Monthly Economic Affairs April, 2013

MONTHLY
ABC Certified
Volume-II, Issue-IV April, 2013
Pakistan in search of new future
The besieged nation MUST see itself in the mirror and learn from the dead past, to change the future course of history and to articulate a new beginning a new political system under the new educated generation of honest, intelligent and visionary leadership to strive for a promising future.
10-11
Rs.250
12-13
From friends to frenemies
A Journey of realization
20-21
The prodigal son returns!
Bilawal Bhutto Zardari
Helicopters import
Princely Jet Aviation evade taxes worth Rs 195 million
Economic Affairs | www.economicaffairs.info
EDITORIAL From the Editors desk
April, 2013
EDITORIAL BOARD
Dr Ashfaq Hassan Khan Dr Abid Sulehri Pervez Amir Shah A Hassan Zubair Malik
Elections 2013: Code of conduct for media
ADVISORY BOARD
Haroon Akhtar Khan Shahid Khaqan Abbasi Hamidullah Jan Afridi
EDITOR
Yassir Rasheed
DEPUTY EDITOR
Maria Khalid
GENERAL MANAGER
Tausif ur Rehman
MARKETING
F. M. Paracha
PHOTOGRAPHY
Wahab Chughtai
GRAPHIC DESIGNER
Mehmood Abdullah
LEGAL ADVISER
Hashmat Ali Habib Advocate Supreme Court
WEBMASTER
Avan Soft (Pvt) Limited Web editor: Sohail Iqbal
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he ever increasing viewership of media has amplified its influence. Media has materialized as an influential force in the modern era that has a decisive impact on human society in shaping its thoughts and views. Our populace depends on the media to get hold of knowledge, political updates and entertainment. The mass media updates people on the government policies and its rationale behind the alteration in those policies. Media also modifies the opinion of the masses depending on what the objective behind a campaign is. Such as, on the night before by-elections of February 2010, a senior journalist in his program on a private channel called on a senior analyst, Irfan Siddiqui and Farooq Aqdas, editor Jang magazine Rawalpindi as guest speakers where they were engaged in a colloquy that was critical of Sheikh Rasheed and discussed Lal Masjid operation, while Sheikh Rasheed was contesting versus Malik Shakeel Awan. Conditions were propitious for Sheikh Rasheed prior to that program. Consequently, Sheikh suffered defeat in elections that is said to be because of the journalists antagonism. For similar reasons, Election Commission of Pakistan has formulated a code of conduct for unbiased, neutral and fair election coverage, which has been duly approved by the media houses. The lack of training and required education makes our media professionals confused about what to report and how, underestimating the responsibility of being the fourth pillar of state. In October 2010, Imran Khans procession was extensively covered on news channels that was a shot in the arm for his political career and then there was a black out for Imran Khan over the media for a particular time. Dr. Tahir-ul-Qadri was also given noteworthy media exposure. This kind of coverage discrepancy baffles the public thinking disposition and makes the decision making intricate for the public. Social media moral code should also be built up because everybody does what he wants to do over the web. Uncensored news and defamation triggers problems for people. Media kindles up the issues and it is for the viewer to get the real picture out of labyrinth. To give its viewers a clear picture media doesnt have to endorse any political partys election campaign but rather be open about every aspect of the parties; what are they executing, where they lack, and their precedent record. There should be contemplation concerning every partys manifesto, whether they have the aptitude to execute what they are guaranteeing. There is a lot for media to cover regarding development and the governments progress such as checking on the Millennium Development Goals by the UN. More importantly, while raising issues of public importance, media should remain unbiased and shouldnt try to build or damage the reputation of specific political parties. It would also be a form of biasness if you continuously discuss the worst law and order situation in Karachi but do not highlight public concern over raising ratio of street crimes in Lahore. The only good way is to enfranchise a constant democratic government for decades. This would eventually help scrutinize the good from bad. Media pressure is constant so when a political party doesnt work in an effective way, media takes it on and lets people know not to vote for them.
MONTHLY
April, 2013
ECONOMIC
THE COVER
Helicopters import
Princely Jet Aviation evade taxes worth Rs 195 10-11 million
EXCLUSIVE
Affairs
12-13
CONTENTS
14-15

Lively performance of National Bank of Pakistan
16-17
18-19
Reforming elitist economy ...........................................................16-17
Reforming elitist economy

22
What a National Power cut tells us about The last
budget
32-33
The last budget ..............................................................18-19
USAID Paving way towards Energy Sufficiency ...........................................................28-29
Engro, PSO
Multiplier Effects of
to work jointly on
Thar coal
PML (N) to show zero tolerance against corruption, Sadiq Farooq ..........................................................30-31
Abu Dhabi Vision 2030

36-37
34-35
Sara Akbar
Amnesty for smuggled cars ...........................................................36-37
Kuwaits iron lady

D I S C L A I M E R
Amnesty for smuggled cars
Utmost care is taken to ensure that articles and other information published are up-to-date and accurate. Furthermore, responsibility for any losses, damages or distress resulting from adherence to any information made available through the contents is not the responsibility of the Magazine. The opinions expressed are those of the authors and do not necessarily reflect the views of the editor, publisher and the management. Comments and suggestions are welcomed.
COVER STORY
April, 2013
Pakistan in search of new future

Those running the politics are nothing other than filthy creed of the dead past. The stunning contrasts and internal conflicts generate extreme uncertainty and massive insecurity to the common folks looking for law and order, individual safety and a secure future. It is all because there are wrong people operating the political governance.
Mahboob A. Khawaja
akistan is at critical crossroads. Its moral, intellectual and socioeconomic and political capacity and lifelines are undermined by its own wicked rulers. If there were any educated, honest and intelligent political leaders of vision and integrity, they would worry about its present and future and try to pursue a navigational Change. Could the THINKING PEOPLE of Pakistan reverse the course of junk history and make a new beginning based on the ideology and values of the concept of Pakistan? Could the new generations of educated, honest and intelligent Pakistanis initiate new political system and institutions, produce proactive visionary leadership to extend intellectual security and help to protect the integrity and security of the besieged nation? Crises made Pakistans history. The first time political power was ever transferred to civilian rule was on the Independence Day 14 August 1947 by the British colonial Viceroy to Quaid-e-Azam Mohammad Ali Jinnah, the 1st Governor General of Pakistan.. What happened afterwards is a history full of intrigues, wickedness, in-house conspiracies and bloody tragedies to shame the Pakistani nation. Whenever an opportunity arose for peaceful transfer of power, it was foiled by the traitors both military and their complacent civilians. Some might allege that Sheikh Mujib ur Rehman was a traitor but what about ZA Bhutto? In principle, Sheikh Mujib ur Rehmans Awami Party won the majority seats in the Pakistan National Assembly during the 1971 elections, why was the power not transferred to him. It was ZA Bhutto, the self-centered and power hungry man, not Sheikh Mujib. There are credible statements that he never wanted separation of the East Pakistan into Bangladesh. ZA Bhutto in collision with General Yahaya Khan conspired for a military action against those who had won a fair election in One Pakistan. ZA Bhutto was likewise a traitor too who took over the reign of power illegally after Pakistan was defeated by India in December 1971. This was his plan implemented to defeat and disgrace the Muslim nation. Bhutto and Yahya Khan were the people who stabbed the body and soul of Pakistan. There was evidence that ZA Bhutto wanted power grab lot earlier during the Ayoub Khan presidency. He
wanted to see Pakistan defeated under Ayoub Khan when India attacked on West Pakistan in 1965 because of war in Kashmir. Those running the politics are nothing other than filthy creed of the dead past. The stunning contrasts and internal conflicts generate extreme uncertainty and massive insecurity to the common folks looking for law and order, individual safety and a secure future. It is all because there are wrong people operating the political governance. How to Change the history to disconnect with the junk past and to make a new beginning is an issue that is not addressed by the
April, 2013
COVER STORY
4 7
traditional political apparatus in this war-torn nation. They all appear eager to hold new elections and use intrigues and backdoor conspiracies to define the power-sharing and political governance. You wont find a single frontline politicians having vision, honesty of purpose and integrity to be respected by the masses. Change would mean life, stability and a promising future if at all it is envisaged by the new educated generation of intelligent and creative people. Nation-building and individual change and development framework have lot in common. Those living in darkness could well appreciate the sight of light and power of seeing and those deaf by nature could well dream and adore when they hear the sound breaking self denied silence. Change is constant part of human life built-in as the full meaning and purpose of life. Nations likewise the individual go through the process of change, leaving past to history and embarking on anew future for change and adaptability to futuristic challenges. The Western industrialized nations have accomplished this aim effectively. Where would the Change come from if there is no systematic mechanism to facilitate political change? If change and new political imagination were ever part of Pakistans political systems (if there are any), how dare the Generals stole fifty years of the national lifelines? Global history tells us wherever absolute military rule overwhelms the country, it destroys all its natural thinking
hubs, morals and intellectual powerhouses. This is what happened to the Europeans before and after the two WW and this is what America is experiencing and this is what caused the former USSR to collapse. Pakistani politics nurtures under the powerful shadow of the military Generals, not on its own as national institutions breeding freedom, human rights, vision, integrity and any glimpse of a different future. America and Britain both share vital strategic interests with Pakistani mi litary establishments. The War on Terror is the net outcome of this strategic pursuit to keep the imperial domination over the former subjects- the subservient Pakistan. The US politicians and British comrades in arms used the 9/11 pretext to wage a bogus war on terror against the Muslim world. Whether 9/11 was an inside job or an amazing terrorist success, the fact is that either way the atrocity is intimately linked with US state terrorism..that Al Qaeda/Mujahideen/Jihadis whatever they are labeled are the Frankenstein creation of US and British military intelligence to fight the proxy war against the Soviet Union in Afghanistan during the 1980s. The 9/11 tragedy if we see it as such is thus a form of blowback where the terrorist dogs of dirty war come back to bite the hand that feeds them. ..So even if we believe that the US/British/NATO war on terror is genuine albeit crassly misguided the fact is that it would not be occurring if it were not for the state terrorism that emanates from Washington and London in pursuit of imperialist intrigues Leaving aside that 9/11 may have been an inside job to facilitate strategic permanent war, even if the official narrative
Bhutto and Yahya Khan were the people who stabbed the body and soul of Pakistan. There was evidence that ZA Bhutto wanted power grab lot earlier during the Ayoub Khan presidency. He wanted to see Pakistan defeated under Ayoub Khan when India attacked on West Pakistan in 1965 because of war in Kashmir.
COVER STORY
April, 2013
popular rebellions, which are then suppressed by joint imperial and collaborator armies. They cite imperial legal doctrine to justify their intervention to repress a subject people in revolt. The spill-over impacts of the war in Afghanistan and strategic developments in the region shaping Pakistans future appear to be the same blueprint as was used by the US and its allies in March 2003 of Iraq invasion. This week is the 10th anniversary of that terrible aggression and crimes against innocent people. In her critical insights unto Iraqs bloody ordeal, Felicity Arbuthnot (Iraq: Destroying a Country: War Crimes and Atrocities. Part II Global Research: 11/8/2010), describes the scope of horrifying human tragedies inflicted on the Iraqi population which perhaps Pakistani nation is going through over several years: The Independents Robert Fisk (The Shaming of America, 24th October 2010) commented: As usual, the Arabs knew. They knew all about the mass torture, the promiscuous shooting of civilians, the outrageous use of air power against family homes, the vicious American and British mercenaries, the cemeteries of the innocent dead. All of Iraq knew. Because they were the victims.parWe found people wandering like ghosts through the ruins looking for the bodies of relatives .. trying to recover some of their possessions from destroyed homes We moved from house to house, discovering families dead in their beds, or cut down in living rooms or in the kitchen It became clear that we were witnessing the aftermath of a massacre, the cold-blooded butchery of helpless and defenceless civilians. In wars, when an aggressor sees the defeat coming, it resorts to mass killings of the civilian population to avenge the fear of the unknown. To pursue its policy of global domination, now American strategists sponsor death squads in Afghanistan and Pakistan. The aim is to terrorize the masses by drone attacks and death squads and destroy their habitats thus creating more reactionary terrorism through its paid political agents the ruling elite. Its ultimate goal is to make Pakistan a crippled nation totally incapacitated for any useful role in global affairs. The cruelty of the American led bogus war on terrorism has transformed Pakistan into a nonproductive beggar nation, solely looking to military and economic aid for all of its operations. The army Generals and their by-products the ruling Bhutto familyPPP Zardari, and in-waiting Nawaz Sharif (Muslim League-N), have infected the body politics of Pakistan with corruption and political tyranny, drained out all of the positive thinking and creative energies of the nation for change, development and a promising future. The traitors are inside, not elsewhere. If the
were true, it still gets down to the US and British playing with fire. These governments create terrorists, fund terrorists, train terrorists, use terrorists. Either way, the facts emerge: the US and its ally puppets have absolutely no regard for democratic freedom, international law or human rights. There is ample tangible evidence to prove that the US led war in Afghanistan has continuing strategies to undermine the integrity of Pakistan. Professor James Petras (Legal Imperialism and International Law: Legal Foundations for War Crimes, Debt Collection and Colonization: Global Research: 12/3/2012) helps us to understand the prevalent context of a modern infant Empire dreaming of global strategic domination and control: By now we are familiar with imperial states using their military power to attack, destroy and occupy independent countries.Empirebuilding throughout history is the result of conquest the use or threat of superior military force. The US global empire is no exception. Where compliant rulers invite or submit to imperial domination, such acts of treason on the part of puppet or client rulers usually precipitate
To all concerned and educated Pakistanis, it is becoming crystal clear that the so called politicians are the wrong people, with wrong thinking and doing the wrong things. The so called American financed democracy has no relationship to the living masses of Pakistan. With almost half of a century of lost time and opportunities under the dictatorship of various army Generals, dismantled public institutions, devastated social and economic affairs, disjointed trades and commerce, political surge of terrorism and dead leadership, how could a nation be able to conduct business as usual?
April, 2013
COVER STORY
4 9
law and justice system is still in tact, these political thugs and indicted criminals should not be allowed to hold offices of public responsibility but be held accountable in a court of law. The besieged nation MUST see itself in the mirror and learn from the dead past, to change the future course of history and to articulate a new beginning a new political system under the new educated generation of honest, intelligent and visionary leadership to strive for a promising future. The military Generals, Bhuttos, Zardari, Sharifs and Chaudris could never have come into political governance unless the whole nation had lost the sense of PURPOSE of the creation of Pakistan and MEANING of the Foundation of Pakistan. Are there any concerned and proactive young people to safeguard the national interests of the present and future generations of Muslim Pakistan? To all concerned and educated Pakistanis, it is becoming crystal clear that the so called politicians are the wrong people, with wrong thinking and doing the wrong things. The so called American financed democracy has no relationship to the living masses of Pakistan. With almost half of a century of lost time and opportunities under the dictatorship of various army Generals, dismantled public institutions, devastated social and economic affairs, disjointed trades and commerce, political surge of terrorism and dead leadership, how could a nation be able to conduct business as usual? The masses wish if Pakistan could be returned to its originality foundation of Islamic ideology and practices for peace and unity of the divided nation. The corruption knows no bound. Under military dictators, Pakistan has lost precious time and opportunities to regain
honor (Ezat) while the Generals were used to lead coercive politics devoid of reason and responsibility the nation continues to live in tormenting uneasiness and being crippled by the cruel acts of death and destruction across Pakistan. Shamefully those wicked instigators who target and kill the minorities and make feuds with other sectors of the society are the criminals bent on destabilizing and destroying the essence of vision and integrity on which Pakistan was built in 1947. If the nation is fractured and feels insecure- the traitors are inside- the few political names- feudal lords, palaces erected with stolen wealth of the nation and hired killers organizing political campaigns who will make their way to foreign lands once their ambitions are met. A concerned school teacher in Islamabad asks the grade 10 students what is the meaning of Pakistan? Who is the most popular leader of Pakistan to win the next election? The classroom sounds deafening silence. (Dr. Mahboob A. Khawaja specializes in global security, peace and conflict resolution with keen interests in Islamic-Western comparative cultures and civilizations, and author of several publications
10
SCAM
April, 2013
Helicopters import
Princely Jet Aviation evade taxes worth Rs 195 million

Waqar Abbasi
ransparency International Pakistan (TIP) has accused the officials of National Bank of Pakistan (NBP), Federal Investigation Agency (FIA), and Federal Board of Revenue (FBR) for joining hands for illegitimately and surreptitiously supporting each other in suspending the cases against M/S Princely Jet Aviation. The TI-P accused the officials of FIA, NBP and FBR for receiving millions as bribe from the M/S Princely Jet Aviation for not administering the trial in cases of Rs 190 million tax fudging and securing loan of Rs 415 million on rented assets. The snapshots of the case revealed that M/s Princely Jets Pvt. Ltd. Located at office No 10, 2nd Floor, Service Club Extension Building, Mereweather Road Karachi/Chaklala Scheme III, Rawalpindi (NTN No 2394552) had imported one unit helicopter Bulkow 105DBS4 S/N 819 Reg AP-BHK on lease for a period of 15 months from UK vide IGM No 2709 dated 3 April 2008, index No 23. The importer M/s Princely Jet filed home consumption good declaration for clearance of the helicopter at Model Customs Collectorate (MCC) PaCCS. In the course of processing the goods declaration (GD) at MCC PaCCS, the tax authorities had
slapped a duty to the tune of Rs94.92 million. The importer claimed exemption of custom duty vide SO 567(1)/06 dated 5-6-2006 at the serial No 35 and income tax exemption through Income Tax Ordinance 2001(vi) S.No 43. The custom authorities processed the case under file No. 2125/8 AFU/ICG and the goods declaration was completed accordingly at statutory rate of custom duty and other taxes by charging PTC heading as 8802.1200, meaning that thereby the benefit of claimed SRO by the importer was not extended. The importer paid custom duty and other taxes amounting to Rs 1.322 million vide Cash No C-943 dated 5-42008 at the declared value of the good for lease period of 15 months at the rate $5000 per month ($5000X15= $75,000). Later on, M/s Princely Jet imported two more units of helicopters as a provisional import in December 2008 at declared lease value of $5000 per month per unit for a period of seven months and filed goods declaration vide custom reference No I-HC-860055 dated 25 Dec 2008 for the clearance in MCC PaCCS, Custom House Karachi through their authorized agents M/s Sarwar International. The custom authorities assented to the declared value of goods and consented to unleashing the consignment subsequent to the imbursement of viable duty and other taxes. The helicopters were imported for the
FIA & FBR officials received millions of rupees as bribe from the M/S Princely Jet Aviation for not administering the trial in cases of Rs 190 million tax fudging and securing loan of Rs 415 million on rented assets.
period of 15 months and seven months subsequently and custom duty along with other taxes was also deposited for this period. After running out of the stipulated time period of 15 months on 3 July 2009 and 25 July 2009, the said helicopters should have been re-exported under the provisions of Customs Act 1969 and the other rules and regulations framed there under, or the importer should have approached the custom authorities with the request to extend the time period for depositing the due custom duty and other taxes liable. The importer neither approached the custom authorities for lengthening the time period nor made payment of custom duty after the expiry of temporary import period of three helicopters. This was an unambiguous violation of the custom ordinance 1969 and evasion of taxes to government. Interestingly, after the conclusion of interim import period of helicopters, the PaCCS system did not churn out any alert for completion of
April, 2013
temporary import period. An investigation into the scam revealed that after clearance of both the consignments (three units of helicopters) the importer approached the local bank for getting loan on the helicopters after mortgaging them. The importer declared the value of the helicopter at $2.5 million per unit and succeeded to get the loan of Rs415 million on this value in collusion with banks management and officers in violation of bank credit policy manual and State Bank of Pakistan Prudential Regulations R-5. Though, Ms. HaniyaShahid, Director, Managing Committee, NBP, warned the technical committee that the credit rating of M/s Princely Jet is negative, the committee endorsed the loan, contravening its own statute by approving loan against a rental item which wasnt owned by the applicant. Mr. Asif Brohi, President NBP was a member of loan sanctioning committee. During the first week of November 2012, the FIA Commercial Crime Wing Karachi initiated its inquiry and secured the record from the relevant bank. A perusal of record reveals that on December 16, 2009 Ghouse Akbar, CEO and Director of M/s. Princely Jets Pvt. Limited wrote a letter (request for loan) addressed to Syed Ali Reza, the then president, NBP informing him that the company had launched its helicopter services with 100 percent equity and requested to direct the relevant corporate team to contact him in this regard. In response to the letter the management of NBP directed two officers namely Syed Ghazanfar Ali and Adnan Bajwa to see Company CEO and to discuss the loan issue. Both the officers after discussing and receiving relevant documents had prepared in February 2010 Credit Memorandum under the instruction of arrested accused NBP officer Irtiza Kazmi, SVP Corporate Head South, NBP. The investigation further found that in the proposal, they cited in first para under the head Borrowers Suitability and Facility Structure: Trelawny Limited Special purpose vehicle was incorporated in British Virgin Islands by M/s Princely Jets (Private) Limited. The sole purpose of Trelawny Limited is to purchase three helicopters and lease that out to Princely Jets on rental basis to optimize tax and capital efficiencies. Investigations also revealed that the 3 helicopters were purchased by M/s Princely Jets, not rented by the company. An Aircraft purchase agreement executed between Aviation Marketing International, LLC, a Nevada Limited liability company with a place of business at Las Vegas, Nevada (Seller) and Princely Jets (Pvt) Limited, a company formed under the laws of Pakistan, with a place of business at Karachi, Pakistan (Purchaser) for the purchase of Bolkow 105 Aircraft (one of the helicopter arrived under customs reference on December 25, 2008)
SCAM
11
confirms the purchase by M/s Princely Jets Pvt. Limited. It was learnt that the company M/s Trelawny Ltd was established by M/s Princely Jets Pvt. Ltd. in order to use the company for sole transaction of three helicopters showing acquired on lease by the company and imported on the basis with the clear cut intention to evade customs duties and other leviable taxes on import of such helicopters. The importer M/s Princely Jets Private Limited and its Director Muhammad Ghouse Akbar was pre-determined/pre-planned to evade the customs duty and other taxes after importation of the helicopters and subsequently to get the loans from the bank. As a matter of fact, the fraudulent importer managed the things in his favor before the customs as well as the bank authorities to defraud the government, it noted. Making use of the above facts, the FIA prepared a contravention report and The FIA Crime Circle Karachi had registered two separate FIRs against the customs officials, NBP officials, including the existing and former Presidents of the bank under section 169 of Pakistan Penal Code. Later, Mr. Anwar Qureshi, Assistant Director FIA was made the investigation officer of this case. Interestingly, after registration of FIR, M/s Princely Jets as on 26 November 2012 has paid a custom duty for the expired period after 15
months. It is pertinent to note that, during this period, the company had secured the loan Rs 415 million against these three rented helicopters. The Collector of Customs (Adjudication-II) accepted the duty and taxes Rs92.45 million from the company and passed the order in favour of Princely Jets stating: On the basis of forgoing and submission as made by the learned attorney of the importer as detailed . I find that the importer has not committed an offence under Section 32(1) of the Customs Act, 1969. Having paid the duty and taxes for the extended period 03-07-2011 to 02-01-2013, I find that the charges leveled against the importer have not been established. I therefore, vacate the show cause notice. The Investigative Officer did not submit challan for trial of accused persons i.e. Custom officials, NBP Board Director and M/s Princely Jet. Nevertheless, he submitted final challan under Sec 169 PPC. TI-P says that the main accused, Mr. Ghouse Akbar, CEO of M/s Princely Jet has bribed the all investigation officers and customs staff. The TI-P noted that Mr Ghouse Akbar is a high profile businessman and influential in the power corridors. He was also involved in providing unauthorized bank guarantees in RPP deals. In 2008 he availed the Tax Amnesty Scheme in his own name toting up to over Rs 1 billion.
12
INTERVIEW
April, 2013
Lt. Gen. Shahid Aziz: I regret supporting the dictator

Lieutenant General Shahid Aziz (retd) was the Lahore corps commander from December 2003 to October 2005. After his retirement, he was appointed chairman of the National Accountability Bureau, a post he left in May 2007. During the Kargil conflict of 1999, he served as DG of the ISIs Analysis Wing. The same year, he was appointed as the DG, Military Operations where he played a crucial role in the coup that brought General Musharraf to power. After 9/11, he served as Chief of General Staff at GHQ when the US sent its forces to Afghanistan. He is married with two sons and two daughters. He recently joined Islamic International University to study Islam.He lives at his picturesque farmhouse in Pind Begwal in the foothills of Murree, about 30 kilometers from Islamabad.
Maria Khalid
Today, Pakistan army is much wiser than what it was in the bygone days and that is how it persisted in detaching itself from the political affairs said General (Retd) Shahid Aziz in an exclusive interview with Economic Affairs. He is happy with the fact that a democratically elected government managed to serve out its term. He gives credit to the people of Pakistan for their endurance. He praises General Ashfaque Pervez Kayani for not intervening in the political affairs of government, despite the availability of incentives. What are major security threats to Pakistan? The security situation of the state is appalling than ever. Our moral, ethical and cultural fabric has been torn apart; there is no justice, no security, price hike, joblessness, unimpeded street killings and abductions for ransom, pitiable governance with corruption at its peak and we are close to financial collapse. Karachi, with politically sponsored crimes, is simmering to explode. If the army pulls out of Balochistan, a hostile takeover is imminent. Khyber Paktunkha still breaths because of armys presence. Unfortunately, we are a strategic ally of a country that
is sponsoring separatism and terrorism in Pakistan. The hard evidence is available that the rebels in Balochistan have been getting support from across the border. The sections of Tahreek Taliban Pakistan (TTP) are getting strength from the international forces engaged in Afghanistan. Our law enforcement agencies have the substantiation but they are helpless because the rulers are obedient and reliant on our enemies for financial gain. Today a number of foreign intelligence agencies are operating and recruiting their agents in Pakistanwith full freedom. There are thousands of foreign spies and agents like Raymond Davis who have infiltrated our system. We need to pull the United States out of our domestic affairs. Albeit a violent breakup with the US isnt the answer, but we need to ease it off. First, we need to pull out of war against Afghanistan and let the Americans come to grips with it. Why have you described the Kargil operation as a meaningless misdeed by Pakistan? Of course, it was a misdeed and the nation has a right to know what exactly happened.After all, it happened during the tenure of an elected government and we lost as many as 600 soldiers in this so-called tactical operation. And I think that Nawaz Sharif is right when he says that he
was not informed about it beforehand. General Musharraf had not even taken the corps commanders into his confidence. Only four generals knewabout the planning of the Kargil operation. That is why I describe it as a four-man show. Initially, it was known only to Gen Musharraf, chief of general staff Lt Gen Mohammad Aziz, FCNA (Force Command Northern Areas) commander Lt Gen Javed Hassan and Lt Gen Mahmud Ahmad, the Rawalpindi corps commander. Even, the then ISI Director General, Lt Gen Ziauddin Butt, was blank in this regard. However, whether Mr Nawaz Sharif was conscious of the operation or not, he bears the ultimate responsibility. After all, he was the prime minister and the army chief was in clear defiance,
Today, Pakistan army is much wiser than what it was in the bygone days and that is how it persisted in detaching itself from the political affairs
April, 2013
that was the right time for Nawaz Sharif to show Musharraf the door, but he couldnt muster the courage when it was needed. General Musharraf says that Kargil was a small tactical operation and there was no need of discussing it with corps commanders. What you say about this argument? Musharraf himself negated his statement by claiming if Prime Minister Nawaz Sharif had not visited the US, we would have conquered 300 square miles of Indian territory. How is it that you were about to conquer 300 square miles in a small tactical operation? It wasnt a small operation. More than 600 soldiers lost their lives. It was an operation that instigated strategic problems and the whole world ganged up on us. While commenting on the failure of the Kargil operation, Musharraf once saidnaively: Our assessment wasnt wrong, but the Indians over reacted. Infact, initially, there was no deployment from the Indian side at Kargil-Drass sector and it had a defensive posture in Kashmir. Initially, Musharraf was in a state of complete denial about the Kargil operation and termed it an act of mujahedeen. The infiltrators managed to cut off Indian supply lines, but we could not maintain this faade for long. Subsequently, our positions at peaks started falling. General Musharraf was worried about falling positions and growing criticism. The Indian reaction coupled with international pressure forced the Pakistan military to withdraw. It was the time, when the Prime Minister Nawaz Sharif flew to Washington to put an end to the conflict. What were the objectives of Kargil operation? Director General, Military Operations (DGMO) Tauqir Zia explained the objectives of the operation in a briefing. According to him, it had cut off Indias supply lines to Siachen because of the closure of Zojila Pass on Srinagar-Drass-KargilLeh road. This would prevent India from supplying its troops in Siachen, forcing India to vacate Siachen. If a commission is formed to investigate the Kargil fiasco, would you be willing to appear before it? I was not involved in the planning or handling of the Kargil operation. However, if a commission is formed by the upcoming government to investigate the Kargil debacle, and it asks me to get my statement recorded, I would readily do that because I believe that any such misadventure without the approval of political government could bring the two nuclear states on the verge of a nuclear holocaust. We have to make sure that such adventures are not repeated in future. Do you think Lt Gen Ziauddin Butts appointment as the army chief was legitimate? Yes, it was. The prime minister has the power to replace chiefs of armed forces, and General Butts appointment was completely legitimate. However, the way Nawaz Sharif attempted to remove General Musharraf was an act of humiliation and army was bound to react. He was not an ordinary employee of the government. He was the army chief and Nawaz ordered his removal when he was on an official visit to a neighboring country, then you put hundreds of fire brigades vehicles on the runway of the Karachi airport and divert his plane. It was all immoral. If Nawaz Sharif had waited until Musharrafs return, then there might not have been any reaction from the other side. It was all unfortunate. Are you saying that the 1999 coup was a rightful move? I was one of the protagonists of the October 12 coup and I am ready to face any action under Article 6 of the Constitution, provided all those who in one way or the other ravaged the country face the charges of breaching the Constitution including Musharraf, the judges who validated the coup and all those who supported the illegitimate rule. The coup was a violation of the Constitution, but the Constitution, drafted by the feudal lords is a rotten product of a system that reeks of corruption. The politicians, who took oath by the same Constitution have been giving the country a bloodbath and suck the blood of people. They all deserve punishment. So do I. However, I regret supporting
INTERVIEW
13
the dictator, but it was an attempt to bring about a change in the broader interest of the country. Have you received invitations from political parties to join them? Yes, some friends from both the major political parties, the PML-N and PPP have invited me to join politics. I would have loved to join some party, had the system been fair. I believe that the parliamentary form of government doesnt suit our psyche and political culture. The political parties, by their very nature, are self-serving. They create sub-nationalisms, focus on disagreements and entangle people in disputes. All political parties protect feudalism and perpetuate oppression and play into the hands of financial mafias and foreign agents, encouraging corruption and crime. You know that President Zardari remained in prison for eight long years, but was not charged in any of the cases that were filed against him in various courts. It doesnt mean that Zardari had not committed any corruption.The successive governments just used accountability to settle political scores. I was the NAB chairman and when I ordered investigations into mega scandals involving billions of rupees, I was asked to resign. The PPP government had once offered me the position of the NAB chairman, but I declined. Will you be casting your vote in the upcoming general elections? No, I will not cast my ballot. I dont have any faith in the current system. The elections will bring back the same elements, perhaps in different proportions, to mint money and gloat over this nations misery.In order to build Pakistan as a welfare state, the system has to be changed, because the existing system is designed to benefit the feudal lords. I am not against voting. We need to change the system through popular uprising, as it happened in Iran, Tunisia and Egypt. The people of Pakistan will have to rise for their rights, as the current powerful elite will not give them their share of the pie. Q. You have expressed your concern over media freedom in Pakistan. Why? There should be some limits.We need somechecks and balances vis--vis the freedom of media. If a media projects the wrong picture, it is because the owner wants it to project it this way. They are pushing the American agenda. There should be laws to control the media.There should be transparency and no foreign investment. The Americans and Indians are funding our media organizations. They have their personnel and economic interests involved. The evidence is available with the army and the government.
14
CORPORATE
April, 2013
pursuits, a happy hallmark. Being one of the biggest banks, both opportunities and problems tend to be of high pole bar to cross, to put proverbially. In the situation prevalent for too long time to afford, results reflect and so do retain refreshing test, not scratching confidence, but solidifying it. NBP has one more recognisable hat in wear. It has been its ranking among the big five banks of Pakistan. Core business of the commercial banks, is business and industrial financing. It has not been on the rise but back foot. This has been evident from nominal six percent sparks to Rs 88.30 billion. In comparison with the year 2011 rolling in profit was increased by 20 percent, the latest year presented an overall retreat. However, pretax profit of the leading group of five banks increased by a token of two percent. Lower the business load, lower was the stress of (making) provision on non-performing loans. This did absorb increase, a routine, in administrative expenses. This tends to be the
Lively performance of National Bank of Pakistan

Umar Latif
erformance, profit and its distribution by the National Bank of Pakistan (NBP), for its 64th year ended December 30, 2012, gives a pleasant surprise to all interested in work sheet of the banking sector. No doubt, this vital financial sector has been sailing in stormy waters since long. Extended economic turmoil, for several cogent reasons of it, external threats and internal uncertainties, tend to make the financial sector perceptibly vulnerable. Policy portrait for this sector has been in flux for want of pragmatic monetary management policy and pursuits. In this surrounding, all the banks have been hit, some more others by collateral impact. None is saved from, big five banks getting bruise, not bright horizons. In this complex situation, not supportive in surge, top to bottom lines, reviewed with care and in backdrop of the ground realities influencing general outcome, NBP carries the flag of reasonable success. This refers to overall competitive thrust possessed perfectly by it. In Pakistan, during the fiscal year 2012, 38 banks were functional, of course a large number, keeping in view the size of economy and squeeze on it over the decades, denoting decline due to the country being front line state in perplexing war flare in the neighbouring country of Afghanistan. Unsettled overall conditions made inroads over the economic situation. Banks survival and thrive depend primarily on peace time economics and offer opportunities to utilise
funds effectively, efficiently. Such a supportive situation has not been a reality in our milieu since long time, at least for about two decades at a stretch. The performance parameters of the NBP underline material success, by measures of increase in earning and lacing it with creamy reward to the shareholders. It writes a story of success and figures make a milestone, on being material and realistic measure of success. That is the story of the NBP, about its latest operating outcome, for the year 2012. NBP is one of the five public sector commercial banks and among them it is in the lead position having over 1,285 branches, of the aggregate of the public sector being 1,748 branches network. Within the 38 banks in all, it is second in branch strength. So, it is fairly widespread, strategic as it can be assessed by its latest performance results. This leaves little doubt about h a v i n g pragmatic p o l i c y portrait a n d positive
April, 2013
CORPORATE
4 15
ti a N
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k n a B l
P f o
i k a
compelling factor for the banks, like any other business, to strive for absorbing increasing this year or year stress and have more in kitty for the stake-holders, have and equitable and reasonable claims. As many as 22 private sector banks, five fighting fit; seven foreign banks floating new schemes to attract borrowers for business increase, and four specialised banks have been a challenge, more so for the public sector banks, not usually preferred by micro and macro-economic activities more vividly and expanded too in the private sector to have clientage coordination with this sector. Alternatively, with constraint to concentrate on the public sector projects posed more problems. As major among them have been on sick list for long time and were simply swallowing good money in fresh lending, chasing the bad money. In this tight situation, working by the NBP, being the major source of lending to state enterprises, turnout to be a tough choice in time measure and in it to steer out of trouble is indeed a planned and poised portrait of dealing business as business. Of course, banks business, as its trait feature points out, is business and it seems to have been secured, as a wellgroomed and guarded effort, in line of success achieved. Of course, sailing in stormy surrounded situation and get to safe soil is a task Herculean. The NBP management during the course of the year, with pragmatic imagination, evolved and introduced two new schemes. The one has been to provide loans against collateral of gold and get the same on retirement of debt. This means to have access to funds and at the same time have
own gold well secured, safe. Gold prices have in general been on rising scale and the interest rate has been reduced by 2.50 percent during the review year and about five percent in the past two years, it has become a good gain for borrowers against gold placement. This scheme seems to have given grand relief to the borrowers in need, at the same time NBP to utilise its funds in remarkable social service, while the business was on the backtrack in borrowings from the banks for its operations, being on decline due to hugely adverse economic, social and political conditions, continuously on desperate decline, giving diminishing returns for the business and so the banks. Another interesting, imaginative scheme floated by the bank has been to provide public servants with facility to borrow against their salaries, in time of hardship. The NBP arranged security of its funds with the government by access to repayment as to schedule. This carried triple benefits, one the government relieved to arrange extra funding for temporary extra
lending to its personnel in hardship but have a source to depend for timely support and have honor protected from seeking support from others, difficult to get it in grinding giving situation and the NBP utilising its surplus funds in social service with steady, secured return on it. Both the schemes have proved their worth in economic plus social good, a service to admire and the competitors to have envy of it. The end-result of it has been salutary in effect, for the government, the major stakeholder and the shareholders from the public, in the NBP as investment outlet. The bank has come out with lucrative cash dividend payment, at Rs 7 per Rs 10 per share, which works out hefty 70 percent, really rewarding. It is further laced with 15 percent stock dividend, in other words bonus shares. Its Rs 10 face value share being quoted in five multiple ensuring premium, the aggregate return becomes exceptionally good, more particularly in the fold of the public sector enterprise, in the gory situation starkly dark when key units in this sector were losing money, wasting resources mercilessly. Very attractive dividend by the NBP is not going to impair its financial strength, though the dividend payout forms hefty 97.20 percent of the after-tax earnings. The government being the major stakeholder, its dividend to be retained as part of the recovery of the loans extended, it will provide funds. Likewise, 15 percent stock dividend will also retain cash resources. This means cash payout will be seventy percent of the surplus and sizeable re-input would be in form of repayment of debts taken by the government and its protgs. So, in nutshell, a concluding comment, it is the note of satisfaction that the NBP shall remain in fine float and the managements firm act of liberal dividend payout reflects its confidence, courage, devotion etc to remain on track of fine float, find gratifying schemes with vision and vitality to follow in firm, if not fantastic flavour. Have happy time with the NBP.
What is a spaghetti diagram?

A complex diagram that maps the path of production for a product or service, typically from requirement to deliverable. A spaghetti diagram can also be used to map the steps taken by employees within an organization as they move a product or service toward completion within the company. As a result of the many steps typically involved in the process, the spaghetti diagram gets its name from its finished appearance, often resembling a bowl of spaghetti.
sta n
16
POLITICAL ECONOMY
April, 2013
Reforming elitist economy

Shakil Ahmad
growing number of Pakistanis subscribe to the notion that our politics is best understood through the generalisation that nearly all political power is held by a relatively small and wealthy group sharing similar values and interests. That mostly comes from relatively similar privileged backgrounds. Most of the top leaders in nearly all key sectors of society are recruited from the same social group. Late Dr Mehboobul Haq had blamed 22 families in Pakistan for the concentration of wealth and resources. But now this group has expanded and may now exceed to several hundred families. These families have interlocking marital ties, enormous corporate and financial interests, and old school ties. They interact not only in the corporate board rooms, but also in gymkhanas, golf clubs, beauty and slimming parlours to name a few places of interest within the country. When it gets hot, or life becomes boring, there are foreign trips to be undertaken. There is so much excitement in the new arrivals at Antwerp, Belgium. Friends in the group may insist on a visit to the Casinos off the French Riviera. There are quiet lunches and dinners to facilitate coordination between the top leaders in business, government, civic organisations, educational and cultural establishments and the mass media. This power elite can effectively dictate the main goals, if not always the practical means and details, for all really important government policy making by virtue of their control over the economic resources of the major business and financial organisations in the country. Their power is seen as based most fundamentally on their personal economic resources, and especially on their positions within the echelons of power. This elite does not really depend upon its ability to garner mass support through efforts to represent the interests of the common man. These few thousand movers and shakers, aligned
April, 2013
with the guardians of our frontiers and their proxies, really run the country and determine the basic directions of public policy. They ensure protection of their financial, corporate interests, and the hold over their constituents in the rural areas. They have no qualms about manipulation of the powerless masses to choose those candidates that would effectively further the elitist agenda. It is for this reason that Pakistan has seen little progress in education, health, women empowerment, land reforms and the imposition of tax on agricultural incomes. Indeed, this vicious agenda formulated for self-serving expedient interests has to change. The first dent has been made by the Supreme Court, which has asked for the list of industrial and agricultural loan defaulters this with a view to enforce recovery from the sharks. There is hope that it will continue to take action in all those cases where wealth has been stashed abroad. Reform of Pakistans elitist economy involves the development and implementation of a long-term strategy stretching beyond the five-year tenure that elected governments enjoy. Pakistan needs to reprioritise its fiscal front in order to expand its fiscal space for development. The money should come from those who pay no taxes. Due to the influence of powerful feudals that grace the Assemblies, the federal government has argued that the imposition of any tax on agricultural income is a provincial subject and cannot, therefore, be legislated by the National Assembly. Yet in the case of levy of GST on services, which too is a provincial subject, the federal government did not hesitate to legislate. If RGST is imposed, it will not hurt the class that is not in the habit of paying taxes; but it is the poor classes that will have to pay the tax. Both the magnitude and the composition of federal spending in the last three years have undermined macroeconomic stability and sustainability, and these trends must change. There is no need to build parliamentary lodges in Islamabad, if the government cannot find the resources for rebuilding schools destroyed by the Taliban. Perhaps, the resources for this purpose cannot be found because the children of the elite do not go to such schools.
POLITICAL ECONOMY
4 17
What is a multi-brand strategy?

Marketing of two or more similar and competing products by the same firm under different and unrelated brands. While these brands eat into each others' sales (see cannibalism), multi-brand strategy does have some advantages as a means of (1) obtaining greater shelf space and leaving little for competitors' products, (2) saturating a market by filling all price and quality gaps, (3) catering to brand-switchers users who like to experiment with different brands, and (4) keeping the firm's managers on their toes by generating internal competition.
The compression of development spending to accommodate runaway recurrent costs is neither consistent with fiscal sustainability, nor is an improvement in the external account, built on restrained imports needed for investment and capital development. Diversion of such funds presumably to fight the war on terror undermines the efforts such as Aghaaz-e-Haqoo-e-Balochistan The propagandist approach has not befooled the people of Balochistan, who have looked upon the programme with loathing and contempt, especially as most of the promises remain unimplemented. The diversion of funds from the development budget for non-productive purposes denies the right of education to children. Those who wish to see Pakistan steeped in ignorance and poverty have to be ignored. The state has to take drastic measures to improve the quality of education and facilities for scientific and technical education. NAVTEC has been a disaster from the time it was established by our commando President General (retd) Pervez Musharraf; it should be wound up. If law and order is maintained at all times, which is the primary duty of the state, and soft loans are provided for income generating schemes, economic activities will begin once again throughout the country. The rate of unemployment will decline and social unrest will abate. The writer is a member of the former Civil Service of Pakistan.
18
ECONOMY
April, 2013
The last budget

Dr Ashfaque H Khan
he outgoing government presented its fifth and last budget on June 1, 2012. Since the year 2012-13 was an election year, the intention of the government was totally inconsistent with the presented budgetary numbers. Reckless spending to win elections was the only intention of the government. The finance team was asked simply to put suitable numbers on the revenue side to arrive at a reasonable budget deficit number, which would be acceptable to the IMF. I wrote numerous articles on last years budget explaining that Budget 2012-13 was a non-serious document and prepared in a casual manner with fragile numbers. It was clear that this budget would die its natural death within a few months of being made public. My position was vindicated when finance officials announced the death of the budget. In
During the first eight months of the year (JulyFebruary) the FBR has collected Rs1160 billion as against Rs1110 billion in the corresponding period of last year, thus registering a dismal growth of 4.5 percent. In order to collect Rs2000 billion, the FBR needs to collect Rs840 billion during the remaining four months (March-June) as against Rs771 billion in the same period last year.
so doing, the officials, the minister and the ministry lost their credibility within and outside the country. How non-serious the budget makers were can be seen from the following facts. The Federal Board of Revenue (FBR) was targeted to collect Rs2381 billion in 2012-13 from the actual collection of Rs1881 billion in the previous year a growth of 26.6 percent. On September 25, 2012, I wrote that the FBR is not likely to collect beyond Rs2150 billion in 2012-13. Since then much water has gone under the bridge and the working environment has deteriorated significantly in the FBR. My current projection suggests that the FBR will face an uphill task even to collect Rs200 billion. During the first eight months of the year (July-February) the FBR has collected Rs1160 billion as against Rs1110 billion in the corresponding period of last year, thus registering a dismal growth of 4.5 percent. In order to collect Rs2000 billion, the FBR needs to collect Rs840 billion during the remaining four months (March-June) as against Rs771 billion in the same period last year. In other words, FBR tax collection must grow by 9.0 percent during March-June. Can this be possible during the transition to a new government? It is therefore safe to suggest that the revenue shortfall from the original target is likely to be Rs400 billion. On the non-tax revenue side, the government expected to receive Rs79 billion through the sale of 3G licenses. Since this is not going to materialise, the total revenue shortfall is likely to reach Rs479 billion. On the expenditure side, the major slippage is likely to originate from the power sector subsidy. The government had targeted the
April, 2013
power sector subsidy to Wapda/Pepco and KESC to the extent of Rs185 million in budget 2012-13. Within eight months of the fiscal year the government has already doled out Rs235 billion, and there are indications that this may reach close to Rs400 billion by the end of the year, amounting to an overspending of at least Rs215 billion. On external inflows to finance fiscal deficit, the budget makers put Rs46.5 billion under the heading of Eurobond and Rs74.4 billion under the receipts from Etisalat. Inflows from these two sources have found their places in every budget over the last five years without any success. The budget designers knew very well that these flows would not be realised even this year and yet added these to the budget as a routine matter. Therefore, external flows worth Rs121 billion are not likely to be available to finance fiscal deficit. With total slippages under the above listed items amounting Rs815 billion or 3.5 percent of GDP, the current year fiscal deficit is expected to be 8.5 percent of GDP or Rs2002 billion. In all these calculations, I have not added the impact of the financial tsunami that deluged Pakistan in late February and lasted till March 16. The bailout package of PIA; subsidies for tube wells, sugar exports and fertilizer; raise in the salary of government servants; the advance payment to oil companies are just the tips on the iceberg. It will take several months to dig out such expenditures and their budgetary impact. I have also not counted the fiscal profligacy of the provinces in the election year (2012-13). I have always stated that this years budget deficit may attain a new height in the range of 9.5-10.0 percent of GDP with all its macroeconomic consequences for the economy. Financing of deficit in the range of Rs.2.2-2.3 trillion would be challenging for the caretaker government. Serious damage to the economy has already been done. Deficit of this magnitude will further compound the difficulties for the caretaker as well as the newly elected government. Interestingly, some of the remnants of the outgoing economic team have started positioning themselves to become acceptable to the new regime by criticising the outgoing government and its policies. Little do they know how much they are hated because of their incompetence by millions of poor of this country. The caretaker regime with 45 days in its
ECONOMY
19
account will face multiple challenges on the economic front. They need to take stock of the damage caused by financial hara-kiri and financial tsunami and make every effort to minimise the damage and prepare a structure of the next budget. The budget strategy paper presented to the outgoing cabinet has been prepared by those who have lost their credibility. Therefore, the caretaker government needs to prepare the structure of the budget by taking on board the representatives of the key political parties. Whosoever forms the new government will take little time to finalise the budget 2013-14 which can be presented during the second or even third week of June. Addressing the issue of debt repayment crisis would be the most critical challenge for the caretaker regime. With foreign exchange reserves dwindling and over a billion dollar payment due to the IMF alone, it will really be a challenging time for the caretaker government. May God give us the strength to absorb the impact of the last budget. The writer is principal and dean at NUST Business School (NBS), Islamabad. Email: ahkhan@nbs.edu.pk
The budget strategy paper presented to the outgoing cabinet has been prepared by those who have lost their credibility. Therefore, the caretaker government needs to prepare the structure of the budget by taking on board the representatives of the key political parties. Whosoever forms the new government will take little time to finalise the budget 2013-14 which can be presented during the second or even third week of June.
What is Real GDP?

An economic assessment that involves quantifying the inflation adjusted market value of goods and services produced by an economic system during a given time. A business might use the real gross domestic product (real GDP) of a nation to indicate the standard of living within that country that can help them determine whether or not their products will be successful.
20
POLITICS
April, 2013
The PRODIGAL SON returns!

P
utting an end to a guessing game about his tiff with his father, Asif Ali Zardari, Pakistan Peoples Party Chairperson Bilawal Bhutto Zardari said that he would lead the election campaign of his party. The PPP was supposed to stage a big public rally in Garhi Khuda Bakhsh, the ancestral village of the Bhutto family, on the anniversary of the hanging of its founder Zulfikar Ali Bhutto on April 4, 1979. The rally was, however, called off for security reasons. We are not organising a big national-level rally this time. Meetings are being held at district level separately, Naudero House spokesperson Ghulam Mustafa Leghari said. Speaking to members of PPPs provincial and federal parliamentary boards via video link from Bilawal House in Karachi, the scion of the Bhutto family directed them to finalise the allotment of party tickets without any delay. It is high time party workers and leadership stood up and started preparations for the upcoming election. We want a massive campaign across the country, Bilawal Bhutto. Senior PPP leaders dispelled the rumours that their party would not stage public rallies as part of its election campaign due to security threats. At least 20 massive public rallies will be held in different cities and towns, which will be addressed by Bilawal Bhutto, Qamar Zaman Kaira said. Bilawal would also address corner meetings of the party during the election campaign. Balawal has formed seven committees
to monitor the election campaign, with a central committee to be supervised by Makhdoom Amin Fahim. Punjab has been divided into three parts: former premier Raja Pervaiz Asharf is responsible for upper Punjab, former chief minister Mian Manzoor Wattoo for central Punjab and former premier Yousaf Raza Gilani for south Punjab. Sindhs former chief minister Qaim Ali Shah will lead PPPs election campaign in Sindh, Anwar Saifullah in KhyberPakhtunkhwa and Sadiq Umrani and Sardar Fateh Muhammad Hasni in Balochistan. Party Chairperson Bilawal directed Kaira to activate the partys media cells and start mobilising the media about the PPP election campaign. Bilawal Bhutto has said election cells be established at provincial and district levels, said a PPP leader, who attended the meeting. Meanwhile, a large number of PPP workers belonging to its minority wing protested outside Bilawal House against alleged discrimination in the award of party tickets. They claimed that the party was awarding tickets only to well-off Hindus and neglecting its jiyalas from the Christian and scheduled caste communities.
It is high time party workers and leadership stood up and started preparations for the upcoming election. We want a massive campaign across the country, Bilawal Bhutto.
April, 2013
POLITICS
assassinated. He also returned to Pakistan in September 2008 to witness his father sworn in as President of Pakistan. Bilawal completed his studies in June 2010. Chairman of Pakistan Peoples Party After the assassination of Benazir Bhutto, Benazir's political will declared Asif Ali Zardari as Benazir's successor for party leadership. However, Bilawal became Chairman of the Pakistan Peoples Party because Zardari
4 21
PROFILE
BILAWAL BHUTTO ZARDARI

Bilawal Bhutto Zardari, born 21 September 1988, is the Chairman of the Pakistan Peoples Party. He is the only son of President Asif Ali Zardari and former Prime Minister Benazir Bhutto. Early life and education Bilawal was born on 21 September 1988. He is the son of Asif Ali Zardari and Benazir Bhutto. He was three months old when his mother first became Prime Minister. Bilawal was admitted to Aitchison College, Lahore, but due to some security problems he could not continue. Instead he went to Karachi Grammar School during his mothers second term in office as Prime Minister. He also attended Froebel's International School in Islamabad.He left Pakistan with his mother in April 1999. His father was in jail in Pakistan from 1996 to 2004 for corruption. He spent his childhood in Dubai and London during his family's self-exile. He later attended Rashid School for Boys in Dubai, where he was Vice President of the student council. He has a black belt in Taekwondo but regrets he could not play cricket because of his family circumstances. Oxford University Bilawal matriculated at Christ Church, a constituent college of the University of Oxford, in mid-2007, to study modern history, studying British history before transitioning to general history. Benazir also enrolled him in the Oxford Union debating society.In December 2007, he returned to Pakistan after Benazir was
PPP on 30 December 2007. Asif Zardari also announced Bilawal's name change from "Bilawal Zardari" to "Bilawal Bhutto Zardari". At that time he was still studying at Oxford. It had been estimated that Bilawal's security at Oxford may cost at least one million pounds each year. In 2011, Bilawal returned to Pakistan and became more prominent in politics, notably when his father went for medical care to Dubai in December 2011. In May 2012, Bilawal Bhutto Zardari stated that Pakistan asked the Interpol to issue a "red warrant" against former military ruler Pervez Musharraf in relation to his mothers assassination case. He started his political career and made his first major public speech on 27 December 2012, the fifth anniversary of his mothers death. Tumandar of Zardari Baloch tribe In 2011, it was announced that Bilawal would be the next Tumandar (Chief) of the Zardari tribe of Baloch as his father Asif Ali Zardari passed on the title to Bilawal rather than becoming the Tribal Chief himself after the death of his father Hakim Ali Zardari. Personal life Bilawal has two younger sisters, Bakhtawar and Asifa. His name means "one without equal". His first language is English, but he can also speak Arabic and Urdu.
favoured Bilawal to represent Bhutto's legacy in part to avoid division within the party due to Zardari's own unpopularity. Zardari planned to act as co-chairman of the PPP for at least three years until Bilawal completed his studies overseas. Bilawal was appointed chairman of the
A large number of PPP workers belonging to its minority wing protested outside Bilawal House against alleged discrimination in the award of party tickets
22
CORPORATE
April, 2013
Engro, PSO
EA Report
to work jointly on
n an effort to diversify its business line, Pakistan State Oil has signed a memorandum of understanding (MoU) with Engro Powergen Limited for reviewing the technical and economic feasibility of Thar coal. Not only that, PSO has announced that it is also exploring scores of investment opportunities in the energy sector with special emphasis on Thar coal and intends to acquire 50% of Engro Powergens shares in Sindh Engro Coal Mining Company as part of the plan. This is a momentous occasion as both companies have joined hands for a project of
Thar coal
national interest and one which will provide energy security for the next generation, Engro Corporation President and Chief Executive Ali Ansari said after the signing of the MoU. Through this MoU, the two companies have established synergies to develop a selfreliant energy supply chain for the country. Indigenous fuel is our future and with the support and backing of the Sindh Government we are taking steps to meet Pakistans energy needs in the years to come, PSO Chief Executive and Managing Director Naeem Yahya Mir said. Speaking on the occasion, Sindh Board of Investment and Sindh Engro Coal Mining Company (SECMC) Chairman Zubair Motiwala said the Government of Sindh had been working to meet rising energy needs of the people and the decision to purchase 51% shareholding in SECMC was a clear indication of the governments support for the Thar coal project. PSO Chief Executive and MD Naeem Yahya Mir and Engro Corp President and Chief Executive Ali Ansari signed the MoU. Through this project, not only would the energy chain be strengthened, it would also generate extensive economic activity nationwide while developing the human capital through state-of-the-art coal mining and coal-based power generation projects, said PSO spokesperson. PSO and Engro have joined hands keeping in view the fact that coal is cheaper and easily available in comparison to other fuel sources and it has become the fuel of choice for developed nations across the world. Both the sides are of the view that coal is the best possible indigenous fossil fuel resource and has the potential to tackle the severe power shortage and bring energy security to the country. Additionally, by playing a lead role in developing this national resource, both companies will be able to strengthen their financial bottom line and expand further through downstream commercial projects based on Thar coal.
The two companies have established synergies to develop a self-reliant energy supply chain for the country. Indigenous fuel is our future and we are taking steps to meet Pakistans energy needs in the years to come, PSO Chief Executive and Managing Director Naeem Yahya Mir
April, 2013
INTERNATIONAL TENDERS
TENDER NOTICE
4 23
TENDER NOTICE
Spare parts for compressor
Onshore
Issuer: Kuwait National Petroleum Company
Service & maintenance for diesel generator & pump sets at Qatalum
Onshore
Issuer: Qatalum Tender no: 10042876 Title: Service & maintenance for diesel l generator & pump sets at Qatalum Description: The scope of this tender is about
service & maintenance for diesel l generator & pump sets at Qatalum
Tender no: 992722 Title: Spare parts for compressor Description: The scope of this tender about spare parts for compressor Bond: N/A Tender fee: N/A Closes: Apr 10, 2013 Contact: Tel- (00965) 2 3887792, 2 3887794 Fax-(00965) 2 3887220 Tender Category: Onshore Tender Type: Other Industry: Compressor Services Enquire by email: cwphelp@knpc.com
Bond: Applicable Tender fee: 2500.00 QAR Closes: Apr 18, 2013 Contact: (00974) 4 4031807 Tender Category: Onshore Tender Type: Other Industry: Generators Sales & Service Enquire by email: tenders@qatalum.com
TENDER NOTICE
MAA - SD - bushng galv SCRD HEX 3/4x1 IN
Onshore
Issuer: Kuwait National Petroleum Company
TENDER NOTICE
MAA - DC - electrical items
Onshore
Issuer: Kuwait National Petroleum Company Tender no: 992645 Tender no: 992647 Title: MAA - SD - bushng galv SCRD HEX 3/4x1 IN Title: MAA - DC - electrical items Description: The scope of this tender is about MAA - SD - bushng galv SCRD HEX 3/4x1 IN Bond: N/A Tender fee: N/A Closes: Apr 8, 2013 Contact: Tel-(00965) 23887792, 23887794 Fax-(00965) 23997792, 23997794, 23887220. For vendors and contractors Fax-( 00965) 23986170 Tender Category: Onshore Tender Category: Onshore Tender Type: Other Industry: Electrical/Mechanical Equipment & Supplies Industry: Pipe & Pipe Fitting Suppliers Enquire by email: cwphelp@knpc.com Enquire by email: cwphelp@knpc.com
Description: The scope of this tender is about MAA - DC - electrical items Bond: N/A Tender fee: N/A Closes: Apr 8, 2013 Contact: Tel-(00965) 23887792, 23887794 Fax-(00965) 23997792, 23997794 , 23887220 For vendors and contractors Fax-(00965)23986170
24
NEWS IN BRIEF
April, 2013
News in Brief
Manufacturing grows 2.73pc Warid International initiates buy-back
arge-scale manufacturing posted a growth of 2.73 per cent in the first seven months (July-January) of 2012-13 from a year ago. The growth in LSM was mainly driven by increase in production of food products, iron and steel products, petroleum products, paper and board, non-metallic mineral products, chemicals, textiles pharmaceuticals and rubber products, according to the data compiled by the Pakistan Bureau of Statistics. Last year, the LSM sector, which accounts for 70 per cent of industrial production, recorded a negative growth because of energy crisis, ever-rising input cost and lack of demand in domestic and international market. The major contribution towards positive growth in LSM performance in the first seven months this year came from food, beverages and tobacco 4.11pc, iron and steel products 14.03pc, petroleum products 11.26pc, paper and board 32.62pc, chemicals 0.61pc, rubber products 25.13pc, pharmaceuticals 7.61pc, non-metallic mineral products 4.79pc and textile 0.50pc. Still some sectors, like fertilizers, witnessed a negative growth of 7.15pc, electronics 13.46pc, leather products 4.28pc, wood products 20.62pc, engineering products 12.21pc and automobiles 9.94pc during the months under review over last year. Relying on growth in the past few months, the government expected that the economy would grow by about 4pc as against 3.7pc growth last year.
ateen Telecoms Board of Directors and Management were informed through an official communique that the companys largest majority shareholder, Warid Telecom International LLC, UAE (WTI), is intending to acquire all of the issued ordinary shares held by the other shareholders of the Company at a proposed purchase price of Rs4.5 per ordinary share, and consequent de-listing from the Karachi, Lahore, and Islamabad stock exchanges. WTI currently holds 54% of the total issued ordinary share capital of the Company. WTIs buy-back of the shares reflects its strong commitment to Wateen and its local operations, and enables a restructuring, said Mr David Burlison, a representative of WTI, in his communique to the Board of Wateen Telecom. He added that WTI believes that the de-listing provides the shareholders with an exit from the business at a return of value which is in excess of that which they would receive on an orderly disposal of the business, he added. The Company has conveyed its intention to the stock exchanges in Karachi, Lahore and Islamabad, as well the Security and Exchange Commission of Pakistan in accordance with the Voluntary De-Listing provisions under Regulation 30-A(i), and the Code of Corporate Governance set out in their respective Listing Regulations.
Bumper wheat crop expected
Govt to raise Rs1.325trn in T-bills auction

he State Bank of Pakistan (SBP) will auction Rs1.325 trillion worth of different periods of market treasury bills (MTBs) from April to June, the central bank reported on Friday. The government is set to raise Rs75 billion through the sale of three-, five-, 10-and 20-year Pakistan Investment Bonds. According to the auction target calendar for the sale of treasury bills and Pakistan Investment Bonds issued by the central bank, the government plans to borrow Rs1.325 trillion from the banking system in April-June through three-, six, and 12-month market treasury bills. The three auctions of the PIBs will be held on April 24, May 22 and June 19, it added.
ue to favourable climate conditions, sufficient availability of agricultural inputs and best management practices, bumper wheat crop production of 25 million tons is expected during the current year. Different crop measuring indicators have shown significant improvement that indicates healthier prospects for the year. Chief Agriculture Policy Institute, Abdul Rauf Chaudhry said that as compared to the last year, the balanced use of fertilizers would help grain formation to improve the per acre yield output. Another indication of achieving bumper wheat crop is the improvement in N:P Ratio which is used for balanced use of fertilizers like potash and phosphors or nitrogen as compared to the last year, he added. Abdul Rauf said that balance use of these two major inputs against the last year would help boost the grain formation and crop output in the country.
April, 2013
NEWS IN BRIEF
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FBR revises rates for sale of duty-free imported vehicles

he Federal Board of Revenue has revised the duty structure on imported vehicles, officials told Economic Affairs. Under the revised duty structure, maximum 75 percent depreciation has been allowed on the value for the purpose of duty and taxes on vehicles sold after 10 years of import. The government allowed duty-free import of vehicles to privileged persons, organisations, offices, agency and the dignitaries of the UAE and Qatar in 2006 through a notification issued on June 5, 2006. The government imposed restriction in case such vehicles are sold within one year of import and the prevailing rate of duty and taxes would be applied. However, concession of 55 percent on the value of the vehicle for levy of duty and taxes was allowed if sold or disposed of after the expiry of one year of import. The FBR amended the notification and issued a statutory regulatory order (SRO) dated March 22, saying that no such motor vehicle would be sold, transferred or otherwise disposed of in Pakistan without prior permission of the Customs Wing of the revenue body and without the payment of duties and taxes livable at the time of import. The board (FBR), however, may allow such sale, transfer or other disposal without the payment of leviable duty and taxes to another person who is also entitled to import the same without the payment of duty and taxes, the notification reads.
Early Kharif: Irsa projects six percent water shortage

he Indus River System Authority projected a six per cent water shortage in early Kharif season and advised provinces to delay cultivation by two weeks till ice starts melting. However, there will be no water shortage in middle and late Kharif season as the country will have 10 MAF more water than the previous year. Irsa observed that 110 Million Acre Feet (MAF) water would be available for Kharif season, of which 23 MAF water would be lost. IRSA noted that in Jehlum and Chenab zones, the loss will be 10 per cent in the early Kharif season and 15 per cent in late kharif season. In the Indus zone, the water loss would be as much as 40 per cent. It said that 67.25 MAF water would be available in canals for provinces. The body observed that the country would face 6 per cent water shortage in the early Kharif season. It was decided that provinces would be given water according to their needs as the country would have more water than the previous season. "However, if the country faces water shortages, provinces would be taken on board to share it," the Irsa said. The country would have a carryover stock 11.5 MAF of water.
New wheat, sugarcane varieties approved

he Sindh Seed Council has approved new high yield varieties of wheat, canola and sugarcane. These include a wheat variety with the yield up to 87 maunds per acre against the existing yield of 70-75 maunds. The new variety, named Benazir, has been evolved by the Wheat Research Institute, Sakrand. Its salient features include short duration and higher yield which would substantially increase wheat output in the province. A spokesman of the Agriculture Department said that the new varieties were approved after several years of trials at research farms and growers fields to tally the yield results. Theses were also tested on soils in Punjab and Khyber Pukhtunkhwa by the national research bodies to verify the yields claimed by the concerned research organisation. The new wheat variety will be cultivated in Sindh and other places from the next Kharif season once seeds were made available. Other varieties approved by the Council are Surhan 2012 for canola and a new sugarcane variety Larkana -2004 with a high yield of 1600-2000 maunds per acre.
Sindh runs out of onions, import starts from India

indh onion consumption has exceeded its production, as the province has started to depend on imports of the commodity from India. The wholesale rate of onion has surged by Rs200 while its retail price has soared to a whopping Rs55 per kilogram. Haji Shah Jehan, President Sabzi Mandi Saddar Karachi said that the Sindh province after consuming its stocks of onion is now meeting its needs from imports being transported from the neighboring country India through Wahga border and Karachi port. Since onion is being imported at a high rate from India, the commodity is not
witnessing any decline in its retail price in the local markets. Haji Shah Jehan further said that a fresh produce of onion will begin to arrive in Sindh from Balochistan after April 15 which will help ease its price.
My Karachi to be held in July
three-day annual international trade exhibition My Karachi: oasis of harmony will open at the Karachi Expo Centre on July 5. The Karachi Chambers of Commerce and Industry has been hosting the event for the last 10 years. The prime objective of the exhibition is to restore the image of the city and attract foreign businessmen. Karachi, once known as the city of lights and a hub of national activities is marred by
deteriorating law and order situation, Chairman, Businessmen Group (BMG) and former president of the KCCI Siraj Kassam Teli and President KCCI Muhammad Haroon Agar said this on Tuesday during a briefing to media. Besides local exhibitors, many foreign companies have shown their interest in the exhibition. The KCCI, he said, has booked five halls at the Expo Centre and may book one more later.
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NEWS IN BRIEF
April, 2013
Investors offer over Rs4billion to bank Alfalahs TFCs
Unilevers delisting opposed

he Arisaig Asia Consumer Fund, another minority shareholder of Unilever Pakistan, has written a letter to the Managing Director Karachi Stock Exchange, requesting that the delisting of the company should not be allowed. The New York-based hedge fund Acacia Partners, a minority shareholder in Unilever Pakistan, has already apprised the Islamabad Stock Exchange and the Securities and Exchange Commission of Pakistan of its objection to the delisting. Arisaig Fund is $3 billion in size, and has invested $l60 million in Pakistans equity market and owns, in addition to Unilever Pakistan, a five percent stake in Colgate Pakistan and a 2.25 percent stake in Nestle Pakistan. This makes the fund one of the largest foreign investors in the countrys equity capital market. The fund owns 778,890 shares, or 5.86 percent, of Unilever Pakistan. It has been maintaining an investment record in the company since March 3, 2004. The request from a foreign investor comes on the heels of Karachi Stock Exchange having rejected the buyback price of Rs9,700 proposed by the company and put it at Rs15,000. Experts believe that price determination should be a concern between the stakeholders, giving importance to minority shareholders under the international norms. Furthermore, Acacia has been investing in Unilever Pakistan for the last seven years with around 4.1 percent of the Unilevers outstanding shares. Acacia has been maintaining a long-term shareholding in many Pakistani companies over the past two decades, including Colgate Pakistan, Jahangir Siddiqui and Co., EFU Life, Adamjee Insurance, New Jubilee Life, IGI Insurance, Glaxo Welcome Pakistan, Siemens Engineering Pakistan, Lakson Tobacco and Pakistan Tobacco. The current investments of Acacia in Pakistan amount approximately $75 million.
he Bank Alfalah Limited (BAL) claimed to have become the countrys 6th largest bank, celebrating the formal listing and quotation of its rated, listed, unsecured and subordinated TFCs on the Karachi bourse. We are proud of this debt market instrument which was oversubscribed by the investors on stocks market which shows that the investors still have great confidence in the Bank Alfalah, CEO BAL Bajwa told reporters at a gong ceremony organised by the KSE at the Exchange to mark formal listing of the newly-launched debt security on the equity market. The listing followed the KSEs nod which was accorded after the completion of all relevant listing requirements. Salim Raza said the debt instrument would augur well for the countrys bond market which was a friction less than 5 percent, of the market. To a question, Raza urged the current caretaker government in Islamabad to take what he called it pre-IMF measures. We all hope that stabilization measures would come up ahead, he remarked. Estimating the annual worker remittances at $ 20 billion being received by their remitters families through formal and informal channels, Arif said capital market was an attractive investment place for the overseas Pakistanis who must be earning $ 40-50 billion an year.
Tunisia expects IMF deal in May

unisia expects to sign a $1.7 billion loan deal with the International Monetary Fund next month after a delay due to the crisis that followed the killing of an opposition politician in February, the finance minister Elyess Fakhfakh said. The precautionary loan agreement would be reached "by May", he added. Last week, the IMF said it would send a team to Tunis between April 8 and 15 to discuss the loan. Tunisia plunged into crisis on Feb. 6 as the assassination of secular politician Chokri Belaid ignited the biggest street protests since the overthrow of strongman Zine al-Abidine Ben Ali two years ago. But a new government has now been formed and protests have died down. Fakhfakh also told newsmen that Tunisia planned to issue its first sovereign sukuk, or Islamic bond, in July to raise $700 million. Tunisia's government, led by moderate Islamists, is keen to develop Islamic finance, which was neglected for ideological reasons by Ben Ali's government.
Pakistan repays $143.8m to IMF
First meeting of Pakistan Russia Business Council held

he first meeting of Pakistan Russia Business Council was held at Federation House under the Chairmanship of Farooq Afzal Chairman, Pak-Russia Business Council. President Federation of Pakistan Chambers of Commerce and Industry Haji Fazal Kadir Khan Sherani, speaking on the occasion stated that PRBC should play its due role in this regard and facilitate its members to penetrate the Russian market which has huge potential for Pakistani products. He also suggested holding joint business council meetings between the two national chambers. Russian Consul General Andrey V Demidov in his address assured his cooperation and assistance in the activities of Pak-Russia Business Council. He said that there is great scope of activities in every field between the two countries. He pointed out that the volume of trade between the two countries is not a true reflection of the long friendship of fifty years between the two countries.
akistan paid the 11th installment of the loan worth $143.75 million to the International Monetary Fund (IMF) under the stand by arrangement programme, announced the central bank. This is equal to 95.83 million special drawing rights (SDR). The country will pay another installment of SDR71 million on April 1 and SDR95.83 million and SDR258.4 million in May this year. Economists said Pakistans foreign exchange reserves will drain further over the next few months on account of debt repayments to IMF and other foreign lending institutions. Pakistan is due to pay around $1.2 billion to the IMF and other donor agencies by the end of June this year. This will put severe pressure on the reserves and Pak rupee, they believe. As a result of such payments, the reserves are expected to decline to $6.8 billion, which are sufficient for around two months of import cover, said Sayem Ali, an economist at Standard Chartered Bank. However, the government is expecting materialisation of financial inflows under the head of coalition support fund (CSF) before June 2013, which would provide some relief to the foreign exchange reserves, he added. The central bank reported that foreign exchange reserves reduced to $12.3 billion as on March 22, while the official reserves of the State Bank of Pakistan fell to $7.2 billion.
April, 2013
NEWS REPORT
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FIA sits on billions rupee scam

Faiz Paracha
he Federal Investigation Agency (FIA) does not seem interested in taking action on a mega scam involving procurement of substandard transformers to Pakistan Electric Power Company (PEPCO) despite the latters recommendations to proceed against the supplier firms. The scam came to the limelight when the PEPCO authorities conducted a departmental inquiry after the Chinese Foreign Affairs Ministry, through an official communication with the Pakistan Foreign Office, drew the governments attention towards the substandard material used in the manufacturing of transformers. It was, later, established in the inquiry conducted by the Pepco that the transformers supplied by some local firms were manufactured using substandard material which caused line losses to Wapda worth billions of rupees. If they are allowed to manufacture transformers as per Pakistani standards, it will help Wapda save trillions of yuans in terms of line losses alone, said the Chinese firm in its communication with the Pakistan government. As per PEPCO sources, the case was sent to the FIA six months ago for further action against the companies concerned. Initially, the matter was referred to the NAB, but the bureau took no interest in it, they further said. An FIA senior officer, seeking anonymity, said using substandard transformers meant increasing the line losses of Wapda up to billions of rupees. FIA investigations, on the other hand, revealed that the PEPCO Lahore office purchased 100,000kg silicon from a scarp store (Data Hajveri) of Misri Shah. But when the FIA tried to probe the matter, there was no record of this procure-
ment with the Wapda office, which reflected a mala fide intention of its officials, they alleged. When contacted, FIA spokesperson Haroon Meer said an inquiry was underway and would be completed in due course of time. Distribution and transformer manufacturing company of China, in its complaint to the Ministry of Water and Power, Islamabad, also alleged that their transformers were rejected by PEPCO under the influence of local manufacturers who misguided the purchasers (PEPCO) about the Chinese manufacturers. It also alleged that local manufactures were using scrap and recycled material (oil and silicon steel) for the manufacturing of transformers and the testing facilities were not up to the mark. As per details, the matter was referred to the Pepco MD on whose direction the GM (M&S) constituted an inquiry committee comprising Director Design (NTDC) Rehman Maqbol, additional manager, D&S NTDC, Sajid Munir Sulehri, and Maj. (retd) Tahir Mehmood, deputy director investigation.
The committee concluded that after sorting out the record of purchase and consumption of silicon steel, the material used in the manufacturing of transformers was of poor quality. These firms included M/s AB Ampere, M/s Hammad Engg. (Pvt) Ltd and M/s Pan Power International (Pvt) Ltd. The M/s A.B. Ampere and M/s Pan Power did not respond to the silicon core pointed out by the committee while M/s Hammad Engg approached the civil court of law challenging the constitution of the enquiry committee. The record of the following firms was observed to be in order: M/s ACE Indigo Industries (Pvt) Ltd, M/s Elmetec (Pvt) Ltd, M/s J.F Industries, M/s Pak Elektron Limited (PEL), M/s Siemens Pakistan, M/s Transpower Industries (Pvt) Ltd, M/s Powertech and M/s Translab. The inquiry committee of the Pepco recommended that since A.B. Ampere (Pvt) Limited, Lahore, M/s Pan Power International (Pvt) Limited, Lahore, and M/s Hammad Engg. Co (Pvt) Limited, Lahore, did not respond to the shortage of silicon steel core, the allegations pointed out by the inquire committee seemed true. The inquiry officers observed that the conclusions made in the report were based on the documents provided by the manufacturers of transformers and verified by the supporting documents and the circumstantial evidence. The enquiry committee was of the opinion that action could be taken against M/s A.B. Ampere (Pvt) Limited Lahore, M/s Pan Power International (Pvt) Limited, Lahore and M/s Engg. Co (Pvt) Limited, Lahore, by the competent authority.
Distribution and transformer manufacturing company of China, in its complaint to the Ministry of Water and Power, Islamabad, also alleged that their transformers were rejected by PEPCO under the influence of local manufacturers who misguided the purchasers (PEPCO) about the Chinese manufacturers.
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ECONOMY
April, 2013
Paving way towards Energy Sufficiency

Virginia Morgan
akistans development vision for an expanded economy, increased industrialization, and elevated standards of living will demand enormous amounts of energy; similarly, sustainable development will require major efforts for long-term energy security. Due to a growing economy, Pakistans energy needs have more than doubled in the past 15 years. The countrys industrial growth and rising per capita income has put relentless pressure on its energy resources. Despite having abundant renewable resources such as water, sun and wind, the sharp increase in demand has led to a countrywide energy crisis which threatens the economic growth. Today, Pakistan relies heavily on thermal power to fill the gap between demand and supply. The widening gap between energy demand and supply has led to power outages and disruption in the countrys economy and development. These challenges require a
multi-prong approach that would address both the immediate energy shortages and help the country build longer-term energy sufficiency. At the request of the Government of Pakistan, the U.S. Government, through USAID, provides support to Pakistan in adding power generating capacity, decreasing losses in the delivery of electric power to customers, and increasing cost recovery from them. These efforts are implemented through investment in energy infrastructure, technical assistance to support institutional reforms, and promotion of new technology. The first part of the assistance focuses on the increase of capacity of Pakistans power plants to produce more electricity. To support this goal, USAID is offering millions of dollars worth of funding to build, upgrade, and maintain power resources. Financing is used to complete construction of the Gomal Zam Dam in South Waziristan and Satpara Dam in Gilgit-Baltistan. USAID-funded programs also work to renovate and modernize equipment at the Tarbela Dam in Khyber Pakhtunkhwa,
At the Tarbela dam, the U.S.-financed rehabilitation of turbines at three generator units has restored 128 megawatts in production capacity. To extend the lifespan of the hydro powerplant at Tarbela, USAID is providing spare parts for routine maintenance and training plant staff in operations and maintenance.
Mangla Dam in Azad Jammu and Kashmir, Guddu and Jamshoro Thermal Power Plants in Sindh, and Muzaffargharh Thermal Power Plant in Punjab. Additionally, local specialists receive training to ensure future maintenance and upkeep of these power facilities, to retain maximum production capacity for the future years.
April, 2013
The Satpara Dam that the United States is helping to complete is already producing 6 megawatts of power. Once fully operational, the dam will generate 17.6 megawatts, mitigate flooding, store water for irrigation, and provide 3.1 million gallons of water per day for homes throughout the Skardu Valley. At the Tarbela dam, the U.S.-financed rehabilitation of turbines at three generator units has restored 128 megawatts in production capacity. To extend the lifespan of the hydro powerplant at Tarbela, USAID is providing spare parts for routine maintenance and training plant staff in operations and maintenance. With U.S. funding, Pakistan has also restored 150 megawatts in production capacity at Jamshoro and 480 megawatts at Muzaffargarh as of February 2013. The United States and Pakistan are also cooperating on completion of Gomal Zam Dam in South Waziristan and renovation of Guddu Thermal Power Plant in Sindh. Gomal Zam will add 17.4 megawatts in power production, while Guddu 75 megawatts. The second part of the USAID energy sector program focuses on reducing the losses that occur after the power leaves the power plant and before it reaches end-users. Currently, these losses are estimated at 10 percent of all power produced. To implement this part of the energy assistance program, the United States working with Pakistan's Ministry of Water and Power and all nine government-owned electric power distribution companies (DISCOs). Assistance efforts seek to strengthen and modernize the governance and management systems a t D I S C O s , i n c re a s e re v e n u e c o l l e c t i o n s , upgrade equipment and maintenance of distribution network, and improve customer services. USAID is also helping to introduce various modern technologies that help DISCOs maximize the amount of power delivered to consumers. For example, to eliminate power fluctuations and reduce losses in the power distribution system, USAID helped DISCOs install 1,700 capacitors and introduce other upgrades. Training of 9,000 linemen is enhancing maintenance of the lines, while electronic meters and automated meter reading equipment are improving the billing systems. Computerized planning operations are optimizing the scheduling of power supply. Realizing that a large amount of power is lost due to highly inefficient technologies, USAID also helped farmers replace 2,500
ECONOMY
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What is the EEOC?

Equal Employment Opportunity Commission. Federal enforcement agency enacted to ensure that employers follow and abide by rules set forth in the Civil Rights Act of 1964. Under the act employers must not deny employment or promotions based on someone's race, religion, sex, or national origin. The EEOC handles all claims of discrimination within the workforce and will investigate and prosecute all violators. The agency is also in charge of implementing anti-discrimination laws to protect employees from unlawful actions. Some companies and states have similar agencies to handle requests at the local level.
outdated agricultural water pumps with modern models that use much less energy to extract the same amount of water for farms. While USAID-sponsored initiative has ended, the U.S. government hopes that producers of tubewell pumps as well as farmers will continue this successful model which not only reduces the use of electricity used for agricultural purposes, but also decreases production costs for the farmers. Last year, this effort was extended to the public sector, where USAID is funding replacement of 410 government-owned pumps in Islamabad, Karachi, and Peshawar. Replacement of pumps in Islamabad is nearly complete, while work in Karachi and Peshawar is still under way. Policy support works to help eliminate energy crises in the country and optimize the use of available resources to fuel the economy and make the country more self-sufficient. The ultimate goal is for Pakistan to eliminate the need for subsidies and mitigate pressures contributing to the country's current energy crisis, including the so-called circular debt. Between October 2009 and February 2012, USAID-funded energy sector projects have already added or saved 800 megawatts of power to the national grid. This amount is sufficient to supply 1.8 million homes continuously. By 2014, USAID programs are expected to add another 400 megawatts to the national power grid, for a total amount of 1,200 megawatts enough energy to power three million homes. These projects will also help Pakistan irrigate more farmland, create reservoirs for drinking water, and enhance energy efficiency. Most importantly, these efforts will help Pakistan increase economic activity for the more prosperous future of the people in this country.
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INTERVIEW
April, 2013
PML (N) to show zero tolerance against corruption, Sadiq Farooq
President Zardari believes in, what is fair is foul and foul is fair. The PPP government was corruption incarnate. Imran Khan is unmanageable; he may sit on opposition benches. Nawaz Sharif always plays with a straight bat.
Faisal Malik
We have reached a point where elections have transpired into a reality and the country may make progress towards a better democratic system subsequently, says Siddiqul-Farooq of PML (N) said in an exclusive interview with Monthly Economic Affairs. He insists that the commendation for constancy of this five years democracy doesnt go to PPP alone but also to the PML-N leadership as they served democracy regardless of criticism. The PPP government has pulled off certain milestones such as reinstating original constitution via 18th amendment, taking 20th amendment to the court of caretaker government, Punjab government sacrificed 11 billion rupees for the Sindhi brothers and NFC went through successfully, said Siddiq. Albeit the federal government botched on all fronts; economy, law and order, unemployment and all quarterly reports issued by State Bank of Pakistan plainly signified dwindling GDP rates. At what point PML (N) parted its way from PPP? Bhurban accord was signed between PML-N and PPP for the restoration of judges. When Zardari didnt execute the promises made with Nawaz Sharif and went against the constitution, we withdrew our members from the federal capital. We decided that both parties will elect a neutral person as president of Pakistan but Zardari violated the agreement and got himself as president of Pakistan and we were forced to sign up for the opposition benches. The general declared principle is that the people give mandate to the government for running the state but if somebody is incapable of serving democracy, he should quit. Zardari believes in what is fair is foul and foul is fair and he proved that with his actions by not playing fair, while Nawaz Sharif plays with a straight bat. Does your party also claim to clean sweep the upcoming elections? Definitely, PML-N would win the general elections with a thumping majority and May
I am a political social worker. I joined Pakistan Muslim League in1993. It was a political gathering in our university organized by Muslim Students Federation and Mian Nawaz Sharif, the then prime minister was the chief guest. His enthusiasm and devotion for reformation of Pakistan utterly inspired me and I took no time in joining PML when he encouraged the gathering to play their due part in nation building. Its now 20 years long association with Muslim League and I have never turned my back on my leader. The passion to serve the society is in my blood hood. My grandfather Faqeer Muhammad was a member of Allama MashriqisKhaksar Tehreek that was established in 1931 to free India from the British rule. He was also a member of Anjuman-i-Tahaffuz-i-Masjid Shaheed Ganj (a committee for the protection of the Shaheed Ganj Mosque) and was jailed after the tragic incident of the Shaheed Ganj Mosque, when about 313 Muslims, marching on the Shaheed Ganj Mosque were killed by police on July 20, 1934.
April, 2013
INTERVIEW
31
11 would be the Day of Judgment for looters, thieves and dacoits. We are confident to form majority government in Federation, KP, Punjab and Balochistan. Whereas, the Peoples party has been solely concentrating on to secure its position Sindh so that they may be able to blackmail center. PML (N) candidates as are full of the spirit of national service and they will achieve success during the elections due to the party performance in Punjab. Is there any possibility of making alliance with Imran Khans party? The PML (N) will try to bring all parties together to serves people, but our approach wouldnt be like the notorious politics of reconciliation practiced by President Asif Ali Zardari. Imran Khan is unmanageable, he believes in solo flight. He has already announced that he wont join PML-N, so he may sit on opposition benches. Imran Khan should rather be called Uturn Khan as he thinks after he speaks and then he has to take U-turns. The only good credit he enjoys is the establishment of Shaukat Khanum hospital, but now it has become clear that he established cancer hospital to use it as a launching pad for politics. Does PML (N) get support from religious extremist parties in Punjab? The strength of religious parties is a reality. There is no political party who doesnt keep contacts with religious group. Those who criticize PML-N for having relations with religious parties, themselves won elections with support of religious groups. Mr Qamar Zaman Qaira, Syed Khurshid Shah and Jamshed Dasti of PPPP won with the help of Ahle SunnatWal Jamaat. PML (N) enjoys workable relations with religious parties, who believe in reforms, democracy and supremacy of the Constitution. To corner religious groups wouldnt be the
right approach; instead we shall make efforts to mainstream them. Would your party, if it forms the next government, would go for a dialogue option to deal with terrorism and insurgency? We firmly opposed to religious extremism and terrorism in all its manifestations. The Pakistan Muslim LeagueNawaz, if voted to power, will keep all options from dialogue to military operation open for tackling terrorism and insurgency issues afflicting parts of Balochistan and Sindh provinces. We believe that development is the only answer to extremism. Our party chief has already announced to bring the lawless tribal regions into countrys political mainstream and ensure health, education and other facilities in these areas. However, when a handful of people dont recognize Pakistan niche despite all positive efforts, then use of force is the only option. The critics should remember that during its previous tenure from 1997 to 1999, the PML (N) government took a series of measures to control terrorist group and counter their activities, by first establishing the AntiTerrorism Courts. But at same time, the PMLN is an avid supporter of Indian-occupied Kashmir, and numerous times, we had made it clear that the party will "never compromise this long standing position on Kashmir dispute. What are the main features of your partys election manifesto? This time, we will be strict on certain fronts e.g. corruption. The party has decided to follow zero tolerance policy against corruption; we will go for any desirable legislation and take any step in accordance with the letter and spirit of constitution to eradicate the menses. Overall renovation of economy is our top priority while energy crisis gets second spot. To make economy an impregnable force
of the country, PML (N) is targeting to increase the national exports to 100 billion dollars in next five years. We will build a new Pakistan where peace should prevail and people would enjoy economically healthier life. Special measures would be our priority agenda to bring significant improvement in industrial as well as agriculture sectors so that the country would cope with global challenges and developing economies. For employment generation, a special programme has been designed to generate three million new jobs in public and private sectors including one million each in IT and SMEs sectors. Minimum wages of workers will be gradually enhanced to Rs 15,000 per month.The PML-N would strive to eventually provide a house to each Pakistani family through public-private partnership. The education budget would be enhanced to 4 per cent of GDP by 2018. Besides repairing the economy, our party chief realize that a strong defence was imperative for the country and it would be made invincible by equipping with ultra modern and scientific techniques to maintain balance of power in the region. A cabinet committee on Defence and National Security headed by the prime minister would be established to maintain democratic oversight of all aspects of foreign and defence policies, ensure that all institutions i.e. civil or military act in accordance with the law and under the instructions and directives of the Federal Cabinet. Moreover, PML (N) will continue its struggle for creating Hazara, South Punjab and Bahawalpur provinces.
What is Fordism?
A manufacturing philosophy that aims to achieve higher productivity by standardizing the output, using conveyor assembly lines, and breaking the work into small deskilled tasks. Whereas Taylorism (on which Fordism is based) seeks machine and worker efficiency, Fordism seeks to combine them as one unit, and emphasizes minimization of costs instead of maximization of profit. Named after its famous proponent, the US automobile pioneer Henry Ford (1863-1947).
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ECONOMY
April, 2013
Multiplier Effects of
Abu Dhabi Vision 2030

Mehmoodul Hassan Khan
nited Arab Emirates is already on the path of socio-economic prosperity and diversification of national economy. Despite, havocs of socio-economy in the region and weak economic prospects at international levels, the macro-economy of the UAE stable, strong and sustainable. Even continued global economic and financial crises, tumbling oil markets and freezing credit markets could not produce any substantial dint in the economy of the UAE. Gradual economic liberalization, publicprivate sector collaboration, financial and banking reforms, industrialization, and above all diversification drive has made it one of the best destinations of FDIs, and doing businesses and projects. Most recently, Abu Dhabi launched its second five-year financial plan. It sought to set out the emirates short-term development priorities/programs to keep it in line with Vision 2030. It is based on the further economic diversification in eight key sectors namely: cultural tourism, aviation, manufacturing, media, health care, petrochemical, financial services and renewable energy. Moreover, these priorities are reflected in the list of projects announced by the Executive Council in January 2012. The Abu Dhabi Louvre and the Abu Dhabi Guggenheim museums projects on Saadiyat Island will form the cornerstone of Abu Dhabi strategy of diversifying cultural tourism. On the other hand, more focus is
given to capacity building in the high-tech aviation industry which will be achieved through Mubadalas investment in Strata, investment in the aluminium, steel, copper and petrochemicals sectors. Media is the part and parcel of ongoing soft image projection drive in the country. The Executive Council is also reviewing its investments in the media sector to ensure that it generates a contribution to GDP. The proposed investments in the media sector include Abu Dhabi Media, which owns several entities including The National, and twofour54, the media zone. Private sector is a must for achieving desired goals of socio-economy in the country. It encourages healthy competition between the service entities. It enhances levels of productivity and efficacy. It generates job opportunities. It is embraced as a strategic partner that effectively supports the public sector and contributes to the implementation of the governments economic plans in the recently announced second five-year financial plan. Electricity, maritime transportation and aviation, among others, are critical areas of involvement for the private sector. It is assured that the investment programme must be carried out by the private sector. Investments in energy and industry would likely be given even more priority in the future. Real estate sector would play an important role in the days to come. Abu Dhabi initiated a long-term plan for the transformation of the Emirates economy, including a reduced reliance on the oil sector as a source of economic activity over time and
a greater focus on knowledge-based industries in the future. It provides a comprehensive plan for the diversification of the Emirates economy and a significant increase in the non-oil sectors contribution to the Emirates Gross Domestic Product (GDP) by the year 2030. It identifies two strategic areas for economic development in Abu Dhabi; building a sustainable economy, and, ensuring a balanced social and regional economic development approach that brings benefits to all. It is the result of an integrated effort among a number of public sector and joint public-private sector entities.
Short Term Economic Priorities

Providing an open, efficient, effective and globally integrated business environment Pragmatic fiscal policy which is responsive to economic cycles and growth patterns Establishing a resilient monetary and financial market environment with manageable levels of inflation Driving significant improvement in the efficiency of the labour market Developing a sufficient and resilient infrastructure capable of supporting a nt i c i pated e co n o m i c g row t h Developing a highly skilled and highly productive work force Enabling financial markets to become the key financiers of economic sectors and projects.
April, 2013
ECONOMY
4 33
The latest figures of the UN Conference on Trade and Development (UNCTAD) said that the UAE has pumped nearly US$55.5 billion into foreign markets over a period of 32 years to emerge as the largest capital exporter in the Arab world. It accounted for nearly 31 per cent of the total Arab foreign direct investment (FDI) outflow of around US$175.8 billion during 1980-2011. The UAE attracted more than US$85.4 billion in terms of FDIs.
The Abu Dhabi Economic Vision 2030 establishes a common framework for integrating all policies/plans and programs that contributes to the ongoing development of the Emirates economy. It encourages the local and international private sector in the Emirate of Abu Dhabi. It would be a new employment opportunities for the people of the UAE. Abu Dhabis vision growth strategy is based on entrepreneurism, qualitative education, innovation and diversification. Small and medium enterprise development is another area of its foremost priority. According to the recently published report of the Saudi American Bank group (SAMBA), the UAE economy would achieve
more than GDP 3.3 percent. High public spending, Dubais economic recovery and inflows of safe investment in the UAE economy may boost its economy around 3.3 per cent in 2013 despite an expected fall in crude output. Its real GDP registered around 4.9 per cent in 2011 and 4.2 per cent in 2012 and growth will likely remain relatively high this year while its fiscal system will continue to record largely surpluses. It further elaborated that most of the 2013 growth would be in the non-oil sector, which could expand by around 4.1 per cent. Growth in the hydrocarbon sector was put at 1.5 per cent, far below the 2012 growth of 5.9 per cent. In current prices, the report showed the UAE GDP would rise by 4.6 per cent to a record high of about $395.8 billion in 2013 from $378.3 billion in 2012. The report showed an increasing shift towards higher capital, including off budget, and social expenditures. The latest figures of the UN Conference on Trade and Development (UNCTAD) said that the UAE has pumped nearly US$55.5 billion into foreign markets over a period of
32 years to emerge as the largest capital exporter in the Arab world. It accounted for nearly 31 per cent of the total Arab foreign direct investment (FDI) outflow of around US$175.8 billion during 1980-2011. The UAE attracted more than US$85.4 billion in terms of FDIs. Concluding Remarks: Abu Dhabi Vision 2030 is the collective wisdom of its visionary leadership, economic managers and commitment of its important organs and departments alike. It reflects its high aims to achieve high standards of productivity, efficiency and the last but not the least, banking stability. It shows a blueprint of further socio-economic prosperity, knowledge-based economy, innovation and above all diversification of energy demand and supply.Booming tourism industry, healthy service sector, strong monetary and fiscal indicators and high ratios of inflows of FDIs would be useful to achieve and consolidate the national drive of diversification and lesser reliance of oil and gas traditional resources of energy in the days to come.
34
INTERVIEW
April, 2013
Sara Akbar
Kuwaits iron lady

Desk Report
uwait Energy has emerged as one of the regions few independent oil companies; CEO Sara Akbar looks back on the private companys rise to regional prominence. Its not every day that a company can report a near 30% rise in revenue, but Kuwait Energy managed to do it for the fourth quarter of 2012. The last few months have certainly been a crucial period as Kuwait Energy has continued its rapid growth around the region. The company won a second bid round for exploration licenses in Afghanistan and also submitted bids for Block I (Sanduqli) and Block IV (Mazar-i-Sharif), two blocks which are located in the Balkh province of Northern Afghanistan at the border with Uzbekistan, in a consortium with Dragon Oil, Turkiye Petrolleri Anonim Ortakligi (TPAO) and Ghazanfar Investment ltd. Kuwait Energy will take a 30% interest in in the Sanduqli block that will be jointly operated by Dragon Oil. And it will take a 25% interest in the MAzar-I-Sharif block that will be operated by TPAO. The company has reported that its income for the last three months of 2012 rose from $45.6 million in 2011 to $59 million in 2012. Its production capacity has also followed suit, jumping 16.1% from 15,018 barrels of oil equivalent per day (boepd) to 17,442 boepd for the fourth quarter, year-onyear. I am pleased to announce another quarEconomic Affairs | www.economicaffairs.info
Iraq has a lot of natural gas and Kuwait needs natural gas, she says. This relationship between supply and demand is absolutely crucial and an economic relationship is one of the best types of relationships to have between countries here, developing relationships between Iraq and Kuwait has always been a major focus for us.
ter of year-on-year increases in revenues, profits and production. The quarter also saw us make strategic progress in Afghanistan and extend our access to capital via a new reservebased lending facility, says Sara Akbar, chief executive officer of Kuwait Energy. On December 19, 2012, the company closed a new reserve based lending facility of $165 million with the International Finance Corporation and Deutsche Bank. The debt facility will be used to finance near-term capital activities and to repay a previous IFC facility. Kuwait Energy also drew down $50 million of its facility with Abraaj Capital and $33 million with Qatar First investment Bank to finance development and growth plans. Both agreements are for a $150 million convertible debt facility to be swapped for ordinary shares if Kuwait Energy launches an IPO. And the company has remained extremely active going into 2013. In January, Kuwait Energy closed its third contract in Iraq to become operator of the block 9 in Basra. The company already operates the Siba gas field, also in Basra and is a partner on the Mansuriya gas field in Dyala province. Iraq has important resources, a growing energy industry and ambitious but necessary growth targets to meet, says Sara Akbar. We see an opportunity in new unexplored fields which could help Iraq reach these long-term goals, were also poised on grabbing opportunities to explore and develop gas fields that would help Iraq meet its domestic needs and export demand she adds. Of course it wasnt easy for the private
April, 2013
company to enter Iraq. The main challenge we faced was being a small-sized energy company when we first entered Iraq back in 2006. We worked closely with the Iraqi government at the time to build a legal study for the service contracts that were signed with oil companies, and also conducted a geophysical study on the Siba gas field, she remembers. But things have certainly been looking up for the company since it started working in Iraq. The step enabled us to prove our expertise and technical expertise, and accompanied with our track record of success in other countries, we were qualified to enter Iraqs third and fourth bidding rounds for oil and gas field, says Akbar. As a Kuwaiti company, one might naturally be led to question the companys ability to operate in Iraq. But for Akbar, the decision to enter Iraq was also an opportunity to develop the ties between Kuwait and Iraq. It was a good way to develop relationships between Kuwait and Iraq, as you know relationships between the two countries have been tense for a very long time and it is simple supply and demand economics, muses Akbar. Iraq has a lot of natural gas and Kuwait needs natural gas, she says. This relationship between supply and demand is absolutely crucial and an economic relationship is one of the best types of relationships to have between countries here, developing relationships between Iraq and Kuwait has always been a major focus for us. For Akbar, the relationships between Kuwait Energy and the Iraqi government have been supported by two main pillars, both of which are deeply rooted in the values of the partnership. The first pillar is to support the country in developing their natural resources for the benefit of their people by bringing our expertise, commitment and dedication, she says. For example, in addition to our exploration and production operations, we are also active in helping with long-term master planning of natural wealth of the countries and their environments as well, she explains. In fact, we are currently working with both the Iraqi and Yemeni governments on this front.par The second pillar, and we cannot emphasize this enough, is our focus on helping the communities in our areas of operation. From helping to empower the unusually large population of widowers in Iraq and help clear land mines, to leading environment, small business and healthcare initiatives, she says. These two pillars have become the backbone of Kuwait Energys operations all over the region. Having expanded into eight countries over the last eight years, the company is consolidating its assets in the Middle East. The Middle East is our home and home to the worlds largest reserves, and Kuwait Energy is primarily a Middle-East focused E&P company, so it makes sense for us to focus on the Middle East, says Akbar. Our current focus of the next two years is Egypt, Yemen and Iraq. We expect that our target to reach an overall production of 75,000 barrels of oil equivalent (boe) per day and proved and probable reserves of 400 million boe by year end 2015 will be mostly led by our investments and activities in these three countries.parThe company is also looking towards entering the Libyan market. We are currently in the early stages of entering Libya. Lets not forget that today Libya is in a transi-
INTERVIEW
4 35
What is the Eurozone?

Comprises of 12 countries that have adopted the Euro as their national currency is a part of the process towards 'Economic And monetary union' (EMU) under the Maastricht treaty. They are: Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain, and Greece.
tion phase focusing on rebuilding not only its energy sector, but also the overall governance system, explains Akbar. One the system is in place, we would look forward to taking part in providing exploration, development and production services.parIn a region where independent oil companies are sparse, its rare to see one rise so quickly. But the company has continued to leverage its assets and ride out the storm that has hit the Middle East over the last few years. What sets Kuwait Energy apart from its competitors is that we are homegrown and have local knowledge. We know how to deal with the region and all the challenges, especially in a turbulent time like the last few years, says Akbar. But the chief executive also welcomes new competition, especially from within the region. We want to encourage more independent company activity in the region by portraying ourselves as a model for other companies. Here in the Middle East there are very few independent operators, you see the super-majors and the state companies, but there are very few independent ones.
36
NEWS REPORT
April, 2013
Amnesty for smuggled cars

EA Report
he just-dissolved parliament has left behind a legacy of unethical practices by the then governments move to support, though stopping short of passing, two controversial tax bills into law during the concluding days of the National Assembly. What surprised many was the kind of tactics the opposition employed to let the tax amnesty bill be passed in the Senate on January 4, and then in the NA standing committee on finance on March 6. They may have adopted the face-saving methods of walkout, boycott and absence, had the two bills, one for whitening black money and the other for legalising smuggled vehicles at nominal tax rates, had been presented for
FBR Chairman Ali Arshad Hakeem claims he could net more than 3.195 million tax evaders within three months. FBR officials had once said that they would not mind, in fact they would prefer, if the scheme was passed and implemented during the tenure of the caretaker government.
vote in the house. However, the government itself dropped the idea at the eleventh hour. But the proposed bills are still out of the harms way, as finance minister Saleem H Mandviwalla has hinted at the possibility of a presidential ordinance for the enforcement of tax amnesty, since it was because of a shortage of time that the NA could not take up and pass the bills. Besides, there is Plan B as well, and the Federal Board of Revenue (FBR) has administrative powers in this regard for meeting tax shortfall. So, nothing is lost. One reason many lawmakers lost interest in the amnesty bill was the amendment incorporated in it at the NA c o m m i tte e l e ve l , w h i c h s a i d t h at parliamentarians, officials and their immediate families will not be offered tax amnesty. But their interest in legalising smuggled vehicles remained unaffected. The FBR issued the notification for the vehicles amnesty scheme late on March 5 the same day the PPP-led coalition government approved the bill with a majority vote at the NA standing committee meeting with an assurance that it would move it in the NA the next day for approval. It is interesting to note that the impossible became possible only after the NA standing committee chairman Khawaja Sohail Mansoor decided to not chair the meeting as a matter of principle and walked out. He also
took along with him the next chairman Abdul Rahib Godil, thus creating conditions for Nafeesa Shah of the Peoples Party to chair the meeting of the committee, which then comfortably passed the bill with the support of PML-N parliamentarians. FBR Chairman Ali Arshad Hakeem claims he could net more than 3.195 million tax evaders within three months. FBR officials had once said that they would not mind, in fact they would prefer, if the scheme was passed and implemented during the tenure of the caretaker government. Although the vehicles amnesty scheme amounts to promoting the smuggling of vehicles, the fact remains that the customs department, with its limited manpower, cannot lay hands on smugglers or owners of smuggled vehicles, most of whom are influential people having close connections in the bureaucracy. The argument goes that since the violators neither pay excise duty nor any taxes at any stage, under this scheme, they will at least provide some revenue to the exchequer. About 150,000 vehicles has been regularised under the new scheme, and the FBR is likely to net Rs10-15 billion in revenue as a result. A total of 2.8 million smuggled vehicles are plying on roads across the country. During a campaign against non-custom paid
April, 2013
vehicles, the FBR had identified a person who had 618 vehicles registered in his name, but he didnt have a national tax number (NTN). This is the second amnesty scheme introduced by the outgoing coalition government. Last year, it gave amnesty to those who wanted to whiten their black money by making investments in the stock market. The amnesty scheme for smuggled vehicles does not go well with local automobile manufacturers and dealers, who allege the government is encouraging unlawful activities. A l l Pa k i sta n M o t o r Dealers Association has rejected the amnesty scheme, saying the government is promoting smuggling. It says that so far, a 1998 or 2000 model of the Land Cruiser was available for Rs800,000 to Rs900,000 in Balochistan, but after the announcement of this scheme, smugglers increased their rates to Rs1.5-1.6 million. This shows who are the beneficiaries of this scheme. This advantage would only be available to a particular class which has smuggled or bought smuggled used cars in the past few years and not paid any duty. Meanwhile, the Competition Commission of Pakistan (CCP) has, in a policy note to the FBR, highlighted the flaws in the policy of legalising smuggled vehicles by paying comparatively less taxes, saying the scheme has placed both the importers of used vehicles and assemblers of new cars at a disadvantage. Since the government introduces such
NEWS REPORT
4 37
a scheme from time to time, this may result in the creation of a grey market for automobiles in the country on a sustained basis. Some of the flaws the CCP pointed out are: the allowable age limit for import of a car is three years while there is no age limit for the smuggled/ non-duty paid motor vehicles under the amnesty scheme. As a matter of fact, the persons who have violated the law by not paying taxes and duties have been incentivised to import motor vehicles of their choice without imposition of any allowable age restriction on them. The policy is discriminatory against persons importing motor vehicles through normal channels, to the extent that the facility of duty and tax concessions has not been extended to the vehicles imported in violation of the Import Policy Order via normal channels through a custom station. On the other hand, the smuggled vehicles anywhere in Pakistan, but outside the premises of custom stations, have been allowed to avail the facility of duty and tax concessions under the scheme.
About 150,000 vehicles has been regularised under the new scheme, and the FBR is likely to net Rs10-15 billion in revenue as a result. A total of 2.8 million smuggled vehicles are plying on roads across the country. During a campaign against non-custom paid vehicles, the FBR had identified a person who had 618 vehicles registered in his name, but he didnt have a national tax number (NTN).

Monthly Economic Affairs April, 2013

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MONTHLY

Volume-II, Issue-IV April, 2013

Pakistan in search of new future

Economic Affairs | www.economicaffairs.info

Economic Affairs | www.economicaffairs.info

EDITORIAL From the Editors desk

Elections 2013: Code of conduct for media

Economic Affairs | www.economicaffairs.info

From friends to frenemies

Lively performance of National Bank of Pakistan

Reforming elitist economy ...........................................................16-17

Reforming elitist economy

What a National Power cut tells us about The last

The last budget ..............................................................18-19

USAID Paving way towards Energy Sufficiency ...........................................................28-29

Abu Dhabi Vision 2030

Amnesty for smuggled cars ...........................................................36-37

Kuwaits iron lady

Amnesty for smuggled cars

Pakistan in search of new future

Economic Affairs | www.economicaffairs.info

Economic Affairs | www.economicaffairs.info

Princely Jet Aviation evade taxes worth Rs 195 million

Lt. Gen. Shahid Aziz: I regret supporting the dictator

From friends to frenemies

Lively performance of National Bank of Pakistan

Economic Affairs | www.economicaffairs.info

What is a spaghetti diagram?

Reforming elitist economy

What is a multi-brand strategy?

Economic Affairs | www.economicaffairs.info

The last budget

Economic Affairs | www.economicaffairs.info

What is Real GDP?

The PRODIGAL SON returns!

BILAWAL BHUTTO ZARDARI

Bumper wheat crop expected

Govt to raise Rs1.325trn in T-bills auction

FBR revises rates for sale of duty-free imported vehicles

Early Kharif: Irsa projects six percent water shortage

New wheat, sugarcane varieties approved

Sindh runs out of onions, import starts from India

My Karachi to be held in July

Investors offer over Rs4billion to bank Alfalahs TFCs

Unilevers delisting opposed

Tunisia expects IMF deal in May

Pakistan repays $143.8m to IMF

First meeting of Pakistan Russia Business Council held

FIA sits on billions rupee scam

Paving way towards Energy Sufficiency

Economic Affairs | www.economicaffairs.info

What is the EEOC?

Economic Affairs | www.economicaffairs.info

PML (N) to show zero tolerance against corruption, Sadiq Farooq

Abu Dhabi Vision 2030

Short Term Economic Priorities

Economic Affairs | www.economicaffairs.info

Economic Affairs | www.economicaffairs.info

Kuwaits iron lady

What is the Eurozone?

Economic Affairs | www.economicaffairs.info

Amnesty for smuggled cars

Economic Affairs | www.economicaffairs.info

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