Tuesday, 22 November, 2011Pages: 8 profit.com.pk

Islamic banking andfinance Page 2

Devil wears Prada Page 3PSM seeking Rs25 billion packagefor revival Page 8

LAHORE

NAUMAN TASLEEM

iNvOlveMeNT of cit-izens and civil societyin governance of thecountry is vital for bet-

ter decision-making. Thisway funds could be spent forcitizens’ welfare and many

problems could be overcome.uSAid would fund projectsin energy, economic growth,agriculture, education andhealth sectors. in the firstphase, emphasis would be onenergy sector, water rightsand municipal services.

These views were ex-pressed by speakers at launch

of uS Agency for interna-tional development (uSAid)programme’s Citizen’s voiceProject (CvP). The $45 mil-lion project is to foster citizenengagement in policy advo-cacy. Programme was an-nounced in a ceremony heldat a local hotel. uS ConsulGeneral Nina Fite was guest

of honour, while other speak-ers throw light on importanceof the project and involve-ment of civil society.

Trust for democratic ed-ucation and Accountability(TdeA) will implement theproject, which will work to in-crease citizen engagement inpolicy advocacy and govern-

ment in energy, economicgrowth, agriculture, educationand health sectors. Throughthe project, uS governmentwould issue up to 500 grantsover next three years.

Speaking on the occa-sion, uS Consul GeneralNina Fite said that the proj-ect represents largest singleinvestment in civic and so-cial organisation in uSAid’s50-year history in Pakistan,and complete set of uS-funded civil society supportprogrammes that will exceeduS$ 100 million during thenext four years. “We hopethat Citizen’s voice Projectwill enable more Pakistaniorganisations to construc-tively engage with their gov-ernment on issues ofnational and local impor-tance. When civil societyworks in concert with stateinstitutions to address citi-zens’ needs and aspirations,the impact can be unlim-ited,” said uS Consul Gen-eral. She appreciated TdeA

and hoped that things wouldchange with the project.

CvP Chief of PartyMukhtar Ahmad Ali whilepresenting overview of theproject said that in the firstcycle of project, grants wouldbe allocated in three fields in-cluding citizen oversight ofmunicipal services, energysector and improved waterrights. He said in the firstphase number of grantswould be up to 24 while max-imum total value is $ 2.6 mil-lion. He said that supportinginitiatives to assess govern-ment performance on specificthemes as well as efforts toadvocate for changes in law,policy and government ac-tion. “Facilitating productivepartnerships between stateand non-state actors to en-hance government’s ability toprovide basic services and beresponsive citizens,” AhmadAli said adding enhancing theorganisational capacity ofcivil society groups and otherpartners through organisa-

tional development and tar-geted trainings is also an-other object of the project.

He said in each quarter,project would award approxi-mately 40 grants, worth be-tween $50,000 and$250,000, through a trans-parent and competitiveprocess. He said activitiesshould be related to issues oflocal and national importancein sectors of energy, economicgrowth, agriculture, educationand health. TdeA Chief exec-utive Officer Muddassir Rizvisaid that TdeA has around 40civil society organisationmembers based in everyprovince and working in everydistrict of the country to facil-itate citizens’ ConstituencyRelations Groups and monitorperformance of state institu-tions at every level. Collectivemission of TdeA is to facili-tate greater citizen involve-ment in democratic processesin order to foster greater gov-ernment transparency and ac-countability.

LAHORE

IMRAN ADNAN

SubSidieS on electricity tothe richest 20 per cent of pop-ulation have been signifi-cantly reduced from nearly 40

per cent to 29 per cent during the lastthree years. However, the richest of therich remain the greatest beneficiariesof electricity subsidies in Pakistan.

World bank’s recently conductedstudy estimates that the share of elec-tricity subsidies for the richest 20 percent in Pakistan declined from nearly40 per cent in March 2008 to 29 percent in March 2011. Research revealsthat under March 2011 tariff struc-ture, it has been estimated that over90 per cent of residential electricityconsumers are net subsidy recipients;or in other words, less than 10 percent of consumers pay more than cost-recovery level. Study terms these im-provements fragile in nature, becausedespite improvement in benefit inci-dence, biggest beneficiaries of elec-tricity subsidies would still be therichest 20 per cent of population. itindicates that significant improve-ment in benefit incidence and fiscalimplications can be largely attributedto reduction in real cost of supply as aresult of reduction in oil prices sinceMarch 2008. if average cost returnedto March 2008 level in real terms, al-most all improvements in benefit in-cidence and fiscal burden would belost, the research underlines.

Research highlights that Pakistan’selectricity sector is in real crisis. de-spite investments in generation capac-ity, electricity demand continues toexceed supply, with blackouts as longas 8–10 hours per day in cities andsometimes double that, in rural areas.it is widely recognised as a severe ob-stacle to growth and poverty reduction.

it points out that in November2010 government was forced to rentthe world’s largest power ship to boostgeneration capacity. Meanwhile, gov-

ernment’s inability to finance its com-mitment to fund subsidies, inefficien-cies of sector entities, including lowcollections, delays in determinationand notifications and increased cost offuel imports contribute to an increas-ingly severe circular debt problem.

Study advocates, “While signifi-cant reforms including tariff increaseshave been implemented, further ad-justments are needed to stem the elec-tricity crisis.” it suggests that in theshort run, there is a need to implementfuel price adjustment policy in truespirit, in place since August 2009.With oil prices now resurging, and fis-cal burden and benefits incidence sodependent on cost of supply, continu-ing these adjustments will help pre-vent deterioration in fiscal burden ofsubsidies. it underscores that it ismore important to move tariff ratesfurther towards cost-recovery level,along with revisions on tariff structure.Although multiple increases have beenpassed on in tariff rates since March2008, even then tariff structure is stillfar from a cost-recovery level. Asglobal oil prices resurge, more drasticand timely tariff adjustments will benecessary to make significant im-provements in fiscal and distributionalimplications of electricity subsidies.

To achieve cost-recovery level, re-search recommends tariff structure re-vision as an option. it suggestssimplification of tariff structure, meansreduction in numbers of slabs fromthree to four and reevaluation of exist-ing slab thresholds, to add more con-sumers in cost-recovery slab.

Furthermore, special attention isrequired to understand how poormight be protected from such changes;some poor households consume a rel-atively large amount of electricity. itestimates that approximate 25 per centof the poorest quintile consume morethan 100 kilowatt hours per month.Rs75 minimum charge for lifeline usersneeds careful reconsideration. becauseof minimum charges, average cost of

electricity for many lifeline users is farhigher than other users, even thoughtheir marginal rate is the lowest. Hav-ing a lifeline tariff is ineffective along-side Rs75 minimum charge, researchmaintains. Study suggests that despiteimprovements in distribution of sub-sidy benefits, rich households still re-ceive a disproportionate share. Thereis a need of alternative policy instru-ments such as a targeted conditionalcash transfer program will likely bemore efficient in protecting the poor.in this situation, a package of policy in-struments could be considered, includ-ing gradual transition from subsidiesto conditional cash transfers. Pakistancould benefit from iran’s experience,which recently introduced similar pro-gram, report concludes.CirCular Debt (inter-Cor-porate Debt): Circular debt iscreated when end-customers (bothpublic and private) do not fully paytheir electricity bills and governmentis not able to fully furnish its commit-ment to fund subsidies paid to distri-bution companies. As a result,distribution companies are unable topay their power purchase cost to Cen-tral Power Purchasing Agency(CPPA) or single-buyer, who in turnis unable to fulfill his obligation topower generation companies. Andpower generation companies and in-dependent power producers (iPPs)fail to pay fuel suppliers. Fuel suppli-ers in turn default on their paymentto refineries, gas producers and inter-national fuel suppliers.

in addition, high dependence onimported oil (and associated pricevolatility in 2009 and 2010), system ofelectricity subsidies in particular is amajor cause of intercorporate debtissue. This includes inability for distri-bution companies (diSCOs) to pass oncost of electricity to customers, alongwith an inability of government to paytariff differential subsidy (TdS), differ-ence between applied tariff and deter-mined tariff in a timely manner.

Richest benefitting most from electricity subsidies

g USAID to fund projects in energy,economic growth, agriculture,education and health sectors

g Project to award approximately40 grants, worth between$50,000 and $250,000

USAID vows to fund projects

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debate02Tuesday, 22 November, 2011

DuRDAnA nAjAm

MANy people think that islamic bank-ing and finance is a cure to all the fi-nancial woes. in fact that is not thecase. islamic banking and finance is

as man-made as the conventional banking. The onlydifference is that islamic banking and finance seeksbasic guidance from islamic sources like the Quran,Sunnah, ijma and Qiyas. Only because of this is-lamic banking and finance is free from some of theweaknesses and problems besetting conventionalbanking. There is very strong theoretical evidencethat the principles of islamic banking and financeare superior to the principles of conventional bank-ing. This is why one would be inclined to assert thathad islamic banking and financial principles beenimplemented in the financial markets the problemswe are facing today in financial industry would havebeen avoided to a great extent.

The woeS of convenTIonAl bAnkIng Conventional banking is based on interest ratemechanism, which encourages people and busi-nesses to borrow and lend heavily. Of coursethere is a motive behind borrowing in the coop-erate sector. For instance if i am a corporate, iwould borrow from a bank only if i can anticipatesome business opportunities coming up. butmany times borrowing or lending takes placewithout any reference to economic activity. itcould be purely speculative. For example, manyof those who are involved in interest rate arbi-trage and currency arbitrage may borrow moneypurely to benefit from interest or exchange ratesdifferentials in different markets. These kinds ofopportunities allow the players in financial serv-ices markets to borrow without practically havingany intention to invest in the real economy. if thistype of speculation persists for some time, it maylead to a financial bubble. Such frequent andheavy borrowing and lending do not go into realeconomy; rather it simply puts further pressureon prices. When the bubble gets enlarged, it isbound to burst and bring a financial crisis. in is-lamic banking and finance, the possibility of thishappening is smaller. islamic banking and fi-nance restricts trading in debt and other financialpapers. Furthermore, there is an islamic eco-nomic principle that disallows selling somethingthat someone does not own or rightfully pos-sesses. in the presence of such a restriction, fi-nancial bubbles cannot occur. This is why onecould say that if the islamic principles had beenfollowed in conventional financial system wecould have avoided the current financial crisis.

InTeReST mAkeS All The DIffeRenceinterest plays a huge role in the contemporaryeconomic systems, and in the absence of an in-terest rate mechanism, the whole banking systemchanges. islamic banks are required to be in-volved in trading, i.e., buying and selling of as-sets, of commodities, of other items, whereasconventional banks simply borrow and lendmoney. For example, Habib bank, which is acommercial bank, would not like to be involvedin trading in its normal routine business. let ussay i am a corporate i go to a commercial bankto borrow one million rupees. if the bank is sat-isfied with my credit worthiness, it would offerme the loan for a specific period and on a specificrate of interest. However, if i had gone to an is-lamic bank, it would have first asked me why ineeded the one million. Had i told that i wantedto buy a few computers with the one million, theislamic bank would decline to offer me moneybut would be happy to buy the computers fromthe market, for one million, to sell those on to mefor one million plus profit. From that view pointthe whole transaction is very different. The bankis getting involved in trading – buying and sell-ing the assets. islamic bonds, called Sukuk, arestructured in the same way.

SUkUkAn islamic bond in many cases is an asset backedsecurity. if a corporate or government wants toissue an islamic bond it must first identify an assetthat it is willing to sell to the investors. in case ofPakistan, a $600 million Sukuk, which was issuedabout six years back used M2 motorway as the un-derlying asset. National Highway Authority soldthe said motorway to Pakistan Sukuk Corporation,which issued islamic bonds sold to different corpo-rations all over the world.

InTenTIonS mATTeR intentions are certainly important. if you go to an is-lamic bank for an islamic transaction, then you cer-tainly would be rewarded for conducting a religiousact, because you opted for a Riba-free banking trans-action. The point is that it is the process of carryingout the transaction that makes all the difference. Onething that we have to understand is that all the reli-gions put heavy emphasis on nomenclature. Howdoes a person enter into islam; by uttering a fewwords? even in matters related with matrimony, it isutterance of a few words (ijab and qubool) that estab-lish marriages, one utters a simple word three timesand the marriage breaks up! Nomenclature, i.e., theway you say a thing makes the real difference. islamicbanking is islamic because such banks call them-selves islamic. Why Hbl and all other banks wouldnot like to call all their operations islamic? becausethe banks themselves know that whatever they do inthe name of islamic banking is different from conven-tional banking. Otherwise if it were exactly the samething then MCb would have said that from now on allour operations are islamic. Many banks shy awayfrom becoming islamic banks because implementingislamic banking requires much more effort, dedica-tion and resources, especially in a country where lawsare not entirely islamic; as is the case in Pakistan.There is nothing to be surprising about it, as all theformer british colonies have inherited their laws fromformer imperialistic power. This is the case every-where in the world. An islamic banking and fi-nance is actually a phenomenonallowing different Muslimcountries to islamise theirlaws gradually start-ing from bankingand financethen movingon too t h e r

areas. islamic banking and finance is an excellent op-portunity for the governments to islamise their laws.in that case one could say that islamic banking andfinance is bringing a social reform as well…

SocIAl RefoRmS ThRoUgh ISlAmIc bAnkIng islamic banking and finance is modernising islamiccommunities. When we look at average users of is-lamic banking and financial services, we find them tobe young people, in their late twenties, educated andwho have also lived for sometime somewhere in eu-rope or America. They are exposed to multicultural-ism. They believe in coexistence of cultures. This is amodern perspective on life held by those who use is-lamic banking. This is a social reform. This social phe-nomenon is allowing the Muslims to recognise thatthere are other practices which are not necessarily is-lamic but could be allowed to be part of a system theylive in. in a country like Pakistan there is recognitionat least at the government level of a dual banking sys-tem. in other words the government is saying that “Tothose who like to have islamic banking services weoffer them an opportunity. Those who still like to haveconventional banking must also have a choice.” Thispermission is the recognition of the fact that every per-son has the right to exist. Today the government ofPakistan is promoting islamic banking in a dual bank-ing system. What does it mean? it means that it is

ready to recognise the importance of those whowould like to use islamic banking. This

is also an acknowledgement oftheir contribution to a modern

islamic society. Thismeans that thosewho have been so

far averse to aconventional

bankingsystem

could be engaged. They would start getting engaged inthe market. Once someone starts getting engaged inthe market their perspective changes. if someone is notdisengaged from what is happening in the market heor she become a very different kind of person. A personwho believes in doing and letting other people do. Heis a person who believes in doing things, a person whobelieves in observing other people doing things. Fromthat viewpoint i still emphasise that islamic bankingand finance has a role to play in bringing social reformsin a number of countries including Pakistan.

An InveSTmenT Toolislamic banking and finance can be used by the gov-ernment to attract investment from other islamiccountries. Malaysia, for example, has used islamicbanking and finance as a tool to generate invest-ment, as a result of which they are receiving a lot ofcapital from the Middle east. They are receiving alot of investment from non-Muslim countries aswell. Malaysia has developed expertise in islamicbanking and finance, and there is a need for a coun-try like Pakistan to study the Malaysian model toget implications for further development of islamicbanking in the country. Malaysia is the number oneplayer in islamic banking and finance. Malaysianislamic financial market has a number of islamicbanks, Takaful (islamic insurance) companies, is-lamic investment banks and fund managementcompanies, and a very vibrant and highly developedislamic capital market. The country has almost allthe universities and other institutions of higherlearning producing human resources for islamicbanking and finance industry. Many countries, forexamples in Africa, are looking into islamic bankingas well. For them Malaysia provides a good exampleto follow and emulate. Pakistan has also done won-ders in developing comprehensive a framework forislamic banking and finance. it is important thatPakistan, like Malaysia, must start marketing its ex-perience and expertise in islamic banking and fi-nance in Muslim and non-Muslim countries. Thisshould bring some good revenue to the country.

PAkISTAn AnD ISlAmIc bAnkInglack of vision and political will has contributed tothe slow growth of islamic banking and finance inPakistan. The Government of Pakistan in a way hasgiven the whole islamic banking and finance to Statebank of Pakistan. The people in the ministry of fi-nance, planning commission etc. have no idea of is-lamic banking and finance, which means that thereis no ownership of islamic finance and banking atthe government level. Once the government decidesto use islamic banking and finance as a tool for

bringing more foreign investment and capital, it canbring home a lot of islamic capital. Though there isalready a lot of investment coming into Pakistanfrom the islamic financial institutions. The likes ofdubai islamic bank, Al baraka bank, bank islamiand others have foreign ownerships. if the govern-ment comes up with a vision of 2020 for islamicbanking and finance and starts pitching islamic Re-public of Pakistan as a friendly state for islamicbanking and finance, a number of institutions, gov-ernments and countries would like to come here.

A Role chAngeR There are islamic financial institutions in Canada,France, America and uK. in uK alone five islamicbanks operational. The uK government is very sup-portive of this movement because it believes that thisis a tool to bring Muslims into the mainstream. Rightnow, if one takes islamic banking and finance out ofthe Muslim communities, a very narrow perceptionof a Muslim as an extremist or a terrorist is left be-hind. islamic banking is giving a new identity to theWestern Muslims. All the major banks are doing is-lamic banking, which gives a lot of credibility toislam. One could say that islamic banking and fi-nance has a role to bring about a change in the per-ception of our Western counterparts about us. in uK,the government has come up with a very comprehen-sive package for issuing islamic bonds. Why? becausethey think that there is a bright future and a lot of po-tential for growth in islamic finance. in next five yearsthe size of islamic banking and finance industrywould be one to two trillion dollars. looking at thisphenomenal size the Western governments andcountries would like to benefit from this by engagingthemselves in islamic banking and finance.

“Durdana Najam is a freelance financialfeature writer. She can be reached at

durdananajam456@hotmail.com”

Islamic banking and finance

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FOR peace to ultimately prevail in Afghanistanso that economic development can happen isan issue and task to deal with by the people ofthat very country alone. The recent crisis inthe euro zone has also focused the thinking

towards these themes. by forging a single market eu wasconfident of handling the economic problems in a collectivemanner but the application of one set of economic princi-ples did not help to assuage the woes of other economies inthe common market. The question of governance and tak-ing decisions by the different capitals themselves in the re-

gion has assumed a differentkind of significance now.

edmund burke veryaptly described the setting upof the institution of a govern-ment as “a contrivance ofhuman wisdom to providefor human wants”. The sig-nificance of appropriate ac-tions by the state at the righttime and at the right place is

undeniable for many reasons. if we take the question ofsteering the economy in the direction where it is requiredto fulfill the desired objectives of provision for human wantsthe concomitant question of provisions of resources to meetthose demands props up for the state to deal with also. inthe academic circles the role of the state and that of the pri-vate individual is a matter that is continually discussed. Thebalance has changed with variations not only in politicaleconomy but also around the key question as to the use ofavailable resources in social and economic terms.

The enlargement of corporate economy around theglobe has benefited through expansion of internationaltrade and investment. The economic preference of seekingprofitable markets and regions for trade or investment ismaking the international economy strong. but at the sametime the level of risk for a big business to falter or for a siz-

able economy to weaken has also grown manifold. Moni-toring by international institutions like iMF or the euro-pean central bank considerably falls short of pinpointingthe weak and vulnerable areas of concern; both at the stateand private enterprise level. These institutions were oncedeveloped on models of economy that were not faced withthe diverse challenges of tackling the economic issues invaried regions. These other areas are now centers of strongeconomic growth. The world economy has now a diversitywhich was unimaginable only a few decades ago. The so-lutions found in one region or in one particular set of eco-nomic activity may not necessarily apply to other regionsor other types of economic activity. The international com-petitiveness in economic terms has an upward trend inmany areas of economy that were once a sole concern ofjust one country or a few business enterprises.

The ongoing talks on the inter-regional trade in thesubcontinent have taken an importance which no one canafford or allow to be derailed on some whimsical groundsor the other. indo-Pak trade is an important part of suchdevelopments. The international players must be watchingclosely the outcome of these negotiations but it is essen-tially the responsibility of these two very countries to realisethe prominence attached with these issues. They must as-siduously work out the nuances involved to these very dif-ficult economic and social questions. The future map ofeconomic cooperation in the region shall have a lot to dowith the serious thinking that must go in resolving theseissues now. There are large number of public and privateconcerns as to how the outcome must benefit all andsundry. The economic future of the people of this regionshould be the prime concern for everyone on both sides ofthe border. The mutual understanding needs to developon the principle of economic cooperation for the benefit ofbusinesses and enterprises on all the sides. A serious andsincere approach towards taking up each issue in a con-genial atmosphere which must be devoid of repetition ofthrowing blames will help settle the problems more effi-ciently. The efforts put in by the different players will de-termine the economic future of nearly one third populationof this globe. The role of the state in assuming and takingup its prime role of looking after the specific economic de-mands of the economy has never been more importantthan in these times of international competition.

The write has served has consultant to the UnitedNations and other developing economies on the issues

of trade and development and can be reached atamjadriazzz@yahoo.com

I T is common knowledge in thecomplicated world of capital marketsthat while fundamentals do matter,the marketplace acts primarily onsentiment. Seen in this backdrop,

periodic ‘talk up’ of market sentiment byprominent figures in advanced economiesmakes sense, especially when they arewithout viable options to turn things around.As a result, while the market eventuallyreverts to fundamentals, it gets breather-windows, when investment picks up and signsof recovery provide hope of better timesaround the corner. Across europe and theunited States, even in the bleakest of times,central figures have postured towardsoptimism, bidding up the market to ensuresolvency. That such windows have becomefew and far between is less a fire-fightingfailure and more an indication of how deepthe current downturn is, but that’s anothermatter.

in Pakistan, if political agitation andcross-party rivalry were not bad enough, wehave yet another potential existentialdilemma for the government as pieces fromthe memogate disaster fall where they may.

And regardless whether the presidency,sources in the government, the ambassador’sseat in Washington, or more shadycharacters have been at play, two things areassured. One, heads will roll, one way oranother. Two, and more importantly, thedrama will deal another tragic andunnecessary blow to our weak and strainedfinancial markets, already suffering frominvestors fleeing for safer pastures.

The norms of democracy dictate thatwhenever political uncertainty reaches acritical threshold, all parties should proactivelycalm matters, as well as public sentiment, orrisk compromising their own political andsocial habitat. unfortunately, suchunderstanding is missing in even our mostastute politicians. in some bizarre cases, self-perceived notions of party loyalty run counterto the country’s bigger interests. We mustinculcate an understanding of the strongcorrelation between politics and the marketplace.Not only will it provide some manner of supportto the economy, it will also make our politiciansmore aware, of their own duties as well as thegreater national interest.

Politics and markets

Mutual understandingneeds to develop onthe principle ofeconomic cooperation

Scenario of inter

regional collaboration

Amjad Riaz

MFN not to harm

local industry

Pakistan decision to grant india the Mostfavoured Nation (MFN) is not somethingthat the country’s trade bodies and busi-ness associations should fear about. Thedomestic market has just created a lot ofhype of the issue. This is not the first timethat Pakistan has relaxed its trade policieswith other countries. it has happened a lotof times and granting india the MFN statusonly implies that Pakistan will give thesame treatment to the imports of india as itdoes to imports from united States, brazil,Thailand etc. However, the government isstill taking measures to safeguard and pro-tect the local industry.

ERum ALi

LAhoRE

Islamabad chamber urges govt to

tackle declining FDI

There is a negative growth in the For-eign direct investment which is ad-versely affecting Pakistan. The decline inFdi is not the only factor that is affect-ing the country’s economic growth. Sur-prisingly, the repatriation of profits anddividends overseas by foreign investorshas also doubled in the first quarter ofthis fiscal year 2011-2012, as comparedto the same period last year. Repatria-tions are now 75 per cent of Fdi inflows,which is a big jump up from 32 per centlast year. Government urgently needs towork with existing investors to over-come business bottlenecks in the currentdifficult environment.

KHALiL HAmDAni

LAhoRE

E D I T O R I A L

Devil wears Prada

‘PAKiSTAN is on the vergeof an economic crisis andcollapse’, read the head-lines of newspapers, na-tionally as well as

internationally. While skimming throughthese daily headlines, it dawned upon methat i live in a crisis-ridden countrywherein, lately there has been more eco-nomic recession than growth, more infla-tion than deflation and more horror thanhappiness.

The fiscal deficit is high and growing,

inflation seems to be rising at an unprece-dented rate, investment is low, povertyhas grown over the years and industriesare facing huge losses. However, remark-ably, the country’s ‘fashion industry’ re-mains noticeably unaffected by thegeneral depression of trade along with theausterity of these harsh realities.

it is truly incredible how people arecapable of finding happiness and har-mony under the shadows of crisis andwith the heritage of unbearable losses.likewise, for many people, blindly follow-ing fashion and compulsive shoppingoffer a state of happiness and content-ment. Can we see this phenomenon as ameans to forget stress and an escape fromharsh realities? it seems like this is one ofthe reasons for the flourishing fashion in-dustry of Pakistan. Come to think of it,the fashion industry is perhaps the onlyindustry that remains unaffected by theeconomic conditions of Pakistan whichprincipally makes the niche of high value

fashion products to be elites; who are notaffected by recession or inflation. is thefashion industry further increasing thegap between the rich and the poor?

Most Pakistani people would admitto owning at least a good quantity ofitems from branded fashion stores. Pak-istani women especially, continue tospend hundreds of thousands on fashionproducts every day. Probably, for them,this might to be their way of contribut-ing towards the economy of Pakistan: icannot afford the price hike in fuel, gasor electricity, but what i definitely canafford is an expensive branded bagwhose name i cannot even correctly pro-nounce. i will also refuse to wear theclothes ever again or preferably burythem stealthily; pretending i neverowned one, if i see some other womanstanding next to me at the crosswalk,wearing the exact same dress. Funny,how the serious loathing for the mass-produced fashion items would still not

stop the ‘economyconcerned’ lady fromspending hundredsand thousands on afashion item that shewill most likely see an-other other woman carrying and thatalso in almost 100 times less price thanwhat she had paid. Thank the phenom-enon of globalisation shall i, or the greymarkets and cheap labour?

Fashion trends change so drasticallythat they rival the changing weather.These fashion industrialists know exactlywhat they’re doing, and are doing it reallysmart. The dictum of the age is to drawthe audience towards the new fashiontrends where any gimmick would sell!Nowadays we come across a prodigiousnumber of advertisements of fashionitems. Also, every other advertisement inPakistan bears resemblance to fashion insome way or the other. ‘Fashion’ is beingused as an appeal by other industries as

well just in hope thatmay be things for themcan change too. Theymust be playing safebecause Pakistani fash-ion industry is success-

fully maintaining itself as an attractiveand the safest industry to exploit.

if we take it to a next level, the fash-ion industry can play a big role in currenteconomic situation of Pakistan to spreadour culture and traditions to other civili-sations across the border, according tomany economic analysts. They believethat the dying film industry of Pakistantook away the investors from lollywood,but the flourishing fashion industry isbringing them back as indian, Arab andother foreign designers flock to holdshows in Pakistan. Can fashion be animage merchant for Pakistan?

The writer is sub editor, Profit. She canbe reached at syedmaheen@hotmail.com

Maheen Syed

For comments, queries and contributions, write to:

email: profit@pakistantoday.com.pk Ph: 042-36298305-10 fax: 042-36298302 website: www.pakistantoday.com.pk

bAbUR SAghIRCreative Head

hAmmAD RAZALayout Designer

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Tu e s d a y, 2 2 N o v e m b e r, 2 0 1 1

Is the fashion industryfurther increasing thegap between the richand the poor?

kUnwAR khUlDUne ShAhIDSub-Editor

mAheen SyeDSub-Editor

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Tuesday,22 November,2011

04news

President IccI, yasir Sakhi butt

The key issues and vital factorsshould be addressed on prioritybasis to improve the bleak foreigninvestment condition

Sugar mills startsugarcane crushing season laHore: in order to facilitate growers, sugar mills havestarted the crushing season of sugarcane to fulfill theircorporate obligation. Now, it is the turn of government tospeed up process of buying 0.2 million stocks from thesugar mills in order to make payments to growers on time.if government takes this action, the liquidity of the sugarindustry would increase, as said by Chairman PakistanSugar Mills Association, Javed Kiani, in an issuedstatement. despite floods in Sindh, sugarcane productionwas estimated to be 54 million tonnes and resultantly,refined sugar production was about 5.00 million tonnesduring the current season. Chairman PSMA said the millershave paid 100 per cent dues to the growers belonging to lastcrushing season, and all credit goes to millers for clearingout all outstanding dues. The millers are making efforts topay price of sugarcane on time during this season. For this,government has to accelerate the process of buying 0.2million tonnes of refined sugar to facilitate the growers.Javed Kiani said the prices of refined sugar have comedown from 20 to 25 per cent this year in November ascompared to last year, when the sugar millers had producedrefined sugar more than what was required. Prices perkilograms in November 2010 were Rs80-90 and Rs62-66during November 2011, he clarified. PSMA chairman saidthe sugar industry has started sugarcane crushing season inNovember, while it was started in december last year. Hesaid this drive of the sugar millers would benefit thefarmers of sugarcane. STAFF REPoRT

PSm losing utility servicesKaraCHi: Woes of financially strapped Pakistan SteelMills (PSM) have been multiplied as Karachi electricSupply Company (KeSC) has disconnected electricitysupply to former due to non-payment of dues. Accordingto sources, PSM which was defaulting over Rs50 millionto privately run public utility was deprived of powersupply at a time when the institution was alreadyreceiving notices from Sui-Southern Gas Company(SSGC) against non-payment of around Rs5 billion.Confirming fresh development, sources at KeSC claimedthat PSM was not paying huge amount despite repeatednotices issued to it by the power company.disconnection was part of a move recently started by thecompany against defaulters. besides, PSM, according tosources, was already facing a scheduled gas loadshedding after failure of paying billions of rupees worthdues that mills owed to the gas company. As both SSGCand KeSC have started disconnecting supply to variousdefaulting departments against non-payment of dues,production and out put of affected organisations werealso on the cards, sources said. However, spokesman ofSSGC claimed that despite disconnection notices issuedby the company gas supply to PSM was not suspended.earlier, SSGC had issued notices to all defaultinginstitutions which collectively owe around Rs45 billionto the gas company as it was unable to keepuninterrupted supply of gas under acute financial crisis.According to official sources of SSGC, as the companywas meeting supply through borrowing credits frombanks, it will no longer be able to ensure uninterruptedsupply to various government and private institutionsincluding Pakistan Steel Mills, Karachi electric SupplyCompany which default around Rs5 billion and Rs30billion to SSGC respectively. Though notices ofdisconnection have been issued to defaultingorganisations, SSGC has not disconnected gas supply sofar. but, he said, company would not be in a position tokeep supplying fuel in near future as it also has to paygas suppliers. He said besides KeSC and PSM, therewere many organisations and government institutionsdefaulting billions of dues to SSGC. STAFF REPoRT

fbR restores SRo 283 KaraCHi: After a detailed discussion with a high levelbusiness delegation of Karachi Chamber of Commerce andindustry (KCCi), Federal board of Revenue (FbR) hasrestored SRO-283. it has also been decided that fate of SRO-1012 will be decided with further consultation. An emergencymeeting was held with Salman Siddique, Chairman FbR,regarding havoc created by SRO-1012 with changes in zero-rated tax regime for five export sectors. delegation of KCCiwas led by Siraj Kassam Teli, Chairman, businessmen Group(bMG) and former President KCCi. After intense negotiationwith FbR Chairman by Siraj Teli, Haroon Farooki, viceChairman bMG group and former President KCCi, thesuccessful negotiation restored SRO 283. And fate of SRO1012 will be decided after consultation with KCCi committeeand FbR on mutual consent. Notification for restoration ofSRO 283 is being issued by FbR. drastic and unilateralchanges had adverse affects on trade causing huge loss toeconomy and national exchequer since many containers wereheld at port due to manipulation of the said SRO by relevantcollectorate officers. business community welcomed themove and praised efforts of Siraj Kassam Teli, HaroonFarooki and other KCCi leadership who made efforts to getresolved this hard issue amicably. STAFF REPoRT

Volumes on KSE dip as investors

remain cautious on new SBP policy rateKARACH

STAFF REPoRT

KARACHi stocks market wasbearish, with trade volumesdipping as low as 31 million

shares on the back of, what marketobservers viewed, investors’ cau-tious approach days before sched-uled announcement of discount rateto be made by State bank.

day saw benchmark, KSe 100-share index, losing 43.02 points or0.36 per cent to stand at 11,894.79points against 11,937.81 of the pre-vious day. index hit respective in-traday high and low of 12,002.76and 11,866.96 points. “bearish ac-tivity witnessed at KSe as investorsremained cautious ahead of policyannouncement this month,” com-mented Ahsan Mehanti, director atArif Habib investments.

Total shares traded at ready-counter were counted at 31.097 mil-lion, just two million up from lastweek’s historic low of 28.661 mil-lion. Friday, last week, had seentraded volumes at 38.838 millionshares at country’s largest bourse.

According to Mehanti, majorfall in global stocks and commodi-ties on united States and europeandebt fears affected investors’ senti-

ment. “investors stayed put despitestrong fundamentals in local com-modity stocks in fertiliser, oil andcement sector,” analyst said.

Trading value also moved down-ward and contracted to Rs1.1 billioncompared to Rs1.3 billion last Friday.Market capital slid to Rs3.093 tril-lion, compared to Rs3.104 trillionpreviously. Of total 327 traded scrips,68 were declared as “plus”, 141 as“minus” and 118 as “unchanged”.“institutional support in blue-chipstocks like Fauji Fertilizers, OGdC,MCb (bank) and National bank ledintra-day recovery in the bearish ses-sion,” Ahsan Mehanti said.

bank Al-Falah was the day’svolume leader having 5.49 millionof its shares traded at the highestper share rate of Rs12.31. banks’share price declined to Rs12.04

after opening at Rs12.07.Other scrips that followed were

Wateen Telecom, National bank ofPakistan, Nishat Mills Xd, FatimaFertilizer Company, byco Petro-leum, Fauji Fertilizer Xd, lucky Ce-ment, lotte PakPTA and PTCl thatcounted their traded shares, respec-tively, at 2.0 million, 1.9 million, 1.8million, 1.5 million, 1.1 million, 1.1million, 0.908 million, 0.900 mil-lion and 0.873 million.

Turnover at future market, how-ever, witnessed an upset and in-creased to 6.773 million shares from2.243 million shares of precedingday. Scrips that were rated as plusnumbered 43, as minus 96 and oneunchanged. ANl-NOv was the vol-ume leader on this side having 1.354million of its shares traded duringthe day “local bourse gives a de-

serted look as the turnover shrinksfurther,” said Hasnain Asghar Ali ofAziz Fidahusein and Company. Ana-lyst said rising uncertainty on polit-ical front along with tough economicand financial situation, with interna-tional lenders like iMF seeking guar-antees before moving forward, keptpressure intact.

However, Hasnain said, likelyrecovery of lost money from variousRPPs on order of Supreme Courtdid allow the beneficiaries from thebanking sector to invite turnover onstrength. “The absence of follow-upsupport, however, kept the daytraders on the sidelines,” he said.

Analyst said lackluster-led priceerosion remerged after low volumegains registered during early trade,thanks to OGdC for allowing indexto test 12000.

SBP overstates accountsfor financial year 2011

KARACHi

ISMAIL DILAWAR

STATe bank of Pakistan(SbP) is found to have“overstated” its consoli-dated financial statementsfor fiscal year 2010-11 by

over Rs25 billion, this was observed byauditors of bank’s financial accounts intheir qualified opinion. Observation wasmade by central bank’s auditors, M/sernst and young Ford Rhodes and M/sKPMG Taseer Hadi and company, intheir “independent report” to sharehold-ers on financial statements of SbP and itssubsidiaries, SbP banking Services Cor-poration and National institute of bank-ing and Finance (Guarantee) limited.

According to auditors, central bankhad “overstated” financial statements oftwo of its departments, banking depart-ment and issue department, by a huge

accumulated sum of Rs25.734 billion forprevious financial year. SbP, as audit re-port states, has overstated assets of issuedepartment and banking department byRs5.987 billion and Rs6.880 billion, re-spectively. “Accordingly, assets of theissue department and banking depart-ment are overstated by Rs 5,987 millionand Rs6,880 million,” audit report saysunder the head of “basis for qualifiedopinion”. Auditors further observedthat financial accounts of bank’s bank-ing department had been exaggeratedon account of liabilities and gold re-serves the department held. Overstate-ment amounts to Rs12.867 billion,auditor report shows.

“The liabilities and unrealised ap-preciation on gold reserve of the bank-ing department are overstated byRs8,522 billion and Rs4,345 billion,respectively,” report noted.

Moreover, central bank also con-

fused auditors by not netting off assetsand liabilities of banking department onaccount of provisioning related to banks’assets recoverable from governments ofindia and bangladesh (former east Pak-istan). According to audit report, SbPand its subsidiaries, denominated to-gether as group in the report, had showna provisioning of Rs2.464 billon as“other” liability. “The group has main-tained a provision of Rs2,464 million re-lating to net assets recoverable from theReserve bank of india, the Governmentof india and those pertaining to transac-tions in bangladesh.”

“This provision has been recorded asother liability of the banking departmentand the relevant assets and liabilitieshave not been netted off,” report added.in their “qualified opinion”, auditors de-clared that except for financial effect ofaforementioned over-statements, theconsolidated financial statements were

giving a true and fair view. “in our opin-ion, except for the financial effect of thematter stated in the preceding para-graph, the consolidated financial state-ments give a true and fair view of thefinancial position of the group,” audit re-port concluded. Clarifying some of theauditors’ reservations, State bank inNote 4.12 of its Consolidated FinancialStatements said income on balances withbangladesh was recognised as income onreceipt basis. While on assets recoverablefrom india SbP’s Note 6.2 says realisa-tion of these assets was subject to finalsettlement between governments of Pak-istan and india. About provisioning, cen-tral bank said, provisions wererecognised when group had a presentlegal or constructive obligation as a resultof past events. “it is probable that an out-flow of resources will be required to settleobligation and a reliable estimate of beamount can be made,” it said.

govt to assist energydepartment in balochistan

iSLAmABAD

STAFF REPoRT

FedeRAl government hasoffered complete assistance tobalochistan in establishment

of a separate energy department inthe province to better address variousenergy issues. Offer was made duringa meeting of Chief Ministerbalochistan, Nawab MohammadAslam Raisani, with SecretaryPetroleum Muhammad ejazChaudhry. CM balochistan wasinformed that a branch office of interState Gas System limited (iSGS)would be established in Gwadar andSukkur to expedite work on iranPakistan pipeline project.

LAHORE

STAFF REPoRT

PeTROleuM Minister,dr Asim Hussain, has re-assured the leaders of All

Pakistan Textile Mills Associa-tion (APTMA), the gas supply offour days a week, during winter.This would further to up-gradedto five days a week as new gasreservoirs are in place duringnext three months.

Minister was responding tothe panic situation in textile in-

dustry in the wake of latestAPTMA press ads, fearing colos-sal losses, due to likely disrup-tion of gas supply ahead.

it may be noted that failureof economic Coordination Com-mittee (eCC) load managementplan, envisaging supply suspen-sion to industry during winterseason on SNGPl network haspanicked the textile industry.The industry has already faced agas curtailment for 120 days dur-ing outgoing summer season ofcurrent calendar year, which

means SNGPl has already cur-tailed gas supply to textile indus-try for more than 90 days.

Also, the gas supply curtail-ment for three days a week hascrippled down 40 per cent of theinstalled capacity, which meansif continued, some four millionbales shall remain unutiliseddue to the forced closures. Cot-ton growers are already underpressure as textile mills are notin a position to procure two mil-lion bales at present due to en-ergy shortage.

APTMA assured offour days a week gas supply

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05

Tuesday,22 November,2011

news

CORPORATE CORNERPTcl awards TopAgent of contact center

iSlaMabaD: in recognition of the outstandingefforts for provision of best customer outreachservices by Pakistan TelecommunicationsCompany ltd (PTCl), Humaira Riaz was given theaward of "Top Agent of the Contact Center” at theannual dinner gala and awards ceremony of PTCl,contact centre Rawalpindi. PTCl OutboundContact Center, Rawalpindi reaches out tocustomers spread all over Pakistan for conductingtelemarketing, feedback and other outreachactivities. PRESS RELEASE

warid organises DengueAwareness campaign for wintersiSlaMabaD: The threat of dengue, reappearingafter winter season is something very alarming. inthis regard, Warid Telecom recently organised a

massive awareness campaign, aimed at helpingcommunities to be more prepared in fighting smartlyagainst dengue. Adopting a unique approach towardsengaging communities, over 300 young leaders weretrained to volunteer for the cause including, Waridstaff members and students of Government Collegefor boys, Gulberg lahore. PRESS RELEASE

Ufone arranges breastcancer Seminar for its employees iSlaMabaD: ufone recently arranged aseminar for its female employees for highlightingthe alarming increase in the rate of breast cancerpatients in Pakistan. The seminar was conductedin collaboration with Pink Ribbon Pakistan andunderlined the importance to significantly reducebreast cancer mortality in the country by creatingwidespread awareness on early detection andincreased access to treatment. PRESS RELEASE

wi-tribe introduces Pocket modemKaraCHi: With an aim to provide internet usersthe opportunity to access richer broadband and tofurther enhance their online experience, Wi-tribehas launched the Pocket Modem, a convenientplug ‘n’ play device that allows users to connect tothe internet from absolutely anywhere. Throughits easy-to-carry, portability feature, the PocketModem adds immense value to the experience of

internet users. it also delivers a perfect solutionwith its attractive packages. Wi-tribe’s Marketingdirector, Ali Fahd said, “With this launch, we aimto provide users with a convenient, portablesolution to instantly connect.” PRESS RELEASE

Samsung wins 30 Innovation AwardslaHore: Samsung electronics Co ltd, a marketleader and award-winning innovator in consumerelectronics and telecommunications, has won 30prestigious awards in the international Consumerelectronics Show (CeS) 2012 innovation Awards.Managing director, Samsung Pakistan, Mr HeeChang yee said, “We’re honoured that CeSrecognises Samsung’s commitment to researchand development.” PRESS RELEASE

ISLAMABAD: Mr Mohi ud Din Chawla (BoSChPharma) is being warmly received by GeneralManager Pearl-Continental hotel Muzaffarabad, MrAamir h Kazi, on his arrival at hotel. PRESS RELEASE

There is a major flaw in the euro system... I do know the system as presentlydesigned has a major flaw and that flawwon't be corrected just by words

billionaire Investor, warren buffett

LAhoRE: Chairman, higher Education Commission,Dr Javed Leghari (r) taking a visit to the Universityof Lahore. PRESS RELEASE

SAhIWAL: Managing Director Bank of Khyber (BoK),Mr Bilal Mustafa, inaugurating BoK, Sahiwal Branch.BoK Executive Director, Mir Javed hashmat is alsopresent on the occasion. PRESS RELEASE

iwAKi

REUTERS

billiONAiRe investor Warrenbuffett said europe's debt crisishad shown up a "major flaw" in the

17-member euro zone system and it wouldtake more than words to fix it. "There is amajor flaw in the euro system ... i do knowthe system as presently designed has amajor flaw and that flaw won't be correctedjust by words," he told CNbC during hisfirst trip to Japan on Monday. buffett,dubbed the 'Oracle of Omaha' for his longtrack record as a value investor, said he hadno idea how europe's sovereign debt crisis,which started in Greece two years ago andrages on, would end, though he noted therewere good valuations among companies ineurope. "Not in the debt space, but in theequity space there are opportunities. i canthink of a dozen euro stocks that areattractive ... there are stocks i like andwonderful businesses. "We bought Tesco(TSCO.l) earlier. i could buy more if theprice came down," said the 81-year-oldchief of berkshire Hathaway inc (bRKa.N),referring to the british retailer. buffettearlier told reporters in iwaki City innortheast Japan that he also seesopportunities to invest in the country andwas not deterred by either the Marchearthquake or a scandal engulfing cameraand medical device maker Olympus(7733.T). Making a trip that he hadcanceled in March due to the earthquakeand tsunami, buffett told reporters: "Myview on Japanese people and Japaneseindustries is unchanged. We just had ademonstration over months that thetsunami did not stop Japanese businessand the people." "Olympus doesn't changemy view at all on Japanese investments,"buffett said, referring to a wideningaccounting scandal at the company, whichhas admitted hiding losses for decadesthrough improper accounting, raisingquestions about Japanese corporategovernance standards. buffett earlieropened a new plant at cutting tool makerTungaloy Corp, a unit of an israeli firm inwhich berkshire Hathaway holds an 80per cent stake. The factory is just 40 kmfrom the Fukushima daiichi nuclearpower plant that was crippled by thedisaster in March.

BRuSSELS

REUTERS

THe euro zone's debt crisisstruck again at the heart ofeurope on Monday despite aclear-cut election victory inSpain for conservatives com-

mitted to tougher austerity. Spain's Social-ists became the fifth government in the17-nation single currency area to be toppledby the debt crisis this year. Portugal, ire-land, italy and Greece went before. but anabsolute parliamentary majority for Mari-ano Rajoy's center-right Popular Partybrought no respite on financial markets in-creasingly alarmed by the absence of an ef-fective firewall to halt a meltdown onsovereign bond markets.

The risk premiums on Spanish, ital-ian and French government bonds roseas investors fled to safe-haven Germanbunds, while european shares fell morethan 2 per cent after Moody's warnedthat France's credit rating faces newdangers. "This crisis is hitting the coreof the euro zone. We should have no il-lusions about this," european economicand Monetary Affairs CommissionerOlli Rehn said. He defended the euro-pean union executive's advocacy of aus-terity policies blamed for choking offgrowth and jobs. "One simply cannotbuild a growth strategy on accumulatingmore debt, when the capacity to servicethe current debt is questioned by themarkets," Rehn told a brussels seminar."One cannot force foreign creditors tolend more money, if they don't have theconfidence to do it. in Greece, the start-ing point of market turmoil now feltaround the world, more political wran-gling cast a pall over the new technocratprime minister's bid to win the nodfrom european leaders on Monday forbailout funds.

borrowing costs for both Spain anditaly hit levels regarded as unsustainablelast week before the european Central bankstepped in to stabilize the market. Twonewspapers said the eCb's governing coun-cil had imposed a weekly limit of 20 billion

euros on purchases of euro zone govern-ment bonds, a figure analyst say prevents itacting as an effective firebreak.

FRENCH RATING RISK

Ratings agency Moody's said a recentrise in interest rates on French governmentdebt and weaker economic growthprospects could be negative for France'scredit rating. "elevated borrowing costspersisting for an extended period wouldamplify the fiscal challenges the Frenchgovernment faces amid a deterioratinggrowth outlook, with negative credit impli-cations," Senior Credit Officer AlexanderKockerbeck said in Moody's Weekly CreditOutlook dated November 21. France's gov-ernment spokeswoman reaffirmed onMonday that Paris would not impose a thirdpackage of budget savings, despite marketpressure on its cost of credit. Talk of a pos-sible break-up of the 12-year-oldsingle currency has grown amongeconomists and market analysts,mostly outside the euro area, aseu paymaster Germany has re-jected most of the widely-touted solutions to the debtcrisis. The chairman ofGoldman Sachs Asset Man-agement, Jim O'Neill, saidthe crisis of europeaneconomic and mone-tary union (eMu) hadreached a point where"big decisions have tobe taken prettyquickly." "it's not obviousto me that eMu could survive with-out italy," he told a Confederation of britishindustry conference. "it's not obvious to methat italy can survive with 6-7 per cent bondyields, so something's going to have givepretty quickly. italian bond yields have gotto come down pretty quickly or eMuwill have some severechallenges." dutch Fi-nance Minister Jan Kees de Jager,one of berlin's closest allies, acknowledgedthat the euro zone could splinter.

Asked whether a break-up of the euro

would cause an economic depression, hetold bNR radio: "This could be a conse-quence from the euro zone falling apart,that is correct. "you never know it for surebut it is a likely outcome if the euro zonefalls apart. Therefore all our efforts are toprevent that scenario," de Jager said.Spaniards gave the People's Party a clearmandate for more austerity against abackground of 21 per cent unemploymentand one of the highest budget shortfalls inthe region. "We will stop being part of theproblem and will be part of the solution,"party leader Mariano Rajoy said after thevote. Analysts said they expected Rajoy,who will not be sworn in until december,to move quickly to turn the economyaround. "This could calm markets butuntil the new government does what itsays it is going to do, nothing willchange," said Angel laborda, analyst atMadrid think-tank Funcas.

Nicolas lopez, head of research atM&G valores, said the government had

to introduce convincing measures."While these measures are

being taken, the eCb willhave to buy up bonds as

it has beendoing to

main-t a i nconfidence," hesaid. in italy, newly-in-stalled Prime Minister MarioMonti, who easily won confi-

d e n c e

votes inboth houses of parliament

last week, could face a battle to win back-ing for greater austerity or liberalizationthan Silvio berlusconi was able to achieve.italian newspapers said on Sunday thatnew budget measures were likely to be un-veiled within two weeks, with a propertytax abolished by berlusconi set to return,plus moves to tackle tax evasion and a cutin payroll taxes to lift employment.

GREEK POLITICS

Greek Prime Minister lucas Pa-pademos will meet eu CommissionPresident Jose Manuel barroso and eu-rogroup head Jean-Claude Juncker onMonday after eu, iMF and europeanCentral bank representatives held toughtalks in Athens.

Fearful of alienating voters, AntonisSamaris, head of the conservative Newdemocracy party, refused to give a writ-ten commitment to the terms of a sec-ond bailout program, no matter whowins an election expected on February19. The leader of the far-right lAOSparty said international lenders wouldnot release the 8 billion dollars Greeceneeds to avoid default in mid-decemberwithout the guarantee. euro zone wideplanning to improve the region's eco-nomic governance and restore marketfaith in the single currency is also miredin disagreements.

details of how the european Fi-nancial Stability Facility (eFSF), thebloc's rescue fund, will act as a bondinsurer and attract foreign investorsare still undecided and the eCb says itwill not act as a lender of last resort.The european Commission will pro-pose much tighter control of budgetson Wednesday along with three op-tions for joint debt issuance of the 17countries sharing the euro, but with-

out any conclusions or suggestionsof which one to choose.

euro zone notworking, words alonewon’t fix it: buffett

Debt crisis strikesat heart of Europe

profit 22-11-2011_Layout 1 11/22/2011 1:24 AM Page 5

top 5 perForMers sector wiseSymbol oPen hIgh low cURRenT chAnge volUme Symbol oPen hIgh low cURRenT chAnge volUme

Food ProducersAL-Noor Suger Mills 55.09 55.09 52.35 55.09 0.00 35Bawany Sugar 11.10 12.00 11.10 11.10 0.00 1Clover Pakistan 51.41 53.00 51.41 51.41 0.00 100Colony Sugar Mills 1.90 1.90 1.63 1.63 -0.27 14,431Crescent Sugar 12.00 13.00 12.99 12.99 0.99 771

Household GoodsAL-Abid Silk Mills 23.34 23.60 23.34 23.34 0.00 2Diamond Ind. 8.20 9.03 8.20 8.20 0.00 2Hussain Industries 3.90 3.90 3.80 3.90 0.00 6Pak Elektron Ltd. 4.20 4.40 4.20 4.25 0.05 8,650Tariq GlassXD 8.65 8.89 8.65 8.65 0.00 10

Personal GoodsAmtex Limited 1.31 1.44 1.30 1.38 0.07 26,864Artistic Denim XD 19.50 19.45 19.00 19.01 -0.49 74,958Ashfaq Textile 7.10 8.10 8.10 8.10 1.00 5,000Azam Textile 1.35 1.40 1.34 1.35 0.00 5,200Azgard Nine 3.71 3.85 3.62 3.66 -0.05 672,596

Future ContractsAHCL-DEC 29.94 29.94 29.80 29.89 -0.05 9,000AHCL-NOV 29.94 29.76 29.55 29.61 -0.33 34,500ANL-DEC 3.74 3.80 3.71 3.75 0.01 1,286,500ANL-NOV 3.74 3.80 3.65 3.65 -0.09 1,354,000ATRL-DEC 127.13 127.50 127.00 127.23 0.10 12,000

Pharma and Bio TechAbbott Laboratories 102.51 103.20 102.50 102.74 0.23 6,920Ferozsons (Lab) Ltd. 76.66 78.00 76.66 76.66 0.00 100GlaxoSmithKline Pak. 69.25 69.90 69.00 69.00 -0.25 3,312Highnoon (Lab) 29.29 29.50 28.70 29.38 0.09 3,502IBL HealthCare XD 12.78 13.29 12.80 13.18 0.40 9,773

Fixed Line TelecommunicationP.T.C.L.A 10.80 10.95 10.70 10.74 -0.06 873,286Pak Datacom LtdXD 34.50 34.50 34.00 34.50 0.00 50Telecard Limited 0.96 1.00 0.89 0.90 -0.06 179,056Wateen Telecom Ltd 1.85 2.00 1.82 1.88 0.03 2,098,153WorldCall Telecom 1.11 1.17 1.05 1.06 -0.05 74,429

ElectricityGenertech 0.36 0.42 0.32 0.32 -0.04 3,307Hub Power Co.XD 37.11 37.15 37.00 37.01 -0.10 416,249Japan Power 0.68 0.68 0.64 0.65 -0.03 164,679K.E.S.C. 1.63 1.71 1.63 1.70 0.07 232,001Kohinoor Energy 17.01 17.00 16.61 17.00 -0.01 300,022

BanksAllied Bank Ltd 62.23 62.80 62.10 62.23 0.00 216Askari Bank 10.95 11.00 10.80 10.86 -0.09 77,973B.O.Punjab 5.69 5.80 5.62 5.65 -0.04 350,983Bank Al-Falah 12.07 12.31 12.00 12.04 -0.03 5,499,424Bank AL-Habib 29.87 30.00 29.75 30.00 0.13 71,128

Non Life InsuranceAdamjee Ins 47.94 47.59 46.80 47.07 -0.87 15,293Atlas Insurance 36.49 36.49 35.27 36.49 0.00 2Century Insurance 7.23 6.80 6.36 6.51 -0.72 10,100Cres.Star Insurance 2.40 2.99 2.00 2.01 -0.39 1,123EFU General Ins 36.61 36.51 36.50 36.51 -0.10 1,713

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

Financial ServicesAMZ Ventures A 0.35 0.33 0.25 0.25 -0.10 36,032Arif Habib Investmen 16.40 16.40 15.56 16.40 0.00 101Arif Habib Ltd. 16.03 16.29 15.96 15.97 -0.06 2,207Dawood Cap.Man XB 1.25 1.29 0.75 1.25 0.00 4Dawood Equities 1.09 1.07 0.83 0.86 -0.23 631

Equity Investment Instruments1st.Fid.Leasing Mod 1.52 1.53 1.53 1.53 0.01 2,500Allied RentalModXDXB 21.64 22.45 21.64 21.64 0.00 1Atlas Fund of Fund 5.86 5.85 5.85 5.85 -0.01 29,600B.R.R.GuardianXD 2.00 2.00 1.72 2.00 0.00 493Cres. Stand.ModXD 0.49 0.44 0.34 0.42 -0.07 69,931

MiscellaneousCentury Paper 13.50 13.75 13.20 13.24 -0.26 6,625Pak Paper Prod. 32.00 32.50 30.50 30.60 -1.40 4,462Security Paper 35.20 35.20 35.06 35.20 0.00 100Pakistan Cables 31.00 32.50 30.50 32.17 1.17 877P.N.S.C.XD 15.98 16.00 15.70 15.71 -0.27 6,500Pak.Int.Con. SD 70.50 71.00 68.32 70.00 -0.50 1,703TRG Pakistan Ltd. 1.60 1.60 1.53 1.59 -0.01 789,439Murree BreweryXDXB 70.60 70.45 69.00 70.00 -0.60 3,891Grays of Cambridge 25.00 25.00 24.47 25.00 0.00 10Pak Tobacco Co. 62.39 62.90 59.70 61.65 -0.74 406Philip Morris Pak. 140.00 140.00 133.00 140.00 0.00 13Shifa Int.Hospitals 29.50 30.45 28.55 29.73 0.23 2,350Hum Network XD 15.50 16.00 15.50 15.50 0.00 3,010Media Times LtdXR 7.96 8.96 7.80 7.96 0.00 52P.I.A.C.(A) 2.00 2.12 1.96 1.98 -0.02 13,170Pak Hotels 28.29 28.29 28.29 28.29 0.00 100Sui North GasXDXB 17.69 17.70 17.36 17.44 -0.25 18,118Sui South GasXDXB 20.16 20.40 20.00 20.00 -0.16 7,675EFU Life Assur 68.36 68.36 68.36 68.36 0.00 25AKD Capital Ltd.XD 27.13 27.13 27.13 27.13 0.00 50Pace (Pak) Ltd. 1.68 1.77 1.63 1.72 0.04 191,889Netsol Technologies 10.73 10.94 10.25 10.46 -0.27 162,695Pak Telephone 3.00 3.44 3.00 3.00 0.00 1

Symbol oPen hIgh low cURRenT chAnge volUme

Oil and GasAttock Petroleum 411.14 412.75 406.10 406.99 -4.15 18,325Attock Refinery 126.72 127.68 125.01 125.37 -1.35 226,908Burshane LPG XD 23.22 23.89 23.22 23.22 0.00 1Byco Petroleum 7.20 7.38 7.19 7.25 0.05 1,147,404Mari Gas Co.XB 96.00 97.00 93.15 93.74 -2.26 47,325

ChemicalsAgritech Ltd. 15.00 15.48 15.00 15.00 0.00 1,002Arif Habib CoXDXB SD 29.85 29.90 29.45 29.51 -0.34 252,944Bawany Air Products 5.00 5.25 5.00 5.25 0.25 1,000Clariant Pakistan 156.34 156.74 155.00 155.18 -1.16 2,897Dawood Hercules 39.08 39.35 38.50 38.62 -0.46 15,788

Industrial metals and MiningDost Steels Ltd. 1.51 1.59 1.46 1.48 -0.03 71,503Huffaz Seamless Pipe 9.20 9.48 9.06 9.06 -0.14 2,002Int. Ind.Ltd. 33.86 33.00 32.18 32.53 -1.33 16,754Inter.Steel Ltd. 10.80 11.00 10.77 11.00 0.20 5,352Siddiqsons TinXD 6.97 7.25 6.97 6.97 0.00 205

Construction and MaterialsAl-Abbas Cement 1.91 2.19 1.90 1.90 -0.01 3,005Attock Cement 52.50 52.52 52.40 52.49 -0.01 1,288Bal.Glass 1.95 1.98 1.95 1.95 0.00 100Berger Paints 14.18 13.70 13.70 13.70 -0.48 500Buxly Paints 6.00 6.50 6.00 6.00 0.00 1

General IndustrialsCherat Packaging 28.15 28.60 27.80 27.86 -0.29 14,445ECOPACK Ltd 3.10 3.15 2.85 3.11 0.01 110,806Ghani Glass LtdXD 39.88 40.50 39.00 39.34 -0.54 1,261MACPAC Films 9.00 9.38 8.53 9.38 0.38 502Packages Limited 89.50 92.00 85.03 88.55 -0.95 17,243

Industrial EngineeringAL-Ghazi Tractors 169.86 172.00 168.00 169.86 0.00 68Bolan CastingXD 28.00 28.55 28.00 28.00 0.00 4,001Ghandhara Ind. 6.94 7.40 7.34 7.38 0.44 500Hinopak Motor 96.11 95.76 91.31 95.76 -0.35 11K.S.B.Pumps 26.95 27.13 25.61 26.95 0.00 418

Automobile and PartsAgriautos Industries 60.27 60.99 60.27 60.27 0.00 50Atlas Battery Ltd. 172.01 172.01 172.00 172.01 0.00 100Atlas Honda Ltd. 125.27 126.00 125.00 125.00 -0.27 500Bal.Wheels XD 26.00 25.99 24.70 24.84 -1.16 537Dewan Motors 2.15 2.60 2.11 2.13 -0.02 79,586

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

Mutual Funds

fund offer Repurchase nAv

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

fund offer Repurchase nAv

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

Markets

Tuesday, 22 November, 2011

06

top 10 sectors

49% 01%Construction & Materials

Chemicals Real Estate & Investment

03%Electricity

01%02%

Fixed Line Telecommunication

17%Equity Investment Instruments

Financial Services

09%Banks10%Oil & Gas04%Personal Goods04%

International Oil PriceWTICrude Oil

$97.41

BrentCrude Oil

$107.58

STOCK MARKET HIGHLIGHTS

Index Change Volume Market ValueKSE-100 11894.79 -43.02 24,226,364 1,099,481,208LSE-25 3114.95 -3.78 1,188,486 27,316,038ISE-10 2680.25 -4.63 76,800 1,730,630

Major Gainers

Company Open High Low Close Change TurnoverPakistan Cables 31.00 32.50 30.50 32.17 1.17 877Ittehad Chemical 23.25 24.41 23.00 24.41 1.16 2,000Ashfaq Textile 7.10 8.10 8.10 8.10 1.00 5,000Wazir Ali 10.60 11.60 11.60 11.60 1.00 1,570Crescent Sugar 12.00 13.00 12.99 12.99 0.99 771

Major Losers

UniLever Pak Ltd. 5479.96 5597.99 5250.00 5362.40 -117.56 62Bata (Pak) Ltd. 780.01 780.01 741.01 747.72 -32.29 2,200Nestle PakistanXD 2986.39 3000.00 2952.00 2979.39 -7.00 47Siemens Pak 879.71 875.00 875.00 875.00 -4.71 56National Ref.XD 318.77 319.90 313.10 314.52 -4.25 26,476

Volume Leaders

Bank Al-Falah 12.07 12.31 12.00 12.04 -0.03 5,499,424Wateen Telecom 1.85 2.00 1.82 1.88 0.03 2,098,153National Bank 44.18 45.00 44.05 44.52 0.34 1,981,921Nishat Mills XD 44.17 44.30 43.10 43.36 -0.81 1,863,093Fatima Fert.Co. 23.05 23.32 22.91 23.01 -0.04 1,582,268

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

Gold 24K 55,729.00 47,829.00 1,706.00Gold 22K 51,608.00 44,245.00 –Silver (Tezabi) 1,023.00 878.00 35.05Silver (Thobi) 1025.00 880.00 –

Interbank RatesUS Dollar 87.2598UK Pound 136.8931Japanese Yen 1.1355Euro 117.2946

Buy SellUS Dollar 87.00 87.70Euro 116.38 117.53Great Britain Pound 135.61 136.84Japanese Yen 1.1250 1.1317Canadian Dollar 83.33 85.44Hong Kong Dollar 11.03 11.26UAE Dirham 23.65 23.79Saudi Riyal 23.17 23.28Australian Dollar 85.12 87.49

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Tuesday,22 November,2011

news

07

iSLAmABAD

JALALUDDIN RUMI

TAKiNG strong notice of not tak-ing the Ministry of Textile intoconfidence over the grant ofMost Favored Nation (MFN)

status to india by Ministry of Commerce,Senate Standing Committee on Textiledecided to write a letter to Prime MinisterSyed yousaf Raza Gillani, complainingthe sole flight of the ministry.

Senate Standing Committee on Tex-tile was held under the chairmanship ofSenator Gul Mohammad lot. He termedthe situation very serious and said thatthis lack of coordination between the twoministries would ultimately harm the in-terest of the country.

lot Chairman of the Committee,Senator Gul Mohammad, while termingthe situation very serious said even bothministries are not on the same page

which would ultimately harm the inter-est of the country, especially on grantingindia MFN status.

Chairman, Textile Committee hasasked both ministries to submit reportover the matter in next fifteen days tofind out the impediments causing lack ofcoordination between the two ministries.

Federal Minister for Textile,Makhdoom Shahabuddin, protestedagainst Ministry of Commerce for nottaking Ministry of Textile into confi-dence regarding the grant of Most Fa-vorite Nation (MFN) status to india.

He said the Ministry of Commercedoes not recognise textile as a separateministry and authorities in commerce di-vision have also never considered consultthe Ministry regarding any matter.

Chairman of the committee askedboth the ministries to submit report overthe matter in fifteen days to find out theimpediments causing lack of coordina-

tion between the ministries.Secretary Textile, Shahid Rashid, in-

formed committee that the commerce of-ficials did not consult Textile Ministrywhile saying that South Asian Free TradeAgreement (SAFTA) has more impactthan giving MFN status to india.

it is important to mention here thatthe items mentioned in the negative listof both countries would also be dilutedafter 2012, according to the joint declara-tion between india and Pakistan. Pak-istan and india was signatory of regionalSouth Asia Free Trade Agreement(SAFTA), according to which more than80 per cent of trade can take place on tar-iff rates below or equal to 5 per cent only,

The only barrier from Pakistani sideis Appendix-G of Trade Policy Orderthrough which Pakistan has restrictedimports from india via land route andaround 1946 tariff lines.

The present trade negotiations are in-

tended to eliminate Appendix-G whichhas restricted imports from india underMFN and SAFTA, he said. This will notonly bring a normal trade relationship,but in fact implementation of free tradeagreement thus, allowing imports fromindia without any custom duty for major-ity of items, he added.

Committee was told Pakistan hasbeen given General Most Favored na-tion (GMFN) status since 1996. despiteof that, Pakistan has not been able toexport goods of more than $272 millionto india whereas; india’s exports toPakistan are estimated to be around$1.5 billion. in case of textile, SecretaryTextile said Pakistan only exported $45million worth of textile products toindia whereas, india exported $566million worth of textile products to Pak-istan in a calendar year.

Committee was also briefed regard-ing TdAP’s participation in interna-

tional textile exhibitions. The Commit-tee members were of the view that Tradeand development Authority of Pakistan(TdAP) should try to find new marketsfor exports instead of just focusing oneurope. Committee emphasises on ex-panding the trade volume instead ofshowing enhanced figures of exports.Chairman committee said commodityprices are coming down and ministryshould try to find new markets, espe-cially in Africa and South America.

The committee was told that evenafter 80 per cent cotton crop was de-stroyed due to the rains and flood inSindh; the country will produce recordcotton production this year.

it is also important to mention herethat despite invitation by the parliamen-tary committee, Federal Minister forCommerce, Amin Fahim and SecretaryCommerce, Zafar Mehmood did not ap-pear before the committee.

g no cooperation between ministries of commerce and textile g Senate standing committee on textile takes strict notice of situation

Ministries differ over MFN status to India

chairman Atlas group, yusuf h Shirazi

LAHORE

STAFF REPoRT

SOuTH KoreanAmbassador to Pakistan,Choongjoo Choiexpressed resolve to

contribute to Pakistan’s economy.While agreeing with lCCi proposalfor transfer of technology, earlyformation of Pak-Korea businessCouncil and joint venturesbetween the two sides, KoreanAmbassador proposed expeditingwork on issues hurting two-waycollaboration to amelioratePakistani economy.South Korean Ambassador wastalking to lCCi President irfanQaiser Sheikh, Senior vicePresident Kashif younis Meherand vice President Saeeda Nazarat a lunch arranged exclusively bythe Ambassador for lCCi office-bearers. Ambassador saidconsistency in policies and betterinfrastructure for investment andstability in the country is necessaryto enhance pace of its economicrecovery. He said Korea is ready tocooperate with Pakistan in allsectors of economy, particularlyelectronics and iT. Ambassadorsaid his aim was to boost bilateraltrade and play a positive role inPakistan’s development. He saidto implement his plan he willutilise exchange of businessdelegations, work with privatesector, remove hurdles in bilateraltrade and make long standingrelations between chambers ofcommerce in the two countries.South Korean Ambassadorexpressed optimism that volume oftrade between Pakistan and SouthKorea was bound to increase asboth governments are takingmeasures to get desired results.He said non-availability ofrequired trade-related informationwas the biggest hurdle in way ofSouth Korean investment in

Pakistan. He admitted Koreaninvestment in Pakistan is very littlewhen it compared to potentialexists in the two countries.diplomat, while identifying anumber of areas for mutualcooperation, said there was a needfor expertise-sharing as bothcountries have a lot to learn fromeach other. He said there is a bigpotential in SMe sector thereforePakistani business community couldavail opportunities in this particulararea. He urged lCCi office-bearersto arrange a business delegation toSouth Korea, so that Pakistanibusinessmen could have first handknowledge about opportunitiesthere. Speaking on the occasion,lCCi President stressed the need forearly formation of Pak-Koreabusiness Council so that businesscommunity could be able tomaximise its interaction with theirKorean counterparts.He said that Korean expertise inthe field of electronics offersmany openings to Pakistanibusinessmen and a little attentionby Korean side could do miraclesin this regard. irfan Qaiser Sheikhsuggested that to create a win-winsituation for both countries,Koreans need to increase theirimports from Pakistan. Presently,most of its demand is being metby Korea from sources other thanPakistan and only a smallquantity is being imported fromPakistan, he added. A littleattention by Korean Governmentand businessmen can increasePakistan’s exports to Koreaconsiderably.Speaking on occasion, lCCi Seniorvice President Kashif younisMeher and vice President SaeedaNazar said there was need for aworkable methodology for moreJoint ventures betweenentrepreneurs of the two sides asthis would pave the way fortransfer of technology.

iSLAmABAD

AMER SIAL

lOSS-MAKiNG Pakistan Steel Mills(PSM) has sought Rs25 billionfinancial bailout package fromgovernment to revive premier

industrial enterprise to enhance its output to1.1 million tonnes from 215,000 tonnescurrently. An official source said a five yearbusiness plan developed by internationalconsultancy, deloitte, which has cash flowestimates for each succeeding year, has beensubmitted to Cabinet Committee onRestructuring (CCOR) for consideration andapproval. Committee is likely to discuss theplan within next few days.Committee will be also recommendingthree names to Prime Minister, appointingone of them as chief executive of thecompany. Appointment of new chiefexecutive and approval of new business

plan will allow government to conclude aninvestment deal with Russia that hasassured an investment of $500 million inupgradation of the mill. Mill was built withfinancial and technical cooperation ofRussia. Government initially plans toenhance output to 1.5 million tonnes thatwould be subsequently enhanced to over 3million tonnes. CCOR, he said, was likelyto provide financial assistance from bankswhich would enable PSM management toenhance output to maximum level of 1.1million tones. without enhancing outputthere was no other method available tobring the company out of current financialcrisis he added. PSM has incurred losses ofRs26 billion in fiscal year 2008-09, Rs11billion in 2009-10 and Rs11 billion in2010-11. Government helped the entity byrescheduling its loans of Rs7 billion andproviding cash assistance of Rs3 billion infiscal year 2009-10. While it helped in

restructuring loans of Rs8 billion andinjected a cash assistance of Rs2 billion in2010-11. Source said government hadinjected close to Rs5 billion in cash duringlast two fiscal years but PSM output hadremained less than 20 per cent which waskeeping the company in the red. Companymanagement claims that a production levelof 70 per cent was required to attain breakeven level. PSM meets close to one fourthof steel requirements in the country.PSM, he said, was stressing for providingfull assistance of Rs25 billion in one goinstead of installments as they impedeefforts of raising output of the entity tomaximum limit. Company has more that17,000 employees and even their permonth salary bill was more than Rs700million. Fixed per month cost was aheavy burden that required a hugefinancial assistance of Rs25 billion for aturn around in the entity.

PSM seeking Rs25bpackage for revivalg cabinet committee

to recommend new ceo PSm

S-korean ambassadorproposes steps to enhance cooperationg Urges lccI office-bearers to arrange businessdelegation to South korea g expresses optimismabout trade volume

In India, nothing can be imported which isproduced within the country. Thisprotection is provided through trade andnon-trade barriers such as emission controlstandards known as bharat I and bharat II

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