will be useless as a pesticide. In this case, the environmental benefits of the product will be short lived. Bt cotton is the most remarkable story, generating both substantial reductions in pesticide use and substantial yield increases. Cotton production requires very high doses of pesticides, over 25 percent of all insecticides used globally are sprayed on that crop. So, the introduction of Bt varieties make a significant contribution to reducing global insecticide use.
Virus Tolerance The third major application of biotechnology to crops is virus tolerance. These crops contain a gene taken from a virus. By a process that is not well understood, plants that produce certain viral proteins are able to fend off infections by the viruses from which the proteins were taken. Two virus-tolerant crops are currently approved for commercial use, papaya and squash. The squash, which is resistant to two viruses, is currently off the market. Although it is difficult to get information on why products are not in the market, it is possible that the squash did not perform well enough in the field to capture market share. 8. Genetically Engineered Livestock and Poultry Animals Engineered for Leaner Meat Status: No livestock engineered for leaner meat is currently near commercialization. Research done early in the 1980s to genetically engineered leaner pigs failed because of unacceptable side effects, including low fertility, arthritis, and impaired immune
R esearch & Development 15. Animal Drugs Made by Engineered Bacteria A drug has been produced for dairy cowsâ€”recombinant Bovine Growth Hormone (BGH) or Bovine Somatotropin (BST)â€”by engineering a bacterium to contain the gene for the hormone. The drug is administered to cows to increase milk production, despite the chronic over supply of milk in the United States. A highly controversial product, BGH is currently used on about a third of the U.S. dairy herd. 16. Vaccine An interesting product is a rabies vaccine intended for use on wild raccoons. In this case, genetic engineering was used to construct a "hybrid" virus made up of a component of the rabies virus inserted into an unrelated "carrier" virus. The resulting virus confers immunity to rabies but poses no danger of causing the disease. Baits laced with the vaccine have been distributed in many parts of the eastern United States in attempts to combat rabies in wild raccoon populations. The vaccine has been approved by the U.S. Department of Agriculture, despite suspicions that it has been only marginally, if at all, effective. Early studies on efficacy failed to demonstrate that the product could control rabies in wild raccoon populations. Data from more recent studies are being withheld from the public as confidential business information. 17. Food Biotechnology Genetic modification of agricultural crops promises the availability of food products with more desirable traits, such as higher quantities of vitamins or lowered amounts of saturated fats for consumers, reduced use of pesticides and other chemicals for environmentalists, and increased yields for growers. Traditional plant breeding, the conventional method to modify plants' genes, has produced similar benefits. But recent biotechnological innovations allow scientists to select specific genes from one plant or animal and introduce them into another to confer desirable traits. This produces the new plant or animal more quickly than conventional methods, and creates plants and animals with traits not found previously in nature. Proponents argue that advances in genetics and new technologies can produce foods with greater yields to feed the growing world population in the 21st century. Critics are concerned that this technology produces uncertainties about potential long-term impacts on public health and the environment, and increases problems related to trade.
usefulness for the reproduction of identical livestock animals was only recently investigated. In 1995, sheep were cloned from embryonic cells in Scotland. In 1996, a substantial breakthrough followed when a sheep, Dolly, was cloned from an adult, nonembryonic cell. Japanese scientists are creating high-value beef cattle through cloning. They have successfully cloned at least 19 calves from adult bovine cells. Because the cost of some premium beef roasts can be between $100 and $200 per pound in Japan, the Japanese cattle industry can support the expense of cloning prize beef cattle. But even with those prices, the cost of genetically engineering cattle on a large scale could be prohibitive. Federal Responsibilities for Regulating Genetically Modified Foods In 1986, the White House Office of Science and Technology Policy (OSTP) finalized the responsibilities for regulating genetically modified foods. For example, the Food and Drug Administration (FDA) is responsible for regulating food and feeds in the market that have been modified through genetic engineering. The U.S. Department of Agriculture (USDA), Animal and Plant Health Inspection Service (APHIS), regulates importation, interstate movement, and environmental release of transgenic plants that contain plant pest components. It licenses, through permits, the field testing of food crops prior to commercial release. But agencies' responsibilities overlap as some plants have been modified to contain plantpesticides. The Environmental Protection Agency (EPA) registers certain pesticides produced in transgenic plants prior to their distribution and sale and establishes pesticide tolerances for residues in foods. APHIS and EPA together established procedures to review and approve field tests of modified plants and microorganisms. FDA has post-market authority to remove food from the market. Table I shows an overview of federal agencies' responsibilities. Agency
Reviews for Safety
Food, feed, food additives, veterinary drugs
Safe to eat
Plant pests, plants, veterinary biologic
Safe to grow
Microbial/plant pesticides, Safe for the environment. new uses of existing pesticides, Safety of a new use of a novel microorganisms companion herbicide
Critics about bio-technological applications and products The introduction of bioengineered crop varieties onto the market has not been without controversy. Some critics have suggested that recombinant DNA modification could make foods unsafe to eat, though most concerns have revolved around the potential impact of bioengineered crops on the environment. Environmentalists have claimed, for example, that gene-spliced varieties could harm wild biodiversity by killing beneficial insects and other living organisms, or by becoming invasive weeds. Those and related concerns have been used as the justification for increasing regulation on biotechnology in the United States and abroad. Countless scientific bodies, including the National Academy of Sciences, the American Medical Association, and others, have concluded that gene splicing techniques themselves are actually safer than traditional breeding methods because breeders know which new genes are being added to plants and exactly what function those genes perform. They all are believed on this slogan: As the worldâ€™s population grows, environmental stewardship will require science to find ways to produce more food on less land.
18. Cloning Biotechnology is also used to produce experimental "transgenic" animals, in which the genetic material has been deliberately modified and to produce "clones" in which animals are reproduced artificially but the DNA is not modified. In agriculture, transgenic animals may be altered to produce higher yields of specific products (meat, milk etc.) or to bring about commodities with enhanced characteristics, such as less cholesterol or reduced fat content. Although cloning has been used to reproduce animals for scientific purposes since the 1950s, its
R egulator y Compliance 1) WITHHOLDING TAX:
is to create a balance between privileges and obligations of Primary Dealers to achieve the objective of development of debt market in Pakistan. According to the amendments, all banks / DFIs interested in Primary Dealer (PD) status, will have to ensure that their charges on Investor Portfolio Securities( IPS) accounts are reasonable and in line with SBPâ€™s objective to broaden the investor base of government securities. Primary Dealers have been instructed to provide efficient IPS accounts related services to customers. PDs will be eligible to claim commission @ 10 paisa per Rs. 100 for all accepted Non Competitive Bids (NCBs) of individuals, employee provident / pension funds and corporate except Asset Management Companies (AMCs), Mutual Funds, Insurance / Mudaraba / Leasing companies in Market Treasury Bill (MTB) and Pakistan Investment Bond (PIB) auctions. A maximum limit of Rs. 250 million is placed for submitting NCB by any one investor in any one tenor of PIB/MTB auction. PDs will be required to display prices of Government Securities on Reuters, Bloomberg / EBND and at their branches.
The Federal Board of (FBR) on July 2 announced that retailers or final consumers will not be liable to 0.5 percent withholding tax under Section 153A of the Income Tax Ordinance, 2001 whereby every manufacturer has to collect WHT at the rate of 0.5 percent at the time of sale of gross sales to all distributors, dealers and wholesalers. The FBR has issued Income Tax Circular No. 01 of 2012 clarifying new Section 153 A of the Income Tax Ordinance 2001 inserted through Finance Act, 2012. According to the new Section 153A of the Income Tax Ordinance, 2001 every manufacturer has to collect withholding tax at 0.5 percent at the time of sale of the gross sales to all distributors, dealers and wholesalers. This adjustable WHT is leviable on the gross sales to all dealers, distributors and wholesalers irrespective of whether they are registered or unregistered taxpayers with income tax or sales tax. The gross sales will be inclusive of sales tax and federal excise duty, and any trade discount shown on the invoices or bills. Retailers or final consumers will however not be liable to withholding tax under this section. The commission agents from whom tax under Section 233 has been withheld shall also not be liable to collection of tax under Section 153A. The circular has also clarified that none of the sector has been exempted from deduction of 0.5 percent WHT as an impression was created before the issuance of the circular that the manufacturers or producers like sugar and flour mills, and ghee and cooking oil units might be exempted from collection of 0.5 percent WHT against the sales made to dealers, distributors and wholesalers from July 2, 2012. Similarly, like other manufacturers, the manufacturers of fertilizers, pesticides and other sectors would also be liable to deduct the 0.5 percent tax from their unregistered dealers, distributors and wholesalers. In budget 2012-13, FBR had proposed 1.0 percent tax to be collected by manufacturers to their unregistered distributors and wholesalers. Through the amended Finance Bill 2012-13, the rate of tax has been slashed from 1.0 percent to 0.5 percent. Therefore, the manufacturers will have to deduct the 0.5 percent tax from the dealers, distributors and wholesalers under the Finance Act 2011.
4) ADVANCE TAX INTRODUCED AS TOOL FOR CGT COLLECTION:
The Federal Board of Revenue (FBR) has introduced advance tax to be collected under Section 236C of the Income Tax Ordinance 2001 for the purpose of providing a tool to collect capital gain tax on disposal of immovable property. FBR has issued an income tax circular to explain capaital gain on immovable property. To overcome the administrative problems being faced in collection of CGT on disposal of immovable property and to keep track of the transactions of immovable property adjustable advance withholding tax @ 0.5 percent of the consideration received on sale/transfer of immovable property was levied on sellers/transferors of immovable property under section 236C of the Income Tax Ordinance 2001. The FBR has clarified that the advance tax to be collected under section 236C has been introduced for the purpose of providing a mechanism for collection of capital gain tax on disposal of immovable property. The actual quantum of capital gain and tax payable thereon is to be computed at the time of filing of income return. Section 236C is not an independent provision and does not operate in isolation. Since Capital Gain Tax has been imposed only on disposal of properties held for a period of p to two years therefore advance tax is also to be collected from sellers who held the immovable properties for a period up to two years. FBR further clarified that in view of the modified constitutional position exemption to capital gains on the disposal of immovable property held for a period of up to two years was withdrawn by making amendments in section 37 of the Income ax Ordinance 2001 through the Finance Act 2012. Simultaneously, a new Division was added in the First Schedule to the Income Tax Ordinance, 2001 giving the following rates of tax to be paid on capital gains from disposal of immovable property: 1. Where holding period of immovable 10% property is up to one year 2. Where holding period of immovable property is more than one year but not more than two years 5%
2) FBR RELIEF TO SALARIED CLASS:
The Federal Board of Revenue has issued income tax circular No. 02 of 2012 that explains the structure of tax rate on salary. The computation of tax on salary shall be as per slabs mentioned in the Finance Act 2012. Instead of applying tax rate on gross amount of salary, computation of tax is to be made through progressive tax rates. The maximum relief has been provided to low salary income and the relief gradually decreases with the increase in salary.
3) SBP amends rules governing PDS:
The State Bank of Pakistan in a Master Circular (DMMD Circular No. 12) issued on July 3 has amended certain rules governing the Primary Dealer System in order to streamline and further strengthen this system. The purpose of the amendments
A griculture Productivity potential of main crops in Pakistanby Syeda Areeba Qadri, Soha Ahmed, Zia ul Hasan, and Mubarik Ahmed
and and irrigation are the key resources in crop productivity in any environment. In absence of these resources it is not possible to cater the food demand for the increasing population of any country. Now a days, the Pakistan agriculture is set in a very distinctive situation of an increasing population on one hand and diminishing resources on the other. The population of Pakistan was reported to be 131.63 million in 1996 and is projected to be 207 million in the year 2015.The agriculture sector has to face the difficult task to at least double the existing food production by the turn of this century. The situation demands immediate measures for an horizontal and vertical growth in the productivity by not only increasing the land under cultivation but also increasing the cropping intensity and the per hectare yield. In Pakistan, wheat, rice, sugarcane and cotton are the main crops. Wheat and rice were the major cereals cultivated on largest area of about 11.80 million hectare during the year 2010-11. While sugarcane and cotton are the cash crops and were cultivated over more than 4.20 million hectare during the year 2010-11. The agricultural land in Pakistan is generally fertile but due to shortage of resources, inferior technology and other factors the crop productivity is much lower to the potential yield. Table-1 shows the gaps between actual and potential yields in various crops.
and fallow-wheat. Among these, cotton-wheat and rice-wheat systems together account about 60% of the total wheat area, whereas arid wheat covers more than 1.50 million hectare area. Figure-1: Comparison of Wheat Yield during the year 2012.
Source: USDA 2012
wheat cultivars, wheat productivity has increased in all the major cropping systems representing the diverse and varying agroecological conditions. These semi-dwarf wheat cultivars have a genetic yield potential of increasing the yield to 6-8 Table - 1: Gaps between Actual and Potential Yeilds tons per hectare comparing the national average yields of about 2.66 tons per hectare. A large Yield Gap (%) Yield (tons/hectare) number of experimentae stations and on-farm Mixed MixedRice Wheat Rice-Wheat Crops cropping Cropping Cropping demonstrations have repeatedly shown high yield Potential Yield cropping system system Overall (tons/hectare) system system Overall potential of the varieties. The progressive farmers of irrigated areas have harvested yield of 6-7 tons 3.508 3.59 3.528 7.116 50.7 49.4 50.4 Rice per hectare. However, in arid areas the yield ranges 64.24 69.94 69.790 106.944 39.9 34.6 34.7 Sugarcane 3.51 3.528 3.528 40.5 40.5 40.5 5.930 Wheat between 0.5 to 1.3 tons per hectare depending on the amount of rainfall. In irrigated areas the wheat Source: Pakistan Journal of Life and Social Science,2011. productivity is found to range from 2.5 to 2.8 tons Wheat: Wheat is considered to be an important commodity all per hectare depending upon the amount of available water and over the world, grown on about 223.55 million hectare with a total other factors. Figure-2 shows the wheat yield in kilograms per production of about 665 million metric tons. The Global average hectare in different regions of Pakistan. productivity is around 3.03 metric tons per hectare. With a high Figure-3: Cotton Yield (kilograms per hectare) in Pakistan variability among countries and regions, the highest average yields are obtained in United Kingdom, France, Germany and Egypt with yields above 7.0 tons per hectare. In China, India, Pakistan and Iran the average per hectare yields are 4.86, 3.05, 2.66 and 2.00 tons, respectively. China, India, United States, Former Soviet Union, France, Canada and Australia are the key producers with 57 percent of the collective share in productivity. The later four countries due to their heavy surplus cater the world market where as the top producers China and India rarely export wheat in international market due to their high domestic demand. Figure-1 shows the comparison of wheat yield in million tons per hectare among some countries of the world. Source: Agricultural Statistics of Pakistan 2010-11. In Pakistan, wheat being the staple diet is the most important crop Factors contributing towards yield gap: Wheat production cultivated on the largest acreages in almost every parts of the in the country has been well below potential and there is around country. The total wheat area in Pakistan is about 9.00 million 60% yield gap in wheat, which is required to be narrowed. The hectares. It contributes 14.4% to the value added in agriculture and major reason for low productivity and instability includes: 3% to GDP. The wheat is grown in different cropping systems, â€˘ Delayed harvesting and consequent late planting. such as: cotton-wheat, rice-wheat, sugarcane-wheat, maize-wheat, â€˘ Non availability of improved inputs like resistant variety of seeds. Over the past three decades with the introduction of semi-dwarf
A griculture • Shortage of irrigation water, drought in rainfed and terminal heat stressed areas. • Soil degradation. • Unawareness of farmers to modern technologies as a result of weak extension programs. Cotton: The world cotton production is projected to be 113.31 million bales for the year 2012-13. Out of this China, India, United States and Pakistan are the key producers with the net productivities of about 30.5, 24.0, 17.0 and 10.0 million bales, respectively. The Former Soviet Union produces about 6.74 million bales. Whereas the rest of the countries only contributes marginally. The average per hectare yield of the world is 745 kg per hectare. The maximum cotton yields of above 1300 kg is obtained in Australia, Syria, Brazil and China. In India, Pakistan and United States the yields are reported to be 484, 704 and 879 kg per hectare respectively. Cotton is the most important cash crop of the country that contributes approximately 60% to foreign exchange earnings of Pakistan. With an area of 3.20 million hectares, it is the second largest crop that provides raw material for the local textile industry and exports. Besides, cottonseed accounts for 70% to the national oilseed and ghee production. It accounts for 11.7% value addition in agriculture and about 2.9% to GDP. Record high production of 14 millions bales were obtained in 2007-08 in Pakistan. Approximately 80% of Pakistan's cotton is grown in Punjab with Sindh as the second largest cotton growing province. The average yield of cotton in Pakistan is 0.70 tons per hectare. Comparing the potential yield of 1.30 tons per hectare. This leaves 40% of unexploited potential to be achieved through various interventions. Yield projection to 1.00 ton per hectare stands a good milestone to be achieved by the year 2015. Figure-3 shows the yield of cotton in different provinces of Pakistan.
Figure-4: Comparison of Cotton Yield during the year 2012.
Source USDA 2012.
RICE: Rice is the second largest cereal produced in the world.
Rice cultivation is the principal activity and source of income for millions of households around the globe, and many countries of Asia and Africa are highly dependent on rice as a source of foreign exchange earnings and government revenue. At the beginning of the 1990s, annual rice production was around 350 million tons that has now reached 465 million metric tons. The production is geographically concentrated in Western and East Asian countries. Asia is the largest rice producer that accounts for about 90% of the world's production and consumption of rice. Out of the total production of world, China, India, Indonesia, Bangladesh, Vietnam and Thailand are the key producers to contribute about 141, 100, 37, 27 and 21 million tons respectively annually. Thailand, India, United States, Vietnam and Pakistan are the key exporters. Figure-5: Comparison of Rice Yield during the year 2012.
Figure-2: Wheat yield (kilograms per hectare) in Pakistan.
Source: Agricultural Statistics of Pakistan, 2010-11.
Pakistan is the fouth largest producer of cotton in the world, the third largest exporter of raw cotton, the fourth largest consumer of cotton and the largest exporter of the cotton yarn. The comparison of cotton yield of pakistan and other leading countries is shown in figure-4. Causes of low yield: Cotton crop faces a number of constraints, including low yield per acre. The causes are: • High price of agricultural inputs (seeds, fertilizers, pesticides etc). • Higher intensity of insects and pests attack. • Shortage of water. • Lack of advance technologies (like IPM), awareness and agroprofessionalism. • Above all natural factors like unexpected rain, drought and floods especially in southern Punjab and Sindh.
Source: USDA 2012.
In Pakistan, rice is the secod largest staple food crop after wheat, the third major crop area-wise and a source of major export earning accounting for 6.1% of total exprot earnings over the last five years. It accounts for 6.8% in value added in agriculture and 1.7% in GDP. Area under rice is about 2.80 million hectares, with 1.16 million hectares under basmati, 0.93 million hectares under IRRI, and 0.29 million hectares under other varieties. The production is estimated to be around 6.80 million tons which includes 2.70 million tons basmati, 3.56 million tons IRRI and others 0.55 million tons. Average yield is about 3.6 tons/ha, with basmati yielding 1.60 tons/ha, IRRI 2.70 tons/ha and other varieties 1.87 tons/ha. The two major rice-growing provinces are the Punjab and Sindh, that accounts for 68% and 23% of the area under rice. Basmati rice is only grown in Punjab.
A griculture The per hectare yield of rice in Pakistan is much below the world average of 4.33 tons. Maximum average yields above 6.00 tons/hectare are obtained in countries like United States, Peru, China, Japan, South Korea, Egypt and Italy. In India and Pakistan average yields are reported to be 3.41 and 3.64 tons per hectare respectively. There exists a large gap between the actual and potential production of rice in the country. Fig-6 shows the rice yield in kilograms per hectare in pakistan.
Figure -7: Sugarcane Yield (kilograms per hectare) in Pakistan.
Figure -6: Rice Yield (kilograms per hectare) in Pakistan.
Source: Agricultural Statistics of Pakistan, 2010-11.
the area and contributes 61% to the country's total cane production. Sindh is the second largest cane-growing province with 25% of the cane acreage. The national average cane yield is 47 tons per hectare and is far below the existing potential. Fig-7 shows the sugarcane Pakistan. Causes Of Low Cane Yield. The main reasons for low yield per hector are: • Old age agricultural practices. • Improper selection and preparation of land. • Conventional planting methods. • Poor management of ratoon crop. • Poor and defective varieties. • Rapid and unplanned increase in sugarcane acreage in unsuitable areas of Pakistan. OVER ALL CAUSES OF LOW PRODUCTIVITY IN PAKISTAN Besides, above all mentioned factors. There are some other reasons that contribute to low productivity in Pakistan. • The rural population in Pakistan is rising; the numbers of small farms are increasing with time despite the total area under cultivation being essentially fixed. • Most empirical evidence indicates that the land productivity on large farms in Pakistan is lower than that of small farms, because of absente farmers and lack of interest in adopting modern technologies. • Inadequate and untimely availability of irrigation water. • Contraction of irrigated areas. • Unequal land distribution resulting into income inequality in rural Pakistan. • The deterioration of the land resource base. • Unfavorable relative agricultural goods price.
Source: Agricultural Statistics of Pakistan, 2010-11.
Causes of failure in potential yielding: Major constraints to
rice production are as under: • High cost or scarcity of land, water , labour and other inputs such as fertilizers, pesticides and even high quality seed. • The problems of flash floods, water logging/submergence due to poor drainage. • Continuous use of traditional varieties due to the non-availability of seeds. • Low and untimely rainfall. • Delay in monsoon onset resulting into delayed seeding, late transplanting and sub-optimium plant population. • In the years of low rainfall, the crop failure due to drought etc. •Yield decline due to late planting of crop as a result of delayed availability of irrigation water and subsequent attack of rice borers and white backed rice hoppers SUGARCANE: A comparison of sugarcane yield in Pakistan and some other cane growing countries is given in Fig- 8. Figure-8: Comparison of Sugarcane Yield during the year 2010.
following practices are required to be implimented in pakistan to improve the yield. o Multiple cropping system approach rather than a single crop development approach. o Cultivation of area specific crop production technologies in different agro climatic zones. o Replacement of low potential/pest susceptible old varieties with new high yielding varieties with promising potential. o To encourage hybrid cultivation through demontrations and making hybird seed available to the farmers. o By adopting the appropriate sowing methods for crop establishment with desired level of plant population. o Encouraging the use of machines along with the traditional implements. o Effective control of pests and diseases with timely and proper application of pesticides. o Adoption of proper post-harvest operations.
Source: Crop FAO STAT,2010.
With an area of 1.1 million hectares, sugarcane ranks as fourth major crop of Pakistan and main source of sugar in the country. It is highly water intensive and yet an important cash crop. It accounts for 6.2% value added in agriculture and 1.5% in GDP. Punjab covers 64% of the area and contributes 61% to the country's total cane production. Sindh is the second largest cane-growing province with 25% of the cane acreage. The national average cane yield is 47 tons per hectare and is far below the existing potential. Fig-7 shows the sugarcane Pakistan. With an area of 1.1 million hectares, sugarcane ranks as fourth major crop of Pakistan and main source of sugar in the country. It is highly water intensive and yet an important cash crop. It accounts for 6.2% value added in agriculture and 1.5% in GDP. Punjab covers 64% of
H ealth & Environment Granting residential security for the marginalized: issues and constraints
ne major challenge faced by urban planners and city managers all through Karachi’s various historical growth and development phases has been the exponential rise in population caused mainly due to migration. Even before the creation of Pakistan, growth in population was primarily due to migration linked to economic and military reasons. Being a port city having a favorable climate, enhanced Karachi’s economic potential, while its strategic location added to its military significance. To cite an example, during the 1911-41 thirty-year period Karachi’s population increased by 133.4% and it has been estimated that 90% of the growth between 1921 and 1941 was the result of migration. As Arif Hasan, a noted development expert, has analyzed in his work The Social Causes of Urban Change in Pakistan (2006), during the period between the last two censuses we find that 38% of the population increase between 1981 and 1998 was due to migration. It is estimated that 50% of this increase was mostly due to migration from Pakistan’s rural and urban areas. In addition thereto, between 1972 and 1978, an estimated 350,000 refugees from Bangladesh (formerly East Pakistan) moved to Karachi, and between 1977 and 1986, about 300,000 Iranian and Afghan refugees also settled in the city in the wake of the Soviet invasion of Afghanistan. One major challenge that faced the government as a result of these phenomenal and continued migration cycles, was providing housing/land tenure and services to the migrating communities. One negative impact of all this has been the proliferation of katchi abadis (squatter settlements). Migration waves and government response: Since 1947, a number of master and structure plans prepared for Karachi have largely failed to find a solution to the problem of squatter settlements mainly due to the fact that they failed to account for the significant interventions being made within the informal sector, and based their work on an inadequate and faulty data base. According to ‘Seven Reports on Housing’ by Arif Hasan, “in the MRV Master Plan developed by Swedish consultants for the Karachi Improvement Trust (KIT) in 1952, an adequate data base was not established for the preparation of the plan with the MRV plan being designed on the assumption that Karachi’s population in the year 2000 would be 3 million, a figure which was reached in the year 1969! In this plan, the decision makers and planners focused on building houses for the migrant settlers. However, the requisite finances for implementing the plans were linked with the development of a new administrative center in the city that never happened as a decision was made in 1958 to shift the capital of the city from Karachi to the newly developed city of Islamabad’. A new policy shift was also then witnessed when the first Martial Law government in Pakistan decided that squatters in
by Farhan Anwar
the inner city areas gave the city an ugly look, and needed to be moved to the outskirts of the city. This shift in the policy focus got reflected in the Greater Karachi Resettlement Plan that was developed for the Government of Pakistan by the Greek consulting firm Doxiades Associated in 1958. This planning document proposed creation of two new Townships – Korangi and New Karachi on the outskirts of Karachi (15-20 miles from the city center) and in the vicinity of these townships, large industrial areas were also planned and incentives provided to the industrialists to develop these areas. Clearance of the inner city slums and shifting of their residents to the new sites was an integral part of the plan. However, development in the industrial areas near the townships did not materialize at the required pace. Thus 50% of the people that were moved shifted back to squat in the city center, or on the fringes of the city to stay close to their places of work. As a consequence of the failure of this plan, a few critically important processes, that are listed below were set in motion that were to characterize the fault lines to be witnessed in all future government attempts at providing low cost housing to the landless in Karachi, till such time that regularization of katchi abadis became part of government policy. • Speculation in property: the people who moved back to the city from the new townships sold their homes to speculators who, in turn, settled middle income people in these houses. • Lack of supporting financial mechanisms: Although there was a heavy government subsidy in the development of the townships, recovery from the users was negligible. In addition, it was seen that in the absence of returns from the users, the government could not raise finances from its own revenues to sustain the settlement schemes. The planning and implementation failures of the Greater Karachi Resettlement Plan clearly manifested that settlement and providing security of tenure to the katchi abadi squatters was just not a physical problem; instead, the sociological aspects and providing financial sustainability to the initiatives were far more critical in determining the chances of success and failure. While the government had failed to develop a policy framework to tackle the issue, it did reshape its approach – it shifted from constructing houses to providing plots and services. The most significant manifestation of this revised focus, that needs a mention here, is the Orangi Metroville Project (1973). This was a Utility Wall Development (UWD) scheme for 35,000 persons. Roads, electricity, gas and sewerage were made available for its 4,133 plots. Plots for all civic amenities were planned, and the location of their sites was in close proximity to an industrial area. In addition, the price of the plots was kept at Rs 2,500. However, the scheme failed to attract the target group; it was planned that 94% of the plots in the scheme would be allotted to persons with an income less than 1000 rupees per month.
H ealth & Environment However, people belonging to the middle class, who had mostly purchased plots from the original allottees moved in and settled. They demolished the utility walls and constructed houses similar to the ones in the middle class areas of the city. The reasons in this could be financial rather than anything else. Residents who moved into the metroville had to bring in contractors and materials from other areas of the city since no such facilities were available within the metroville itself. This process required substantial financial investments. A proposal for setting up a ‘Housing Bank’ for assisting the lower income plot owners with loans at low interests did not materialize, and the only loans available were from the House Building Finance Corporation (HBFC) where the loan disbursement mechanisms did not favor the poor. Project, policy and interacting with stakeholders: The first policy decision for providing an institutional basis within a policy framework context to the issue of katchi abadis came in 1972, when the Federal Government initiated the Katchi Abadis Improvement & Regularization Program (KAIRP), which aimed to regularize 2,320 katchi abadis across the country (having a population of 5.5 million) and to provide residents with water, sanitation, electricity, road paving and other facilities in lieu of payment of development charges (referred to as ‘lease charges’). The impetus for this program came from populist slogans of the government elected in the historic 1970 elections that also bifurcated the country. The KAIRP led to enactment of the Sindh Katchi Abadis Act-1987 that provided a comprehensive legal and administrative framework for the process of regularizing the katch abadis. This provincial law (which was mirrored by corresponding legislation in other provinces) provided the buttress for a politically motivated announcement on March 23, 1985 whereby all unplanned settlements of at least forty households that were in existence on that day were regularized. This law led to the formation of the Sindh Katchi Abadis Authority (SKAA). Hindrances in implementing SKAA mandate: Initially SKAA faced a number of problems in fulfilling its mandate mainly owing to the complications in procedures and processes that were removed by working and learning with communities through the incorporation of revised procedural mechanisms. This revision in approach and strategy was adopted in 1994 and as soon as the lease camps started working with the simplified procedures, people thronged them to file applications for leases, and to pay the lease money through challans. In less than eight months, for the first time in its history, SKAA became self-financing. Conclusion: The changes made SKAA’s lease granting and development procedures in 1994 were primarily structured to achieve decentralization, and making the process participatory, transparent and appropriately suited to the demands of the targeted communities. The basic premise was to accept the interventions and innovations based on the ground realities pointed out by the communities, even though they didn’t conform to any specified standards but only aligned the government procedures and development inputs to the realities on ground in order to assure greater acceptability and improved chances of sustainability of the actions taken. As Haris Gazdar and Hussain Bux Mallah conclude in their work Residential Security “Marginalization and Social Protection
(regularization) of unplanned housing in katchi abadis has been an important factor in providing residential security to the socially marginalized. It is quite clear that settlements, communities and individuals that have gained protection through the government programs and laws for regularization are now in possession of secure assets.” However, what needs to be understood now is that, the availability of public land and associated services and infrastructure cannot be unlimited. Concerns about the future sustainable development of the city are valid in the context of the uncontrolled urban sprawl of the city with most of the development taking place in Karachi’s peripheral areas being beyond the mandate of the government. Another concern is that the relatively weak and lenient policy towards housing and related regulation in Karachi continues to contribute to facilitating migration from other parts of the country, and also from other neighboring countries. While in the early period of the city’s growth, most of the migrants represented hard working, enterprising and creative people that fitted and contributed well to the growth of the city. That is not the case anymore; much of the present influx, it is being felt by many, is politically motivated i.e. to take care of rival political concerns, is interested in wrenching the demographics of the city in their favor. It is high time we realized that regularization must at a certain stage discourage the unsustainable sprawl of the city that, if left unregulated, foretells serious consequences for ensuring security to Karachi’s residents along with provision of basic services and infrastructure commensurate with fulfilling the needs of a modern and sustainable metropolis. Another important lesson is that for the success of an urban development venture to have a wider impact, it has to be embedded firmly within the larger canvas of the overall development dynamics of the city. While the process of giving land to the landless is a learning curve – from thinking in terms of projects to developing the policy and institutional frameworks, and from a detached and bureaucratic planning approach to linking it with communities and learning from experiences on ground. Unfortunately, the overall planning process for the city has failed to account for this parallel development processes and to provide the necessary regulatory and environmental safeguards to make the process manageable and integrated with the formal planning processes. The result has been that, while significant successes have been achieved, the city continues to present a profile of inequitable growth, with access to land and services being determined within the context of a dysfunctional governance scenario bereft of even the basic requirements of social and public accountability.
S ocial Issues Crime Against Humanity
by Iftikhar Mobeen
escribed as the Palestine of Asia by the UN, the Rohingya Muslim community in Myanmar is currently going through an unutterable ordeal at the hands of the Rakhine extremist Buddhists in Arakan who are targeting the Muslim minority with the worst form of religious cleansing. Branded by the United Nations as one of the most persecuted minorities of the world, Rohingyas are a Muslim people living in the Rakhine State, located in west of Myanmar. With a population of 3 million, Rakhine state is bordered by the Bay of Bengal to the west and the majority of its residents are Theravada Buddhists and Hindus. Ethnic cleansing is rife in Myanmar and is turning into a human tragedy of colossal proportions. A confidential United Nations report dated May 29, 2011 and marked “Not for Public Citation or Distribution”, defines ethnic cleansing as a “purposeful policy designed by one ethnic or religious group to remove by violent and terror-inspiring means the civilian population of another ethnic or religious group from certain geographic areas”. The settlement of the Rohingya Muslims in this region dates back to the eighth century The suppression of the Rohingya Muslims of the Arakan region dates back to the World War II. On March 28, 1942, about 5,000 Rohingya Muslims were brutally massacred by the Rakhine nationalists in the Minbya and Mrohaung Townships. After this worrying incident, the Muslims of the region were frequently subject to harassment by the Burmese government which has so far refused to grant them official citizenship. According to the UN High Commissioner for Refugees, this lack of full citizenship rights means that the Rohingyas should tolerate other abuses, including restrictions on their freedom of movement, discriminatory limitations on access to education, and arbitrary confiscation of property. It's said that as a result of dire living conditions and discriminatory treatment by the government, some 300,000 Rohingyas have so far immigrated to Bangladesh and 24,000 of them also escaped to Malaysia in search of a better life. Many of them have also fled to Thailand, but neither Bangladesh nor Thailand has received them warmly. Bangladesh is negotiating with the Burmese government to return the Rohingyas and Thailand has sporadically rejected the hopeless immigrants. There have been instances where boats of Rohingyas reaching Thailand have been towed out to sea and allowed to sink, sparking international anger among Muslims and non-Muslims. Human Rights Watch says that the government authorities continue to require Rohingya Muslims to perform forced labor. According to HRW, those who refuse or complain are physically threatened, sometimes with death, and children as young as seven years old have been seen on forced labor teams. Dr. Mohamed Elmasry University of Waterloo professor writing for The Egyptian Gazette, has enumerated the different hardships the Rohingya Muslims have historically undergone. He writes that they are subjected to various forms
of extortion and arbitrary taxation, land confiscation, forced eviction and house destruction and financial restrictions on marriage. Rohingyas continue to be used as forced laborers on roads and at military camps. The Myanmar government's mistreatment of the Rohingyas, however, has long been contested and protested by the international organizations. For several years, human rights activists have decried the arbitrary measures leveled against the Rohingya Muslims in Myanmar by the government and the extremist Buddhists. In May 2009, Elaine Pearson, the Human Rights Watch's deputy Asia director issued a statement in protest at the deteriorating conditions of the Rohingya Muslims, calling on the Association of Southeast Asian Nations (ASEAN) to press the Burmese government to end its brutal practices: "the treatment of the Rohingya in Burma is deplorable – the Burmese government doesn't just deny Rohingya their basic rights, it denies they are even Burmese citizens.". Rohingya Muslims who are denied their basic rights, i.e. the right to freedom of movement, marriage, faith, identity, ownership, language, heritage and culture, citizenship, education etc. Deplorable as it is, the Muslims in Myanmar are among the most persecuted minorities in the world according to UN. US photographer Greg Constantine has recently released a book of black and white photography titled “Exiled to Nowhere: Burma’s Rohingya.” He believes that “One of the things that is lost in the discussions of the issues of statelessness—particularly with the Rohingya—are human stories.” He relates the story of 20-year-old Kashida who had to “flee to Bangladesh with her husband. The Burmese authorities had denied her permission to get married, but when they discovered she had married in secret and was pregnant they took away all her family’s money and cows and goats. They forced Kashida to have an abortion, telling her: “This is not your country; you don’t have the right to reproduce here.” Now, the conflict has escalated in the Rakhine State again and the Muslims are once more experiencing difficult days as a black shadow of violence and unrest has been just cast over their already trembling lives. It was on the reports that
S ocial Issues 10 Rohingya Muslims were killed by a mob of 300 Rakhines while on their way back from the country's former capital Rangoon. According to Due to a group of UK-based discriminatory NGOs, 650 Rohingyas treatment by were massacred from June government, 10 to 28. The United 300,000 Rohingyas Nations estimates that have immigrated between 50,000 and 90,000 Rohingyas were displaced to Bangladesh since the eruption of and 24,000 of in the Asian them escaped to violence nation. However, due to Malaysia in the absence of indepensearch of a dent reporters and monibetter life tors in the country, it's impossible to verify the exact number of those who have been displaced. It's also reported that some 9,000 homes belonging to the Muslims in the western state of Rakhine were destroyed. On July 20, Amnesty International called the recent attacks against minority Rohingyas and other Muslims in Myanmar a "step back" in the country's recent progress on human rights, citing increased violence and unlawful arrests following a state of emergency declared six weeks ago. Unfortunately, the Myanmar peace prize laureate Aung San Suu Kyi has turned a blind eye and a deaf ear to the plight of the Rohingya Muslims. Maybe she has forgotten her own words on democracy and human rights that, “The struggle for democracy and human rights in Burma is a struggle for life and dignity.” The Organization of Islamic Cooperation (OIC) has voiced its concern over the recent violence in the state of Rakhine and the varying reports which have leaked out as to the number of the Muslims killed. As reported by the TimeTurk News Agency, over 1,000 Rohingya Muslims have been murdered thus far in the conflicts broke out in the region. The mainstream media in the West have been largely silent about the massacre of Muslims in Myanmar and the ordeal that has befallen them. They have found other interesting topics to give coverage to, and as always, bigotry against Muslims hardly moves them. Amid the shameful silence of the Western governments and their affiliated media who outrageously boast of being independent and professional, it's a moral responsibility, not only for Muslims, but for all the conscious citizens around the world, to stand shoulder by shoulder with the subjugated Muslims of Myanmar and demonstrate that Islamophobic prejudice, intolerance and discrimination will not remain unanswered. In view of the ongoing inhumane violations in Myanmar, the US and its western allies, which keep pontificating about human rights in the world, have feigned ignorance about this humanitarian catastrophe. Why? It is certainly incumbent upon every person who cares about human dignity to fly in the face of this inhumanity and give a helping hand to the downtrodden Myanmar Muslims.
Need for economic growth and poverty reduction
opulation explosion is a serious problem that has caused to a large number of people, running into billions, abject poverty, starvation, malnutrition, diseases, illiteracy, lack of access to healthcare, and a host of social, political and economic injustice. According to estimates, the world population stood at 7,025,071 people as on July 9, 2012, a leap of over 2.5 times over the last 50 years, while the earth’s resources remain finite. There is therefore urgent need to focus attention on population explosion in the context of overall development plans, programmes and the need to find solutions for these issues. In its decision in 1989, the Governing Council of the United Nations Development Programme recommended that ,for focusing attention on the urgency and importance of the problems, July 11 should be observed by the international community as World Population Day. This was done all over the world including Pakistan. But observing day is not enough; it requires much more than that if poverty-stricken people are to be taken out of their predicament. Economic growth is one of the solutions. According to speakers at a seminar on poverty and inequality organised by World Bank in Islamabad on July 26, 2012, pro-poor policies and equitable growth are essential for vulnerable segments of society to catch up and not get permanently left behind because of uneven playing field. Pakistan’s growth had spurred during the period of wars in the 60s, 80s and 2000s, when the country received more foreign inflows, observed the Federal Minister for Finance Abdul Hafeez Shaikh adding that during the 80s, Pakistan had been fighting the Afghan war and since the 2000s, the nation has been an ally in war against terror; both times Pakistan saw huge inflows from the US. He further reiterated the government’s resolve to accelerate growth, reduce poverty and address inequality. The Minister highlighted four measures the government has introduced for bridging inequity: i) agricultural pricing policy that helps the farming sector; ii) increased expenditures on social safety nets with emphasis on better targeting of the poorest and vulnerable segments of society; iii) under the new formula for sharing federal resources with provinces the latter have received a major boost in transfers; and iv) deliberate effort is being made by the federal government to have regionally balanced development of infrastructure throughout the country. He welcomed the World Bank’s initiative of expanding the development discourse in Pakistan. Speaking on the occasion, Farzana Raja, chairperson of Benazir Income Support Program (BISP) proposed that the provinces should allocate certain funds out of increased share of National Finance Commission (NFC) for social protection policy. She also asked the corporate sector to contribute towards social protection for the way forward to tackle the arising situation. Francois Bourguignon, Director at Paris School of Economics and an eminent authority on micro determinants of poverty said: “Absolute poverty reduction has to be the main goal of development; domestic policies can reduce inequality without impairing growth.”
S tock Market Stock Market Review - July 2012
Top five gainers scripts MoM HCAR
Top five loser scripts MoM ENGRO
30% 20% 10% 0%
falling coal prices as well as improvement in domestic demand boosted performance of the 'Construction & Materials' sub-sector, while banks rallied on better outlook for 2QCY12 results. The Chemicals sub-sector was the major underperformer in July primarily due to below line earnings of FFBL as well as growing concerns on ENGRO's ability to repay its debt given the cash flow constraints arising from the severe gas curtailment. Within the AKD Universe, HCAR (+29%), DGKC (+17%) and AKBL (14%) were the major outperformers while the laggards list was headed by ENGRO (-8%), FFBL (-7%) and EPCL (-5%) respectively. Outlook: Our near term outlook for the market is positive given i) release of CSF funds and ii) prospect of monetary easing in the upcoming monetary policy following below line CPI reading for Jul'12, which came in at 9.6%YoY, and was the first time since Dec'11 that the CPI reading has come in single digits.
he KSE-100 index rallied by 5.6% in the month of July and in the process was the best performing market in the region. Furthermore, the KSE easily outscored the benchmark MSCI-FM index, with MSCI-Pakistan gaining by 6.1% during the month compared with a return of just 0.9% of the MSCI-FM index. Thawing of relations between Pakistan and USA was the main reason behind the KSE price outperformance. In this regard, the two sides have agreed on the reopening of NATO supply routes, which is expected to result in improved foreign inflows to Pakistan, where initial reports indicate an inflow of US$1.1bn in CSF funds. Market performance in numbers: KSE-100 index closed the month at 14,577 points, representing an increase of 5.6% MoM, while the CY12TD gain stands at an impressive 28%. Thawing of relations with the US was reflected in foreign inflows, with total inflows in July of US$31mn, compared with an outflow of US$109mn in the previous month. Trading activity also gained some momentum with average daily volumes rising by an encouraging 11%MoM to 90mn shares. Amongst the blue chip sectors 'Construction & Materials' and 'Banks' were the notable outperformers. Improving prospects of cement sector profitability following
by Ayub Humayun Ansari
AKD Universe Leaders & Laggards Jul'12 29% 17% 14% -8% -7% -5%
HCAR DGKC AKBL ENGRO FFBL EPCL
Money Market T-Bills (3mth)
Sector-wise price performance - Jul'12
Sector MoM YoY Technology Hardware 1852% 2998% and Equipment Beverages 27% 43% Pharma and Bio Tech 25% 44% Electronic and 18% -1% Electrical Equipment Construction and Materials 16% 102% Financial Services 12% 81% Software and Computer 11% -24% Services Equity Investment Instruments 10% 16%
P.I.B (3 year)
P.I.B (5 year)
P.I.B (10 year)
Foreign Portfolio Investment Monthly (July 2012) Gross Buy Gross Sell Net Buy/Sell Rs Rs Rs $ FIPI 6,173,902,437 (3,217,924,039) 2,955,978,388 31,115,562 Local Companies 30,947,580,285 (31,680,017,010) (732,436,726) (7,709,860) Banks/DFI 5,914,001,312 (6,808,640,259) (894,638,944) (9,417,252) Mutual Funds 5,654,098,333 (4,556,276,999) 1,097,821,339 11,556,014 NBFC 1,729,869,601 (1,928,412,529) (198,542,925) (2,089,926) Local Investor 46,799,074,830 (47,679,986,763) (880,911,931) (9,272,757) Other Organization 1,487,001,579 (2,834,270,780) (1,347,269,204) (14,181,781)
C ommodity Review Commodity Market Review - July 2012
CRUDE OIL [USD / barrel]
GOLD US $/troy Oz
1630 1620 1610 1600
SILVER US $/troy Oz
Open: 1,596.20 Low: 1,567.90 Close: 1,614.10 High: 1,623.50 Change: + 1.12 % Despite last trading day losses, gold posted its second consecutive monthly rise
PALMOLEIN [Rs./37.324 kg] PALM OLEIN RS / 37.324 kg 5,050 5,000 4,950 4,900 4,850 4,800 4,750 4,700
Open: 83.68 Low: 83.68 Close: 87.45 High: 92.48 Change: + 4.51 % Oil prices fell for a second consecutive day on last trading day of the month on speculation that the Federal Reserve will be less likely to announce additional measures to stimulate the U.S economy. Crude reduced the monthly gain to 4.51 % in July, on the account that Fed will probably forgo a third round of large-scale asset purchases at a two-day meeting ahead. During July-2012, the traded volumes at the Exchange increased to Rs. 30.51bn from Rs. 6.47bn in the corresponding month of the previous year, a significant growth of 371 % .
Open: 3,550 Low: 3,425 Close: 3,425 High: 3,575 Change: - 3.52 % In the domestic markets a downward trend in rice prices has been witnessed over the month of July. Maximum price was Rs 3,575 per 100 Kg while the minimum price observed was Rs 3,425 per 100 kg showing a decrease of 3.52 %.
SILVER [USD / troy Oz]
GOLD [USD / troy Oz]
Low: 2,998 High: 3,087
Open: 2,950 Close: 2,946 Change: - 0.14 %
IRRI-6 RS/100 kg 3,600
IRRI 6 [Rs. / 100 kg]
Open: 27.36 Low: 26.67 Close: 28.20 High: 28.33 Change: + 3.07 % Silver gained 2 percent to $ 28.20 on last trading day of July, resulting in an increase of 3.07 %. During July 2012, the traded volumes at the Exchange decreased to Rs. 5.07bn from Rs.7.90bn in the corresponding month previous year.
PMEX Commodity INDEX PMEX COMMODITY INDEX
CRUDE OIL US $/Barrel
Traded Volume Traded Lots (Rs) 309,489 Jul, 2012 103.87 billion 193,775 Jul, 2011 52.27 billion 391,859 Jun, 2012 118.82 billion
after a string of weak U.S. economic indicators boosted expectations that the Federal Reserve was exploring new ways to support growth Interest in physical gold remained lackluster, with demand from major consumer, India, crimped by higher prices and the world's largest gold-backed, exchangetraded fund, SPDR Gold Trust, set for its biggest monthly outflow this year in July. During July, 2012, the traded volumes at the Exchange increased to Rs. 68.28bn from Rs. 37.89bn in the corresponding month of previous year, witnessing a significant growth of 80.22 % .
or the first time in more than two years, commodities, equities, bonds and the dollar posted gains. Raw materials led the increase as the Standard & Poorâ€™s GSCI Total Return Index of 24 raw materials rose 6.4 percent in July. The MSCI All-Country World Index of equities rallied at the end of the month for a 1.4 percent gain. The Dollar Index, a measure against six currencies, added 1.3 percent. Bank of America Merrill Lynchâ€™s Global Broad Market Index shows that bonds of all types posted a return of 1.4 percent on average. During July-2012, the traded volumes at the Exchange increased to Rs. 103.87bn from Rs. 52.27bn in the corresponding month of the previous year, a growth of 98.72 % witnessed vis a vis july, 2011.
by Raede Latif
Open: 4,930 Low: 4,750 Close: 4,775 High: 5,000 Change: - 3.14 % Malaysian crude palm oil edged lower on last trading day of July, posting its third successive monthly loss. Benchmark October palm oil futures on the Bursa Malaysia Derivatives Exchange lost 0.8 percent to close at 2,980 ringgit ($953) per ton. A downward trend was seen in the domestic market. An overall decline of 3.14 % was observed in the month of July, 2012. Maximum price Rs 5,000 was on 6th of July and minimum price of Rs. 4,750 per 37.324 kg was noticed on 30th of the month. August 2012
E ducation & Training Innovationthe key to success
by Ferozeali Hussaini
nnovation is the process of using intellectual resources to create new products or services capable of generating positive business results. Peter Drucker defines innovation as “the specific instrument of entrepreneurship... the act that endows resources with a new capacity to create wealth.” In other words, innovation may be referred to as ‘creation of better or more effective products, processes, services, technologies or ideas made available to the markets and the society’ for archieving positive results. Innovation may thus be considered as conceiving new ideas leading to the creation of a new product, process or service. It is not just the invention of a new idea that is important; it is actually “bringing it to market”, putting into practice and diversifying it in a manner that leads to new products, services or systems that add value or improve quality. It may involve technological transformation and management restructuring. Innovation also means applying new technology and employing out-of-the-box thinking to generate new value and to bring about significant changes in society. Innovation is an important topic in the study of economics, business, entrepreneurship, design, technology, sociology, and engineering. It is the key factor in society and economy. In society, innovation aids in comfort, convenience, and efficiency in everyday life while in business, innovation serves as a catalyst to growth for achieving financial returns. There are different kinds of innovation. They include, for example: • Computer printer • Microprocessor chips • Personal/laptop computers • Email • Word processing software • Google search • iPod and iTunes • Microwave oven • WiFi • Spreadsheet software • Social networking • Mobile phones • Disposable baby diapers • Energy sources i.e. wind turbines and solar panels • The World Wide Web / • Global Positioning or Satellite Internet Navigation systems • Digital cameras This is of course not a definitive list. New breakthrough innovations will continue to emerge over time. The Importance of Innovation in Entrepreneurship Innovation has long been accepted as an important driver of modern economy. The economy consists of enterprises and businesses. Without them, our economy would not survive. But a business must also sustain itself, be able to constantly evolve to fulfill the demands of the community and the people. In every business, it is imperative to be industrious, innovative and resourceful. Entrepreneurship produces financial gains and keeps the economy afloat, which gives rise to the importance of innovation in entrepreneurship. In other words, entrepreneurs
are innovators of the economy. Companies and enterprises keep innovation as goal of their organization. Innovations contribute to the success of the company. Other factors that add to the importance of innovation in business and entrepreneurship is competition; it stimulates any entrepreneur to come up with innovative products or services which are better in quailty and are also cost-effective. Innovation Process: A business survives on the basis of its ability to bring the right products or services to the right market, at the right time. With their budgetary constraints and cut-throat competition for survival and growth businesses are under constant pressure to develop inovative products that are competitive in quality and cost-effective too. For achieving this goal there has to be a prefect combination of innovation, profitability and customer engagement. To create and sustain innovative products or services, businesses need to maintain strategic clarity on: 1- the purpose - to know exactly and clearly what is important for the business to sustain and grow; 2- deployment of resources; 3- the process to be used. The process of innovation is a structured action that can be put to implementation easily. In business and economy, the process of innovation is the adoption of technologically new or significantly improved production methods. These methods may involve changes in equipment or production organization or both. The methods may be intended to produce new or improved products, which cannot be produced using conventional plants or production methods, or essentially to increase the efficiency of existing products. This includes significant changes in techniques, equipment and/or software. The core of the innovation process is formed by the company and its employees. Factors affecting the innovation process from the outside include: strategy and structure, which strongly determine the contours of innovation process from the centre: • customers' needs, • the benefits for the customers, • global and technological trends, • behavior of the competitors, • requirements of the families of entrepreneur and employees, • the needs of intermediaries (distributors and resellers), • the needs of network partners. An important step in the development process of an innovation is to evaluate it with the help of a business case. The following points are evaluated:
E ducation & Training • Aims: What is the basic aim and what are customer benefits of the innovation? • Status quo: What is new about the idea? Which components exist already? • Strategy: Does the implementation strategy correspond to the general corporate strategy? • Risk: Which risks have been identified? What are the consequences for the project? How likely is it that any of the risks will crystallize? • Resources: What staff resources as well as technological, financial, structural and knowledge-/experienced-based resources will be used and bound by the project?? • Economic importance: What is the market potential? What is the effect on liquidity planning? How are distribution and sales organized? • Perspectives: What perspectives does the innovation open up for the company, the customers, the competition? • Project plan: What is the course of action, what are the responsibilities and what is the time frame necessary for the realization of the innovation? Is your company ahead of the game or not? Every business lives or dies on its ability to bring the right products or services to the right market at the right time. To do this, companies have to consistently achieve the right combination of innovation, profitability and customer engagement. Important Steps - Creating an Innovative Organization: According to a global study by IBM, today's CIO spends an average of 55% of his or her time on activities that spur innovation, and the key component underpinning all successful innovations is the business model. For a business model to be of value, it must have three core elements: a unique central idea that defines who you are, a grasp of future market trends, and profitability from either lower cost base or an offering that cannot be easily copied. Implementing a differentiated business model can successfully unite silos across the enterprise, turn around opportunities faster, get customers to stay longer and pay a premium, resolve internal crises quicker, and better leverage the allocation of resources. The solution is a combination of insights from Booz & Company, Michael Porter, and Philip Kotler that can guide organizations to conquer the challenge of building a business model geared for innovation and business transformation: 1. Know Thyself ? The first step of this process is a crucial assessment of what business you are in, how the business is differentiated, and if and why it is trapped in price competition hell. It is then a question of knowing the appropriate innovation strategy for an ambitious, audacious, and imaginative response. 2. Ideation: The second step is to create a simple idea with sophisticated delivery by looking at the business from the outside-in, not the inside-out. Often, existing customers are not visionaries and cannot imagine beyond their existing experiences, so it is essential to realize that innovation needs to be market-driven, not solely customer-driven. Apple has built an empire from anticipating market needs. Steve Jobs wanted customers to have memorable experiences when they tried something new on an Apple device.
3. Redefine the business: The third step of creating a new business model is to redefine the business you are in and ascertain whether the aims are to attract more users and/or devise new uses for the product, service, or experience that will be innovated. A robust plan must also cover government regulations and laws currently in the market space; an essential component often overlooked. "When evaluating countries for investment or opportunities, look first at a country's geopolitical stability and its laws protecting property rights: these issues tend to provide a better long-term view on market risk and opportunity than economic indices.” 4. Lead, Follow or Get out of the Way?: The fourth step requires forming a strong leadership team with a shared vision that will be at the center of the business, balancing contention with compromise while simultaneously maintaining focus on the brand and business goals. Contrary to popular belief, business innovation is not about isolation and competition; it is more often about cooperation and collaboration inside the business. This is best achieved by treating the leadership team as venture capitalists who have a stake in the program's success. Therefore the leadership team needs to define the overarching ambition for the business that can help steer the future and act as a compressed management tool when making decisions. 5. Big Results Require Big Ambitions: The fifth step frames the financial and strategic objectives of the business. Jim Collins, author of Good to Great and Built to Last, asserts that "a conservative, disciplined approach to growth is a critical factor in sustaining a great business model. Though it may seem counterintuitive, great companies willingly leave shortterm growth on the table if it means abandoning proven methods of long-term growth." Business innovation is not about isolation and competition; it is more often about cooperations and collaboration in the business. According to McKinsey, 84% of executives believe innovation is extremely important for their company's growth strategy. However, the successful implementation of innovative products, services, and experiences is a road paved with strain and failure. While building the business, do not let short-term growth override the long-term vision. This approach downgrades immediate appetite for returns in favour of a strong future. 6. Don't be Let-down: The secret of business innovation is to think big, act small, fail fast and learn rapidly. Former IBM CEO Lou Gerstner said business transformation “requires focus, leadership, and commitment to create an authentic community of motivated thinkers and doers that can open new channels for the business and industry." Conclusion: Innovation must have a place within the strategic orientation of a business. As a basic principle: Innovations are not miracles; they are not sudden inspirations from outside or from above. They are the product of a systematic process. In short, entire new industries and many existing ones have transformed to become creators of valuable ideas and experiences. Increasingly, civilization must organize itself to maximize the generation of new and better ideas, creating the infrastructure, education systems, and innovative organizations that will solve problems and create value to change the world.
E vents London Olympics opening ceremony – a great historic moment
ondon 2012 Olympic Games started off with a grand ceremony welcoming the athletes from more than 200 nations. For London, this is an historic occasion as it is the third time the UK capital is hosting the world’s biggest and most important sporting event. The Queen opened the Olympic Games for the second time in her 60-year reign after a spectacular ceremony. Prime Minister David Cameron and US First Lady Michelle Obama, accompanied the Queen. Entitled Isles of Wonder, the opening ceremony was directed by Oscar-winning Boyle with the aim of celebrating all things British and charting the nation's history. Director Danny Boyle's £27m production kicked-off London 2012 with imagination, style and a very British sense of humor. According to BBC, it attracted a UK TV audience of 26.9 million, - more than four times the number that watched the opening ceremony in Beijing four years ago. An estimate of over a billion viewers worldwide watched the Opening Ceremony, which reflected the key themes and priorities of the London 2012 Games, based on sport, inspiration, youth and urban transformation. The main theme of the Ceremony was 'this is for everyone'. From the industrial to the digital revolution, the Ceremony celebrated how Britain has contributed to the world. The Ceremony also celebrated Britain’s free health service, the National Health Service (NHS) and paid tribute to Britain’s contribution to a modern world. At its heart was a show-stealing performance by the Queen who made her movie acting debut alongside James Bond star Daniel Craig but appearances from Bradley Wiggins, Rowan Atkinson and David Beckham added to the occasion, showcasing British talent and a sense of fun. The Ceremony featured a volunteer cast of more than 7,500 volunteer performers who gave up their weekends and evenings to take part in a total of 248 rehearsals at two east London rehearsal sites and at the
Stadium. Artistic Director of the Olympic Games Opening Ceremony, Danny Boyle said: ‘Our show was really the volunteer’s show. If you want to judge us as an island, these people are the best of us, and we hope the feeling of the show was a celebration of their generosity.’ A short while before the show began the Red Arrows flashed across London in a thrilling flypast, leaving behind red, white and blue trails of vapor. The world-famous RAF aerobatics team flew above the capital at exactly 8.12pm - 2012 on the 24-hour clock. It started with the ringing of a giant bell by cycling hero Wiggins, who last weekend became the first Briton to win the Tour de France. The stadium was then turned into a 'green and pleasant land' with hills, a cottage and people enjoying an idyllic version of British life. Animals including 12 horses, three cows, two goats, 10 chickens, 10 ducks, nine geese, 70 sheep and three sheep dogs also appeared in these opening scenes. The
peace was shattered as the age of industry sprouted from the ground with loud banging. A cast of hundreds swarmed on to the centre of the arena as the darker, grimier, urban landscape emerged, with giant smoking chimneys rising up from the ground. The athletes from all over the world, paraded in front of the audience. Pakistani athletes preferred the national dress Shalwar Kameez and projected the national culture. Mystery surrounded as to who would perform the ceremonial event, with Sir Steve Redgrave, Sir Roger Bannister and Daley Thompson all tipped as contenders - but the honor became the lot of seven talented young athletes. Before leaving for east London, the Queen and Prince Philip held a reception for foreign heads of state and VIPs at Buckingham Palace. David Cameron said Britain was ready to welcome "the greatest show on Earth", adding: "This is a great moment for our country, so we must seize it." The show has been praised by those who travelled from all around the world to see it. August 2012
E vents My Karachi – Oasis of Harmony
exhibition halls. Largest presence of foreign delegates in the exhibition was from India with 20 exhibitors led by former Mumbai Chamber of Commerce president Ashok Kumar Bharat. In the Indian pavilion 8 brands participated including Forbes, TATA Chemicals, EurekaForbes, Venus Lifestyle and others. The exhibitors from Indonesia also participated. High level business delegations from India and Afghanistan visited the exhibition for B2B meetings. Indian exhibitors received very encouraging response from the visitors including the Pakistan and Afghan buyers and international participants maintained successful B2B and B2C interaction. Ashok Barat stated BombayKarachi Joint Chamber was formed on the initiative of Indo-Pak Commerce Ministries. It was a productive move, he said, towards boosting trade between the two port cities of neighboring India and Pakistan. He also invited KCCI to organize an exhibition of Pakistani products with the collaboration of Bombay Chamber in Mumbai. Sindh Industries Minister Rauf Siddiqui said that an effluent treatment plant will be completed at Kotri Industrial Area with Turkish support next month. Various prominent personalities including Federal Minister for Overseas Pakistanis Dr. Farooq Sattar, Acting Speaker, Provincial Assembly of Sindh Shehla Raza, Coordinator to Chief Minister Sindh Sharmila Farooqi and MNA Khawaja Sohail Mansoor also visited the exhibition. From Diplomatic Corps, Consul General of Turkey Murat M. Onart, Consul General of Japan Masaharu Sato, Consul General of Indonesia Rossalis Rusman Adenan, Deputy High Commissioner of Bangladesh Ruhul Alam Siddique, Commercial Counsellor of Vietnam Nguyen Hong Tien and Diplomats of Russia, France, Korea, Sri Lanka and Afghanistan also graced the occasion with their presence. The exhibition attracted a large number of men, women and children from all walks of life. purchasing for forth coming Ramazan and Eid. Stalls of garments, readymade garments, food items, cooking oil, cosmetic, mobile phone etc attracted a huge crowd.. Huge rush was seen at ‘house of italia’ oil stall and food and beverages stalls. Since inception, My Karachi Exhibition has been portraying a positive image of Karachi as a hub of financial activities in Pakistan as well as a promising land of opportunities.
he “9th My Karachi – Oasis of Harmony” Exhibition, organized by Karachi Chamber of Commerce & Industry, held from 13th to 15th July, 2012 at expo center was well attended by public and corporates from leading FMCG sector. This annual event was co-hosted by the, Sindh Government, and City District Government, Karachi. The vision of “My KarachiOasis of Harmony” Exhibition was to rebuild the image of Karachi and to give positive signals to the foreign entrepreneurs that the industrial and commercial activities are going on smoothly in Pakistan particularly in Karachi. Yet another objective underlying the organization of this event was to ensure that corporate entities meet and strengthen relationships with the foreign counterparts and enhance the image and prestige of Pakistan and Karachi. The exhibition was inaugurated by Chief Minister Sindh, Syed Qaim Ali Shah, accompanied by Rauf Siddiqui, Provincial Minister for Industries and Commerce along with President KCCI, Mian Abrar Ahmed and other dignitaries. In his inaugural address, the Chief Minister of Sindh, Syed Qaim Ali Shah underlined the need for establishing SMEs and promoting the pivotal role of this sector in the country’s economy. He said, “The Karachi Chamber of Commerce and Industry (KCCI), Commerce International and the business community should extend special emphasis to promote the SME sector as I would recommend the concerned circles of the government to establish more SME zones with one dedicated SME zone for women entrepreneurs.” Mian Abrar Ahmad, President KCCI, reiterated his view that Pakistan did not need aid but trade and this perception of Pakistan needs to be depicted worldwide effectively. He said that KCCI had gone international with the formation of Pak Afghan and Bombay Karachi Joint Chamber which aimed to play an enterprising role in to promoting regional trade particularly in SAARC block and generally with ECO, GCC, ASEAN and Central Asian Trading blocks. More than 7000 people visited the exhibition in three days. An important feature of the exhibition was the participation from regional countries such as India, Indonesia, Sri Lanka, Vietnam and Afghanistan etc displaying their products at more than 200 stalls in four
E vents Dr. Asif A. Brohi appointed Chief Operating Officer (“COO”) NBP
• Providing a platform for the industry leaders to come together and draw a road map to have a stable and sustainable economic growth; • Focusing on how entrepreneurship triggers, fuels and propels the engine of economic growth towards self-reliance, progress and prosperity; • Uplifting the spirit of change and leadership and encouraging the youth to find imaginative and innovative ways to seek solutions to the many problems plaguing Pakistan and other developing countries. An eminent galaxy of high profile professionals and personalities comprising successful entrepreneurs, economists, bankers, academics besides students, regulators and legislators from Pakistan and overseas attended the Congress. They include, besides others, Prof. Dr. Atta-ur-Rehman, UNESCO Science Laureate, Mr. Shahid Aziz Siddiqui, Chairman, State Life Insurance Corporation of Pakistan, Mr. Kazi Abdul Muktadir, Deputy Governor, State Bank of Pakistan, Mr. Aamir Niazi, President, Pakistan Society of Training & Development, Engr. Shadia Yousaf Bakhait, Resident Representative, UNIDO, Mr. Ghalib Nishtar, President, Khushhali Bank, Mrs. Attiya Nawazish Ayaz, Assistant Secretary General, ICCIA, Dr. Saqib Rizavi, President, Szabist, Ms. Tahira Raza, SEVP, NBP, Ms. Sultana Siddiqui, President, HUM TV, Mr. Asad Umar, former President, Engro Group, Brig. (Retd.) Saleem Moin, Former Chairman, NADRA, Mr. Salman Burney, Managing Director, GSK, Mr. Humayun Bashir, President, OCCI.
Noted banker Dr Asif A Borhi has been appointed the Chief Operating Officer (COO) of National Bank of Pakistan (NBP). He is also appointed the Chairman of the Board of the subsidiaries: NBP Exchange Company and NBP Capital Limited. Dr Brohi has rich experience of banking and administration. Previously, he was serving as Group Chief, Commercial & Retail Banking, NBP. Dr Asif Borhi joined NBP in 1984 and held numerous Senior Management positions at the Regional and Head Office levels including his last assignment as Group Chief Operations. He holds a Bachelor's Degree in Law and a Master's Degree in Literature from the University of Sindh and a Master's Degree in Business Administration from USA and a Doctorate in Public Administration from Karachi University.
NBP has received "Pakistan Deal of the Year Award 2011" National Bank of Pakistan (“NBP”) has received "Pakistan Deal of the Year Award 2011" for acting as Inter-creditor Agent as well as Lead Arranger & Advisor with regard to financing of two Renewable Wind Energy Power Projects of 50 MW each in the country. The two power projects are Pakistan’s first ever 100% Islamic financed Renewable Energy Power Projects. This has also set a new precedent in terms of Islamic financing structure in the local banking sector. The deal included arrangment of PKR 6 billion under Musharaka (Shirkat ul Milk) Finance Facility with a consortium of local banks and a foreign debt component of USD 134 million being provided under Ijarah Finance Facility by Asian Development Bank (“ADB”) and Islamic Development Bank (“IDB”) whereas NBP has acted as Inter-creditor Agent for both local and foreign lending group.
Prof. Dr. Nasim A Khan, Vice Chancellor, Hamdard University is giving his book on Solar Energy to eminent Social Worker and Chairman, Hilton Pharma Sardar Yasin Malik during his visit to Hamdard University.
ENTRECON 2012 organized to promote entrepreneurship In an effort to promote entrepreneurship, Ozair Hanafi School of Learning (OHSOL) organized 2-day International Enrepreneurship Congress (ENTRECON - 2012) on 14 and 15 July, 2012 at Karachi. Spread over nine technical sessions and power-packed presentations from successful professionals, the congress aimed at:
Karachi: Mr. Wazir Ali Khoja, Chairman NITL & Mr. Manzoor Ahmed, COO are declaring results of NIT Funds for 2011-2012 in a press conference at a local hotel.
S cience & Technology In New Mexico, daredevil skydives from 18 miles above Earth
elix Baumgartner, termed as â€œAustrian DareDevilâ€? by international media, jumped from a balloon flying at an altitude more than 18 miles above Earth, on 25th July, 2012, falling at speed topping 500 miles per hour (805 kilometers per hour) in a training run for his attempt to make the worlds highest skydive. He landed safely in a desert near Roswell, New Mexico after leaping from an estimated 96,940 feet wearing a pressurized space suit equipped with an oxygen supply. A helium-filled balloon lifted Baumgartner into the sky carrying him in a pressurized capsule. He executed a free fall of 3 minutes and 48 seconds, reaching speeds of 536 mph, according to Red Bull Stratos, a project using the jumps to gather medical and scientific research data. Baumgartner, aged 43, is making final preparations to break the record held by skydiving legend Joe Kittinger, a retired U.S. Air Force colonel. Kittinger's record -- for freefalling from 102,800 feet, or more than 19 miles -- has been revered in the aviation community since it was set in 1960. At the time, no one knew whether a human could survive such a leap. Now, with Kittinger himself serving as mentor, Baumgartner plans to shatter that record with a free-fall from 120,000 feet up, just over 22 miles. Baumgartner will be wearing a custom-made body suit that aims to allow him to travel faster than the speed of sound. Baumgartner's team of international experts in medicine, science, engineering, aviation and design is looking for the perfect three-day weather window -- when the skies will be clear, with little wind and low humidity -- and then make the leap. When Baumgartner tries to break Kittinger's record, he'll be using a pressurized capsule attached to a high-altitude helium balloon for a "stratospheric flight" to more than 120,000 feet. He will then exit the capsule and jump -- protected only by a pressurized 'space' suit and helmet supplied with oxygen -- in an attempt to become the first person to break the speed of sound and reach supersonic speeds in free-fall before parachuting to the ground. In the past, Baumgartner has also jumped from Malaysia's Petronas Towers and Taiwan's Taipei 101, two of the world's tallest buildings.
Micro-drones: The new face of cutting-edge warfare
ar from the aero plane-sized craft that are the face of cutting-edge warfare, a much smaller revolution in drones is under way. Micro-aerial vehicles (MAVs) with uncanny navigation and real-time mapping capabilities could soon be zipping through indoor and outdoor spaces, running reconnaissance missions that others cannot. They would allow soldiers to look over hills, inside buildings and inspect suspicious objects without risk. Now researchers led by Roland Brockers at the NASA Jet Propulsion Laboratory in Pasadena, California, have developed a MAV that uses a camera pointed at the ground to navigate and pick landing spots. It can even identify people and other objects. The system enables the drone to travel through terrain where human control and GPS are unavailable, such as a city street or inside a building. A human operator needs to tell the drone only two things before it sets off: where it is and what its objective is. The craft figures out the rest for itself, using the camera and onboard software to build a 3D map of its surroundings. It can also avoid obstacles and detect surfaces above a predetermined height as possible landing zones. Once it selects a place to put down, it maps the site's dimensions, moves overhead and lands. In a laboratory experiment, a 50 centimetre by 50 centimetre quadrotor craft equipped with the navigation system was able to take off, travel through an obstacle-filled indoor space and land successfully on an elevated platform. With such capabilities making their way into ever smaller craft, it may not be long until the PD-100 Black Hornet (pictured), which is set to become the world's smallest operational drone, gets an upgrade as well. As it stands the PD-100, which has been in testing by Norwegian manufacturer Prox Dynamics since 2008, can navigate autonomously to a target area using onboard GPS or fly a pre-planned route. It can also be controlled by a human from up to a kilometre away, has an endurance of up to 25 minutes, can hover for a stable view, and fly both indoors and out. Just 20 centimetres long and weighing about 15 grams, the PD-100 makes the drone created by Brockers's team look like a behemoth. And while it may look like a toy, Prox Dynamics claims it can maintain steady flight in winds of up to 5 meters per second. This has attracted the attention of the UK Ministry of Defence, which last year issued a request for the vehicle under the name "Nano-UAS".
S cience & Technology Iran's Nuclear Program ‘Thunderstruck’ by AC/DC computer virus
cyberspace security expert said he received a series of emails from an Iranian nuclear scientist complaining that computers at two plants bizarrely began playing a heavy metal anthem over the weekend. The attack caused computers at the Natanz and Fordo nuclear plants to blast the metal anthem “Thunderstruck” by arena rock gods AC/DC at full volume in the middle of the night, the emails said. It also reportedly shut down “part of the automation network,” said Mikko Hypponen, a Finnish computer security expert who has advised governments on cyber-security. Hypponen, the chief research officer at F-Secure, a well-regarded Finnish computer security firm, announced in his blog that he had received the emails from a scientist at the Atomic Energy Organization of Iran. One of the emails stated: “I am writing to inform you that our nuclear program has once again been compromised and attacked by a new worm with exploits which have shut down our automation network at Natanz and another facility Fordo near Qom.” It continued: “According to the email our cyber experts sent to our teams, they believe a hacker tool Metasploit was used. The hackers had access to our VPN. The automation network and Siemens hardware were attacked and shut down. I only know very little about these cyber issues as I am a scientist, not a computer expert.” The email concluded: “There was also some music playing randomly on several of the workstations during the middle of the night with the volume maxed out. I believe it was playing ‘Thunderstruck’ by AC/DC.” In 2010, US Special Forces in Afghanistan blasted Metallica and Thin Lizzy, AFP reported, when fighting the Taliban in Marjah. The approach included blasting a playlist that continued for hours on powerful speakers in an effort to subdue the Taliban, who hated the music. Coincidentally, the head of Iran’s Information Technology and Communications Organization, Ali Hakim Javadi, urged the United Nations to condemn organized cyber attacks. He indicated that “high-cost viruses,” like Stuxnet and Flame, for example, were not made “by a single individual,” and that international bodies must confront them together, the state-run IRNA news service reported on 25th July. Israel and the United States were fingered for the Stuxnet and Flame viruses, though they have never admitted culpability. Flame was touted as “the most sophisticated cyber virus ever” when it hit systems in Iran and across the Middle East in May. It was said to be 20 times as powerful as Stuxnet, which, in 2010, caused some Iranian nuclear centrifuges to fail.
World's biggest hydroelectric plant fully operational
fter 19 years of construction, the Three Gorges Dam, the world's largest hydropower project, started working at full capacity on 25th July, 2012 as the last of its 32 turbine generators was put into operation. The first generator went into operation on July 10, 2003. The last one, or the No. 27 unit, is one of six generators that make up the dam's underground power plant. The Project was launched in 1993 with a budget equivalent to 22.5 billion U.S. dollars. The Three Gorges Dam's generators have a combined generating capacity of 22.5 million KW. The dam also has two smaller power plants, each having a generation capacity of 50,000 kilowatts (KW)."The full operation of the generators makes the Three Gorges Dam the world's largest hydropower project and largest base of clean energy," Zhang Cheng, general manager of China Yangtze Power Co. Ltd., the operator of the generators, said in a ceremony. The Chinese government regards the project as a historic engineering, social and economic success, with the design of state-of-the-art large turbines, and a move toward limiting greenhouse gas emissions. However, the dam flooded archaeological and cultural sites and displaced some 1.3 million people, and is causing significant ecological changes, including an increased risk of landslides. Made of concrete and steel, the dam is 2,335 m (7,661 ft) long and the top of the dam is 185 metres (607 ft) above sea level. The project used 27.2 million cubic metres (35.6×106 cu yd) of concrete (mainly for the dam wall), 463,000 tonnes of steel (enough to build 63 Eiffel Towers) and moved about 102.6 million cubic metres (134.2×106 cu yd) of earth. The concrete dam wall is 181 metres (594 ft) high above the rock basis.
D iscovery NASA finds lost spacecraft Mysterious building found on dark side of the moon
ritish archaeologists have unearthed the remains of a mysterious prehistoric structure that might be older than Egypt’s pyramids. Discovered during work at a housing development in Monmouth, Wales, the bulky feature consists of a series of trenches possibly housing the timber foundations of a massive building. Made from what seems to be entire tree trunks, the sleeper beams are huge, measuring more than 50 ft in length and more than 3 ft across. Experts believe the structure could date to at least the Bronze Age, but could be early Neolithic, about 6,500 years old, thus predating Egypt's pyramids by about 2,000 years. Speculations range from interpreting the structure as the foundation of an early Neolithic long house to seeing it as a large platform constructed on water-saturated soil. Radio-carbon tests of the foundations are being carried at the moment. Results are expected within a couple of weeks.
scientists have found the crash site, pictured above, of a spacecraft set into orbit during the early 60s. They believe it is the Lunar Orbiter 2 which disappeared back in 1967 during a passage over the far side of the moon, when the craft went out of telescope and radio range. The primary function of Lunar Orbit 2′s was documenting areas of the moon that would be most hospitable to the Apollo and Surveyor missions. During its run, it returned a total of 609 high resolution images and 208 medium-sized frames. The wreckage is thought to have been located by the Lunar Reconnaissance Orbiter (LRO) which is currently mapping the lunar surface in unprecedented details. One of its key findings is our solar system’s coldest spot: a crater near the moon’s North Pole recorded at minus 415 degrees Fahrenheit.
Drilling discovers ancient Antarctic rainforest
rilling of the seabed off Antarctica has revealed that rainforest grew on the frozen continent ,52 million years ago, scientists said on 2nd August 2012, warning it could be ice-free again within decades. The study of sediment cores drilled from the ocean floor off Antarctica's east coast revealed fossil pollens that had come from a "near-tropical" forest covering the continent in the Eocene period, 34-56 million years ago. Kevin Welsh, an Australian scientist who travelled on the 2010 expedition, said analysis of temperature-sensitive molecules in the cores had showed it was "very warm" 52 million years ago, measuring about 20 degrees Celsius (68 F). "There were forests existing on the land, there wouldn't have been any ice, it would have been very warm," Welsh told AFP of the study, published in the journal Nature. The findings are very significant in understanding future climate change, particularly given how important Antarctica and the very large volume of water stored on its surface would be for the entire planet. It shows that if we go through periods of higher CO2 in the atmosphere it's very likely that there will be dramatic changes on these very important areas of the globe where ice currently exists. If we were to lose a lot of ice from Antarctica then we're going to see a dramatic change in sea level all around the planet. Even a few metres of sea level rise would inundate "large portions of the habitable land around coasts of many major countries and low-lying regions. The ice on east Antarctica is 3-4 kilometres (1.9-25 miles) thick, and is thought to have formed about 34 million years ago. Welsh said there would also be major impacts to global temperatures were the ice to recede, because it is an integral cooling mechanism for the planet, regulating the temperature by reflecting the sun's energy into space.
H istory ‘Direct Action Day’ and the birth of Pakistan
ugust is a month of historical significance for the Indo-Pak subcontinent, not just because it was partitioned in this month in 1947, but also because the Muslim League’s final decision to seek nothing short of Pakistan was taken in this very month in 1946. Although the onset of WW-II had built pressures on the British rulers of India to unite the Congress Party and Muslim League, the first ‘elected’ Prime Minister of India thwarted those efforts. After Japan’s entry into WW-II, and its quick conquest of Burma and its possible invasion of East India thereafter, it was time to check the rise of dissidents in India to let the British focus on preparing for a Japanese invasion. Pressed by the Labour and Liberal members of his coalition regime, as well as his American allies, Churchill reluctantly conceded that some steps should be taken to break the deadlock over self-rule being demanded by the Indians. In 1942, Churchill had told Lord Amery “I hate the Indians; they are a beastly people with a beastly religion.” It was this mindset that aroused the Indians against the British, and the pressures created by WW-II required a handicapped Britain to muster the support of its badly managed colonies to fight the Axis powers. Subash Chandra Bose created the Indian National Army – an outfit in which the second in command was an India Muslim. This development posed a challenge to British Army in containing the Japanese Army’s advance towards Aasam. It was a tough scenario for the British Viceroys, who were trying their best to face up to two challenges: containing the Japanese advance, and bringing together the Congress and the Muslim League to agree on keeping India united and turning it into a democracy. In 1946, Congress agreed with the Muslim League that, one third seats in the parliament would always be reserved for Indian Muslims. Relying on this commitment, the Muslim League agreed to forego its demand for Pakistan. With great difficulty, Jinnah was finally able to convince the Muslim League to do so, and the agreement with Congress Party was the basis of the elections in 1946 that installed the first elected government in India, and Pundit Nehru became its Prime Minister. But, in an historic press briefing later on, Nehru declared that, with two-third majority of the Indian parliament, the Congress Party could do away with this key clause of the Congress-League agreement, which convinced Jinnah to forego the demand for Pakistan. What happened next was inevitable. Muslim League called on its followers to observe August 16, 1946 as the ‘Direct Action Day’ to again demand Pakistan in protest against the Hindu intransigence. In Calcutta, in three days over 20,000 were killed in communal rioting. In a chain-reaction, similar outbreaks of communal violence occurred in East Bengal and Bihar. Punjab needed only a spark to explode with fury that dwarfed the horrors of Calcutta.
Worse still, there was evidence that discipline in administration, the police, and even in the Army, was beginning to crumble under pressure of sectarianism. These were clear signs that a partition of India was inevitable. Duplicity of the Congress Party manifested by its agreeing to the one third-two third formulae with the Muslim League but hiding its real intent of violating this agreement as soon as it could muster a two third majority in its parliament, left Muslims with no other option. Given this setting, it was imperative that the British rulers devised a plan for partitioning of India on a rational and fair basis. However, Viceroy Lord Wavell’s solution, which he himself termed as ‘Operation Madhouse’, was to just get out i.e. withdraw the British rule province by province starting with women and children, then the civilians, then the Army. After a great deal of haggling, Prime Minister Attlee, already tired of the ever-increasing trouble in India, decided that the British will transfer power to the Indians in June 1948. But before that, Lord Wavell was withdrawn, and on March 22, 1947 Lord Mountbatten took over as the new Viceroy to negotiate a modus operandi for the transfer of power; the big ‘if ’’ therein being that India stays a British dominion – a condition that Nehru agreed to provided transfer of power took place in 1947. While Jinnah agreed that Pakistan too would accept a British dominion status, he did not agree to let Mountbatten become the Governor General of Pakistan. Mountbatten went to the extent of telling Jinnah that if he is appointed the Governor General of India and Pakistan, he might adopt the title of ‘Moderator’, as suggested by the late US President Roosevelt. Jinnah knew that Mountbatten had close links with the Congress Party, and that VP Menon and Krishna Menon were his close advisors providing a constant line of communication with Sardar Patel – all three of them deadly against the creation of Pakistan. In this setting it was unlikely for Mountbatten to act fairly in crucial matters. Mountbatten’s proposed route to partitioning of India was an indication thereof because it provided for India, Pakistan and a third entity called ‘Princely State’ – a powerful part of India that was likely to remain pro-British. Besides, how biased he was, proved by the fact that even by August 12, 1947 there was still no decision of how India will be partitioned. Whether Chittagong hill tracts will form a part of Pakistan, how will Punjab be divided, what would be fate of Kashmir and what would be the status of the states that did not decide to join either India or Pakistan. It is no surprise that the partition of India and subsequent invasion of Kashmir, Hyderabad, Junagdh and Manawader, were some of the bloodiest events in history that the British presided over. It was a clear manifestation of the fact that to be fair was not the aim of the British, no matter what it cost the Indian Muslims who fought valiantly in 1857, defending India’s independence that the British still call “the Mutiny”.
S ports Wimbledon: return of the top performers
n July 8, at Wimbledon’s All England Club, Roger Federer's victory over the British Andy Murray in the men’s final secured for Federer a record-equalling seventh title, like the tennis legend Pete Sampras, and returned him to the top of the world rankings. The day began with hopes of a milestone British win in the men’s finals after 76 years, but that optimism was shattered when the Swiss player Roger Federer again showed his remarkable tennis skills after a three year-long struggle for regaining form. The royals were at the Centre Court to back Andy Murray. British Prime Minister David Cameron joined Prince William's wife – Duchess of Cambridge – in the royal box. Besides, former England soccer captain David Beckham too was present. Sadly, though, for the well wishers of Andy Murray the day ended with tears; Murray lost to Federer 4-6, 7-5, 6-3, 6-4 on Centre Court, but he put up a valiant fight and was applauded by everyone, which he fully deserved. For the past two years, victory had eluded Federer. Having won the men’s singles title for five consecutive years in a row beginning 2005, it must have been hard for him to wait three long years in frustration to reclaim this coveted title. By the time he came to south-west London for his 14th Wimbledon campaign, his inability to reach the top in 2010 and 2011 had built a hopeless track record. The overly disappointing part was his form at Wimbledon where he faced two quarter-final exits: in 2010 (against Tomas Berdych), and in 2011 (against Rafael Nadal). That Roger Federer could give a two-set lead in a Grand Slam was a shocking performance. To many, 30-year-old Federer was a fading force, and one of the reasons cited therefor was that, to a father of two young daughters, tennis was no longer as important as when he first showed his talents by shocking Pete Sampras at Wimbledon in 2001. His breakthrough victory, however, came in 2003 at Wimbledon when he defeated Mark Philippoussis in straight sets opening the floodgates of success. The following year he grabbed three of the four major world titles i.e. defended his Wimbledon title and secured another two maiden triumphs – the Australian and US Opens men’s singles’ titles. This was the beginning of Federer’s golden era wherein he won nine of his first 10 Grand Slam finals. No wonder the emotions he showed after his victory over Murray suggested this meant much more than just the thrill of increasing his record tally of major titles to 17 – it was re-establishing his place in world tennis after his 2010 victory at the Australian Open. The days thereafter were the toughest period of Federer's career, beginning with a surprise defeat against Juan Martin del Porto, followed by his defeats against Tomas Berdych, Wilfred Tsonga, Rafael Nadal and
Novak Djokovic. Critics began doubting his unquestioned right to be regarded as the ‘greatest’ of all times. Undoubtedly, age and health problems seemed threatening for Federer’s return to his grand form, but on the evidence of his win on July 8, and as humorously remarked by Andy Murray, he is good enough despite being 30. As for Andy, in his match with Federer, he established himself as a future champion; he has established himself as a great player and a likely future champion. For Serena Williams too, winning the women’s singles title was a revival despite suffering mentally and physically in the last one and a half year. After suffering seventeen months of a life-threatening blood clot in her lungs, her return to the top was unbelievable; this illness seemed to have ended her glittering tennis career. But that fear vanished when Williams defeated Agnieszka Radwanska 6-1, 5-7 and 6-2 defying her mental and physical scars to climb back to the top. Serena’s family never hoped she would play in a big event again. Like her sister Venus, Serena now has five Wimbledon titles under her belt. This was a career reviving tournament for her and she too was overjoyed by her success. "I never dreamt of being here again, being so down. Gosh, just before that I had the blood clot, I had lung problems, a tube in my stomach and it was draining constantly. I had two foot surgeries; it was a lot. I just felt down, the lowest of lows," said Williams. "Coming here and winning today is amazing because literally last year I was ranked almost 200. It's been an unbelievable journey for me," she added. This victory is her 14th Grand Slam since her last Wimbledon triumph in 2010. Inspired by the painful memory of her shock French Open first round exit against Virginie Razzano last month, Serena spent the last month in a determined bid to re-establish her primacy. After Martina Navratilova–1990 Women’s Singles champion–Serena is now the first woman over 30 to win this coveted title. She needed all the experience gathered over her illustrious career to survive the remarkable 23-year-old Pole, Radwanska, but Radwanska too was severely affected by an upper respiratory illness over the last few days, and withdrew from the doubles match and cancelled her pre-match media appearance. She is first Pole to reach a Grand Slam final after 73 years. Radwanska may have lost but her change of pace and nerves seemed to get the better of Serena as she surrendered the set at 5-6, with a succession of errors. Serena had to battle for every point to finally earn the decisive break for a 3-2 lead in the third set. Thereafter, she fought well to finally win with the score 6-2. At 22, Radwanska has a long career in front of her. Given the talent she showed in this contest, she has the potential for reaching the top position and holding on to it for many years.
S ports Two great cricketers leave the scene
akistan's legendary opening batsman Alimuddin expired in London on July 12, after a protracted illness. He was 81 and healthy. Born in Ajmer on December 15, 1930, at the age of just 12 years and 73 days, he was the youngestever person to play in a first-class cricket match when he appeared for Rajasthan in the Ranji Trophy. As such, his cricketing career began in as early as 1942, and went on until 1962–a span of 20 years that saw him achieve great successes in a period that was tough, because cricket in PakiAlimuddin stan was taking roots, umpiring wasn’t at its best nor were there technologies like Decision Review System (DRS). Besides, cricketers were rewarded modestly for their services and they didn’t have all the comforts that today’s cricketers have at their disposal. What made them achieve records was their zeal and commitment–things that are sometimes not visible in the conduct of our cricketers. After migrating to Pakistan, he entered Test Cricket in 1954 while playing in the series against India, and scored 103 in the Karachi Test. Later, he was a member of the team which defeated England at The Oval, in 1954. He was known for his solid technique and formed a reliable opening pair with ‘Little Master’ Hanif Muhammad. In the Karachi Test in the 1962 series against England he hit a stroke-filled 109. As the Pakistan team’s opening batsman, he played 25 test matches between 1954 and 1962–an 8-year period–and scored 1,091 runs. Besides, in the 140 first class cricket matches that he played, he scored 7,275 runs. According to Hanif Muhammad, “Alimuddin was my senior partner, and I learnt a great deal from him. It’s a sad day for cricket because he served Pakistan with great deal of honour and dignity.” He remained welldressed throughout his life, and a dedicated cricketer and a modest person. Another peculiarity was that he remained a bachelor all his life. Recalling the memories of his relationship with Alimuddin, former Pakistan captain Javed Miandad remembered him for his kindness to junior cricketers. “Because he was in PIA in London, he always helped and patronized the cricketers” on their visits to play against England. He recalled Alimuddin’s role in building new cricketers and said “Alim Bhai remained in cricketing circles throughout his life and used to arrange cricket matches” to enhance activity and build a competitive spirit in young players.
n July 13, Brett Lee, the world famous Australian fast bowler announced that he is retiring from international cricket; that this was likely was a prediction he made a few months earlier. A serious calf injury, which forced him to return home from England, was the second major injury in recent months that eventually convinced him to call it a day. Age was having its effect, and from 2008 onwards, Lee gave up playing test cricket, but continued to play in limited-over international matches for Australia Brett Lee besides the lucrative T20 competition organized by IPL. Lee was going to play in the World T20 tournament in Sri Lanka later this year, and had discussed with the selectors his plans to retire after that tournament, but the calf injury while playing against England changed those plans. In his prime, at one time Lee was the fastest and the most aggressive bowler in the world and stayed in that category for several years. But what steadily slowed his career were a variety of injuries including stress fractures, ankle injuries, side strains, a broken foot, and more recently, calf injury. “It [retirement] was going to be post-[T20] World Cup, but I woke up this morning and felt that the time was right”, said Brett Lee explaining his retirement. “To play international cricket you need to be mentally and physically 100 percent fit, and I didn’t think it would be fair to the team or myself if it wasn’t in the case....Looking ahead at the next two months I just did not have that desire any more. It’s not a lack of commitment, but you just get to that point in your life when enough’s enough, and the great run is at an end.” Retiring after reaching 35 years of age is not odd because by the time any player, especially a pacer like Brett Lee, reaches this stage, he has seen his best days. His track record speaks volumes about the effort he put in for Australia. In his career in international cricket, he took 310 test wickets at a respectable average of 30.81, and 380 one-day international wickets at an even better average of 23.36 but, unfortunately, had to retire from cricket just one short wicket of Glenn McGrath’s all-time high Australian record. Had Lee not been injured at this juncture, he surely could equal, even exceed this record to end up at the top of the list. Commenting on Lee’s record, Chairman of selectors John Inverarity said “Brett has been an absolute ornament to the game; a fine player, a fierce and brave competitor, a generous opponent and one who always upheld the highest standards of sportsmanship. He has been a cricketer in every sense of the word.”
S ports Pak-Sri Lanka series: the questions it poses
akistan’ cricket team concluded its tour of Sri Lanka rather unhappily; it levelled a 2-match T20 series 1-1, lost a 5-match 1-day series 3-1 as well as the 3-Tests series 1-0. Undeniably, weather played a role in crystallizing these very disappointing results but so did the sub-standard performance of the senior players, both batsmen and the bowlers. Proof thereof is that the ICC rankings of Yunus, Misbah and Umar Gul, suffered a fall, Saeed Ajmal’s ranking stayed put, but those of Azhar Ali, Asad Shafiq and Junaid Khan went up. Azhar Ali scored two hundreds in the Tests, and Asad Shafiq hit a matchsaving century in the final Test at Pallekele which ended in a draw. Left-arm pace bowler Junaid Khan took 14 wickets in the three Tests, including five- wickets hauls in the second and third Tests. But, as pointed out by Misbah on his return to Pakistan, fielding was the weakest link in the chain.
There are also questions over the standard of ‘captaincy’ that was exhibited by Misbah. His laid back attitude in the field while the bowlers kept committing blunders, and were repeatedly hit for boundaries, was unforgivable. All he would do was to smile cynically instead of counselling the bowlers. The forthcoming series against Australia in the UAE would be an opportunity to try out promising bowlers and batsmen. What the PCB should be aiming at is developing a group of 20 players with the required skills – bowling, batting, fielding and wicket-keeping, so that it has a stock of players that can play top-class cricket at the international level. Pakistan has been ranked among the best cricket playing nations in the world teams; let this remain its distinction.
Hashim Amla: First triplecenturion for SA
laying in the first Test against England at Oval, Hashim Amla created history. He became South Africa's first triple-centurion scoring 311 runs without being out. South Africa won the first test by an inning and 12 runs. It was the first Test triple century in England in 22 years, since Graham Gooch hit 333 against India at Lord’s in 1990. Amla was at the crease for more than 12-and-a-half hours by the time he completed 300 runs. He surpassed team-mate AB de Villiers' 278 not out against Pakistan at Abu Dhabi in November, 2010 - the previous highest Test innings for a South African. Amla, who gave only one chance of being out when he was on 40, went past numerous landmarks, lifting the tempo of his innings but seldom played a false stroke. England set ultra-defensive fields but could not halt the flow of runs by Amla. A triple century in Test cricket has been scored on 26 occasions by 22 different batsmen from six of the ten Test-cricket playing nations. Brian Lara and Chris Gayle of the West Indies, Donald Bradman of Australia and Virender Sehwag of India are the only batsmen to reach 300 more than once. Hanif Mohammad, Inzamam-ul-Haque and Younis Khan are the three Pakistani batsmen who scored triple centuries only once in their careers. The fastest Test triple-century by the number of balls faced (recorded thus far), was by India’s Virender Sehwag in 278 balls against South Africa in the first Test of the Future Cup in Chennai in 2008.
The defeat in the Test match series against Sri Lanka ended Pakistan's unbeaten run of 7 series wins since losing a Test series to England on the 2010 tour that was marred by spotfixing allegations in the Lord's Test. This unbeaten track record since 2010 also included a 3-0 whitewash of England–world’s number one Test team– earlier this year. Should Pakistan have agreed to the absence of the Decision Review System (DRS), given the fact that even the best of field umpires can make errors of judgment? Throughout the tour matches, the field umpires kept making mistakes and, tragically, most of the wrong decisions went against Pakistan. Who is really responsible for the continued lapses in fielding, the players or the coaches? The number of dropped catches, gaffes in stoppable shots that eventually became boundaries, the almost total incapacity to target wickets so as to ‘run out’ Sri Lankan batsmen, and over-throws, indicate the need for a re-orientation of the team in fielding disciplines. What is the team selection policy on the wicket-keepers? Is it not necessary that, besides the regular wicket-keeper, there must be a player having this key skill to takeover if the regular wicket-keeper gets injured? In the last Test match, Taufeeq Umar proved a poor replacement. Had skipper Misbah taken over that role, perhaps, he would not have dropped as many catches as did Taufeeq Umar, nor let so many stumping opportunities go waste besides the scoring of so many leg byes. These lost opportunities and the extra runs given, made a big difference in the result of the last Test match that had to be abandoned. Finally, isn’t it time the senior players took the back seat?
A rt & Literature Amir Khusro: the epitome of brilliance
n their book entitled History of India, Elliot and Dawson recorded that “Amir Khusro, the ‘Parrot of Hind’, whose name was Yamin-ud-Din Muhammad Hassan, was one of the most prolific poets the world ever produced, for he is said to have left behind some half a million verses. Without answering for the accuracy of this prodigious number, a mere glance at the list of his creations establishes the boundless fertility of his muse.” The majesty of Amir Khusro as a poet, mystic, and inventor of both music and musical instruments, continues to amaze every one for the past seven centuries. Critics the world over rank him as a legend in the true sense of the word. After its conquest by Chengiz Khan, the residents of Hazar- e-Lachin, including Amir Khusro’s father, Amir Said-ud-Din had to migrate to India. Said-ud-Din settled in Patiala and was later married to a daughter of Imad-ulMulk. Amir Khusro was the second of the three sons of Amir Said-ud-Din. By the time he was eight years old, Amir Khusro’s father died and thereafter he was brought up by his maternal grandfather Imad-ul-Mulk, who was an influential courtier of Sultan Altamash, then the ruler of Delhi. Because Amir Khusro was brought up in a literary environ-ment by his grandfather, by the time he died, Amir Khusro had earned a name for himself as an upcoming poet with the promise of excelling, and this quality made him the favourite of all the kings that ruled Delhi beginning with Sultan Ghayas-ud-Din Balban in 1273 to Ghayas-ud-Din Tughlaq in 1325, the year Amir Khusro departed for the heavens. This includes a tough period in 1285 when he was imprisoned by the Tataris while Amir Khusro was fighting on the battlefield to defend the then ruler of Delhi. During his childhood, he developed an interest in mysticism, and often spent time with Hazrat Khawjah Nizamud-Din, and in 1272 he became his disciple and began learning from him the real purpose of life, which eventually made him a mystic, linguist, and musician who stands out as an example for the rest. He was an expert of Turkish and Persian, and thereafter became an expert of Hindi too because, to spread the message of Islam – the desire of his master Hazrat Khawjah Nizam-ud-Din – this was imperative. His singular contribution in the field of linguistics is combining Hindi with Persian to create a new language, that finally became Urdu. The success that he achieved in this field was proved by the fact that, centuries later, even Mirza Ghalib had to accept him as the authority in linguistic matters, and in his famous book Aud-e-Hindi, admitted that Amir Khusro’s use of a word or expression was the ultimate test of the validity of its use–a fact later confirmed by Sir Syed Ahmed Khan in his documentation of Indian history in Aasar-us-Sanadeed.
Besides Sir Syed, Shibli Naumani, another great linguist, accorded Amir Khusro the status of an incomparably great poet. In Shibli’s view, while Firdausi could compose only Masnavis, Saadi could not compose Qaseedas, and Hafiz, Urfi, and Naziri couldn’t go beyond the realm of Ghazals; Amir Khusro alone composed all of them and with remarkable success. That is not all; he invented the Dohas–a new form of poetry–that later became an accepted style. Maulana Abdul Halim Sharar admired Amir Khusro for giving Indian music its present profile. Amir Khusro composed the Tarana, Qawwali and Rung, and his invention of the Sitar and Tabla–instruments without which Indian music simply can’t be composed–were the trend setters; that so much of genius could reside in one human being is simply mind boggling. While studying the lives of great men and women, the critics assess how much they were influenced by the trends of their time and to what extent they influenced those trends because while history creates great personalities, greater personalities create history. Writing about Amir Khusro, Dr Tara Chand said “it is said that a poet is the mirror of his time. Khusro is an example of the truth of this axiom. His poetry brilliantly reflects the Indian mindset of the 13th and 14th century – the bright spots in politics, grandeur of royalty, perfect portrayal of social values, colourful reflections of life, twists and turns of love, dialogue of the worshippers of love, tragedies, genius, and how it helps overcome issues – all wrapped in a mystical description thereof. According to Gibb, Kramer, Levi-Provencal and Schacht, all editors of The Encyclopaedia of Islam, “Works of Amir Khusro provide the fullest single expression extent of medieval Indo-Muslim civilisation; they revealed, as perhaps does no other surviving body of Indo-Persian literature of that time, the religious, ethical, cultural and aesthetic ideas of the courtly, educated and wealthy Indian Muslims of the 13th and 14th centuries.” According to A.C. Banerjee in his book Medieval Studies, there are very few literary men in medieval Indian history who can lay claim to the wide personal knowledge of men and events during a period extending over half a century, which it was the privilege of Amir Khusro to possess. Though he wisely confined his activities to the sphere wherein his genius shone with ‘unrivalled’ brilliance, and never aspired after any direct participation in political affairs, his unique experiences must have made him an acute observer of events–a consideration that enhances the value of his testimony with regard to the history of his times, because in dealing with an age, of which little contemporary evidence has survived, the best material we can hope to seize is the version of an intelligent observer, who had access to all court intrigues, but no share therein.
Q uotes “I am not saying drones have not assisted in the war against terror, but they have a diminishing rate of returns. We will seek an end to drone strikes and there will be no compromise on that.” – Sherry Rehman, Pakistan’s Ambassdor to the United States stated talking to White House war adviser Douglas Lute to an audience at the Aspen Security Forum on 27 July, 2012. “Preserving price stability must be the principal role of the ECB and not the financing of state debt. Buying government bonds cannot be a permanent solution. We only establish new trust in the Eurozone if budget discipline is strictly maintained and structural reforms are implemented.” – Germany’s Economy Minister Philipp Roesler stated in an interview published on July 28, when he warned the European Central Bank against any largescale government bond purchases.
“We will not consider appeals and give consent to searches of vessels sailing under the Russian flag, nor to the application of other restrictive measures to them”. Russian Foreign Ministry spokesman Alexander Lukashevich.
“The cyber bad guys are expected to be prowling for user data through a method called “search engine poisoning”, in which they manipulate search engines to display results that take users to malicious sites.” -- Alex Kirk, Senior researcher at Sourcefire Inc. warning about cyber attacks in connection with London Olympics. Olympics organizers are spending about $750 million on technology alone, a quarter of its $3.1 billion budget. “There is a regime that massacres its own people. We must do what we can do to make some important progress in trying to avert this appalling situation”. Turkish President Recep Tayyip Erdogan urged international action in Syria.
“Instead of doing what’s right for middle-class families and small-business owners, Republicans in Congress are holding these tax cuts hostage until we extend tax cuts for the wealthiest Americans. Republicans in Congress and their nominee for president believes that the best way to create prosperity in America is to let it trickle down from the top.” – US President Barack Obama addressing via radio and internet on July 28, on stalemate that could increase taxes on Americans next year. 70
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A strology Your Horoscope August 2012
by Dr. Aameer Mian www.astrohope.com
CANCER: Your Sun will stay in your money house by making Sextile with Jupiter in 12th house, on 3rd Aug. It will create a balance in income and expenditure in accord with financial betterment. The ruling planet of money, Mars, will stay in the 4th house by making Conjuction with Saturn from 15th to 16th Aug. The very situation will take you to lead your domestic tasks with more active participation but counseling will be required in property related issues. Sun, your ruling planet of money house, from 21st to 22nd Aug will give birth to Sextile with ruling planet of 10th house. This movement will not only overwhelm you by providing you chance of success in the career but you will find an ability to deal with your professional tasks with a refreshing thought. Moreover, you will explore the world through travelling that will give you unlimited financial benefits. If you set your goals before, their achievement will become easier.
ARIES: Your ruling planet Mars will stay in 7th house from 1st to 23rdAug, and this aspect will bring your social and domestic life under spotlight. The role of Mars in 8th house will bestow you with benefits in marital and societal matters along with the betterment in the issues related with inheritance from 24th to 31st Aug. Saturn-Mars Conjunction will put your anger and emotions on fire but by controlling yourself you can make your performance better in business and domestic sphere. The utmost need of discipline will be heightened. From 21st and 22nd Aug, SunMars Sextile will urge you to attain your goals and eventually success will be yours. Moreover, you must be self- confident and plan wisely to solve your current problems. MarsNeptune Trine will make your decision-making power more realistic. Your extraordinary courage will bring positive results in your way while you will utilize your right of expression in a satisfactory manner.
LEO: Your revolutionary brain will bring
positive change in your financial matters and resources as your ruling planet Venus is moving in the house of money. You will find chances of recreation due to the role of Venus in 3rd house, from 8th to 31st Aug; it will strengthen your affection for relatives. Love affairs will gain more sensitivity but you will show positive approach by taking wise decisions under VenusNeptune Trine from 10th to 11th Aug. It will become a source of unfathomable desires. From 15th to 16th Aug, Venus-Pluto competition will tempt you towards opposite sex whereas some psychological problems will also keep on nagging you. So, be careful and do not take decisions without consulting experts. Venus-Uranus Square on 16th Aug, will influence your social life and put you in social problems. Lack of decorum and your moody attitude will cause anxiety. You should join the company of some sincere and intimate ones for assistance.
out new ideas and their utility in your specific field will give you standardized output. It will enrich you with respect and fame with the help of Sun, your ruling planet from 1st and 22nd Aug. From 23rd to 31st Aug, Sun will step into the house of money; it will urge you to make positive decisions in business. You will also witness a boost in your confidence level. Students must keep it in mind that educational role will remain vital in their lives. From 17th to 18th Aug, Sun-Saturn Sextile will develop your good relations with higher authorities. You will trace your boundaries and limitations but your output will be marked with excellence. Sun-Mercury Sextile will advance your desire to bring positive changes whereas you will not only utilize your ability to cope up with problems but attain success. The competition between Sun-Neptune from 24th to 25th Aug, will create misunderstandings with intimate relatives. So, do not take momentous decisions. Sun-Pluto Trine from 30th to 31st Aug, will not only instill a desire for empowerment but it will also increase your trust on others. You will be able to exercise your financial power finally!
TAURUS: On 7th Aug, you will find a
Mercury, your ruling planet, will stay in 12th house by being retrograde from 1st to 8th Aug whose influence will tempt you to control your expenditure and be careful of envious fellows. From 9th to 31st Aug, Mercuryâ€™s stability will put an end to your problems. You will get an edge on enemies. You will face problems because of your experimental attitude and unnecessary expression of ideas. The keen responsibility of this activity is concerned with Mercury- Uranus Trine from 19th to 20th Aug. Mercury-Jupiter Sextile will cause determination in decision making from 23rd to 24th Aug. You will take profound interest in scholastic activities. The very situation will bring out positive attitude in you that will remove your hurdles. From 30th to 31st Aug, Mercury-Saturn Sextile will bring strong ideas and they will ensure your success.
The very first week of the month will demand your rapt attention due to the movement of Mercury in 3rd house from 1st to 8th Aug. Mercury will remain stable, from 9th to 31st Aug, which will vanish the possibility of problems and you will win co-operation from relatives. Your ideas and plans will scatter under the pressure caused by Mercury-Uranus Trine from 19th to 20th Aug. Some unimportant plans and ideas will cause delay in recent tasks. So, be careful! From 23rd to 24th Aug, Mercury-Jupiter Sextile will empower you to keep an eye on certain issues in progress. Your interest in educational sphere will be heightened and you will advance with positivity under Mercury-Saturn Sextile from 30th to 31st August.
A strology LIBRA: Venus, your ruling planet, will stay in 9th house from 1st to 7th Aug that will create in you a wish for higher education, poetry and literature. From 8th to 31st Aug, movement of Venus in 10th house will ensure your success in career. Moreover, you will get support and practical help from friends and intimate ones. You will be attracted by the opposite sex and will make pleasant relations. From 10th to 11th Aug, VenusNeptune Trine will make you sensitive. Your focus on romantic world will make you more determined. From 15th to 16th Aug, the jealous ones can plot against you; be ware! You will find complications in property dealings. From 16th to 17th Aug, Venus-Uranus Square will make your nature irritating. The uncertainty will become obvious in surroundings; do not take vital decisions on your own without consultation and accept the challenges of fate.
Your career and job will go on smoothly due to Saturn; your ruling planet is going to stay in the house of money. But domestic issues require help from elders especially your father and then you will be able to get good results. From 15th to 16th Aug, Mars- Saturn Conjunction will cause both negative and positive influences. You will begin with a new struggle for the accomplishment of tasks while your business and job will attain excellence. From 17th to 18th Aug, Sun-Saturn Sextile will help you to be determined and this act will influence your subordinates to support you. Your serious attitude will create positive aura while your creativity will be heightened and it will earn you benefits under Mercury-Saturn Sextile from 30th to 31st Aug.
You will not only enter into the world of literature but your way towards higher education will become smooth due to the stay of your ruling planet, Saturn, in 9th house all through this month. You will notice a desire for foreign visit. Your subordinate ruling planet, Uranus, will be in a retrograde position in the 3rd house and it will make you focus on travelling strategies. Your hopes concerned with relatives will remain unfulfilled. From 15th to 16th Aug, under Mars–Saturn Conjunction you need to control your anger because it will harm you in business and job. From 16th to 17th Aug, Venus-Uranus Square will make you expressive but it will also become a sound reason for your anxiety. From 17th to 18th Aug, Sun-Saturn Sextile will make your officials to co-operate with you and strong determination will award you success. During Mercury–Uranus Trine, your experimental attitude will guarantee success by restraining haste in technical work from 19th to 20th Aug. From 30th to 31st Aug, MercurySaturn Sextile will increase your level of determination which will not only ensure your success but also help you find solutions to your queries.
SCORPIO: From 1st to 23rd Aug, your ruling planet, Mars, will ensure your success in management affairs due to its stay in 12th house but you need to keep an eye on expenditures. From 24th to 31st Aug Mars will be on its peak which will influence your brain’s revolutionary process; you will be free from disturbances but it will be a temporary relief. In 3rd house, Pluto will be in a retrograde position so you should adopt a very careful attitude. You can be irritated by your neighbors. From 14th to 15th Aug, situation will be more problematic that will cause you to waste money and time also; try to be focused. Mars-Saturn Conjunction will delay your success but a number of happenings will lead you towards desirable destination from 15th to 16th Aug. Sun-Mars Sextile, from 21st to 22nd Aug, will inject fighting spirit and you will brandish sword against dangers. You can pursue your struggle for gaining confidence. From 26th to 27th Aug, Mars-Neptune Trine will make you realistic that will bring improvement and reward in routine life. Under Sun-Pluto Trine, from 30th to 31st Aug, you will rely on yourself for attainment of your set goals.
PISCES: Your ruling planet, Jupiter’s stay in 4th house will create possibility of financial benefits from property and some business deals. Your subordinating ruling planet, Neptune, will be in an ascendant position that will become a source of tension and negative thoughts. From 2nd to 3rd Aug, Sun-Jupiter Sextile will urge you to exaggerate the factual happenings while accomplishment of tasks will demand a strong fighting spirit against delays. From 10th to 11th Aug, Venus-Neptune Trine will make you walk on the road of love, desires and arts and you will be calm due to determined decisions. On 23rd Aug, Jupiter-Mercury Sextile will move your decisive senses positively. You will become more interested in academic endeavors. From 24th to 25th Aug, Sun-Neptune will have a competition which will cause misunderstandings. So, be careful. During Mars-Neptune Trine from 26th to 27th Aug, your decisive capacities will be beneficial for you. Your sentimental expressions will become stronger.
You will attain marital bliss and success in social sphere under the stay of Jupiter, your ruling planet, in 7th house. Your delayed tasks will be accomplished by others’ co-operation while people desiring to tie a knot will see green signals. From 2nd to 3rd Aug, Sun-Jupiter Sextile will urge you to travel and you will deal with your tasks that are still in the pipeline by bringing them on a larger scale without thinking of dangers. Mercury-Jupiter Sextile will make your decisive capacity reliable. You will feel tempted with the charm of educational world and strong support of relatives will move you positively.