Value Chain (May 12)

• Askari Bank Ltd.• Allied Bank Ltd.• Al-Baraka Islamic Bank• Bank Alfalah Ltd.• Bank Al-Habib Ltd.• Bank of Khyber Ltd.• BankIslami Pakistan Ltd.• Bank of Punjab• Burj Bank Ltd.• Barclays Bank PLC Pakistan• Dubai Islamic Bank • Faysal Bank Ltd.• Habib Bank Ltd.• Habib Metropolitan Bank • JS Bank Ltd.• KASB Bank Ltd.• MCB Bank Ltd.• Meezan Bank Ltd.• National Bank Ltd. • NIB Bank Ltd.• Soneri Bank Ltd.• Standard Chartered Bank• Summit Bank• Silk Bank Ltd.• United Bank Ltd.

Clients

K.G. Traders (Pvt.) Limited, is a leading knowledge based services organization which aims to fulfill the outsourced business needs of organizations in Banking and Corporate Sectors. Established in 1964, the organization is considered as most professional and reputable consul-tants, whereby, the service quality has always been appreci-ated by its valued customers.The firm is fully equipped and backed by a team of qualified personnel who believe in continuous improvement in service quality. The organization is diligent in its efforts to uphold the principles of professional practice, follows modern approaches and techniques in its strategies. Our product range includes but not limited to the following:

Key Services1. Collateral Management (Banks’ Muccadam) Services

2. Asset Valuation – PBA Approved No Limit Valuator

3. Supervision Services

4. Stock Inspection Services

5. Clearing & Forwarding Services

6. SECP related Services

7. BIR Services – Local Credit Report & Income Estimation

Our nation-wide presenceKARACHI BRANCH609 - Clifton Center, Block – 5, Kahkashan, Clifton.Tel: 021-35293377-80Fax: [email protected]

HYDERABAD BRANCHA-184, Bait-ul-Khair Building, Mezz. Floor, Near Meezan Bank, Jamia Masjid Road, Saddar.Tel: 022-2730941- 022303828Fax: [email protected]

FAISALABAD BRANCH05,04th Floor, Ashraf Butt Centre Circular.Tel: 041-2412028Fax: [email protected]

RAHIMYAR KHAN BRANCH05, Main Shafi Town, Shahbazpur Road.Tel: 068-5000428Fax: [email protected]

SUKKUR BRANCHC-28,1st Floor, Street No.6, Hamdard HousingSoceiety, Airport Road.Tel: 071-5000695Fax: [email protected]

GUJRANWALA BRANCH1st Floor, Dr. Nadeem Nazir, Muhallah Amir Park, Commissioner Road.Tel: 055-3017516Fax: [email protected]

ISLAMABAD BRANCH14,3rd Floor, Shahnawaz Plaza, Plot No.11, G-11 Markaz.Tel: 051-2100461Fax: [email protected]

LAHORE BRANCH11-D, Block-H, Gulberg IITel: 042- 35817214-15Fax: [email protected]

MULTAN BRANCH7 & 8, 1st Floor, Trust Plaza, LMQ Road.Tel: 061-4542535, 061-4542536Fax: [email protected]

II nside

SBP monetary policy – the warnings it containsGovernance, what the hell it is?

Democracy, defiance of court verdict, and escalating chaos

“Pakistan’s untold economic story”

Utilizing waste water for agriculture

The eventual death of a promising bank

Pakistan pharma industry poised to grow

Coming budget and the gathering storm

Room No. 612, 6th Floor, Clifton Center, Khayaban-e-Roomi, Clifton, Karachi.

Mr. Tariq Iqbal KhanMs Rahnuma Ahmed Mr. Shujat Ali BaigMr. Mubarik Ahmed Ph: 021-35293371-72

Dr. Aameer Mian Mr. Farhan AnwerMs Raeda LatifMs Soha Ahmed & others Email - [email protected]

Website: www.valuechainmagazine.com

Ibn-e-Hassan Printing Press, Hockey Stadium, Karachi.

Liberty Books (Pvt) Ltd. 021-3567144-35656568Rehbar News Agency, Karachi 0333-2168390

Syed Yasir Ali, Book Mart, Lahore 042-35773717-18Ahmad Rehman, Best Book Sellers, Faisalabad. 041-38733763Kitab Ghar, M. Kha lid, I-144, Iqbal Road, Rawalpindi. 051-5552929

National News Agency, Book Mart, Karachi 021-35688828

PRINTED BY PUBLISHED BY

DISTRIBUTORSFatima Khalid Publications (Pvt) Limited

17-20

22-26

27-39

40-43TRADE & INDUSTRY

49-52

55-56

Chief EditorDr. Zeeshan [email protected]

EditorNadeem Abdul [email protected]

Deputy EditorJauhar [email protected]

Advisor Editorial TeamA.B. [email protected]

Research EditorMustafa Ali [email protected]

Assistant EditorSyed Asif [email protected]

Director MarketingK. Jehangeer [email protected]

VisualizerAli Siddique [email protected]

General ManagerMahmood [email protected]

Bureau ChiefsSyed [email protected]

Ajmal [email protected]

Mumtaz [email protected]

Global slide in the profile of governanceThe 'big lie', and a `little man'

Martyrs’ Day: questions that need an answer21MEMORIUM

Reforming the tax structure Tax recovery: the basic improvements it needs Rationalizing the tariff regime, and tax refunds FPCCI proposals for inclusion in the Federal Budget 2012-13 A case for alternate energy (Part II)

“Lifestyle Pakistan” exhibition in India

Hidden Hunger53-54

Celebrating anniversaries: is that all you should do?

Your Horoscope - May 2012

Team

Volume - 2 Issue - XIII May - 2012

(27)

Price: PKR -150

Disclaimer: The views expressed by the writers do notnecessarily reflect those of the magazine or its editorial staff.

(27)

41-42. Interview withFayaz Anwar

69. History: Maulana Azad – the man with an incredible vision

47. Events: Air crashes and the lesson they offer

29-30 Economy: Reforming the tax collection and payment cultures

51-52 Banking & Finance: Islamic Financial Services: past, present and future

62-64Workshop on ‘The Power of Entrepreneurship’Two-Day Training Fair for WomenConnecting Vision to Reality

EDUCATION & TRAINING

CONTRIBUTORS

Global & National BriefsVoice of Industry - In brief

Monthly Commodity ReviewMonthly Stock Market Review

11-1415-16

5960

Obituary72Sports71

Regulatory Compliance44Events45-47

Art & Literature70Travel & Tourism67-68Science & Technology66

73-74

Another International Award for PakistanAwards

57-58Climate Change – roadmap of a strategy for KarachiHEALTH & ENVIRONMENT

65

Value Chain welcomes the views of its valued readers. Please send us your

views on the address below:

Fatima Khalid Publications (Pvt) Ltd.

Room No. 612, Clifton Centre, Block 5, Clifton, Karachi

Email: [email protected]

The Editor reserves the right to edit your letters for making it brief or for

any linguistic flaws therein.

etters to the EditorLL

PM’s contempt of courtSir, Mr Yusuf Raza Gilani’s blunt refusal to comply with the verdict of the Supreme Court isn’t odd; his repeated assurances to abide by the court’s verdict, is the standard deceptive trick used by the PPP leaders. The fact that his regime survived for four long years, courtesy the support of PML-N, MQM and ANP, encouraged it to go on misgoverning the state and become over intoxicated with power. Mr Gilani’s stand, that he can be disqualified by none other than Speaker of the National Assembly, is a manifestation of the fact that power has blinded him beyond retrieval, as stated in the Quran (Sumun bukmum umyun fa hum la yarjeoon). It is now beyond logic to expect the PPP regime to do things that are moral, rational and ethical. God help Pakistan! Jameel MahmoodKarachi Aitzaz Ahsan – what a turnaround! Sir, Mr Aitzaz Ahsan was a reputed lawyer, a man whose conduct did manifest moral values. The change in his thinking as well as conduct isn’t natural. I guess Mr. Munir Sheikh (Value Chain April 2012) was right in suspecting that the incumbent regime discovered something about Aitzaz that it is using to exploit him to the hilt. Abdullah AhmedLahoreUnfulfilled promises Sir, during April, the much talked about roundtable on energy promised a lot; none of it has been implemented thus far. The one thing that defines the conduct of the politicians is “lying shamelessly”. It applies to all of them.The chaos that cripples Punjab’s industrial towns bothers none in Islamabad. Most of the industrial units in Lahore, Faisalabad, Gujranwala and Sialkot, let alone the rest

of Punjab, operate for just six days per week, eight hours a day. A disaster building up is the steady pace of job losses and rising poverty that propels petty crime and suicides. Mr. Muhammad Mahfooz (Value Chain April 2012) is right in pointing to the fact that over a million have lost their daily livelihood. It is clear that the regime is unconcerned about what a mess it has made of Pakistan. It is time this regime was shown the door.Zahir KhanFaisalabad A suicidal trade policy Sir, in the context of imports from India, a list of 1,209 negative items (i.e. not to be imported from India) was decided and provided to India, but the amazing part was that Pakistan’s government agreed that this list would reduce to zero as early as December 20, 2012. It was a wholly dumb promise because, given the way the government is tending to the needs of business and industry, by that date sectors that now can’t compete with cheap imports won’t gain efficiency to become competitive. Reason: these units can’t acquire modern technology courtesy the slide in exchange rate of the Pak Rupee. Nor would power shortages disappear, nor will the law and order scenario stop impacting economic activity. But Indian goods will flood the Pakistani markets forcing more industries to close down. Mehmood ShaikhFaisalabadExchange rate ‘tsunami’Sir, PTI’s Imran Khan keeps promising a tsunami that will drown the corrupt, but doesn’t notice the other tsunami that is building up. The recent disclosure by the IMF that, in 2012-13, to the extent of US$10.5 billion, Pakistan’s foreign exchange reserves will be consumed by debt repayments was a shocker because our existing exchange reserves are only US$16.55 billion. If we can’t get more foreign exchange in the form of FDI, development or stand-by loans, and deposits, the reserves may drop to US$6 billion. This extent of the reserves simply cannot support the value of the Rupee in exchange markets. With Pakistan so highly dependent on oil imports, how will we manage electricity supply at the current miserable level, let alone all else. Will it not lead to a total collapse of the economy i.e. employment and containment of poverty and the evils that it encourages – petty and organized crime? Is Mr Yusuf Raza Gilani bothered about it or he just wants to preside over a Pakistan-destroying chaos?Azam Sheikh Lahore

Banks’ risk-aversionSir, in his letter (Value Chain April 2012) Mr Muhammad Zahur pointed to a very lethal tendency in our banking sector i.e. its ‘risk-aversion’. Hopefully, after recent warnings by the credit rating agencies to lower the credit rating of Pakistani banks for overexposure to the government i.e. investing in T-Bills and GoP Bonds, the banking sector will realize its blunder in believing that governments are still zero-risk entities. That is no longer the case anywhere, much less in Pakistan struggle-ing under the so-called peoples’ regime.Sadiq AliSialkotIsn’t it time India capitalized on the opportunity afforded by Bangladesh?Sir, after Bangladeshi cricket team’s tour had to be suspended on the orders of a Bangladeshi High Court, what I expected was a quick reaction from India, which is keen more than ever before, on restoring its relations with Pakistan in every sector. India can spring a surprise by announcing a short tour of Pakistan by its cricket team. Let us hope it does.Sohail AnwarLondon Should black wealth be welcomed?Sir, I find it absolutely shocking that our government is prepared to lay down red carpets to receive black wealth for invest-ment in Pakistan’s stock market as well as the real sector. The demand made and readily accepted by the government was that the entities bringing back the wealth they earlier had illegally siphoned out of Pakistan should not be asked any embarrassing questions nor penalized more than 1% of the assets they bring back. Shouldn’t these entities be penalized in a way that is recognized globally as fair, so that Pakistan doesn’t add another negative to its reputation–safe heaven, for black wealth?Munsif SiddiqueKarachi

May 2012

Mon

thly

April 2012

9

Awan Trading Co. is Pakistan based Coal trading entity which was incorporated in the year 2002. The company started its operation as an importing company and for the last two years it has also started supplying domestic coal (Pakistan coal). So far the company has imported and supplied 5 million tons of coal, from South Africa and Indonesia, to the cement factories.This opportunity of supplying coal to cement factories was created due to their (Cement factories) shift from furnace oil to coal as the main energy fuel. Since then the company has been sincerely committed in its mission of

supplying coal to factories as a source of energy. What you sell is important! So we source our Coal from best suppliers around the world. Developing longterm relationships has been the hallmark of our company. Our promise that “we deliver, no matter what the situation” has earned us, the confidence of our buyers.The success of our trading can be gauged from the fact that we are now importing 21 vessels (1 million ton) of coal in a year which as resulted in 30% market-share for Awan Trading Co and hopefully the share will increase in the coming years.

Myanmar’s opposition claimed a historic victory in by-election on April 1 for pro-democracy leader Aung San Suu Kyi in her first bid for a seat in parliament.

China’s Communist Party has suspended former high-flying politician Bo Xilai from its top rank and named his wife a suspect in the murder of a British businessman.

Britain and Japan said on April 10 that they have decided to identify a range of appropriate defence equipment for joint development and production which contributes to both countries’ security and presents industrial opportunities.

Nepal’s former Maoist rebels on April 10 handed over control of their fighters and weapons to the national army, in a move likely to bolster a falter-ing peace process nearly six years after a civil war ended.

A car bomb near a church in north-ern Nigeria on Easter Sunday killed at least 20 people and put the country on alert over fears of further attacks.

On April 8 Syria demanded written guarantees insurgents will stop fighting before it pulls back troops under the terms of a UN peace plan, and a rebel leader said the initiative was doomed.

The Obama administration and its European allies plan to open new nego-tiations with Iran by demanding the immediate closing and ultimate disman-tling of a recently completed nuclear facility deep under a mountain.

Mali’s President Amadou Toumani Toure resigned on April 8, paving the way for the soldiers who ousted him in a coup to stick by a deal to restore civilian rule and hand over power to the presi-dent of the National Assembly.

Israel on April 8 declared Nobel Prize-winning German author Guenter

reports that he offered a Pound 10 million ($ 15.9 million) bounty for the capture of US President Barack Obama.

The UN Security Council on April 16 tightened sanctions against North Korea over its failed rocket launch and warned of new action if the isolated state staged a new nuclear test.

Russian Foreign Minister Sergei Lavrov on April 19 criticized Nato’s planto withdraw combat troops from Afghanistan in 2014, stressing that China was concerned about it too. He said that as long as Afghanistan is not able to ensure by itself the security in the country, the artificial timelines of withdrawal are not correct and they should not be set this way.

Indian Minister for External Affairs Preneet Kaur, has appreciated the statement of General Ashfaq Parvez Kayani on Siachen, as a positive move by the Pakistani military establishment and said that India would respond to it with the same gesture.

Tens of thousands of North Koreans rallied on April 20 screaming hatred for South Korean President Lee Myung-Bak and calling for his death over alleged insults during the North’s anniversary celebrations.

Iran claimed on April 22 that it had reverse-engineered an American spy drone captured by its armed forces last year and has begun building a copy.

Afghanistan and US have agreed on a strategic partnership deal that is meant to govern the US role in Afghanistan as international forces draw down.

Socialist challenger Francois Hollande beat Sarkozy on April 22 in the first round of polling for presidential seat in France. Hollande won between 28 and 29 percent of the vote compared to Sarkozy who bagged 25.5 to 27 percent of votes.

Egypt has scrapped a 2005 gas export deal with Israel which relies on Egyptian natural gas for 40 percent of its supplies to produce electricity.

Top Indian and Pakistani political and business leadership on April 13 opened the Integrated Check Post at the India-Pakistan border, Attari, which would open a gateway to new socio-economic ties between the two countries.

Grass “persona non grata” over a poem in which the former SS soldier described the Jewish state as a threat to world peace.

India’s Maoist rebels who held an Italian tour guide hostage in India for more than three weeks released the hostage on April 12 after authorities agreed to release Maoist prisoners.

Fang Lizhi, one of China’s best-known dissidents whose speeches inspired student protesters throughout the 1980s, died in the United States where he fled after China’s 1989 military crackdown on the pro-democracy movement.

Shops and businesses were shut in Indian held Kashmir during a strike to protest against the US prison sentence given to Dr. Ghulam Nabi Fai, a Kashmir-born man accused of working for Pakistan’s spy agency to influence Washington policymakers.

The first president of independent Algeria, Ahmed Ben Bella, died on April 11, 2012 in Algiers at the age of 95. He was Algeria’s president from 1962 to 1965 when he was overthrown by his defence minister, Houari Boumediene.

On April 7, Iran told the visiting former Japanese premier Yukio Hatoyana that it will pursue its nuclear programme despite restrictions.

North Korea’s heralded long-range rocket test on April 13 ended in failure disintegrating in mid-air soon after blast-off and plunging into the sea.

The World Bank on April 16 chose Korean – American physician Jim Yong Kim as its next chief. He will succeed outgoing President Robert Zoellick, a former US diplomat who is departing in June at the end of his five-year term.

Britain’s Labour Party on April 15 suspended Lord Nazeer Ahmed over

Global events

lobal BriefsG

May 201211

Global economy

France’s economy posted no growth in the first quarter and there are no signs of a strong recovery in activity in the coming months.

China returned to an export-led trade surplus of $ 5.35 billion in March, heralding the prospect that a rebound in the global economy is lifting overseas orders just in time to compensate for a slowdown in domestic demand.

Spain, sucked back into the center of the Eurozone debt crisis, is headed towards a financial crunch in 2013 that may force it to seek international help.

The largest US banks including Morgan Stanley, Bank of America and Citi group are facing a historic shift to lower credit ratings which could increase their cost of funding and reduce competi-tiveness in their capital markets businesses.

Iran’s non-oil exports surged 29 percent to nearly $ 44 billion in the year to mid-March despite tough Western sanctions to rein in Tehran’s disputed nuclear drive.

According to the World Bank forecast on April 12, China’s economic growth will fall to 8.2 percent this year due to slowing domestic consumption and weak external demand, before rebounding in 2013.

India said on April 13 it would open up to direct foreign investment from Pakistan in a deepening of commercial ties that could help propel a peace process between the two countries.

Power Construction Corporation of China has signed a $2.4 billion contract to build the second phase of a massive coal-fired power complex in southern India to help meet soaring local demand for electricity.

China said on April 13 its economy grew 8.1 percent in the first three months of 2012, its slowest pace in nearly three years, as it was hit by weak demand in the nation’s key export markets.

Qatar National Bank, the Gulf state’s largest bank, has acquired a 49 percent stake in Libya’s Bank of Commerce and Development as part of the Qatari lender’s aggressive expansion strategy.

According to Treasury Secretary, Timo-thy Geithner, the US economy is in a better position to deal with high gasoline prices.

Chinese Premier Wen Jiabao said on April 22 that the global financial crisis is not over and technical innovation and investment will be key to sustaining what remains a “tortu-ous” recovery. He also said that China would press on with reforms aimed at creating better legal protection for foreign investors.

A Reuters poll of more than 700 econo-mists across the world, predicted a modest 3.3 percent growth in the global economy this year with the US economy expected to grow at an annual rate of around 2.5 percent in the first three months of the year down from 3.00 percent record in the final quarter of 2011.

Speaking at a debate as part of the World Investment Forum on April 22, officials from the UN Conference on Trade and Develop-ment and several African nations complained the level of investment inflows to the continent was too low. They urged sovereign wealth funds worth an estimated $ 5 trillion to invest in developing countries, even as they seek the right climate and demand steps against corruption.

Citigroup shareholders have reportedly rejected the board’s compensation plan for the top five executives, which included a $ 14.9 million package for the Chief Executive Vikram Pandit for 2011, after he kept his salary in 2010 at just $ 1.00.

National Bank of Abu Dhabi has launched a real estate fund in partnership with a Kuwaiti firm to seek investment opportunities in the United Arab Emirates’ property sector.

Chinese Premier Wen Jiabao on April 26 said his country would set a $ 10 billion credit line and a $ 500 million in investment fund dedicated to eastern and southern European states as it aims to increase trade with the region to $ 100 billion in 2015.

Dubai announced on April 26 that it has raised $ 1.25 billion from the sale of two tranches of Islamic bonds and that the proceeds will be used for debt financing and general budgetary purposes.

The People’s Bank of China, China’s Central Bank, announced on April 14 that it would allow the yuan to fluctuate by up to 1 percent pm either side of its trading band against the dollar in a major step towards loosening currency controls. IMF and the US welcomed the decision.

According to EU’s statistics office Eurostat, the Eurozone’s trade with the rest of the world showed surprising strength in February, driven by French and German exports of cars and machinery. Exports from the 17 coun-tries sharing the euro surged 11 percent to give a trade surplus of 2.8 billion euros, from a deficit of 2.8 billion euros in February 2011. Imports rose 7 percent in February, mainly due to demand for Russian oil and gas during a sharp cold snap in February.

The IMF on April 17 estimated global growth at an annual rate of 3.5 percent this year, accelerating to 4.1 percent in 2013.

India’s central bank on April 17 lowered interest rates springing a bigger than forecast cut of 50 basis points along with a warning that further easing will be difficult.

Italy on April 18 said its recession would deepen in 2012 with the economy shrinking 1.2 percent and delayed a target to balance its budget by 2013.

Iran has reportedly extended a ban on oil exports to Germany and Italy and plans to ban imports from European Union countries.

Japan’s MS&AD is set to buy New York Life’s 26 percent stake in a joint venture with Max India for about $540 million signaling the continued appetite of Japanese companies for overseas assets.

The Group of 20 nations on April 20 pledged more than $430 billion to better than double the IMF’s lending capacity-and protect the global economy from the euro zone’s debt crisis.

lobal BriefsGG

May 201212

Pak politics

Talking to media after party’s Central Working Committee meeting in Islamabad on April 30, PML-N Chief Mian Nawaz Sharif warned the govern-ment of following the Supreme Court’s order in the Prime Minister contempt of court case or face a protest move-ment. He called on the opposition parties as well as ‘every Pakistani’ to come out on the streets to take the country forward. He invited all the opposition parties to rise above political differences and unite for this cause.

A 7-member bench of the Supreme Court of Pakistan on April 26 convicted Prime Minister Yousuf Raza Gilani for his willful intent of not complying with its order regarding writing a letter to the Swiss and other authorities for reopen-ing of illegal wealth cases against Prersi-dent Asif Ali Zardari. The symbolic punishment lasted for 30 seconds.

The majority of constitutional lawyers have expressed the view that following his conviction in the contempt of court case, the Prime Minister automatically stands disqualified.

PML-N Chief Mian Nawaz Sharif and PTI Chairman Imran Khan have demanded that the Prime Minister should step down in the wake of his conviction by the Supreme Court.

During Pakistani and US officials meeting in Islamabad on April 26, CIA shared intelligence suggesting that Al Qaeda planned to carry out major attacks inside Pakistan.

Prime Minister’s son, Ali Musa Gilani, ex-Secretary Health Khushnood Akhtar Lashari, Member National Assembly, Mian Abdul Sattar, acting Secretary, Ministry of Narcotics Control Zafar Abbas have been declared accused in Rs. 7 billion Ephedrine chemical scam by the Anti-Narcotics Force.

Chief of Army Staff General Ashfaq Parvez Kayani on April 18 called for peace-ful resolution of the Himalayan glacier dispute with India, and suggested Pakistan should spend less on defence and more on development.

In their meeting in New Delhi on April 8, President Asif Ali Zardari and Indian Prime Minister Dr. Manmohan Singh expressed their resolve to normalize the strained relations between the two countries. The Indian Prime Minister also accepted the invitation to visit Pakistan.

The US has offered a lucrative mon-etary favour to Pakistan for the federal budget 2012-13 in exchange for resumption of supply routes of NATO forces stationed in Afghanistan. The US offer is in addition to US earlier commitment to pay compensa-tion for 24 soldiers killed in NATO air strikes at Salala checkpost. The US has also offered “other” taxes on NATO supplies passing through Pakistan.

Balochistan Chief Minister Aslam Raisani has accused elements in policy-making machinery in Islamabad of indirectly helping the elements trying to break up Pakistan by not implementing announcements and promises made by President Asif Ali Zardari and Prime Minis-ter Yousuf Raza Gilani.

Tehreek-e-Insaf Chairman, Imran Khan told a public gathering in Abbottabad on April 8 that the current leadership is incapable of liberating Pakistan as it emerged as a result of NRO given by foreign powers. He pledged that PTI would disengage from the war on terror through dialogue and would liberate Pakistan from foreign influence.

In a meeting with businessmen and entrepreneurs belonging to various sectors, President Asif Ali Zardari on April 7 called for broad-based political consensus on national economic policies, owned by the business community, for their continuity regardless of which government was in.

NAB Chairman Admiral (Retired) Fasih Bukhari on April 11 said that although President Asif Ali Zardari enjoys enjoys complete immunity under the constitution of Pakistan and international law, the apex court decision regarding graft cases against him in Swiss courts will be final.

Prime Minister Yousuf Raza Gilani on April 11 took his cabinet into confidence on

the ephedrine imports scam and refuted allegations about involvement of his son Syed Ali Musa Gilani.

The joint sitting of the Parliament on April 12 unanimously passed new terms of engagement with the United States based on mutual respect for sovereignty, independence and territorial integrity of each other while leaving the resumption of NATO supplies issue vague.

Prime Minister Yousuf Raza Gilani appointed Irfan Qadir as Attorney General for Pakistan w.e.f April 12, 2012 replacing Maulvi Anwarul Haq who has been made advisor to the President’s House.According to World Trade Organization, economic shocks like the eurozone debt crisis are behind an expected slowdown in global trade growth to 3.7 percent this year, from 5.0 percent in 2011.

Prime Minister Yousuf Raza Gilani’s accused son Ali Musa Gilani and his family were reportedly granted “in-arrival” visas at Cape Town airport facilitated by the Pakistan High Com-mission bypassing the Foreign Ministry. They are reported to be living in a villa at a resort booked in the name of the country’s mission to claim diplomatic immunity for the fugitive family.

Spelling out priorities of the budget 2012-13 at a press conference in Islamabad on April 15, Prime Minister Yousuf Raza Gilani said that job creation, food security and meeting energy shortages will be priorities of the next federal budget wherein more incentives will be given to the farmers to increase production.

In a statement issued on April 16, Pentagon said that April 15 attacks in Afghanistan were likely carried out by Haqqani terrorists who operate from sanctuaries in neighbouring Pakistan.

The Khyber Pakhtunkhwa govern-ment on April 16 removed four senior officials over April 15 jailbreak in Bannu. Some 384 prisoners including 22 convicted hardened criminals and terrorists, were freed in the wake of two-hour attack.

Some US media outlets reported on April 17 that Pakistan was taking steps to quietly reopen NATO supply routes to Afghanistan in the next few weeks.

ational BriefsNN

May 201213

Pak economy

A private company carrying out reconnaissance in Tharparkar district has found some positive signs that there are gold reserves in the shape of power in the area. The company has applied for licence for exploration of gold in the area.

Foreign Private Investment: Accord-ing to State Bank of Pakistan report Pakistan is losing charm for foreign investors as both direct and portfolio investment fell sharply during the nine months of the current fiscal year. According to the report foreign private investment in Pakistan fell by 64.7 percent during July-March 2012.The portfolio investment is more disap-pointing since there is an outflow of $388 million compared to an inflow of $305 million during the nine months.

Unveiling four key points of the next budget — economic stability, self- reliance, reduction in unemployment, inflation and poverty reduction — Finance Minister Abdul Hafeez Sheikh on April 10, announced that the govern-ment would not impose any new tax or increase tax rate in the 2012-13 budget.

The State Bank of Pakistan has set Rs. 285 billion target for disbursement of agriculture loan among small farm-ers for current fiscal year.

The Pakistan Industrial Association Front urged the government to allocate sufficient funds for the construction of large water reservoirs in the upcoming federation budget otherwise days are not far when India would provide water on its own terms and conditions.

President Asif Ali Zardari, during his meeting with Saudi Deputy Foreign Minister Prince Abdul Aziz bin Abdullah bin Abdul Aziz on April 10 stressed the need for strengthening economic and trade ties between Pakistan and Saudi Arabia. He also sought Saudi Arabia’s invaluable support in early finalization of Pakistan-GCC Free Trade Agreement.

Non-Performing Loans of agricul-tural financing has posted a surge of 11 percent to Rs. 32 billion as on Dec. 31, 2011, reportedly, due to post flood effects and high cost of production.

Economic Coordination Committee has reportedly restored institutional

investment in National Savings Schemes to enable it to secure Rs. 150 billion which the Finance Ministry fears would be withdrawn on maturity.

Facing a serious financial crunch and fed up with Etisalat’s inflexibility in paying over $ 800 million in PTCL sale proceeds, Pakistan has asked the UAE-based firm to clear its dues before June this year or face hostile takeover of the country’s telecom giant by the government.

The cement manufacturers in Sindh and Balochistan have increased cement prices by Rs. 10 per 50-kilogram bag effective April 9.

Banks’ outstanding under Export Refinance Scheme declinend to three year low level of Rs. 192 billion at the end of calendar year 2011 mainly due to State Bank’s condition with regard to overdue export proceeds and decline in cotton prices.

According to official sources, the fiscal deficit was expected to shoot up to five percent of the GDP as key foreign inflows such as Coalition Support Fund, proceeds of auction of 3G licences to telecommunication companies and arrears of PTCL privatization are not likely to fully materialize by June 30.

According to Asian Development Bank’s latest report released on April 11, Pakistan’s economic outlook is expected to stay modest as its growth during fiscal year 2012 would hover around 3.6 percent.

Gas Sales-Purchase Agreement: The Economic Coordination Committee of the Cabinet on April 12 allowed the Ministry of Petroleum and Natural Resources to formally ink a gas sales-purchase agreement for import of gas from Turkmenistan under the $ 7.6 billion TAPI gas project at 69 percent of crude oil parity price.

Minimum Profit Rate: Maintaining policy rate unchanged at 12 percent forthe next two months, SBP on April 13 asked banks to fix a minimum profit rate to 6 percent per annum on all savings schemes effective May 2012 to encourage depositors.

US has reportedly disbursed $ 2.6 billion to Pakistan under Kerry Lugar Bill since its inception in October 2009 while the total amount of money released to the country under Coalition Support

Fund is $ 8.8 billion since the year 2002.

According to SBP monetary policy announcement on April 13, the current year government borrowings for budg-etary support increased to Rs. 373 billion from the scheduled banks and Rs. 218 billion from SBP during July 1 to March 30, FY12. The yearly growth in these borrowings turns out to be 56.5 percent and 18.5 percent, respectively.

Government Borrowing: The State Bank of Pakistan revealed on April 17 that the Federal Government’s borrowing for the budgetary support has witnessed a huge growth of 110 percent to a new record level of one trillion rupees because of slow foreign inflows, rising fiscal deficit and less than expected revenue collection.

Sales Tax Returns: The Federal Board of Revenue has allowed filing of sales tax returns for March 2012 without the mandatory requirement of submitting national tax number (NTN) and computerized national indentity card (CNIC) for unregistered persons.

Dassu Dam Financing: The World Bank has allocated $ 1.8 billion for Pakistan’s development projects in the current year and has also agreed to assist with financing for a multi-year Dassu Dam to be built in Kohistan on River Indus with a 1,500 MW power genera-tion capacity.

Petroleum Minister Dr. Asim Hus-sain said on April 20 that Pakistan, Afghanistan and India had signed an agreement on a transit fee of US cents 49 per MMBTU for $ 7.6 billion Turkmenistan-Afghanistan-Pakistan-India gas pipeline project. The project is likely to bring gas to Pakistan by December 2016.

Pakistan has reportedly decided to seek a new financial arrangement with the IMF amid concerns that it may not be able to repay its foreign debts in the next financial year without external support.

ational BriefsNN

May 201214

Trade & Industry briefs

MFN Status to India: Mr. Irfan Qaiser Sheikh, President, Lahore Chamber of Commerce and Industry is of the view that Most Favoured Nation status to India would be of little benefit to Pakistan unless all Pakistan-specific Non Tariff Barriers are removed and the core issues are addressed. He said in the presence of core issues between the two countries and multiple NTBs imposed by India, the desired results from opening up trade could not be fully realized.

Proposals for Budget 2012-13: In its proposals for 2012-13 budget , the Karachi Chambers of Commerce & Industry has suggested to the govern-ment to shift its focus from rural to urban economy and take necessary measures to provide stimulus to indus-try and trade.

The American Business Forum (ABF) has handed over budget proposals to the government with prime urge to encourage investment in the knowledge – based economy through targeted fiscal measures. The Forum identified sectors like informa-tion technology, pharmaceuticals and biotechnology as the cornerstone of the new economy and can help Pakistan diversify its export portfolio and reduce its risk from exposure to crop-risk and natural disasters. Increased investment in these sectors yields the added benefits of enhanced FDI, human development and employ-ment of educated youth, the Forum maintained.

Power Tariff Hike Condemned: The Lahore Chamber of Commerce and Industry on April 17 took strong exception to another increase of Rs. 1.67 percent in power tariff and termed it a plan to turn the country into a marketplace instead of a manu-facturing hub. The Chamber urged the government to refrain from any further increase in power tariff that is bound to give a deathblow to its reputation.

In its budget proposals, Lahore Chamber of Commerce proposed that the budget for the year 2012-13 must be focused on energy sector as the country’s economic revival hinges on availability of cheaper and uninter-rupted power and gas supply. The government should allow duty free import of power generation plants operated through rice husk.

KCCI organized a seminar on “Telecommunication & Crime” at Karachi on 28th April. The seminar aimed at creating awareness among members about the increased cyber crimes and criminal activities happening in the whole country and particularly in Karachi while negatively availing the facility and benefits of Telecommunication and Technology. Besides others, Mr. Raza Haroon, Provin-cial minister for Information & Technol-ogy also addressed the gathering.

APTMA Dismayed: Group leader of All Pakistan Textile Mills Association, Gohar Ejaz, told a press conference on April 12 that the textile industry was dismayed about non-implementation of energy conference decisions. He said there was no evidence that textile industry specific decisions would be implemented as exemption from electricity load shedding on independent industrial feeders and five days a week gas supply to textile industry’s captive power plants were still awaited. He said that there was a 40 percent and 31 percent in closure of capacities.

LCCI sends SOS to SBP: President, Lahore Chamber of Commerce and Industry, Irfan Qaiser Sheikh on April 12 sent an SOS to the State Bank of Pakistan pleading it to save the national economy and industry by bringing its policy rates to single digit reducing it by 250 to 300 basis points. He said that a cut of 50 to 100 basis points would not be doing any service to the dwindling economy.

Ban of Purchase of Machinery: The Pakistan Hardware Merchants Associa-tion on April 13 demanded of the govern-ment to lift ban on purchase of machin-ery, as the government was the buyer of 30 percent of the total sale of machinery and spare-parts in the country. The Association said that owing to energy crisis, the machinery and spare parts sales had already gone down by almost 40 percent. Therefore, the government should rescue this important sector of the economy as the total volume of the hardware is between 3 to 4 billion dollars

All Pakistan Cement Manufacturers Association has suggested to the Ministry of Finance to abolish withholding tax on electricity bills of cement factories and reduce the federal excise duty on cement from existing Rs. 500 per ton to Rs. 300 per ton in budget for 2012-13.

Reduction in Corporate Tax Rates Proposed: In order to encourage docu-mentation and growth of corporate sector, the Securities and Exchange Commission of Pakistan has strongly proposed gradual reduction in the corporate tax rates for private and listed companies with simultaneous increase in the tax rate of Association of Persons in the upcoming budget.

Cut in Tax, Interest Rates: The Kara-chi Chamber of Commerce and Indus-try has criticized the government for not taking objective measures of achiev-ing higher GDP growth against the prevailing high population growth rate of around 2 percent. The Chamber also urged the government to immediately bring down interest rates to single digit and reduce sales tax and income tax rates, if revival of industrial and business activity has to be witnessed.

Private Sector-led Economic Gro-wth: President, Islamabad Chamber of Commerce and Industry, Yassar Sakhi Butt, has said that the government should focus on the importance of creating a policy environment that encourages private sector-led economic growth as well as the need to boost private investor’s confidence.

IPCCI hails President’s visit to India: President, India Pakistan Chamber of Commerce and Industry, S. M. Muneer said that President Asif Ali Zardari’s visit to India was a positive sign and reflection of the desire of Pakistan that it would like to have very cordial and friendly relation-ship with India.

Refund of Tax Claims: The Lahore Chamber of Commerce and Industry in a statement on April 11 demanded of the Chairman, Federal Board of Revenue (FBR) to expedite stuck-up Sales Tax and Income Tax refund claims as the delay in release of funds that run into billions has triggered serious liquidity crunch for the export-ers and manufacturers that might lead to closure of several industrial units.

oice of IndustryVV

May 201215

Trade & Industry briefs

Karachi Chamber of Commerce & Industry’s President Mian Abrar Ahmad had a meeting with Ms Mandy Ivemy, Regional Manager for Gulf, Iran and Pakistan, United Kingdom’s Border Agency and underlined the need for issuing priority business visas for United Kingdom. He also called for timely issuance of visas to genuine Pakistani students who get admission in UK’s universities for higher studies.

Fuel Adjustment Charges: Pakistan Industrial and Traders Association Chairman, Sohail Lashari, in a statement on April 13 said that industrial growth in the country was the lowest in the region while the rate of inflation was the highest as compared to other regional countries. He termed the fuel adjust-ment charges in the electricity bills a ‘ robbery ‘ and urged the Prime Minister Yousuf Raza Gilani to abolish this self-made tax immediately and take measures to generate sufficient and cheap electricity in the country.

Ban on Export of Hides and Skins: Pakistan Tanners Association has demanded complete ban on export of raw, wet blue hides and skins, pickled of all sorts inducing wet blue split from Pakistan as 30 percent to 40 percent of capacity was lying idle and many indus-trialists were closing down their units and business owing to non-availability of raw material.

Export Development Fund: Syed Muhammad Asim Shah, Chairman, All Pakistan Bedsheet & Upholstery Manufac-turers Association has said that the federal government had deducted Export Develop-ment Fund (EDF) of Rs. 13 billion from the textile sector but spent only Rs. 3 billion on the betterment of the industry. He demanded that the government should allocate remain-ing Rs. 10 billion for upgrading value-added industry and equipping it with modern technology and trained/skilled workforce.

ard and fake seeds creating fears of decline of 15 to 20 percent in the produc-tion of important crops like cotton, rice, maize, vegetable and fodder. They told the media that fake seed mafia is playing havoc in the Punjab province but both the Federal Seed Certification Depart-ment and Punjab Agriculture Department’s high-ups were playing the role of silent spectators. He claimed that volume of this illicit business has reached to the Rs.8 billion.

Law & Order Situation: KCCI President, Mian Abrar Ahmed, has expressed concerns over deteriorating law and order situation and business shut-downs severely hampering commercial and industrial activities which caused losses of billions of rupees. He said that no concrete efforts for safety and security of businesses were observed and the government and the law-enforcement agencies were only giving statements and doing lip services.

Cut in Petrol Prices: President, Multan Chamber of Commerce & Industry Anis A. Sheikh in a press statement on April 4 termed the govern-ment decision to cut petrol prices by Rs.2 per litre merely eyewash and a joke with the inflation-hit nation. He said that the government should withdraw the increase in POL prices otherwise business community would be bound to agitate the government’s anti-business policies.

Sales Tax Slab: The Lahore Chamber of Commerce and Industry has suggested to the government to take the private sector on board if it is really interested in jobs creation and power generation. The LCCI also suggested that the Sales tax slab should immediately be curtailed to 10 percent from existing 16 percent in order to reduce inflationary pressures.

Increase in Oil & CNG Prices: Trad-ers and industrialists have reacted sharply to the increase in oil and CNG prices and said this would hamper all sectors of the economy along with an upshot to inflation. They said that the increase in POL prices will have chain reaction and now prices of rice, pulses, sugar, power, tea, milk, ghee, soap and other commodi-ties are expected to rise in near future. They urged the President and the Prime Minister to take immediate notice of the increase and direct the concerned minis-tries to withdraw it in toto otherwise they fear there will be severe agitation from the masses.

Load Shedding: In a statement on April 4, office bearers of Lahore Chamber of Commerce and Industry urged the govern-ment to immediately stop unscheduled load shedding . They said they feared an anarchy-like situation in the country if appropriate measures are not taken to overcome the situation. They also called for an immediate revival and reactivation of LCCI- LESCO Dispute Resolution Committee so that the issues could be discussed and tackled in an bearers urged the President and Prime Miniter to take notice of this situation and act promptly to save industrial and social fabric of the country.

Priority Business Visas: Karachi Chamber of Commerce and Industry has urged the United Kingdom to take into account KCCI’s recommendations for issuing priority business visas.

NIT Kiosk Services at PSO: NIT’s sales promotion teams are organizing informative kiosk services to create aware-ness among public about the benefits and Tax Rebates available for investors of NIT funds. A kiosk was organized from 18th to 19th April, 2012 at the Head Office of Pakistan State Oil (PSO), Karachi to inform PSO staff and executives about the benefits of investment in NIT funds. A good number of PSO employees and executives visited NIT kiosk to get information about investments in NIT funds.

Cut in Input FED Rate: The Karachi Chamber of Commerce and Industry has urged the government to allow beverage manufacturers to adjust Federal Excise Duty (FED) paid on inputs in Sales Tax Mode or reduce the rate of input FED on concentrate to 25 percent from 50 percent. The Chamber noted that these measures could reduce the cost of doing business and the benefit would be passed on to consumers.

Fake Seed Mafia: Agri Forum Pakistan Chairman, Muhammad Ibrahim Mughal has drawn the attention of the govern-ment towards the business of substand

oice of IndustryVV

May 201216

T he way the state machinery operates at present, final figures of revenues collected

and expenses incurred aren’t available till end-September i.e. three months after the passage of the federal budget for the next year. Thus, budgets are based on estimates of these statistics that often prove wrong. This year the Finance Minister will present the Budget for 2012-13 on May 25, i.e. much earlier than the usual practice, and so these statistics would be more unreliable. A budget based thereon, may be more off the mark.The first sign thereof is the dispute between Pakistan Bureau of Statistics and the Finance Ministry, over the GDP growth rate. The next would be between the IMF and the Finance Ministry over fiscal deficit-to-GDP ratio. But the argument to rebut criticism of the budgetary assumptions would be that no one has a crystal ball to see what the regime can’t see. On February 25, the Prime Minister had promised the media that his government won’t levy any new taxes in the coming budget–a promise repeated by the Finance Minister–and on April 27 Chairman FBR promised the same. Good for everyone, but from where will come the resources to repay public borrowing of the last quarter, let alone the rest, as per the terms of the recently passed SBP Autonomy Bill?It is unlikely that the US will release $1.5bn plus committed under the Kerry-Lugar Bill, or quickly reimburse more than $2bn spent by Pakistan on account of US forces in Afghan-istan; payment of these funds would be withheld subject to Pakistan meeting US terms involving its role in the US ‘war on terror’. The latest unsuccessful visit of Marc Grossman to Islamabad shows that this delay is now certain. Disclosures about the likely contours of the budget indicate that non-tax revenues include an amount equal to Rs 70bn as external proceeds of the privatisation of state-owned entities (SOE). That inflow too is unlikely; Privatisation Commission reports indicate that preparatory work to privatise SOEs has not begun (which are these SOEs, anyway?) and all the other reforms remain stalled because 2012 is the election year. As a consequence of this confusion Rs 117.8bn ($1.2bn) slotted in as external programme support too won’t be disbursed. The same applies to proceeds of awarding G3 telecom licenses.The scenario portraying problems in repayment of domestic debt are worrisome, but the government could pressurize the SBP into printing more currency to repay the domestic debt, without caring about its impact on money in circulation and inflation. But, that’s not how it can repay maturing external debt; it must either borrow more or default on its commit-ments that the Musharuff regime avoided by getting external debt rescheduled due to its reputation, and postpone repay-ments until January 2008. The incumbent regime won’t get this relief, given its track record of meeting its commitments to the IFIs. The attitude of the developed states, especially of an ‘angry’ US, may forestall further lending by the IMF.Fearing the fallout from crystallization of such a possibility, a

high-profile Pakistani delegation led by the Finance Minister visited the offices of the IMF and WB. According to media reports, the delegation was keen on a new $3.5 to $5bn SBA with IMF. Report-edly, the IMF officials pointed to Pakistan’s record of honouring the terms of the existing SBA–the rising commodity prices, surge in oil imports, and the approaching deadlines for external debt repay-ment, as the factors that will impact the economy’s external sector in the coming months. The other

major issue in obtaining fresh external debt would be Pakistan’s over-indebtedness. A recent ADB report shows that Pakistan is now its third largest borrower after Vietnam and India. Being a big borrower is not the problem; it is the visible inability to generate external debt repayment capacity. That’s what Pakistan lacks primarily due to a horrible state of its power sector courtesy the circular debt which has more to do with waste and corruption than rise in furnace oil price. Produc-tion capacity exists, but revenue leaks via corrupt oil buying practices, power theft, line-losses and non-payment by consum-ers, especially state offices, are crippling this sector.This is the key distortion causing a slide in exports because import of inputs on easy terms by the export-oriented sector is now difficult. Suppliers no longer trust Pakistani exporters to pay on time. Pakistan also can’t attract foreign investment to expand its industrial base. Weak internal security and regulation are the other disincentives discouraging foreigners.In this setting, of all the gathering storms, the worst could be the one that may lead to default on external debt repayments, or deplete the country’s exchange reserves and cause a rapid slide in the Rupee’s exchange rate. Prospects of this scenario crystal-lizing are becoming brighter–the end market observers had pointed to a year ago–and warned the regime to prepare for facing it without making the nation suffer its fallout. Of the $7.6bn borrowed from IMF in 2008 under the SBA, Pakistan has to repay $4.3bn in 2012-13, besides instalments under the existing IFI and bi-lateral loans. Recently, IMF had estimated Pakistan's gross financing [external debt servicing] needs in 2012-13 at $10.5bn, but feared that its ability to pay would weaken significantly beginning 2012-13. That was a very realistic forecast. In 2010-11, Pakistan repaid $5.78bn without repaying anything to the IMF. With a fresh load of repaying $4.3bn to IMF, the burden will cross $10bn mark. Not surpris-ingly therefore, since March 2011, official foreign exchange reserves have fallen by almost $3bn.Desperate actions like permitting the unquestioned return of ‘black’ wealth are hardly reflective of governance based on a sound vision of the future. To begin with, during the tenure of the sitting regime, not much of that ‘black’ wealth would return, whose infusion into its economy could make Pakistan a less secure place for investment–a support that Pakistan will need if it is governed as dumbly as at present, and keeps ignoring its import substitution sector as recklessly as being done now. These are bad signals for the future.

Coming budget and the gathering storm

EEditorial

May 201217

As before, State Bank of Pakistan’s April 13 Monetary Policy statement contained a

number of warnings. In fact they were repetition of what the SBP has been saying for the past three years.While the primary consideration in devising monetary policy remains bringing inflation further down as it has persistently remained in double digits in the last few years what is equally important is ensuring financial system’s stability and smooth functioning of the payment system given the current stressed liquidity conditions in the market. While SBP is continuously injecting substantial short term liquidity in the system (Rs200 billion as of April 13), it is being continuously rolled over. It is worrying that these injections are becoming too frequent, in fact permanent, which poten-tially carries inflationary risks.Consistently growing government borrowing from the banking system is adversely impacting the economy as a whole by steadily eroding its medium term productive capacity; almost frozen private sector credit, lack of invest-ment and persistent inflation in double digits together reflect that scenario. In the nine months of the current financial year, public borrowing from scheduled banks has been Rs 373 billion besides Rs 218 billion from the SBP. Year-on-year rise in public debt from these sources has touched 56.5 and 18.5 percent respectively. Year-on-year rise in private sector credit, on the other hand, was just 4.2 percent though deposits of the banking system rose by 17.4 percent during the same period. These are fairly worrying signs.Of all these negative trends, the consistent decline in private investment is the most worrisome aspect for several reasons: it impacts medium term inflation, growth prospects for job creation and, above all, foretells lower economic growth in the coming years. What is making such a future more likely is the fact that, despite decent growth in deposits, banks persist with financing public debt rather than identifying venues for risk-taking in real sectors, and building partner-ships to route credit to the private sector. The cost to the economy is visible; investment to GDP ratio has fallen to a historically low level and economic growth has been considerably lower than the economy’s potential. Very rightly, the SBP asks “If a revival in private sector credit and growth prospects is to take place, a pertinent question in the current circumstances is: how will the government roll over its maturing short-term debt and raise additional financing while simultaneously retiring its borrowings from the SBP?” Thereafter, the SBP goes on to express its fears when it says “With shortfalls in external sources, the most likely avenue would be more borrowings from the SBP. The inflationary implications of this scenario should not be underestimated.” Indirectly referring to the provisions of the recently passed parliamentary bill granting SBP its autonomy, the monetary policy statement expresses its fears about the likely violation

of the bill–a fact pointed out by observers at the time the bill was passed by the parliament fearing government’s inability to comply with its terms, given the current irresponsible state of fiscal management.No wonder the monetary policy says, “simulta-neously meeting the legal requirement of zero quarterly borrowing from SBP, scaling back liquidity injection, effectively anchoring inflation expectations, and creating space for the private

sector, could prove to be a much more difficult task than appreciated.” It could indeed be the case because of the profile of fiscal debt management, especially the disregard for austerity. It is worth asking how many past Presidents and Prime Ministers went on as many foreign visits as did Presi-dent Zardari and Prime Minister Gilani, accompanied by so many ministers.Blatant disregard for regulatory restrictions is the factor that drives the fiscal deficit to new heights and is rapidly exposing the economy to more shocks. This approach is devoid of any concern for adopting a forward-looking approach. Yet, it is defended on the strength of a questionable ‘public mandate’. What is hurting the image of the regime is that it justifies its irresponsible administration on the basis of ‘public mandate’, and undermines the very concept of democracy which is bad. According to the SBP, the economy needs a forward-looking approach to policy-making with strict adherence to rules laid out in the legal frameworks be it the State Bank of Pakistan Act (after amendments in 2012), or the Fiscal Responsibility and Debt Limitation (FRDL) Act-2005.SBP worries about the consequences of living beyond means –stage when domestic liquidity would virtually be exhausted, and to worsen that scenario, the external sector too would be placed in jeopardy. Given substantial external debt payments, declining trend in exports, rising oil price, and weak financial inflows, the external position would remain under pressure. Besides, external flows will decline because of greater security concerns and pervasive bad governance, the most worrying indicator thereof being the almost unchecked corruption.With gradual rise in external current account deficit, and the consistent drop in foreign inflows, SBP’s exchange reserves are declining. During first eight months of the financial year 2011-12, external current account deficit was $3 billion while net capital and financial account receipts were $187 million. Liquid foreign exchange reserves of the SBP therefore fell to $11.8 billion by end-March from $14.8 billion as at end-June 2011. These developments are exerting a downward pressure on Rupee liquidity, as reflected in a 21.4 percent drop therein by end of March (on a year-on-year basis) in the Net Foreign Assets of the banking sector. The key sentence in the Monetary Policy is “The challenge is if the underlying behaviour of a significant user [i.e. the state] of money doesn’t respond to interest rate signals, monetary policy would be ineffective in achieving its objectives.”

SBP monetary policy – the warnings it contains

ditorialEE

May 20121818

PM’s contempt of courtSir, Mr Yusuf Raza Gilani’s blunt refusal to comply with the verdict of the Supreme Court isn’t odd; his repeated assurances to abide by the court’s verdict, is the standard deceptive trick used by the PPP leaders. The fact that his regime survived for four long years, courtesy the support of PML-N, MQM and ANP, encouraged it to go on misgoverning the state and become over intoxicated with power. Mr Gilani’s stand, that he can be disqualified by none other than Speaker of the National Assembly, is a manifestation of the fact that power has blinded him beyond retrieval, as stated in the Quran (Sumun bukmum umyun fa hum la yarjeoon). It is now beyond logic to expect the PPP regime to do things that are moral, rational and ethical. God help Pakistan! Jameel MahmoodKarachi Aitzaz Ahsan – what a turnaround! Sir, Mr Aitzaz Ahsan was a reputed lawyer, a man whose conduct did manifest moral values. The change in his thinking as well as conduct isn’t natural. I guess Mr. Munir Sheikh (Value Chain April 2012) was right in suspecting that the incumbent regime discovered something about Aitzaz that it is using to exploit him to the hilt. Abdullah AhmedLahoreUnfulfilled promises Sir, during April, the much talked about roundtable on energy promised a lot; none of it has been implemented thus far. The one thing that defines the conduct of the politicians is “lying shamelessly”. It applies to all of them.The chaos that cripples Punjab’s industrial towns bothers none in Islamabad. Most of the industrial units in Lahore, Faisalabad, Gujranwala and Sialkot, let alone the rest

Governance, what the hell it is?

akistan finds a reference in international media almost every day, albeit for reasons that cause

the conscientious Pakistanis embarrassment because, with few exceptions, each such story is a new chapter in the pervasive slide of governance.Stories about a Pakistani winning the Oscar, or a medal for a discovery, or achieving rare distinction in an examination, or winning a sporting event, though welcomed by all Pakistanis, can’t make up for the damage being caused to the country’s image by fresh stories about blatant corruption in the highest offices of the state and its institutions, and embezzlement of billions that push those institutions closer to bankruptcy; such stories are steadily diluting the confidence of the masses in the state.What makes this scenario worse is that the top brass of the state denies these shameful events in the face of undeniable evidence. That isn’t all; besides displaying their incompetence and callousness, top officeholders of the state defy the law, and in that quest, leave no stone unturned including transfers, re-assignment, even sacking of the officials nominated by the superior judiciary to investigate the alleged (and often visible) corruption involving politicians and bureaucrats who are the cronies of the political parties in power.Never before in Pakistan’s history were so many Ministers of Law, Law Ministry Secretaries, Attorney Generals, heads and investigation chiefs of Federal Investigation Authority (FIA) and National Accountability Bureau (NAB), and now Anti-Narcotics Force (ANF), replaced or sacked, as now the reign of the current ‘democratic’ regime governing Pakistan, that visibly has the backing of the US and EU. While the Western media keeps reporting on the corruption unleashed by the present regime, you hardly ever see leaders in the West faulting the regime. The only issue on which they fault the regime is the country’s role in the West’s ‘war on terror.’ What one finds odd is that, in spite of such conduct, the West, especially the US, can’t understand why the world hates them. How absolutely amazing! Open defiance of the law by Pakistan’s regime is encouraging lawlessness at a pervasive scale, which is manifested by rising trend of targeted and wanton killings, murders, robbing of bank, jailbreak, shameful crimes against women, organized frauds, dacoity, and petty crimes. Nothing different could be expected if breaking the law without being caught, much less being held accountable for it, became the order of the day. While corruption and embezzlement is crippling state offices and rendering them incapable of delivering on even the basic civic services (water supply, sanitation and security), the sole focus of the state officeholders is on securing their positions and those of their cronies. Ask any Pakistani and he won’t hesitate even for a moment to admit that democracy is the worst form of governance; the sooner it goes the better.Fresh investment in social and physical infrastructure is now imperative to rebuild the aging arrangements and structures and expand them to keep pace with the over 2% per annum

rise in the country’s population. Sadly, a regime that proudly calls itself a “peoples’ regime” seems unconcerned about the people. Ironically, the president claims that he isn’t bothered about the verdicts announced by courts of law; he cares only for the peoples’ verdict–a people sick of the regime. This is the flawed justification that is being used to shield corruption because it implies that the ‘elected’ rise to a level where they are absolved of the obligation to comply with the law.

This state of affairs is mind boggling because the combined impact of escalating insecurity and bad governance is eating away the very roots of investor confidence in a country that must increase investment in the real sector by 21% a year.Except for the 1958-68 decade, when savings in Pakistan had grown at over 14% per annum, Pakistan never recorded high savings. During that decade GDP growth had averaged 6.4% a year making Pakistan the second fastest growing economy in Asia. The backlog created by drop in savings and GDP growth since then requires that saving must rise at 21% and GDP at 7% a year for building investor confidence, which hasn’t occurred to the regime. This lack of economic sense is blacken-ing the face of democracy.A shocking example of how politicians look at things was the instance wherein, replying to a TV reporter who wanted to know how the massive jailbreak in Bannu took place (biggest in Pakistan’s history), a minister of the Khyber Pukhtunkhaw province said “the Army Head Quarter too was attacked.” It is such tactless cover-up of its glaring failures that symbolizes governance under democracy in Pakistan. The Bannu jailbreak on April 15 was a shocker; it portrayed the incompetence of the political leadership and bureaucracy because 384 prisoners were helped to escape by hundreds of Taliban, who came in a vehicle convoy from N. Waziristan, occupied the jail for over two hours, celebrated their victory, and the jubilant convoy went back unhindered; no security force even interrupted it, let alone confront it.The ‘democrats’ have proved that they are not bad merely at managing the economy; they are bad at doing almost every-thing. The commonly held view is that they are focused only on self-aggrandisement and enrichment. That this ‘pastime’ has already squeezed the economy’s wealth generation ability hasn’t occurred to them or, perhaps it has, and now they are in a hurry to make the most of their last days in the corridors of power, which explains their zero concern for governance.Pakistanis hope that the next regime will focus on issues that need urgent attention–infusing efficiency and transparency in administration, stiffer accountability, optimizing output from resources, and pulling above the ground the massive reserves of natural resource of Pakistan to cut its huge fiscal and trade deficits. If implemented in a truly committed fashion, these efforts will create massive opportunities for investment and employment – the two activities that suffered the most in the last four years. That’s what good governance could deliver.

P

ditorialEE

May 201219

Celebrating anniversaries: is that all you should do?

pril 21 marked the 74th death anniversary of Shair-e-Mashriq Allama Dr Sir Muhammad

Iqbal, who conceived the idea of what we to-day call the Islamic Republic of Pakistan. As always, there were several public meetings to praise him, and thereafter, we reverted back to our way of life, that virtually has nothing to do with what he stood for, and proved all his life by his admirable conduct in extremely challenging times.The Mard-e-Momin (a believer who unques-tioningly places his trust in God, and steadfastly follows the divine dictate in all his actions) is now a rarity. The self-proclaimed defenders of Islam, who by their conduct portray Islam as a ruthless code, are anything but Mard-e-Momin since they are the clan that is projecting a horrifying image of Islam that once attracted all because of its humanity, compassion, negation of class divide and spirit of forgiveness. These elements divided the Ummah into factions while claiming to be the sole group on the right path. To these clans, Allama Iqbal posed a critical question:

Yoon to Mirza bhi ho, Syed bhi ho, Afghan bhi hoTum sabhi kuch ho batao ke Musalman bhi ho?

Simply translated, the question is:You elevate yourselves claiming to be Mirza, Syed or AfghanBe whatever you claim to be, but are you a Musalman too?

Isn’t our society and polity steadily decaying because we have diluted the civilized values taught by Islam? Where does this decay emanate from? Obviously, from the top, for it is the top echelons of the society that carry the key obligation of setting examples of moral and ethical conduct. We drifted to the present level of collective insan-ity because our leaders no longer care about their sacred obligations; this is depicted by the style of governance of every institution. The reason there for is the corruption of the institutions of the state and their prodding of the rest of the society to follow suit.But this odd conduct is not an oddity; that’s how we recall all our leaders including Quaid-Azam – the Father of the Nation. All we do is pay lips service to the objectives they set for us. It is no surprise that we are descending into a bottomless pit of disgrace and economic distress, which is the logical fate of the nations that lose respect and confi-dence of other nations.The dispensation that we are now proud of having in place is democracy–a dispensation whose lethal weakness was identified by Allama Iqbal long ago when he composed the following historic lines:

Jamhooriyat woh tarz-e-hukumat hai ke jis meinBandon ko gina kartey hain tola nahien kartey

Translated in simple English, the lines read something like:Democracy is a form of governance wherein

Heads are counted without concern for the sanity therein

That he was absolutely right while pointing to this grav e flawin democracy, has been proved over and over again, not only this country but everywhere, though Pakistan is, by far, its biggest victim. The incompetent are in control of everything in the name of democracy by claiming ‘public mandate’ that, in the last elections was a mere shadow of what this term implies, as proved by facts that came to light later on. What that conduct is leading to is chaos that now seems uncontrollable and disgracing

democracy.Allama Iqbal saw history in the making when, at the advent of the 20th century, he traveled to Germany to acquire higher education. What he saw there, was described in a truly classic article –‘Payam-e-Iqbal’– published in two parts in 1926, in an Aligarh-based magazine ‘Sohail.’ During his stay in Germany he observed how democracy can function as well as fail in societies that weren’t credibly freed from the clutches of their landed aristocracies. That‘s why he could vividly foretell how that system would fail in the post-colonial era that the Indian sub-continent was entering.The European experience, and seeing for himself how Islam was systematically routed by a Machiavellian Europe, at first prompted him to compose the ‘Shikwa’, but soon he realized how recklessly Muslims flouted the Islamic code of conduct, that led to that end–a tragedy that prevented the world from becoming a more just and therefore a far better place to live.This realization prompted him to compose ‘Jawab-e-Shikwa”– a remarkable explanation of why the Muslims were in the pit and how they could rise again to carry out the divine mission of cleansing this world of segregation based on race, religion, and classes, inculcating a culture of compassion and the spirit of forgiveness–all of them implementing the divine will. Allama Iqbal knew that a change in Muslim imperial mindset was necessary to inculcate a culture that placed learning (not just Quran), but all other disciplines that Quran pointed to–a culture that was once the distinction of the Muslims all over the world; their research was later to serve as the foundation for European successes in every field that led to discoveries.What Allama Iqbal stood for all his life was this great cause-changing the Ummah’s mindset and shifting its energies to the pursuits that could elevate it to the pedestal it was obliged to occupy and serve humanity in submission to the divine will. It was this very cause i.e. inculcating a culture that prioritized learning–that was deliberately sidelined by successive regimes that came into power in Pakistan. Had the landed aristocracy not done that, it would have been difficult to subjugate the masses because then they would have voted into power only the honest and the competent to administer the state for the betterment of all, without distinction. He wanted the masses to stand firmly on their own feet and his message was:

Khudi na baich, ghareebi mein naam paida kar

A

ditorialEE

May 201220




















Grass “persona non grata” over a poem in which the former SS soldier described the Jewish state as a threat to world peace.

India’s Maoist rebels who held an Italian tour guide hostage in India for more than three weeks released the hostage on April 12 after authorities agreed to release Maoist prisoners.

Fang Lizhi, one of China’s best-known dissidents whose speeches inspired student protesters throughout the 1980s, died in the United States where he fled after China’s 1989 military crackdown on the pro-democracy movement.

Shops and businesses were shut in Indian held Kashmir during a strike to protest against the US prison sentence given to Dr. Ghulam Nabi Fai, a Kashmir-born man accused of working for Pakistan’s spy agency to influence Washington policymakers.

The first president of independent Algeria, Ahmed Ben Bella, died on April 11, 2012 in Algiers at the age of 95. He was Algeria’s president from 1962 to 1965 when he was overthrown by his defence minister, Houari Boumediene.

On April 7, Iran told the visiting former Japanese premier Yukio Hatoyana that it will pursue its nuclear programme despite restrictions.

North Korea’s heralded long-range rocket test on April 13 ended in failure disintegrating in mid-air soon after blast-off and plunging into the sea.

The World Bank on April 16 chose Korean – American physician Jim Yong Kim as its next chief. He will succeed outgoing President Robert Zoellick, a former US diplomat who is departing in June at the end of his five-year term.

Britain’s Labour Party on April 15 suspended Lord Nazeer Ahmed over

emoriumMM

May 2012

pril 30 marks the day when we sadly but proudly remember our valiant sons who defended us against

foreign aggression, and doing so sacrificed the greatest gift–their lives–that God had given them; let us pray that they all are honoured in their lives hereafter. Soldiers obey the orders of their commanders placing total trust therein, which places on the commanders a solemn responsibility of giving appropriate orders but they must follow the command of their top brass. In its 64-year history, besides the numerous skirmishes on its Eastern border, Pakistan had to fight three full-fledged wars in 1948, 1965 and 1971. Later, in 1979, it was plunged into a war–the Afghan civil war–that continues to date. The result is that the number of martyrs in the defence forces has been unusually high for a country like Pakistan in its short history.The war against India in 1948 was the result of how reckless-ly the British divided India wherein, defying its own principle of ethnic majority, the Maharaja of Kashmir was coerced to announce Kashmir’s accession to India. This decision incited the vast Muslim population of Kashmir to rise against him in October 1947. Initially Pakistan provided covert assistance to the Kashmiris to push the British Governor General of India to act, but instead of accepting the ground reality, he opted to invade Kashmir forcing Pakistan to go to war with India in June 1948. On January 15, 1949 a UN administered cease-fire ended that war, but to-date this wound bleeds both India and Pakistan–the legacy of Pundit Nehru and Mountbatten. According to Shuja Nawaz (Crossed Swords, Oxford Univer-sity Press, 2008), launching a guerrilla operation without trained manpower to direct and control the Tribal fighters, was a big error. Instead, Kashmir should, at first, have been infiltrated by sizeable group of trained soldiers who should have taken control of airfields to prevent Indian Army from coming in, and thereafter Pakistan’s armed forces should have launched a full-scale attack on Kashmir. Because this strategy was not implemented, beginning October 7, India began airlifting its troops to Kashmir. By early November, through 600 sorties, India was able to airlift over 5,000 troops to Kashmir.In 1965 the trouble first started in the Run of Kutch-another territory left undivided by the British that Pakistan wanted to be demarcated. After failing in its efforts to settle this issue, Pakistan decided to occupy the territories that belonged to Pakistan. The Indian response was war. Again a ceasefire was imposed–this time by Premier Harold Wilson–without settling the issue, but the clash exposed the weaknesses of India’s armed forces. This encouraged a second attempt at liberating Kashmir. This time the error made in 1948–sending untrained infiltrators into Kashmir-was avoided and by September 5, India was virtually on the run; as before, India resorted to invading Pakistan. But the 1965 war will be remembered for years to come because the fight put up by Pakistan’s soldiers on every front especially in the battle at Chawinda–the biggest after the battle for Leningrad–made every Pakistani proud.

As before, terms of the ceasefire and of the Tashkent decla-ration did not resolve the Kashmir issue; sacrifices by Pakistani soldiers weren’t rewarded and the wound contin-ues to bleed. The 1971 war–the most devastating–was rooted in contin-ued escalation of economic imbalances between the West-ern and Eastern wings of Pakistan that gave India the opportunity of the century–exploit the divide and trigger Indian-aided civil war in East Pakistan–that finally split the country. No less painful was the fact that after losing that war, 90,000 Pakistani troops became POWs in India. This tragedy lasted until 1973 when the humiliating Shimla accord was signed. In all these wars, while the soldiers and officers of the defence forces fought courageously on the ground, in the skies, and the Arabian Sea, leadership, both political and their own, let them down. A continuing tragedy, that has cost thousands of lives since 1979, economic losses of $68 billion (government estimate) and lasting damage to Pakistan’s global perception (hard to quantify), is the country’s totally tactless participation in the Afghan civil war. This is the legacy of Gen. Zia-ul-Haq, who was desperate to gain legitimacy after overthrowing an elected government and being involved in the overthrown Prime Minister’s hanging. In the post-1971era, Zia-ul-Haq damaged the country more than anyone else by encouraging religious fundamentalism and arming the religious groups; we pay for it in the shape of almost pervasive terrorism.The running tragedy of Pakistan is the quality of leadership it repeatedly suffered under since 1948; now it is being ruled by a lot that has broken all previous records of irresponsi-bility, a grave example thereof being the vehemently denied reports that it let thousands of US secret agents enter, reside, and operate from Pakistan to serve US interests. This beats what even Zia did during his decade-long illegal regime. Under the incumbent regime, Pakistan is not allowed to retaliate against open aggression–acts like attacks on Abbotabad and Salala, and the unabated drone attacks. Consequently, it places at risk the lives of its citizens and soldiers. Sacrifice is a sacred act but should people be asked to perform it to serve foreign imperial and downright crimi-nal interests? Will this attitude inspire more to stand up and fight for Pakistan?

Martyrs’ Day: questionsthat need an answer A

Yadgar-i-Shuhada Park and Monument in Multanmade for the soldiers of 1965 and 1971 battles who got Shahadat

21

Chinese Premier Wen Jiabao said on April 22 that the global financial crisis is not over and technical innovation and investment will be key to sustaining what remains a “tortu-ous” recovery. He also said that China would press on with reforms aimed at creating better legal protection for foreign investors.

A Reuters poll of more than 700 econo-mists across the world, predicted a modest 3.3 percent growth in the global economy this year with the US economy expected to grow at an annual rate of around 2.5 percent in the first three months of the year down from 3.00 percent record in the final quarter of 2011.

Speaking at a debate as part of the World Investment Forum on April 22, officials from the UN Conference on Trade and Develop-ment and several African nations complained the level of investment inflows to the continent was too low. They urged sovereign wealth funds worth an estimated $ 5 trillion to invest in developing countries, even as they seek the right climate and demand steps against corruption.

Citigroup shareholders have reportedly rejected the board’s compensation plan for the top five executives, which included a $ 14.9 million package for the Chief Executive Vikram Pandit for 2011, after he kept his salary in 2010 at just $ 1.00.

National Bank of Abu Dhabi has launched a real estate fund in partnership with a Kuwaiti firm to seek investment opportunities in the United Arab Emirates’ property sector.

Chinese Premier Wen Jiabao on April 26 said his country would set a $ 10 billion credit line and a $ 500 million in investment fund dedicated to eastern and southern European states as it aims to increase trade with the region to $ 100 billion in 2015.

Dubai announced on April 26 that it has raised $ 1.25 billion from the sale of two tranches of Islamic bonds and that the proceeds will be used for debt financing and general budgetary purposes.

The People’s Bank of China, China’s Central Bank, announced on April 14 that it would allow the yuan to fluctuate by up to 1 percent pm either side of its trading band against the dollar in a major step towards loosening currency controls. IMF and the US welcomed the decision.

According to EU’s statistics office Eurostat, the Eurozone’s trade with the rest of the world showed surprising strength in February, driven by French and German exports of cars and machinery. Exports from the 17 coun-tries sharing the euro surged 11 percent to give a trade surplus of 2.8 billion euros, from a deficit of 2.8 billion euros in February 2011. Imports rose 7 percent in February, mainly due to demand for Russian oil and gas during a sharp cold snap in February.

The IMF on April 17 estimated global growth at an annual rate of 3.5 percent this year, accelerating to 4.1 percent in 2013.

India’s central bank on April 17 lowered interest rates springing a bigger than forecast cut of 50 basis points along with a warning that further easing will be difficult.

Italy on April 18 said its recession would deepen in 2012 with the economy shrinking 1.2 percent and delayed a target to balance its budget by 2013.

Iran has reportedly extended a ban on oil exports to Germany and Italy and plans to ban imports from European Union countries.

Japan’s MS&AD is set to buy New York Life’s 26 percent stake in a joint venture with Max India for about $540 million signaling the continued appetite of Japanese companies for overseas assets.

The Group of 20 nations on April 20 pledged more than $430 billion to better than double the IMF’s lending capacity-and protect the global economy from the euro zone’s debt crisis.

oliticsPPoliticsPP

May 2012

anything including deciding whether an individual has, or has not committed a violation of the law. This attitude has damaged the image of our democracy immensely, particularly so in terms of public relief and betterment, about which the regime in has done practically nothing.People expected the PPP (‘peoples’) regime to work for their economic uplift. But the chaos on the streets in every corner of Pakistan manifests that this regime has strained the people economically, more all the earlier regimes. The visible failure of his regime was enough for Mr Gilani to step down. There are some who believe that, given the lengthy hearing in Mr Gilani’s case, they expected the Supreme Court to announce a detailed verdict on April 26, to close this chapter that has disrupted all state activities.

But they overlook the fact that past actions of the judiciary (beginning with sacking of the Kh Zaimuddin regime) and of the armed forces (beginning with Ayub Khan’s Martial Law) constrain these pillars of the state from acting because they could yet again be labelled ‘anti-democracy’. But, by ignoring their obligation to secure the national interests, in effect, they are postponing critical changes in administration with serious consequences for all.If eventually Mr Gilani is made to accept the verdict, his and the federal cabinet’s actions effective April 26 could become invalid. The longer Mr Gilani exercises authority more of the state actions will become illegal–a fear that must be gripping the bureaucracy. Federal budget for 2012-13 is being drafted. But if at this point in time, the authority of the PM to take critical policy decisions is in doubt, the budget and all that it proposes will lose its sanctity.Businesses are in a fix; they are unsure about the validity of the budgetary proposals (especially those relating to taxation) that the parliament may sanction. Should they be relied upon to plan business activities in 2012-13, or could the budget be revised, rendering all their business strategies invalid? That is not all; a bigger worry for the business sector is the forecast about Pakistan’s foreign exchange reserves 2012-13 onwards, and the impact a massive decline therein would have on the Rupee’s exchange rate and therefore on inflation.The IMF prediction that, in 2012-13, $10.5bn of the present exchange reserves would be used to repay Pakistan’s maturing external debt confirms what was predicted by observers a year ago. But the regime began looking for funding support only now; what will hamper its success in this endeavour is the regime’s record of fiscal mismanagement; that’s what the IMF officials informed the Finance Minister. On March 30, official reserves stood at $11.84bn, and the total at $16.55bn. If they go down by $10.5bn, the official reserves will drop to about $1bn and the overall reserves to $6bn. If this scenario crystallizes, could a slide in the exchange value of the Rupee be contained? Mr Gilani doesn’t have time to think it over.

esides the many shocks it suffered, includ-ing an actual and several near air crashes, a

massive snow slide in Siachin and a virtual civil war going on in Layari, the biggest of them is the conviction of the Prime Minister by the Supreme Court in a long-running contempt of court case. The vast majority of legal experts and retired judges of Pakistan’s higher judiciary believe that the Prime Minister’s conviction also disqualified him from remaining a member of the parliament in the light of Articles 63(1)(g) and 204 of the constitution, and Section 18(1) of the Contempt of Court Ordinance.Although a detailed judgment of the Supreme Court on the Prime Minister’s conviction is awaited, based on the contents of the short order delivered on April 26, there is a consensus that, as of that date, Mr Yusuf Raza Gilani ceased to be the PM; neither he, nor his recently extended cabinet of federal ministers, can exercise any authority in matters of the state. However, Mr Gilani and his legal advisors keep expressing the opinion that only the Speaker of the National Assembly has the authority to disqualify him from the membership of the parliament, and along with it his right to remain the PM. This logic elevates the authority of the parliament above that of the Supreme Court. Mr Gilani has even said that no PM, if from his PPP, will write a letter to the Swiss authorities to re-open the money laundering cases against Mr Ali Zardari – the refusal that led to the conviction of Mr Gilani in the contempt of court case. His stand faulting the court verdict, that began as soon as he came out of the Supreme Court after he served his sentence until the rising of the court, is backed by all PPP stalwarts. Tragically, however, these PPP stalwarts are crossing all limits of prudence, decency and decor.Defiance of the court verdicts has become the distinguishing characteristic of the PPP, which conveys the impression that their brand of democracy makes no allowances for respect of the law; it is, if anything, lethal for the very dispensation that they all claim to adore. Their demand that the parliament be accepted as the final authority on virtually everything implies that the judiciary can’t question the parliament’s decisions. If allowed to go unchallenged, one day, they may dispense with the judicial system and hand over the immensely delicate job of dispensing justice to the parliament.The question is “should law be interpreted and administered by those with expertise therein, and a moral and professional track record of having done so, or should parliamentarians–their majority not having these critical attributes–be accepted as the bunch that can dispense justice?” Besides, is there any precedent for such a departure from recognized democratic practices? Democracies everywhere leave it to the judiciary to interpret the constitution and the law, and dispense justice. PPP claims having been elected by ‘180’ million Pakistanis as if every man, woman child and infant voted in their favour. It is this mandate that they consider their authority to do just about

Democracy, de�ance of court verdict, and escalating chaosB

22







Chief of Army Staff General Ashfaq Parvez Kayani on April 18 called for peace-ful resolution of the Himalayan glacier dispute with India, and suggested Pakistan should spend less on defence and more on development.

In their meeting in New Delhi on April 8, President Asif Ali Zardari and Indian Prime Minister Dr. Manmohan Singh expressed their resolve to normalize the strained relations between the two countries. The Indian Prime Minister also accepted the invitation to visit Pakistan.

The US has offered a lucrative mon-etary favour to Pakistan for the federal budget 2012-13 in exchange for resumption of supply routes of NATO forces stationed in Afghanistan. The US offer is in addition to US earlier commitment to pay compensa-tion for 24 soldiers killed in NATO air strikes at Salala checkpost. The US has also offered “other” taxes on NATO supplies passing through Pakistan.

Balochistan Chief Minister Aslam Raisani has accused elements in policy-making machinery in Islamabad of indirectly helping the elements trying to break up Pakistan by not implementing announcements and promises made by President Asif Ali Zardari and Prime Minis-ter Yousuf Raza Gilani.

Tehreek-e-Insaf Chairman, Imran Khan told a public gathering in Abbottabad on April 8 that the current leadership is incapable of liberating Pakistan as it emerged as a result of NRO given by foreign powers. He pledged that PTI would disengage from the war on terror through dialogue and would liberate Pakistan from foreign influence.

In a meeting with businessmen and entrepreneurs belonging to various sectors, President Asif Ali Zardari on April 7 called for broad-based political consensus on national economic policies, owned by the business community, for their continuity regardless of which government was in.

NAB Chairman Admiral (Retired) Fasih Bukhari on April 11 said that although President Asif Ali Zardari enjoys enjoys complete immunity under the constitution of Pakistan and international law, the apex court decision regarding graft cases against him in Swiss courts will be final.

Prime Minister Yousuf Raza Gilani on April 11 took his cabinet into confidence on

t is hard to name a country that is not suffering in one form or another because of bad governance, either of the

state or the other sectors of that country’s polity and economy. What caused governance to become as bad as it now is? Protests everywhere prove that people want this question answered. People seek an answer to this question although, all along, it was their own failure to curb this decline by defying those who were causing it, often in broad daylight, and going scot free despite parliamentary, judicial and administrative checks that, supposedly, were in place. The harsh reality is that all these institutional arrangements were infiltrated by elements that unwittingly formed parts of a mafia–Zionists–that began destroying all civilized values to eventually acquire control of the world to administer it on behalf of its Creator. That’s what they believe. Read protocol 4 of “The protocols of the learned elders of the Zion”, and you will understand what is going on around the world. The success of the Zionist movement is reflected in the fact that flaws in governance have become deep rooted, and defy any remedy because the managers of the state, industry and business, down to the lowest ranks, have lost a commitment to respecting and practicing moral values. The meaning of the word “smart” has changed; it now means being ‘clever’–the ability to deceive in visibly ‘unethical’ ways; that is the big tragedy–which downgraded the traditional commit-ment of businesses to delivering the ‘best value’ for the price charged. The shift to measuring success in terms of ‘profit’ instead of enhanced capacity for delivering the ‘best value’ for the price –route to greater market access to add to human prosperity and convenience via better goods and services–transformed businesses into profit centres. This change also encouraged a tendency to decimate competitors via merger and acquisition to deny consumers any choice. Doing so was imperative for turning humans into a totally submissive lot. All this went on despite practice of democracy, and parliaments, judiciary and state administration supposedly being in place. Three cheers for democracy and all these grand institutions!What the clever-by-half Zionists forgot was that this system was bound to fail, as it did, beginning 2007. The “occupy” movement may have lost its way, but it was a clear indication of the fact that, right down to the lowest levels of humanity, the facade created (courtesy democracy and parliaments) was a cover up since it actually legalized malpractices rather than curb them. Today, aren’t the worst off states the ones that, shamefully, still claim to be ‘exemplary democracies’?The corruption of democracy–election of the proxies of big businesses to the parliaments–shifted legislative objectives to achieving visible, rather than real and lasting results. Rental power in Pakistan, that implied sub-contracting the delivery of state obligations, is just one example of how democracies began crafting devices to enrich their benefactors–the mega businesses that now fund election campaigns, and thereafter keep bribing the parliamentarians. These tactless believers in

‘free for all’ markets also goaded the governments into legalizing market freedom (i.e. its volatility) which was essen-tially a mechanism for profiting for powerful market manipulators at the expense of the actual goods/commodity users.How deceptive were the risk-hedging gadgetries–derivatives, credit default swaps and the rest–was proved beyond doubt by the miseries that afflicted the holders of these contracts in the hope that they were secured against specific risks. How could it happen? What were market regulators doing? Alan Greenspan was the Fed Governor in whose regime all these contracts gained credibility; his belief in the integrity of these contraptions was so high that their trading was not regulated although, to check lethal speculation therein, these contracts should have been traded via regulated exchanges. Greenspan believed that markets had the ability to “self-regulate” which eventually proved a disastrous pro-speculation myth. The worst of these volatility driven markets is the oil market wherein price goes up or crashes based on the level of US oil stocks about whose being true the ordinary don’t have even the foggiest idea. Yet, that statistic determines movement in oil price that impacts practically every economy except those of the oil producing countries. Together, the OPEC member states, powerful speculators and mega oil companies pocket billions of dollars at the cost of escalating misery for millions across the globe. Just one example of how the state has gone down in fulfill-ing its obligations is the recent decision of the government that, from now on, oil prices will be revised every fortnight. But if the fiscal deficit and the circular debt still can’t be plugged, could oil prices be revised every day? This profile of the state policy on oil price reflects a craving to pass the entire effect of market volatility on to the citizens. If that is the role the state wishes to adopt, would citizens need it anymore? Dumb politicians no longer ponder this possibility because they are now the proxies of the big businesses, not national leaders–a tragedy that has befallen most nations around the world. Market volatility and the inability of the ordinary to survive it has created uncertainties about everything and inculcated a culture of living in today with its corruptive and after effects. The craving for becoming a millionaire overnight is now the objective that everyone is out to achieve whether he is a state or a corporate employee. No one seems interested any more in producing quality goods with long lives i.e. the ability to serve the buyers for an extended period. Besides cheating the buyers, short-life goods cause accumulation of junk with its harmful effects on the global environment, and a frightening escalation in natural calamities that cost hugely in terms of human lives and asset losses every year. The bigger tragedy is that decline in the all-round quality of governance worsened despite all the improvements in higher education. That’s so because, since the 1970s, the text books on management continue to prescribe profit as the mark of

Global slide in thepro�le of governanceI

oliticsPPoliticsPP

May 201223

Fund is $ 8.8 billion since the year 2002.

According to SBP monetary policy announcement on April 13, the current year government borrowings for budg-etary support increased to Rs. 373 billion from the scheduled banks and Rs. 218 billion from SBP during July 1 to March 30, FY12. The yearly growth in these borrowings turns out to be 56.5 percent and 18.5 percent, respectively.

Government Borrowing: The State Bank of Pakistan revealed on April 17 that the Federal Government’s borrowing for the budgetary support has witnessed a huge growth of 110 percent to a new record level of one trillion rupees because of slow foreign inflows, rising fiscal deficit and less than expected revenue collection.

Sales Tax Returns: The Federal Board of Revenue has allowed filing of sales tax returns for March 2012 without the mandatory requirement of submitting national tax number (NTN) and computerized national indentity card (CNIC) for unregistered persons.

Dassu Dam Financing: The World Bank has allocated $ 1.8 billion for Pakistan’s development projects in the current year and has also agreed to assist with financing for a multi-year Dassu Dam to be built in Kohistan on River Indus with a 1,500 MW power genera-tion capacity.

Petroleum Minister Dr. Asim Hus-sain said on April 20 that Pakistan, Afghanistan and India had signed an agreement on a transit fee of US cents 49 per MMBTU for $ 7.6 billion Turkmenistan-Afghanistan-Pakistan-India gas pipeline project. The project is likely to bring gas to Pakistan by December 2016.

Pakistan has reportedly decided to seek a new financial arrangement with the IMF amid concerns that it may not be able to repay its foreign debts in the next financial year without external support.

corporate success. Talking of higher education, only recently did it occur to business schools and universities to introduce a course on “Corporate Social Responsibility”. That is some awakening! Even though this subject now forms a part of the courses on business management, fresh graduates have little chance of practising and implementing whatever they learn in this course.Fresh graduates have no choice; they either learn to conduct business along the lines in practice in a corporation, or make an exit. Remember Greg Smith, who recently resigned from Goldman Sachs? His problem was that he had not lost his sense of morality completely, despite serving this invest-ment bank for 12 years. What he too pointed to was that corrupt governance was distorting the system as a whole, which is the case in the ‘developed’ West. In Pakistan, the latest sign of decline in the education sector is large-scale copying at the secondary and higher secondary exam-inations-a corruption aided by the invigilators. Economic powers involved in environmental pollution won’t accept any curbs on their corrupt industrial practices. Even the big multinational manufacturers that, at one time, took pride in their quality control, do not bother about this value; their products–for example cars–in the millions have to be recalled for removing defects that shouldn’t have been there in the first place if corporate governance was as responsible as it once used to be. The services offered by state entities–civic services–are far worse but none in the government is bothered about improving them. Take, for example, the state of the Karachi Water & Sewerage Board. Over the years, connivance of businesses with tax authori-ties –another shocking achievement of the quality of gover-nance –has led to ballooning of the fiscal deficits that have made it virtually impossible for the state to improve its services, let alone increase their spectrum and availability. Leave aside all; just look at the state and availability of basic services such as water supply, and basic healthcare, educa-tion, sanitation, and security. None of these services kept pace with the rise in popula-tion, with the result that people in under-developed and developing countries are worse off each day. To avail any of these services, they must make compromises–bribe employees in these services down to the lowest levels. Impliedly, surviving is now under threat courtesy the quality of governance that is now in vogue. More than ever before, the survival of the ordinary is under threat. Crimes of all shades raging from petty to grave are on the rise at a frightening pace, firstly, because, as in the case of basic civic services, the strength of peace-keepers-police and lower judiciary–didn’t keep pace with the rise in population and, secondly, as with all other state-provided services, these services too became the victims of corrup-tion down to their lowest levels. Pakistan now has one of the worst police-citizen ratios in the world; compared to the far more civilized and law-abiding population in the UK where this ratio is 1:151, it is 1:500 in a country like Pakistan. To make things worse, the police are faced with enormous handicaps–training quality, weaponry, protective gear, telecom devices, purpose-oriented screening gadgetry, transport equipment,

forensic investigation abilities and equipment, and legal advisory services that could ensure quality investigative effort so that known criminals were not allowed to go scot free by an equally handicapped lower judiciary. Of the many causes of failure in law enforcement, the big ones are corruption of the police and lower judiciary that are exploited to the hilt by powerful criminal gangs as well as the even more powerful landlord community.One can go on pointing to more loopholes in the system but the question is: are ‘we’ going to do something about filling up these loopholes? The ‘we’ here refers to those at the helm of affairs–a clueless, visionless and petty-minded bunch that adores our parliament. There is little to suggest that this hope will materialize because politicians also lack the ambition to do something revolutionary in clearing the mess they have in front of them–crux of the promise of the oath they all took.In spite of the darkness that engulfs the world due to a mixture of bad and corrupt governance, there is a reason not to lose hope. That reason is the historic struggles and the capacity of nations to rise from even a state of total disarray. Remember the state of the war-battered Japan, Korea and Vietnam, or the corruption and civil war ridden Kenya and Ghana? They rose literally from ashes and rebuilt their economic and social setups. So can the coun-tries that are ridden by equally or less debilitating crises. But it calls for the masses lining up behind the good and compe-tent among them and fighting for a total revamp of the system, which will require huge sacrifices.Nations that can do so have a chance of restoring sense and sensibility in their societies, as proved by the nations that did so but they all struggled in a non-self-destructive fashion. We have yet to learn that struggle must be non- self-destructive.

Rare example of good governanceGermany is among the few countries that set rare examples of good governance in the past two decades. The tough test was the reunification of Germany. After the collapse of the Berlin Wall, reopening of the Brandenburg Gate, and unifi-cation of Germany, there was an exodus of the former East Germans to West Germany but a tougher task was to devise ways wherein this huge influx – larger than the West German population–could be brought at par with the comparatively affluent West Germans to mitigate feelings of segregation. It took time and a lot of efforts on the part of the successive governments to restore visible economic parity between East and West Germans. It demanded recreation of a modern and sizeable industrial base in former East Germany, expansion of both domestic and foreign markets to absorb the increase in industrial output, and re-programme the psyche of East Germans to a new way of life–serving the private sector.At present, Germany is the country that has prevented a total EU collapse and saved the Euro. While all these have been outstanding achievements, there were lapses too such as the instances of bad management in Siemens and German banks ending up lending Euro 57bn to the Greek Government.

oliticsPPoliticsPP

May 201224






KCCI organized a seminar on “Telecommunication & Crime” at Karachi on 28th April. The seminar aimed at creating awareness among members about the increased cyber crimes and criminal activities happening in the whole country and particularly in Karachi while negatively availing the facility and benefits of Telecommunication and Technology. Besides others, Mr. Raza Haroon, Provin-cial minister for Information & Technol-ogy also addressed the gathering.

APTMA Dismayed: Group leader of All Pakistan Textile Mills Association, Gohar Ejaz, told a press conference on April 12 that the textile industry was dismayed about non-implementation of energy conference decisions. He said there was no evidence that textile industry specific decisions would be implemented as exemption from electricity load shedding on independent industrial feeders and five days a week gas supply to textile industry’s captive power plants were still awaited. He said that there was a 40 percent and 31 percent in closure of capacities.

LCCI sends SOS to SBP: President, Lahore Chamber of Commerce and Industry, Irfan Qaiser Sheikh on April 12 sent an SOS to the State Bank of Pakistan pleading it to save the national economy and industry by bringing its policy rates to single digit reducing it by 250 to 300 basis points. He said that a cut of 50 to 100 basis points would not be doing any service to the dwindling economy.

Ban of Purchase of Machinery: The Pakistan Hardware Merchants Associa-tion on April 13 demanded of the govern-ment to lift ban on purchase of machin-ery, as the government was the buyer of 30 percent of the total sale of machinery and spare-parts in the country. The Association said that owing to energy crisis, the machinery and spare parts sales had already gone down by almost 40 percent. Therefore, the government should rescue this important sector of the economy as the total volume of the hardware is between 3 to 4 billion dollars







by Rahnuma Ahmed

call the Apartheid Wall, or the Berlin Wall – he [Fini] was forgiven his party's past." The Holocaust whiplash, obviously, descends only on those who are critical of Zionism and its policies of tormenting Palestinians-- Muslims and Christians, alike. The Israeli Prime Minister Benjamin Netan-yahu therefore jumped into the fray. Israel cannot be compared to Iran (a "shameful moral equivalence") because "in Iran there is a regime that denies the Holocaust and calls for destruc-tion of Israel," adding for good measure, "it is Iran, not Israel, which threatens to destroy other countries." While the first bit of what Netanyahu says is partly true, the second is an obvious lie. It is Israel which has repeatedly demonstrated its willingness to invade and "destroy" neigh-bours (Gaza, Lebanon, Syria, Egypt). It is Israel which is the only Middle Eastern nation to possess nuclear weapons, and has refused to sign the Non-Proliferation Treaty. While it damns Iran for declaring it will "wipe Israel off the map", it is Israel which looks the other way at the Likud Party Platform's declaration that Palestine shall never have a state west of the Jordan. Netanyahu’s response is typical. When the cover story is exposed as false, the Zionists never deny but always attack and divert (James M. Wall, Veterans Today, April 8, 2012).On the nuclear issue, on its part Israel maintains a policy of nuclear ambiguity, supposedly for three reasons: confirma-tion would lead Arab publics to pressurise their own government to acquire nuclear weapons. Secondly, accord-ing to US Congressional law, the government is prohibited from providing foreign aid to governments which have nuclear programmes not under international inspection, and finally, France, which had helped construct the Negev Nuclear Research Centre near Dimona in the 1950s, had insisted on absolute secrecy (Yoel Cohen, Israel Affairs, 2010).But Grass has declared that he has had enough, "[of] the West’s hypocrisy – and one can hope that many others too may free themselves from silence, challenge the instigator of known danger." Challenge Israel, he did. Mordechai Vanunu, who worked as a technician at Israel's nuclear plant in Dimona for 9 years (1976-1985), in an interview with The Sunday Times in 1986, blew the whistle on his country's clandestine nuclear activities. Vanunu had work-ed at Dimona when Israel had insist-ed that it would not be the first Middle Eastern nation to introduce nuclear weapons to the region (a big lie). Information and photos leaked by Vanunu disclosed that Israel had "secretly developed an extensive

unter Grass, who won the Nobel Prize for Literature in 1999, is no 'little man.' The press release which

announced his award, stated: "[In The Tin Drum, 1959, Grass] comes to grips with the enormous task of reviewing contemporary history by recalling the disavowed and the forgotten: the victims, losers and lies that people wanted to forget because they had once believed in them". But now that Grass writes what the West's writers and intellectuals, editors and journalists, and of course, its leaders, would rather, remain buried and forgotten in his recently-published poem "What must be said",The universal silence around this fact,under which my own silence lay,I feel now as a heavy lie – fury hath followed. The victims, of whom Grass speaks, are the Palestinians. They are being made to `pay' for the Holocaust, which had historical roots in Christian anti-Semitism. In "two millen-nia of Christian ideas and prejudices," which provided the major basis of anti-Semitism, culminating in the Holocaust (Robert Michael, Holy Hatred: Christianity, Anti-Semitism, and the Holocaust, 2006) had nothing to do with the Pales-tinians, or Islam.Because the state of Israel, which claims to speak for the Jews of the world, has not only been built on stolen and occupied Palestinian land--the founders say God had 'prom-ised' them the land, and to think that Muslims are accused of being blind believers of the Quran–but persists in build-ing more and more settlements. Grass felt compelled to write about it because of Germany's recent sale of a sub- marine to Israel, "whose speciality is to deliver warheads capable of ending all life," which he fears will be used by Israel to launch, "a strike to snuff out the Iranian people on suspicion that under his [Ahmadinejad's] influence an atom bomb’s being built...." If that happens, the Germans will become, "enablers of a crime," foreseeable, and therefore will not be absolved with any of the usual excuses.The fury is not because the poem's "literary qualities" are doubtful (Raymond Deane, Electronic Intifada), or maybe, because it is downright "bad" (Salman Rushdie), but because it breaks the code of silence that seals lips in the West, and that of their innumerable acolytes worldwide. The Israeli interior minister has banned Gunter Grass from entering Israel. Calls have been made to revoke his Nobel Prize. The Hebrew Writers Association in Israel has called on the international literary community to rebuke him. He has been called an anti-Semite; dubbed a Nazi – "traces of the swastika on his clothes" – a reference to Grass having been drafted into the Waffen-SS, which was the combat arm of the Nazis' paramilitary organisation, in the last months of World War II. An attack "beneath contempt" says Tariq Ali who reminds us that when Gianfranco Fini, the former Italian minister, whose party has directly descended from Mussolini's, went to Israel and praised the Wall – which Palestinians and other peace-loving peoples of the world

�e 'big lie', and a `little man'

G

oliticsPP

May 2012

Benjamin Netanyahu

Mordechai Vanunu

25

Karachi Chamber of Commerce & Industry’s President Mian Abrar Ahmad had a meeting with Ms Mandy Ivemy, Regional Manager for Gulf, Iran and Pakistan, United Kingdom’s Border Agency and underlined the need for issuing priority business visas for United Kingdom. He also called for timely issuance of visas to genuine Pakistani students who get admission in UK’s universities for higher studies.

Fuel Adjustment Charges: Pakistan Industrial and Traders Association Chairman, Sohail Lashari, in a statement on April 13 said that industrial growth in the country was the lowest in the region while the rate of inflation was the highest as compared to other regional countries. He termed the fuel adjust-ment charges in the electricity bills a ‘ robbery ‘ and urged the Prime Minister Yousuf Raza Gilani to abolish this self-made tax immediately and take measures to generate sufficient and cheap electricity in the country.

Ban on Export of Hides and Skins: Pakistan Tanners Association has demanded complete ban on export of raw, wet blue hides and skins, pickled of all sorts inducing wet blue split from Pakistan as 30 percent to 40 percent of capacity was lying idle and many indus-trialists were closing down their units and business owing to non-availability of raw material.

Export Development Fund: Syed Muhammad Asim Shah, Chairman, All Pakistan Bedsheet & Upholstery Manufac-turers Association has said that the federal government had deducted Export Develop-ment Fund (EDF) of Rs. 13 billion from the textile sector but spent only Rs. 3 billion on the betterment of the industry. He demanded that the government should allocate remain-ing Rs. 10 billion for upgrading value-added industry and equipping it with modern technology and trained/skilled workforce.

ard and fake seeds creating fears of decline of 15 to 20 percent in the produc-tion of important crops like cotton, rice, maize, vegetable and fodder. They told the media that fake seed mafia is playing havoc in the Punjab province but both the Federal Seed Certification Depart-ment and Punjab Agriculture Department’s high-ups were playing the role of silent spectators. He claimed that volume of this illicit business has reached to the Rs.8 billion.

Law & Order Situation: KCCI President, Mian Abrar Ahmed, has expressed concerns over deteriorating law and order situation and business shut-downs severely hampering commercial and industrial activities which caused losses of billions of rupees. He said that no concrete efforts for safety and security of businesses were observed and the government and the law-enforcement agencies were only giving statements and doing lip services.

Cut in Petrol Prices: President, Multan Chamber of Commerce & Industry Anis A. Sheikh in a press statement on April 4 termed the govern-ment decision to cut petrol prices by Rs.2 per litre merely eyewash and a joke with the inflation-hit nation. He said that the government should withdraw the increase in POL prices otherwise business community would be bound to agitate the government’s anti-business policies.

Sales Tax Slab: The Lahore Chamber of Commerce and Industry has suggested to the government to take the private sector on board if it is really interested in jobs creation and power generation. The LCCI also suggested that the Sales tax slab should immediately be curtailed to 10 percent from existing 16 percent in order to reduce inflationary pressures.

Increase in Oil & CNG Prices: Trad-ers and industrialists have reacted sharply to the increase in oil and CNG prices and said this would hamper all sectors of the economy along with an upshot to inflation. They said that the increase in POL prices will have chain reaction and now prices of rice, pulses, sugar, power, tea, milk, ghee, soap and other commodi-ties are expected to rise in near future. They urged the President and the Prime Minister to take immediate notice of the increase and direct the concerned minis-tries to withdraw it in toto otherwise they fear there will be severe agitation from the masses.

Load Shedding: In a statement on April 4, office bearers of Lahore Chamber of Commerce and Industry urged the govern-ment to immediately stop unscheduled load shedding . They said they feared an anarchy-like situation in the country if appropriate measures are not taken to overcome the situation. They also called for an immediate revival and reactivation of LCCI- LESCO Dispute Resolution Committee so that the issues could be discussed and tackled in an bearers urged the President and Prime Miniter to take notice of this situation and act promptly to save industrial and social fabric of the country.

Priority Business Visas: Karachi Chamber of Commerce and Industry has urged the United Kingdom to take into account KCCI’s recommendations for issuing priority business visas.

NIT Kiosk Services at PSO: NIT’s sales promotion teams are organizing informative kiosk services to create aware-ness among public about the benefits and Tax Rebates available for investors of NIT funds. A kiosk was organized from 18th to 19th April, 2012 at the Head Office of Pakistan State Oil (PSO), Karachi to inform PSO staff and executives about the benefits of investment in NIT funds. A good number of PSO employees and executives visited NIT kiosk to get information about investments in NIT funds.

Cut in Input FED Rate: The Karachi Chamber of Commerce and Industry has urged the government to allow beverage manufacturers to adjust Federal Excise Duty (FED) paid on inputs in Sales Tax Mode or reduce the rate of input FED on concentrate to 25 percent from 50 percent. The Chamber noted that these measures could reduce the cost of doing business and the benefit would be passed on to consumers.

Fake Seed Mafia: Agri Forum Pakistan Chairman, Muhammad Ibrahim Mughal has drawn the attention of the govern-ment towards the business of substand

nuclear program, hiding its existence from the Israeli people and parliament, and the world" (Counterpunch, August 18, 2004). Vanunu claimed Israel had 150 to 200 atomic bombs, that it had started producing a hydrogen bomb and a neutron bomb. Vanunu, then 32-years old, was lured from London to Rome, beaten, drugged and kidnapped back to Israel by Mossad; an in-camera trial sentenced him to 18 years imprisonment–more than 11 of which were in solitary con- finement–on charges of having spied. He told American muckraker Eileen Fleming, "The Shin Beet, you know like the FBI and the Mossad, like your CIA were watching me. They tortured me by keeping a light on in my cell constantly for 2 years. They told me it was because they were afraid I would commit suicide, and the oppressive camera was for my safety. They recruited the guards and other prisoners to irritate me. They would deprive me of sleep by making loud noises near my cell all night long." Vanunu was released from prison on April 21, 2004 under strict government restrictions curtailing his speech and movement; he has since been arrested and imprisoned several times on charges of violation. Rejecting spy charges, Vanunu wrote this poem while imprisoned in Ashkelon. I reproduce it in its entirety because to me, it speaks of the best of the Nuremberg tradition, which had transformed the notion of personal culpability, making it a crime to follow the unconscionable orders of a superior. It is a scath-ing critique of the "big ones," the leaders, who assume that the diligent worker, the simple mechanic -- are "headless." Vanunu overturns this by reclaiming his "conscience," an ethical choice that landed him for long years in prison, and post-prison, being denied the right to leave Israel.

I Am Your Spy I am the clerk, the technician, the mechanic, the driver.They said, Do this, do that, don’t look left or right,don’t read the text. Don’t look at the whole machine. Youare only responsible for this one bolt. For this one rubber-stamp.This is your only concern. Don’t bother with what is above you.Don’t try to think for us. Go on, drive. Keep going. On, on.So they thought, the big ones, the smart ones, the futurologists.There is nothing to fear. Not to worry.Everything’s ticking just fine.Our little clerk is a diligent worker. He’s a simple mechanic.He’s a little man.Little men’s ears don’t hear, their eyes don’t see.We have heads, they don’t.Answer them, said he to himself, said the little man,the man with a head of his own. Who is in charge? Who knows where this train is going?Where is their head? I too have a head.Why don’t I see the whole engine?Why do I see the precipice–is there a driver on this train?The clerk driver technician mechanic looked up.He stepped . back and saw – what a monsterCan’t believe it; rubbed his eyes and–yes, it’s there all right. I’m all right. I do see

the monster. I’m part of the system.I signed this form. Only now I am reading the rest of it.This bolt is part of a bomb. This bolt is me. Howdid I fail to see, and how do the others go onfitting bolts. Who else knows?Who has seen? Who has heard?—The emperor really is naked.I see him. Why me? It’s not for me. It’s too big.Rise and cry out. Rise and tell the people. You can.I, the bolt, the technician, mechanic?—Yes, you.You are the secret agent of the people. You are the eyes of the nation.Agent-spy, tell us what you’ve seen. Tell us what the insiders, the clever ones, have hidden from us.Without you, there is only the precipice. Only catastrophe.I have no choice. I’m a little man, a citizen, one of the people,but I’ll do what I have to. I’ve heard the voice of my conscienceand there’s nowhere to hide.The world is small, small for Big Brother.I’m on your mission. I’m doing my duty. Take it from me.Come and see for yourselves. Lighten my burden. Stop the train.Get off the train. The next stop—nuclear disaster. The next book,the next machine. No. There is no such thing.In 2010, the director of the Norwegian Nobel Committee disclosed, that “he [Vanunu] has written letters to us this year and last year also, where he stated explicitly that he did not want to be a candidate for the Nobel Peace Prize. The reason he gave was that Shimon Peres [currently president; twice prime minister, 1984-1986; 1995-1996] had received the Nobel Peace Prize, and Peres he alleged was the father of the Israeli atomic bomb and he did not want to be associated with Peres in any way.”(Geir Lundestad, Director of the Norwe-gian Nobel Institute and Secretary of the Norwegian Nobel Committee, February 24, 2010). According to Israel's Channel 2, US officials believe Netanyahu has already decided to strike Iran (March 5, 2012). It is good to see a great literary figure (Gunter Grass) follow the lead of a little man (Mordechai Vanunu). Hopefully, there will be many more, for, as Grass writes, "tomorrow might be too late."

Rahnuma Ahmed is an anthropologist, a former academic, who contributes weekly columns to the daily New Age (Dhaka).

oliticsPPoliticsPP

May 2012

Shimon Peres

Israeli soldier clubs Danish protester with rifleDenmark has demanded an explanation from the Israeli govern-ment for video footage showing a senior Israeli army officer striking a Danish activist in the face with an M16 rifle, an act which has been sharply criticised by the Israeli prime minister, president and chief of staff.In the video, Lt Col Shalom Eisner, deputy commander of the Jordan Valley territorial brigade, is clearly seen slamming his rifle into the face of Andreas Ias. There was no obvious reason for the assault in the clip, which was broadcast on Israeli television and posted on YouTube. The soldier was suspended by the Israeli Defence Forces (IDF) pending an investigation.

26

Pakistan’s untold economic story

n the second half of April, Federal Finance Minister Hafeez Shaikh visited the US in the company of

Pakistan’s economic ‘managers’. Besides attending IMF and WB spring meetings, the visit was also meant to project Pakistan as an ideal loca-tion for investment. On April 18, he spoke at Washington's Brookings Institution wherein he said that, during FY12, Pak economy would grow by 4 percent. Reason: the democratic regime in power had taken a series of corrective steps to put the economy back on the track. According to him, in spite of the high oil price and uncer-tain global economic outlook, this GDP growth “although below Pakistan's potential, is the best in recent years”. The minister listed a host of ‘successes’ of the regime despite pretty bleak economic prospects after the ‘epic’ 2010 floods, and internal and external security threats. The successes included a check on inflation, unprecedented revenue generation, highest-ever level of foreign exchange reserves of $18 billion, 29 percent rise in exports in 2010-11, and upward trend in exports this year. Besides these positive trends, he cited the cap on public borrowing, success of the austerity drive, and consistent rise in remit-tances by overseas Pakistanis.Thereafter, he addressed the US-Pakistan Business Council, wherein he said what has been making newspaper front-lines: "I want to tell you the untold story of Pakistan-Pakistan is a great destination for investment." In his address he informed the American business community about the extraordinarily liberal investment regime Pakistan, and the huge enormous prospects that Pakistan’s economy offered. About liberalism, he said Pakistan’ incumbent regime allows foreign investors to earn phenom-enal returns and they could invest as much as they wanted, and could also pull out as much capital as they wanted. Besides, Pakistan welcomed foreign investment in all fields.Thereafter, the minister cited the stress that would be created by servicing of external debt, including that of international financial institutions that had accumulated over the years and now poses the biggest single challenge that could dilute the statistics and prospects he had earlier highlighted. Doing so, he rightly pointed to the cost Pakistan paid for accepting its role in the West’s ‘war on terror’, and the unfair treatment it suffered at the hands of those it had supported in this effort. On April 25, Wall Street Journal carried an article “Pakistan’s Untold Economic Story” authored by the finance minister to highlight what he had said in his address at the US-Pakistan Business Council. What the finance minister did was indeed commend-able-the effort to inform and rationalize the opinion of the American business community about Pakistan, its problems as well as prospects. But did he do a convincing job thereof ? The fact that he quoted some questionable estimates of Pakistan’s key economic indicators diluted the impact his promises could have had.

“Over the last four years, the Pakistani government has taken difficult but important steps to get our economy back on track. This year, real growth in gross domestic product is likely to reach 4%, nearly double last year's rate. During the first nine months of fiscal year 2012, tax collection has surged by 24%, remittances from Pakistanis abroad by 21% (to $9.7 billion), and our exports by 5.5% over last year's base of $25 billion. Inflation and consumer prices were down in March, easing pressure on small and medium-size companies. The Karachi Stock Exchange KSE100 Index now stands at 14,000, having been at 6,000 in 2008. Pakistan's foreign exchange reserves increased to $18 billion in 2011, the largest in history and our financial obligations are declin-ing. In 2015, Pakistan's annual repayment to the IMF will be a quarter of its 2012 obligation.

“Pakistan’s untold economic story” by Hafeez Shaikh, Wall Street Journal, April 25, 2012

The reality is that, according to latest reliable estimates: • GDP is unlikely to rise by 4 percent in FY12. IMF and WB

think it could, at best, touch 3.6 percent but now the view is that GDP growth could be just 3.2 percent. This is based on rational logical; if agriculture sector (that contributes 19 to 25 percent of the GDP) is likely to grow by 3.8 percent (government’s own estimate), and other sectors are likely to grow much less, how would the GDP grow be 4 percent?

• All market sources claim that exports are declining cour-tesy the rising import cost of inputs due a slide in the exchange rate of the Rupee and the ongoing power load-shedding. In this setting, there is very no likelihood of the exports show-ing any growth. Export growth last year too owed itself to a rise in cotton prices globally, not the ‘series’ of corrective steps taken by the regime.

• Inward foreign remittances too have gone up because CPI is continuously rising, forcing earners abroad to remit more to their dependents in Pakistan. This trend doesn’t support the logic about better governance; on the contrary, it takes the steam out of that logic.

• KSE-100 index has risen not because the corporate sector (oddly, except for the banking sector) is blooming. The real reason there for is a questionable ‘amnesty’ that the regime has granted to investors who bring back their black wealth stashed away abroad. If anything, this move is casting dark shadows over the integrity of Pakistan’s stock markets.

• The ‘largest in history’ exchange reserves which the finance minister proudly pointed to reflected more the borrowing from the IMF than a concerted attempt at building them.

• ‘Liberalism’ in attracting foreign investment that he talked about was an act of desperation. Investors seek security of their physical and financial assets, reliable civic services and fair regulation and taxation. Can the minister guarantee all this given the profile of the regime he praises so much?

I

EEconomy

May 201227

he way the state machinery operates at present, final figures of revenues collected

and expenses incurred aren’t available till end-September i.e. three months after the passage of the federal budget for the next year. Thus, budgets are based on estimates of these statistics that often prove wrong. This year the Finance Minister will present the Budget for 2012-13 on May 25, i.e. much earlier than the usual practice, and so these statistics would be more unreliable. A budget based thereon, may be more off the mark.The first sign thereof is the dispute between Pakistan Bureau of Statistics and the Finance Ministry, over the GDP growth rate. The next would be between the IMF and the Finance Ministry over fiscal deficit-to-GDP ratio. But the argument to rebut criticism of the budgetary assumptions would be that no one has a crystal ball to see what the regime can’t see. On February 25, the Prime Minister had promised the media that his government won’t levy any new taxes in the coming budget–a promise repeated by the Finance Minister–and on April 27 Chairman FBR promised the same. Good for everyone, but from where will come the resources to repay public borrowing of the last quarter, let alone the rest, as per the terms of the recently passed SBP Autonomy Bill?It is unlikely that the US will release $1.5bn plus committed under the Kerry-Lugar Bill, or quickly reimburse more than $2bn spent by Pakistan on account of US forces in Afghan-istan; payment of these funds would be withheld subject to Pakistan meeting US terms involving its role in the US ‘war on terror’. The latest unsuccessful visit of Marc Grossman to Islamabad shows that this delay is now certain. Disclosures about the likely contours of the budget indicate that non-tax revenues include an amount equal to Rs 70bn as external proceeds of the privatisation of state-owned entities (SOE). That inflow too is unlikely; Privatisation Commission reports indicate that preparatory work to privatise SOEs has not begun (which are these SOEs, anyway?) and all the other reforms remain stalled because 2012 is the election year. As a consequence of this confusion Rs 117.8bn ($1.2bn) slotted in as external programme support too won’t be disbursed. The same applies to proceeds of awarding G3 telecom licenses.The scenario portraying problems in repayment of domestic debt are worrisome, but the government could pressurize the SBP into printing more currency to repay the domestic debt, without caring about its impact on money in circulation and inflation. But, that’s not how it can repay maturing external debt; it must either borrow more or default on its commit-ments that the Musharuff regime avoided by getting external debt rescheduled due to its reputation, and postpone repay-ments until January 2008. The incumbent regime won’t get this relief, given its track record of meeting its commitments to the IFIs. The attitude of the developed states, especially of an ‘angry’ US, may forestall further lending by the IMF.Fearing the fallout from crystallization of such a possibility, a

high-profile Pakistani delegation led by the Finance Minister visited the offices of the IMF and WB. According to media reports, the delegation was keen on a new $3.5 to $5bn SBA with IMF. Report-edly, the IMF officials pointed to Pakistan’s record of honouring the terms of the existing SBA–the rising commodity prices, surge in oil imports, and the approaching deadlines for external debt repay-ment, as the factors that will impact the economy’s external sector in the coming months. The other

major issue in obtaining fresh external debt would be Pakistan’s over-indebtedness. A recent ADB report shows that Pakistan is now its third largest borrower after Vietnam and India. Being a big borrower is not the problem; it is the visible inability to generate external debt repayment capacity. That’s what Pakistan lacks primarily due to a horrible state of its power sector courtesy the circular debt which has more to do with waste and corruption than rise in furnace oil price. Produc-tion capacity exists, but revenue leaks via corrupt oil buying practices, power theft, line-losses and non-payment by consum-ers, especially state offices, are crippling this sector.This is the key distortion causing a slide in exports because import of inputs on easy terms by the export-oriented sector is now difficult. Suppliers no longer trust Pakistani exporters to pay on time. Pakistan also can’t attract foreign investment to expand its industrial base. Weak internal security and regulation are the other disincentives discouraging foreigners.In this setting, of all the gathering storms, the worst could be the one that may lead to default on external debt repayments, or deplete the country’s exchange reserves and cause a rapid slide in the Rupee’s exchange rate. Prospects of this scenario crystal-lizing are becoming brighter–the end market observers had pointed to a year ago–and warned the regime to prepare for facing it without making the nation suffer its fallout. Of the $7.6bn borrowed from IMF in 2008 under the SBA, Pakistan has to repay $4.3bn in 2012-13, besides instalments under the existing IFI and bi-lateral loans. Recently, IMF had estimated Pakistan's gross financing [external debt servicing] needs in 2012-13 at $10.5bn, but feared that its ability to pay would weaken significantly beginning 2012-13. That was a very realistic forecast. In 2010-11, Pakistan repaid $5.78bn without repaying anything to the IMF. With a fresh load of repaying $4.3bn to IMF, the burden will cross $10bn mark. Not surpris-ingly therefore, since March 2011, official foreign exchange reserves have fallen by almost $3bn.Desperate actions like permitting the unquestioned return of ‘black’ wealth are hardly reflective of governance based on a sound vision of the future. To begin with, during the tenure of the sitting regime, not much of that ‘black’ wealth would return, whose infusion into its economy could make Pakistan a less secure place for investment–a support that Pakistan will need if it is governed as dumbly as at present, and keeps ignoring its import substitution sector as recklessly as being done now. These are bad signals for the future.

of the bill–a fact pointed out by observers at the time the bill was passed by the parliament fearing government’s inability to comply with its terms, given the current irresponsible state of fiscal management.No wonder the monetary policy says, “simulta-neously meeting the legal requirement of zero quarterly borrowing from SBP, scaling back liquidity injection, effectively anchoring inflation expectations, and creating space for the private

sector, could prove to be a much more difficult task than appreciated.” It could indeed be the case because of the profile of fiscal debt management, especially the disregard for austerity. It is worth asking how many past Presidents and Prime Ministers went on as many foreign visits as did Presi-dent Zardari and Prime Minister Gilani, accompanied by so many ministers.Blatant disregard for regulatory restrictions is the factor that drives the fiscal deficit to new heights and is rapidly exposing the economy to more shocks. This approach is devoid of any concern for adopting a forward-looking approach. Yet, it is defended on the strength of a questionable ‘public mandate’. What is hurting the image of the regime is that it justifies its irresponsible administration on the basis of ‘public mandate’, and undermines the very concept of democracy which is bad. According to the SBP, the economy needs a forward-looking approach to policy-making with strict adherence to rules laid out in the legal frameworks be it the State Bank of Pakistan Act (after amendments in 2012), or the Fiscal Responsibility and Debt Limitation (FRDL) Act-2005.SBP worries about the consequences of living beyond means –stage when domestic liquidity would virtually be exhausted, and to worsen that scenario, the external sector too would be placed in jeopardy. Given substantial external debt payments, declining trend in exports, rising oil price, and weak financial inflows, the external position would remain under pressure. Besides, external flows will decline because of greater security concerns and pervasive bad governance, the most worrying indicator thereof being the almost unchecked corruption.With gradual rise in external current account deficit, and the consistent drop in foreign inflows, SBP’s exchange reserves are declining. During first eight months of the financial year 2011-12, external current account deficit was $3 billion while net capital and financial account receipts were $187 million. Liquid foreign exchange reserves of the SBP therefore fell to $11.8 billion by end-March from $14.8 billion as at end-June 2011. These developments are exerting a downward pressure on Rupee liquidity, as reflected in a 21.4 percent drop therein by end of March (on a year-on-year basis) in the Net Foreign Assets of the banking sector. The key sentence in the Monetary Policy is “The challenge is if the underlying behaviour of a significant user [i.e. the state] of money doesn’t respond to interest rate signals, monetary policy would be ineffective in achieving its objectives.”

EEconomy

May 2012

he process of taxation reforms must be two-fold. First, we must reconsider the currently levied taxes. Without doubt

they are too many, and being collected by too many agencies. It has created too many headaches for the taxpayers and too many opportunities for tax collectors to extort help taxpayers evade taxes. Second, to be perceived as fair and thus rightly payable taxes must be related to provision of visible benefits. While FBR is the tax collector, it exercises no authority in the way tax revenue is spent by state offices. Consequently, FBR is seen as the ruthless tax collector of a tyrant king. In all civilized countries, tax demands are accompanied by a summary of what the taxing authorities did with taxpayers’ money last year and a summary of activities and projects to be undertaken next year put as the justification for the taxes being collected. While it is understandable that the federal government can’t provide these details because those details would be too exhaustive and may not interest every taxpayer, but such details must be provided by the provincial and local government tax collecting authorities because their activities directly impact the citizens and claims of these tax collecting authorities are also verifiable by the ordinary taxpayers. This culture must be introduced forthwith if the state is to regain its writ, which has nearly been lost, thanks to the conduct of the bureaucracy as the unquestionable masters of the state. Taxes on individuals, households, SMEs, agriculturists, and the corporate sector, must be so rationalized that:• taxes can realistically be related to the services and benefits

provided by the state,• in terms of rates, taxes shouldn’t stifle incentive to increase/expand

the level of productive effort, • taxes should serve as incentives for reducing consumption and

promoting saving and investment,• taxes are few in number and payable to fewer agencies so as to

contain the administrative cost of collection,• taxes are payable with minimum inconvenience in terms of paperwork and official formalities,

• taxes in broadly the same category are levied and collected by the same authority, and

• taxes are levied on bases which cannot be manipulated and therefore leave no leeway for collusion between taxpayers and the levying/collection agency.

As of now, the only way to tax the retail sector is via annually renewable trade licenses. Retail sector be divided into three categories–small, medium and large–and be taxed only once a year for a fixed amount for a 3-year period wherein retailers must learn to maintain proper books of account, to be taxed fairly based on profit actually earned. This will also facilitate the build-up of a retailer data-base that doesn’t exist now, to eventually bring all retailers into the net but after giving them time to remedy their financial illiteracy–a relief the state must feel obliged to offer, but for three years and no more. This is an advice that has repeatedly been sidelined by the FBR.These reforms must aim at encouraging people to pay taxes, not evade them, by simplifying and rationalizing tax structure keeping in view one objective i.e. justifying the incidence of tax. Indeed, we

must shun the old tradition of the federation levying the majority of the taxes. But this objective cannot be achieved credibly unless the provinces develop the ability to utilize tax revenue optimally. Provin-cial records of spending tax revenue don’t encourage such a move. Provinces must be goaded into acquiring this crucial ability. The logic that, by refusing to pay special grants, the federation could prod the provinces to play a more responsible role is a dangerous idea. In Yugoslavia, this policy did not inculcate prudence; it gave rise to demands for dismembering the federation. The federation must focus on building this capacity in the provincial administrations before devolving the authority to levy, collect and spend tax revenue. Another aspect that must be examined is the influence of the powerful landlord class on provincial administration in utilizing the tax revenue. Without effective checks to stamp out these distortions, devolution is bound to fail.One expects that the government would do away with the multiplic-ity of tax collection agencies. That it would institute a system whereby taxpayers would be paying their taxes to just three or four tax collection agencies. Sixty-four years was sufficient time for doing all that. Yet nothing of the sort was thought about, let alone institu-tionalized. In this background of grave omissions one wonders what the governments and the bureaucracy have been doing all this time. The multiplicity of taxes, particularly levy of surcharges that make little sense to the taxpayers, must be discontinued. An example of how unrealistic taxation can be is the surcharge in the form of excise duty imposed on bank borrowings. It is no more than a device to hike-up borrowing rates. Similarly, federal levies such as Employees' Old age Benefit Insurance, Workers' Welfare Fund, and provincial levies such as Social Security, and Education Cess are examples of how confusing and complex the taxation system is. It would have been a lot better if a composite tax for these employee benefits could be levied and collected by one agency. Revenues collected under one head can be allocated for all the above purposes, which is a prerogative that remains with the government. It does not require injection into the revenue collection system. Thinking along these lines is now imperative.

Reforming the tax structureT

28

akistan finds a reference in international media almost every day, albeit for reasons that cause

the conscientious Pakistanis embarrassment because, with few exceptions, each such story is a new chapter in the pervasive slide of governance.Stories about a Pakistani winning the Oscar, or a medal for a discovery, or achieving rare distinction in an examination, or winning a sporting event, though welcomed by all Pakistanis, can’t make up for the damage being caused to the country’s image by fresh stories about blatant corruption in the highest offices of the state and its institutions, and embezzlement of billions that push those institutions closer to bankruptcy; such stories are steadily diluting the confidence of the masses in the state.What makes this scenario worse is that the top brass of the state denies these shameful events in the face of undeniable evidence. That isn’t all; besides displaying their incompetence and callousness, top officeholders of the state defy the law, and in that quest, leave no stone unturned including transfers, re-assignment, even sacking of the officials nominated by the superior judiciary to investigate the alleged (and often visible) corruption involving politicians and bureaucrats who are the cronies of the political parties in power.Never before in Pakistan’s history were so many Ministers of Law, Law Ministry Secretaries, Attorney Generals, heads and investigation chiefs of Federal Investigation Authority (FIA) and National Accountability Bureau (NAB), and now Anti-Narcotics Force (ANF), replaced or sacked, as now the reign of the current ‘democratic’ regime governing Pakistan, that visibly has the backing of the US and EU. While the Western media keeps reporting on the corruption unleashed by the present regime, you hardly ever see leaders in the West faulting the regime. The only issue on which they fault the regime is the country’s role in the West’s ‘war on terror.’ What one finds odd is that, in spite of such conduct, the West, especially the US, can’t understand why the world hates them. How absolutely amazing! Open defiance of the law by Pakistan’s regime is encouraging lawlessness at a pervasive scale, which is manifested by rising trend of targeted and wanton killings, murders, robbing of bank, jailbreak, shameful crimes against women, organized frauds, dacoity, and petty crimes. Nothing different could be expected if breaking the law without being caught, much less being held accountable for it, became the order of the day. While corruption and embezzlement is crippling state offices and rendering them incapable of delivering on even the basic civic services (water supply, sanitation and security), the sole focus of the state officeholders is on securing their positions and those of their cronies. Ask any Pakistani and he won’t hesitate even for a moment to admit that democracy is the worst form of governance; the sooner it goes the better.Fresh investment in social and physical infrastructure is now imperative to rebuild the aging arrangements and structures and expand them to keep pace with the over 2% per annum

rise in the country’s population. Sadly, a regime that proudly calls itself a “peoples’ regime” seems unconcerned about the people. Ironically, the president claims that he isn’t bothered about the verdicts announced by courts of law; he cares only for the peoples’ verdict–a people sick of the regime. This is the flawed justification that is being used to shield corruption because it implies that the ‘elected’ rise to a level where they are absolved of the obligation to comply with the law.

This state of affairs is mind boggling because the combined impact of escalating insecurity and bad governance is eating away the very roots of investor confidence in a country that must increase investment in the real sector by 21% a year.Except for the 1958-68 decade, when savings in Pakistan had grown at over 14% per annum, Pakistan never recorded high savings. During that decade GDP growth had averaged 6.4% a year making Pakistan the second fastest growing economy in Asia. The backlog created by drop in savings and GDP growth since then requires that saving must rise at 21% and GDP at 7% a year for building investor confidence, which hasn’t occurred to the regime. This lack of economic sense is blacken-ing the face of democracy.A shocking example of how politicians look at things was the instance wherein, replying to a TV reporter who wanted to know how the massive jailbreak in Bannu took place (biggest in Pakistan’s history), a minister of the Khyber Pukhtunkhaw province said “the Army Head Quarter too was attacked.” It is such tactless cover-up of its glaring failures that symbolizes governance under democracy in Pakistan. The Bannu jailbreak on April 15 was a shocker; it portrayed the incompetence of the political leadership and bureaucracy because 384 prisoners were helped to escape by hundreds of Taliban, who came in a vehicle convoy from N. Waziristan, occupied the jail for over two hours, celebrated their victory, and the jubilant convoy went back unhindered; no security force even interrupted it, let alone confront it.The ‘democrats’ have proved that they are not bad merely at managing the economy; they are bad at doing almost every-thing. The commonly held view is that they are focused only on self-aggrandisement and enrichment. That this ‘pastime’ has already squeezed the economy’s wealth generation ability hasn’t occurred to them or, perhaps it has, and now they are in a hurry to make the most of their last days in the corridors of power, which explains their zero concern for governance.Pakistanis hope that the next regime will focus on issues that need urgent attention–infusing efficiency and transparency in administration, stiffer accountability, optimizing output from resources, and pulling above the ground the massive reserves of natural resource of Pakistan to cut its huge fiscal and trade deficits. If implemented in a truly committed fashion, these efforts will create massive opportunities for investment and employment – the two activities that suffered the most in the last four years. That’s what good governance could deliver.

by A.B. Shahid

he rising gap between tax revenue and public expen-

diture has caused a fiscal deficit which seems impossible to contain. Heavy public sector borrowing and printing of currency, to bridge the deficit, has resulted in a sustained bout of inflation. Economic policy-making-its cornerstone being budget-making, remains unsci-entific and unrealistic. In the past, budgets have been drafted by bureaucrats who lacked appreciation of what the budget-making exercise actually means. Their main objective was cutting the fiscal deficit to an ‘acceptable’ level, not simultaneously striving to induce higher investment and higher productivity therefrom. Conse-quently, these crucial objectives were never achieved credibly. Outstanding domestic public debt alone is now too high. Atop thereof is external debt that is incurred essentially to meet trade deficits year after year. At over US$ 60bn, this debt limits the government’s options (if any) to improve its fiscal management.Successive devaluations of the Rupee to help out inefficient exporters in raising exports achieved only massive increases in the Rupee value of imports and external debt. Rarely did exporters convert this benefit into a lasting advantage–add to their efficiency. In hindsight, offering this crutch was not the way to contain trade and Balance of Payments BoP deficits. The industry needs prodding to increase its efficiency if it has to genuinely compete with foreign manufacturers. That’s the route to meeting the dual objectives of increasing exports and progressively substituting imports with domestic output but the industry won’t mend its ways until the government rationalizes the tariff structure, freezes the surcharges on fuel and energy, cuts down on bureaucratic red tape in agreeing to just demands of the industry and ensures that trade bodies enforce their self-regulatory role (in promoting import subs-titution) by making them realize the gravity of the situation. Lack of vision in devising strategies to contain fiscal deficit led bureaucrats to propose additional taxes rather than adopt measures that tailor taxation to encourage economic growth, which will automatically result in higher tax revenues. What is more unfortunate is the fact that not enough attention was paid to improving tax collection. While proposing higher taxes it was overlooked that in a corrupt society like ours, increased taxes rarely lead to higher tax collection because such measures only induced taxpayers to evade taxes with the active connivance of tax collectors, as manifested by the ever-increasing fiscal deficits.Pursuing this myopic approach, policy-makers achieved little in terms of giving the country a fair and growth-oriented tax system that could nurture a culture of voluntary tax payment by all stakeholders.

What we have evolved is a system which is seen by taxpay-ers as unjust because it is devoid of a realistic appreciation of tax incidence. Ineptly prepared, and summarily adopted budgets, have created a clear class divide – those who pay unduly high taxes and thosewho either don't pay any taxes at all, or pay far too less compared to the benefits they derive from the state. Taxpayers have not had much say in designing the taxation structure or collection system, whether Pakistan was under a democratic dispensa-tion or groaning under a martial

law. All previous regimes left taxation entirely to the bureaucracy as long as the rulers’ interests were secured. All taxpayer efforts at transforming the system into a fair, workable, and future-oriented dispensation have failed. Every year, tax collection system is deliberately riddled with more anomalies, and so rendered even more complicated for taxpayers to comply with. Collection agencies connive with a clever bunch of taxpayers to exploit the new loopholes in the system for their mutual benefit. That being the case, taxpayers, more tragically tax collectors, use their energies to defeat the system. This is the ongoing saga of Pakistan that must come to an end.Individuals, with virtually zero vision, much less a desire to do something good for the country to make them true heroes, now rule the roost. To start with, we must admit that past govern-ments relied on imposing indirect (consumption) taxes on the flawed belief that collecting indirect taxes was cost-effective. This is evidenced by the fact that two thirds of tax revenue (import duty contributing the bulk) continues to be realized through indirect taxes. This was the major factor responsible for rising inflation, and increased misery among lower income groups because these taxes were simply passed on to them by businesses via the price mechanism. In fact, the guise of indirect taxes was used by many businesses to cover up unjustified price increases. The government ignores the fact that these taxes negate the principle of ‘ability to pay’ as the basis for fair taxation, and hence escalate poverty. Inflation, partly the product of these taxes, led to demands for higher wages since higher indirect taxes took away the benefits of increased wages.

Reforming the tax collection and payment cultures T

Inept budgets created a clear

class divide between those

who pay unduly high

taxes and those who don't pay

taxes at all or pay far too

less compared to benefits they avail

EEconomy

May 201229

pril 21 marked the 74th death anniversary of Shair-e-Mashriq Allama Dr Sir Muhammad

Iqbal, who conceived the idea of what we to-day call the Islamic Republic of Pakistan. As always, there were several public meetings to praise him, and thereafter, we reverted back to our way of life, that virtually has nothing to do with what he stood for, and proved all his life by his admirable conduct in extremely challenging times.The Mard-e-Momin (a believer who unques-tioningly places his trust in God, and steadfastly follows the divine dictate in all his actions) is now a rarity. The self-proclaimed defenders of Islam, who by their conduct portray Islam as a ruthless code, are anything but Mard-e-Momin since they are the clan that is projecting a horrifying image of Islam that once attracted all because of its humanity, compassion, negation of class divide and spirit of forgiveness. These elements divided the Ummah into factions while claiming to be the sole group on the right path. To these clans, Allama Iqbal posed a critical question:

Yoon to Mirza bhi ho, Syed bhi ho, Afghan bhi hoTum sabhi kuch ho batao ke Musalman bhi ho?

Simply translated, the question is:You elevate yourselves claiming to be Mirza, Syed or AfghanBe whatever you claim to be, but are you a Musalman too?

Isn’t our society and polity steadily decaying because we have diluted the civilized values taught by Islam? Where does this decay emanate from? Obviously, from the top, for it is the top echelons of the society that carry the key obligation of setting examples of moral and ethical conduct. We drifted to the present level of collective insan-ity because our leaders no longer care about their sacred obligations; this is depicted by the style of governance of every institution. The reason there for is the corruption of the institutions of the state and their prodding of the rest of the society to follow suit.But this odd conduct is not an oddity; that’s how we recall all our leaders including Quaid-Azam – the Father of the Nation. All we do is pay lips service to the objectives they set for us. It is no surprise that we are descending into a bottomless pit of disgrace and economic distress, which is the logical fate of the nations that lose respect and confi-dence of other nations.The dispensation that we are now proud of having in place is democracy–a dispensation whose lethal weakness was identified by Allama Iqbal long ago when he composed the following historic lines:

Jamhooriyat woh tarz-e-hukumat hai ke jis meinBandon ko gina kartey hain tola nahien kartey

Translated in simple English, the lines read something like:Democracy is a form of governance wherein

Heads are counted without concern for the sanity therein

That he was absolutely right while pointing to this grav e flawin democracy, has been proved over and over again, not only this country but everywhere, though Pakistan is, by far, its biggest victim. The incompetent are in control of everything in the name of democracy by claiming ‘public mandate’ that, in the last elections was a mere shadow of what this term implies, as proved by facts that came to light later on. What that conduct is leading to is chaos that now seems uncontrollable and disgracing

democracy.Allama Iqbal saw history in the making when, at the advent of the 20th century, he traveled to Germany to acquire higher education. What he saw there, was described in a truly classic article –‘Payam-e-Iqbal’– published in two parts in 1926, in an Aligarh-based magazine ‘Sohail.’ During his stay in Germany he observed how democracy can function as well as fail in societies that weren’t credibly freed from the clutches of their landed aristocracies. That‘s why he could vividly foretell how that system would fail in the post-colonial era that the Indian sub-continent was entering.The European experience, and seeing for himself how Islam was systematically routed by a Machiavellian Europe, at first prompted him to compose the ‘Shikwa’, but soon he realized how recklessly Muslims flouted the Islamic code of conduct, that led to that end–a tragedy that prevented the world from becoming a more just and therefore a far better place to live.This realization prompted him to compose ‘Jawab-e-Shikwa”– a remarkable explanation of why the Muslims were in the pit and how they could rise again to carry out the divine mission of cleansing this world of segregation based on race, religion, and classes, inculcating a culture of compassion and the spirit of forgiveness–all of them implementing the divine will. Allama Iqbal knew that a change in Muslim imperial mindset was necessary to inculcate a culture that placed learning (not just Quran), but all other disciplines that Quran pointed to–a culture that was once the distinction of the Muslims all over the world; their research was later to serve as the foundation for European successes in every field that led to discoveries.What Allama Iqbal stood for all his life was this great cause-changing the Ummah’s mindset and shifting its energies to the pursuits that could elevate it to the pedestal it was obliged to occupy and serve humanity in submission to the divine will. It was this very cause i.e. inculcating a culture that prioritized learning–that was deliberately sidelined by successive regimes that came into power in Pakistan. Had the landed aristocracy not done that, it would have been difficult to subjugate the masses because then they would have voted into power only the honest and the competent to administer the state for the betterment of all, without distinction. He wanted the masses to stand firmly on their own feet and his message was:

Khudi na baich, ghareebi mein naam paida kar

This vicious circle goes on fuelling inflation and poverty. Yet the policy-makers don’t realize that indirect taxes tend to be regressive. It is time overreliance on indirect taxes was done away with.All the existing indirect taxes must be reviewed to assess their impact on low income groups; taxes that limit even essential consumption must be cut/withdrawn to contain pressures for wage increases so that inflation is gradually brought under control; if this is not done, there will be no end to the rise in inflation

which will completely destroy whatever competitive strength is left in our already beleaguered industrial sector. Whether this call had any impact will become visible in the Federal Budget for 2012-13 that, according to the Federal Finance Minister, will be presented to the parliament on May 25–a ‘first-ever’ event in Pakistan’s history. Whether by then the minister would be having all the relevant facts–a reliable estimate of likely tax and non-tax revenue collection by June 30, if nothing else – is anybody’s guess. Going by last year’s experi-ence, there is strong likelihood that revenue collection could be below target as last year, to the utter embarrassment of the Finance Minister. How wise it is to hasten the process of budget presentation is debateable; taxation recommendations based on unreliable estimates of revenue collection in FY12, targets missed and rationales therefore, and resultant deficit or surplus that they gave rise to, would lack the basis that could justify them. Yet the minister proposes to go ahead with this plan. It is this strategy that creates doubts about the credibility of the whole process and its outcome. The fears are that the government may yet again resort to increasing indirect taxes on the same flawed bases as applied in the past because FBR hasn’t made the kind of efforts necessary to improve ability for collecting taxes, especially the indirect taxes.The business community must share the blame for the rising burden of indirect taxes. It portrays a total lack of credibility in paying taxes levied on any other basis. The current debate on the advisability of introduction of the Value Added Tax (VAT) has brought to the fore serious bottlenecks that exist in collecting all such taxes. Collecting VAT at the retail level presumes retailer literacy, recording of sale transactions on a verifiable basis, and honestly paying VAT to the FBR. Which of these assumptions is based on realism? None at all. Didn’t the result of imposing GST and WHT prove that? It is tragic, that even after lapse of 64 years the huge SME sector wants to be exempted from even the most basic record keeping which could permit tax collection on verifiable bases–the big benefit it ignores to its own disadvan-tage; this is a wholly inexcusable lapse that SMEs will not be able to justify. Yet the business circles again seek exemptions from record keeping and documentation, on the pretext that the lower levels of business community aren’t well versed in book-keeping

and documentation. That may be true to an extent, but it can’t be made an excuse for inadequate or improper record keeping. A business that can’t produce proper records based whereon its tax liability could be assessed correctly should be prepared to pay taxes that, in reality, could be unjustified. The state should not be expected to go on (virtually forever) making concessions for the illiteracy of the business owners and managers. Businesses have no option but to gear-up to meet the basic record keeping requirements, which is in their interest. Unless they do so, taxation will remain inequitable because it won’t permit taxation on the basis of consumption which is the most realistic basis for taxation. This cannot be done by mere policy announcements; the state must discover ways of facilitating book-keeping by the retailer community that is handicapped due to its lack of literacy. Simultaneously, trade associations should be goaded into enforcing codes of self-regulation on their members. It is time trade associations took these obligations seriously. The solution doesn’t lie in seeking exemptions in record keeping. The Chambers of Commerce must accept their obligations in developing jointly with the Chartered Accountants and tax authorities the standard record keeping formats to be used by SMEs, and a simple guide in all of the provincial languages on maintaining the books of accounts according to the tax regulations. It is indeed surpris-ing that, instead of adopting this course of action, the Chambers are supporting the demands for exemption from business record keeping. If businesses can't learn how to maintain their books, they will lose their right to be treated as businesses. Besides, there will always be room for their manipulation by Tax Authori-ties. Half the time they will hurt their businesses themselves. We have not heard of any such initiative on the part of the many Chambers of Commerce that we have. In the absence of such an initiative, that could inculcate the culture of sound and purpose-oriented book-keeping, things would slide from bad to worse, while businesses look for scapegoats to justify this clear weakness on their part. The tragedy of the business community is that it believes in seeking concessions too often; it hasn’t yet accepted that lack of state-provided services–power supply, street cleaning and lighting, sanitation, water supply and above all, security–owes itself to inadequacy of financial resources (tax revenue) at the disposal of the state. Indeed, corruption too bleeds the state, but the fact that state revenues are never enough for meeting the needs of maintaining even basic services much less adding to them, is undeniable. Stories about smuggling, under and over invoicing, tax evasion, fake tax refunds and, above all, not depos-iting with FBR hundreds of billions of rupees of indirect taxes (Sales Tax, Withholding Tax, Value-Added Tax, etc.) collected from the people, must come to an end.

Indirect taxes that limit even essential consumption by low income groups must be reduced to contain pressure for wage increases that fuel inflation

The state can’t go on making

concessions for illiteracy of the

business community;

businesses have no option but to

gear-up for record keeping requirements,

which is in their own interest

EEconomy

May 201230




















As before, terms of the ceasefire and of the Tashkent decla-ration did not resolve the Kashmir issue; sacrifices by Pakistani soldiers weren’t rewarded and the wound contin-ues to bleed. The 1971 war–the most devastating–was rooted in contin-ued escalation of economic imbalances between the West-ern and Eastern wings of Pakistan that gave India the opportunity of the century–exploit the divide and trigger Indian-aided civil war in East Pakistan–that finally split the country. No less painful was the fact that after losing that war, 90,000 Pakistani troops became POWs in India. This tragedy lasted until 1973 when the humiliating Shimla accord was signed. In all these wars, while the soldiers and officers of the defence forces fought courageously on the ground, in the skies, and the Arabian Sea, leadership, both political and their own, let them down. A continuing tragedy, that has cost thousands of lives since 1979, economic losses of $68 billion (government estimate) and lasting damage to Pakistan’s global perception (hard to quantify), is the country’s totally tactless participation in the Afghan civil war. This is the legacy of Gen. Zia-ul-Haq, who was desperate to gain legitimacy after overthrowing an elected government and being involved in the overthrown Prime Minister’s hanging. In the post-1971era, Zia-ul-Haq damaged the country more than anyone else by encouraging religious fundamentalism and arming the religious groups; we pay for it in the shape of almost pervasive terrorism.The running tragedy of Pakistan is the quality of leadership it repeatedly suffered under since 1948; now it is being ruled by a lot that has broken all previous records of irresponsi-bility, a grave example thereof being the vehemently denied reports that it let thousands of US secret agents enter, reside, and operate from Pakistan to serve US interests. This beats what even Zia did during his decade-long illegal regime. Under the incumbent regime, Pakistan is not allowed to retaliate against open aggression–acts like attacks on Abbotabad and Salala, and the unabated drone attacks. Consequently, it places at risk the lives of its citizens and soldiers. Sacrifice is a sacred act but should people be asked to perform it to serve foreign imperial and downright crimi-nal interests? Will this attitude inspire more to stand up and fight for Pakistan?

Tax recovery: the basicimprovements it needsThe rising population of tax evaders reflects on the short-

sightedness of our financial managers–Tax Authorities. Does it not surprise anyone that in a nation of 180 million, so far only 1.2 million ‘unfortunate' citizens have been targeted for paying taxes though the economy has grown manifold since 1971. By generating tax revenue from a limited population of taxpayers, Pakistan became one of the world’s highly taxed yet highly corrupt states–a development that doesn’t bother anyone. With so many businesses being taxed, supposedly on high rates, tax revenues ought to be enormous. The question is where “does the revenue go leaving massive deficits to be funded every year?” There are three possible explanations:• taxes are not collected fully, or • taxes are collected but are spent on causes not disclosed to the

public, or • both the above malpractices are in vogue.While making the use of tax revenue transparent is a subject in itself, and needs imposition of fresh tough administrative checks within the state offices (considering how the Auditor General and parliament’s Public Accounts Committee failed to discipline ministers, bureaucrats and executives in state-owned enter-prises), this article focuses on improving the tax collection system. Suggested improvements: Tax collection should no longer be perceived as merely an exercise in issuing often confusing circulars that disregard taxpayers' convenience. Government must realize that life is no longer as simple as it used to be fifty years ago; its routines are very demanding and complex. People now need to plan things much in advance to be able to appor-tion time and resources for them. They need to be helped in paying taxes on time. This is not a favour, but an obligation of the state towards its citizens. By giving this effort a helping and friendly face, the state can achieve much more in inculcating a tax paying culture rather than by insisting on an authoritarian style. It calls for:• rationalizing taxes on the basis of “ability-to-pay”, • credibly delivering against taxes, and• facilitating tax payments.Tax Returns: We have yet to adopt the practice of publishing booklets containing formats of the various tax returns to be filed by the citizens, guidance on filling them as well as the manner of paying the taxes including lists of the offices where these payments are to be made. Such booklets should be mailed to all existing taxpayers, at least six weeks before the last date for filing the tax returns. Government stationary offices should be set up in all sizable localities where all types of government stationary meant for use by the citizens is on sale at prices fixed by the government.Availability of Tax Returns: As for the efficiency of the tax collection system (and without going into the sordid detail of corruption which is its integral part), one only has to recall the scenes that take place in front of the Income Tax offices every year when taxpayers literally beg for tax return forms. It seems that, till date, none of the brilliant senior officials in the FBR was

able to devise a system whereby all these forms could be printed in sufficient quantities and dispatched to tax collection offices, well in time. The state of affairs isn’t any better at other tax collection offices. We are all familiar with the difficulties with which ‘challan' forms are made available to the taxpayers for paying taxes; you have to buy them from touts sitting outside the premises of these offices. Tax payment options: Taxpayers rightly expect that, given their training at the World Bank and IMF sponsored courses wherein they are exposed to a working understanding of how governments in other countries go about collecting taxes, the civil servants would have instituted a system which is easy to comply with–a wish unfulfilled to date. For a start, it defies common sense as to why tax payments can be made only at SBP or NBP. Why can't all banks collect taxes and transfer the proceeds to respective government accounts on a weekly basis? It hasn’t occurred to taxation authorities that allowing scheduled banks to collect taxes could speed up collec-tion. All that the FBR would be required to do will be to carry out random spot checks of their collection accounts maintained with scheduled banks to verify whether or not funds were being transferred promptly.Tax advisory: Precious little has been done to facilitate the calcula-tion of tax liability. Businesses avail advisory services from profes-sional tax consultants, and can also pay for such services; individuals and small retailers need assistance in this regard but don’t get it. Tax advisory offices therefore must be set up in every residential locality to help such taxpayers in filing their tax returns. In Britain, such offices manned by certified tax accountants, exist in residential localities where taxpayers get this cost-free help; addresses of these advisors are printed in the attachments to the tax returns.It is realized by governments in most developing countries, including even those having a colonial history but a reformed bureaucracy. We have yet to accept the fact that majority of the citizens aren’t thieves who only believe in tax evasion. If the state credibly delivers services funded by the tax revenue it collects, and citizens see that happening, there is no earthly reason why they will not pay taxes. People avoid paying taxes because they get little in return for paying taxes. Isn’t it a fact that the state fails to provide even basic services such as water, sanitation, road repairs, security, basic healthcare, basic education, and electricity? Should the people

EEconomy

May 201231

anything including deciding whether an individual has, or has not committed a violation of the law. This attitude has damaged the image of our democracy immensely, particularly so in terms of public relief and betterment, about which the regime in has done practically nothing.People expected the PPP (‘peoples’) regime to work for their economic uplift. But the chaos on the streets in every corner of Pakistan manifests that this regime has strained the people economically, more all the earlier regimes. The visible failure of his regime was enough for Mr Gilani to step down. There are some who believe that, given the lengthy hearing in Mr Gilani’s case, they expected the Supreme Court to announce a detailed verdict on April 26, to close this chapter that has disrupted all state activities.

But they overlook the fact that past actions of the judiciary (beginning with sacking of the Kh Zaimuddin regime) and of the armed forces (beginning with Ayub Khan’s Martial Law) constrain these pillars of the state from acting because they could yet again be labelled ‘anti-democracy’. But, by ignoring their obligation to secure the national interests, in effect, they are postponing critical changes in administration with serious consequences for all.If eventually Mr Gilani is made to accept the verdict, his and the federal cabinet’s actions effective April 26 could become invalid. The longer Mr Gilani exercises authority more of the state actions will become illegal–a fear that must be gripping the bureaucracy. Federal budget for 2012-13 is being drafted. But if at this point in time, the authority of the PM to take critical policy decisions is in doubt, the budget and all that it proposes will lose its sanctity.Businesses are in a fix; they are unsure about the validity of the budgetary proposals (especially those relating to taxation) that the parliament may sanction. Should they be relied upon to plan business activities in 2012-13, or could the budget be revised, rendering all their business strategies invalid? That is not all; a bigger worry for the business sector is the forecast about Pakistan’s foreign exchange reserves 2012-13 onwards, and the impact a massive decline therein would have on the Rupee’s exchange rate and therefore on inflation.The IMF prediction that, in 2012-13, $10.5bn of the present exchange reserves would be used to repay Pakistan’s maturing external debt confirms what was predicted by observers a year ago. But the regime began looking for funding support only now; what will hamper its success in this endeavour is the regime’s record of fiscal mismanagement; that’s what the IMF officials informed the Finance Minister. On March 30, official reserves stood at $11.84bn, and the total at $16.55bn. If they go down by $10.5bn, the official reserves will drop to about $1bn and the overall reserves to $6bn. If this scenario crystallizes, could a slide in the exchange value of the Rupee be contained? Mr Gilani doesn’t have time to think it over.

esides the many shocks it suffered, includ-ing an actual and several near air crashes, a

massive snow slide in Siachin and a virtual civil war going on in Layari, the biggest of them is the conviction of the Prime Minister by the Supreme Court in a long-running contempt of court case. The vast majority of legal experts and retired judges of Pakistan’s higher judiciary believe that the Prime Minister’s conviction also disqualified him from remaining a member of the parliament in the light of Articles 63(1)(g) and 204 of the constitution, and Section 18(1) of the Contempt of Court Ordinance.Although a detailed judgment of the Supreme Court on the Prime Minister’s conviction is awaited, based on the contents of the short order delivered on April 26, there is a consensus that, as of that date, Mr Yusuf Raza Gilani ceased to be the PM; neither he, nor his recently extended cabinet of federal ministers, can exercise any authority in matters of the state. However, Mr Gilani and his legal advisors keep expressing the opinion that only the Speaker of the National Assembly has the authority to disqualify him from the membership of the parliament, and along with it his right to remain the PM. This logic elevates the authority of the parliament above that of the Supreme Court. Mr Gilani has even said that no PM, if from his PPP, will write a letter to the Swiss authorities to re-open the money laundering cases against Mr Ali Zardari – the refusal that led to the conviction of Mr Gilani in the contempt of court case. His stand faulting the court verdict, that began as soon as he came out of the Supreme Court after he served his sentence until the rising of the court, is backed by all PPP stalwarts. Tragically, however, these PPP stalwarts are crossing all limits of prudence, decency and decor.Defiance of the court verdicts has become the distinguishing characteristic of the PPP, which conveys the impression that their brand of democracy makes no allowances for respect of the law; it is, if anything, lethal for the very dispensation that they all claim to adore. Their demand that the parliament be accepted as the final authority on virtually everything implies that the judiciary can’t question the parliament’s decisions. If allowed to go unchallenged, one day, they may dispense with the judicial system and hand over the immensely delicate job of dispensing justice to the parliament.The question is “should law be interpreted and administered by those with expertise therein, and a moral and professional track record of having done so, or should parliamentarians–their majority not having these critical attributes–be accepted as the bunch that can dispense justice?” Besides, is there any precedent for such a departure from recognized democratic practices? Democracies everywhere leave it to the judiciary to interpret the constitution and the law, and dispense justice. PPP claims having been elected by ‘180’ million Pakistanis as if every man, woman child and infant voted in their favour. It is this mandate that they consider their authority to do just about

still go on paying taxes? That all governments, current or past failed in these endeavours, is the ongoing harsh reality of this country and the worst record in this context is that of the incumbent regime that virtually has no time for attending to its essential responsibilities–providing these basic services–which is an unfortunate reality that it keeps denying, though all such deceptive efforts only make it more untrustworthy.Collecting indirect taxes: This is the weakest area wherein improvement must be prioritized above everything else. This action can no longer be postponed. FBR has itself discovered that, while these taxes are being charged and collected by businesses on behalf of the FBR they aren’t surrendered fully even by institutions as well documented, audited, regulated, and monitored, as commercial banks.Merely authorizing businesses to collect these taxes in order to economize on the cost of collecting these taxes was over-optimistic, in fact, a grossly flawed policy of the FBR. Unless the FBR makes its own monitoring arrangements to check on the full and timely surrender of these taxes, it amounts to reposing undue trust in the recording abilities and integrity of the collect-ing agents. There never was, nor will there ever be, a substitute for focused monitoring. Besides, monitoring has to be purpose-oriented, clever, and should include disciplines that are virtually un-violable by the FBR monitors. The fact that SMEs–running into millions–are owned as well as managed by people with limited financial literacy, points to the need for devising standard accounting systems that are easy to implement and also provide for connectivity between reports that facilitate cross-checking facts so that crude, even clever, attempts at hiding facts don’t succeed.Without such checks, the hope that taxes such as excise duty, sales tax, withholding tax, value-added tax and other indirect taxes will be levied correctly, recorded and surrendered is no more than self-deception. Unless the FBR makes a concerted effort to devise books of account along these lines in Urdu, English and the four provincial languages to ensure that the SMEs know precisely how they must maintain their business record to comply with FBR’s purpose-oriented transparency, hoping that indirect taxes could be surrendered in full to the FBR would be mere self-deception.This isn’t the first time this proposal has been offered to the FBR; in 1997, the proposal was routed through the then Prime Minister Nawaz Sharif, and later directly, but had no effect. The response manifests FBR’s concern for building its image as well as perfor-mance in the context of giving the country a fair and transparent taxation system. It is frustrating for the Pakistanis to see that sane advice falls on deaf ears, no matter who is in power or who is running the FBR; all they surmise is that vested interests rule supreme. It is time we changed our ancient taxation and tax collection systems. Outdated and flawed taxation systems and practices have impoverished the state (remember the size of the public debt?) and enriched the vested interests. The huge mountain of debt that we stand on is the creation of a decadent system which must change. Time to sit and pontificate over whether to change or stay put is over. IMF’s demand to contain the fiscal deficit (that we managed to disregard without being denied IMF funding) is now firm. The

strains to be faced by us in the absence of further IMF support should serve to make it clear to the in-power regime that, in struggling with its present pathetic economic malaise, Pakistan has no chance of survival without improving its tax collection system. Pakistan’s condition will remain distressful until we be honest with ourselves–businesses agreeing to pay taxes honestly and FBR helping them in this endeavour. That is what the taxpayers expect from the Finance Minister when he presents the Federal Budget 2012-13.

Some suggestionsIn spite of all these negatives, the ways in which the willing taxpayers could be facilitated in paying taxes are:• Publishing booklets containing various tax returns to be

filed by citizens, and guidance on filling them as well as the manner of paying taxes. These booklets should be issued separately by federal, provincial and local governments and include lists of tax advisors, tax offices, and banks, where payments can be made

• These booklets should be mailed to all existing tax payers, at least 6 weeks before the closing date for filing returns.

• Besides mailing tax return formats and guidance booklets, government stationary offices should be set up in all sizable localities where all types of government stationary for use by citizens should be sold including application forms for obtaining birth/death certificates, NICs, passports, driving licenses, vehicle registration, business registration, stamp papers, revenue stamps as well as standard formats of the contracts like ‘Nikahnama’, domestic employment, etc.

• Taxation authorities responsible for collecting several taxes should always send a composite tax demand to cut down the number of payments to just one.

• Provincial and local government offices should be required to send along with their tax demands the summary of the manner in which last year’s tax revenue was spent, and as well as a summary of the plans for utilizing tax revenues of the current year.

• Tax advisory offices should be set up in all major localities to assist people in filing of their tax returns. Tax advisors appointed by the government should be available in these offices to provide free tax advice to the tax payers.

• Taxpayers should also be given the option of paying taxes either in lump sum or in quarterly/monthly instalments. Taxpayers wishing to pay in instalments should be advised to apply to the relevant taxation authority requesting for instalment payment booklets. For such payments, booklets should be published and taxpayers should be provided this booklet containing 4 or 12 tickets, each representing a tax demand of the requisite instalment amount.

• If filing tax returns via the internet really has to make sense it must also require filing scanned copies of all supporting documents along with returns. First, it won’t be possible even for those with PCs and access to internet. Second, will FBR be satisfied with scanned copies of supporting evidence that can cleverly be manipulated? Obviously not. So, filing electronic tax returns in addition to manually filed returns shouldn’t be made compulsory; it must be a choice that a taxpayer may exercise if it suits him or her.

EEconomy

May 201232







‘free for all’ markets also goaded the governments into legalizing market freedom (i.e. its volatility) which was essen-tially a mechanism for profiting for powerful market manipulators at the expense of the actual goods/commodity users.How deceptive were the risk-hedging gadgetries–derivatives, credit default swaps and the rest–was proved beyond doubt by the miseries that afflicted the holders of these contracts in the hope that they were secured against specific risks. How could it happen? What were market regulators doing? Alan Greenspan was the Fed Governor in whose regime all these contracts gained credibility; his belief in the integrity of these contraptions was so high that their trading was not regulated although, to check lethal speculation therein, these contracts should have been traded via regulated exchanges. Greenspan believed that markets had the ability to “self-regulate” which eventually proved a disastrous pro-speculation myth. The worst of these volatility driven markets is the oil market wherein price goes up or crashes based on the level of US oil stocks about whose being true the ordinary don’t have even the foggiest idea. Yet, that statistic determines movement in oil price that impacts practically every economy except those of the oil producing countries. Together, the OPEC member states, powerful speculators and mega oil companies pocket billions of dollars at the cost of escalating misery for millions across the globe. Just one example of how the state has gone down in fulfill-ing its obligations is the recent decision of the government that, from now on, oil prices will be revised every fortnight. But if the fiscal deficit and the circular debt still can’t be plugged, could oil prices be revised every day? This profile of the state policy on oil price reflects a craving to pass the entire effect of market volatility on to the citizens. If that is the role the state wishes to adopt, would citizens need it anymore? Dumb politicians no longer ponder this possibility because they are now the proxies of the big businesses, not national leaders–a tragedy that has befallen most nations around the world. Market volatility and the inability of the ordinary to survive it has created uncertainties about everything and inculcated a culture of living in today with its corruptive and after effects. The craving for becoming a millionaire overnight is now the objective that everyone is out to achieve whether he is a state or a corporate employee. No one seems interested any more in producing quality goods with long lives i.e. the ability to serve the buyers for an extended period. Besides cheating the buyers, short-life goods cause accumulation of junk with its harmful effects on the global environment, and a frightening escalation in natural calamities that cost hugely in terms of human lives and asset losses every year. The bigger tragedy is that decline in the all-round quality of governance worsened despite all the improvements in higher education. That’s so because, since the 1970s, the text books on management continue to prescribe profit as the mark of

EEconomy

May 2012

n the past, the objective of taxation had been bridging fiscal gaps; pursued in isolation, it hurt the economy as

reflected in Pakistan’s sliding import substitution capacity and mounting trade deficit. Secondly, it has been established by experts that as long as impact of all the taxes on the net business income remains below 50% of incomes, they act as an incentive for increasing the output since, out of every additional Rupee of income, less than half is paid in taxes. Such taxation prods ever-higher economic activity, and discourages tax evasion. The government did that in the case of corporate taxes. But, what wasn’t appreciated was that, taxes at 50% of the income imply total of all taxes payable. While income tax levels have been reduced, the combined impact of applicable federal, provincial, and local taxes exceeds 50% of net incomes. Thus the claim that taxes have been lowered lacks credibility.Besides, levels of economic self-sufficiency were achieved by Newly Industrialized Countries of Latin America and Asia not by providing tax incentives only to the large corporations but by encouraging SMEs even more because they form the backbone of any economy. Economic progress can’t be sustained unless prosperity reaches the lowest income groups, not as charity, but as an incentive for expanding economic activity to make every household self-supporting. It is crucial to remember that efficient and enterprising SMEs grow into bigger businesses. The more of them we have the better it is. It is therefore imperative that taxation of SMEs should be kept at levels which serve:1. as an incentive to expand2. reasonable profits to bolster investor confidence, and3. permit profit retention so that businesses grow via inter-

nally generated resources and fresh equity.Criticality of self-sufficiency in foreign trade The key governance error of all regimes following the Ayub regime was that they did not strive to achieve self-sufficiency in foreign trade over time i.e. exports exceeding, or equalling imports. Ironically, under Gen. Musharuff we saw continued build-up of trade deficit year- after-year. The yawing trade deficit forced Pakistan yet again to accept the wholly illogical and economy-crippling terms of the IMF because Pakistan had no foreign exchange reserves and the Pak Rupee was depreciating very rapidly. The backlog accumulated since 2007-08 is massive and unless focused efforts are made to contract the deficit, it will lead to a state of bankruptcy. The 2012-13 Budget to be announced on May 25 must make a beginning in this regard because the developing scenario is worrisome.It is time the taxation system ensured that it serves as an incentive for setting up more domestic industrial units by allowing input cost benefits so that these emerging units are able to:

1. import plants and inputs at landed costs that give them competitive edge, and

2. also produce quality goods at prices that can compete with imported substitutes.

These objectives are achievable by bringing changes in import tariffs. We are under pressure from the WTO to reduce import tariffs. We must pursue a policy of rationaliza-tion of import tariffs keeping long-term objectives in view which are to curtail import of consumables and encourage imports of capital goods. By freezing tariffs on import of consumables, and reduction in those on capital goods’ import, we will comply with IMF conditionalities without jeopardizing our national objectives. Sadly, these issues were not assigned the urgency they deserved; we can’t dream of self-sufficiency by continuing to ignore the fact that economic prosperity won’t spread unless businesses grow, their productivity rises, substitution of imports is achieved at a steady pace and new employment opportunities are created.In the long run, the remedy lies in domestic production of substitutes to cut imports. But that’s possible only if an initial cost advantage is afforded for importing plant and machinery to commence production. To support the efforts of local industry to quickly start manufacturing goods on competitive prices, duty on import of goods being manufactured locally must not be lowered.Containing smugglingRationalizing import duties to permit domestic production of more goods, that deserves continuous debate and correc-tive action, could gradually wipe out smuggling. There is growing demand for goods that are either not produced locally, or are produced locally but at high costs leaving great incentive to smuggle them. In the short-term, there is no remedy for this problem except strengthening the preventive agencies. That, unfortunately, is in a pathetic state as proved by the ongoing investigation about the ‘missing’ containers. Blatant misuse of the Afghan Transit Trade (ATT) is a shameful example of what havoc the business community (in league with Customs Authorities) can rake on the economy. It is amazing that, in spite of ATT’s being faulted by all quarters, you keep hearing faulty logic in support of loosening the ATT terms. The sooner we strengthen the edge of the domestic sector to produce international quality at competi-tive prices the better. In the long-run, that’s the way to fight smuggling. Meantime, we can review import duties on the items that are imported because of domestic non-availability, and cut them to levels where it will become attractive to import rather than smuggle them. Earning higher revenue

Rationalizing the tari� regime, and tax refundsI

33

corporate success. Talking of higher education, only recently did it occur to business schools and universities to introduce a course on “Corporate Social Responsibility”. That is some awakening! Even though this subject now forms a part of the courses on business management, fresh graduates have little chance of practising and implementing whatever they learn in this course.Fresh graduates have no choice; they either learn to conduct business along the lines in practice in a corporation, or make an exit. Remember Greg Smith, who recently resigned from Goldman Sachs? His problem was that he had not lost his sense of morality completely, despite serving this invest-ment bank for 12 years. What he too pointed to was that corrupt governance was distorting the system as a whole, which is the case in the ‘developed’ West. In Pakistan, the latest sign of decline in the education sector is large-scale copying at the secondary and higher secondary exam-inations-a corruption aided by the invigilators. Economic powers involved in environmental pollution won’t accept any curbs on their corrupt industrial practices. Even the big multinational manufacturers that, at one time, took pride in their quality control, do not bother about this value; their products–for example cars–in the millions have to be recalled for removing defects that shouldn’t have been there in the first place if corporate governance was as responsible as it once used to be. The services offered by state entities–civic services–are far worse but none in the government is bothered about improving them. Take, for example, the state of the Karachi Water & Sewerage Board. Over the years, connivance of businesses with tax authori-ties –another shocking achievement of the quality of gover-nance –has led to ballooning of the fiscal deficits that have made it virtually impossible for the state to improve its services, let alone increase their spectrum and availability. Leave aside all; just look at the state and availability of basic services such as water supply, and basic healthcare, educa-tion, sanitation, and security. None of these services kept pace with the rise in popula-tion, with the result that people in under-developed and developing countries are worse off each day. To avail any of these services, they must make compromises–bribe employees in these services down to the lowest levels. Impliedly, surviving is now under threat courtesy the quality of governance that is now in vogue. More than ever before, the survival of the ordinary is under threat. Crimes of all shades raging from petty to grave are on the rise at a frightening pace, firstly, because, as in the case of basic civic services, the strength of peace-keepers-police and lower judiciary–didn’t keep pace with the rise in population and, secondly, as with all other state-provided services, these services too became the victims of corrup-tion down to their lowest levels. Pakistan now has one of the worst police-citizen ratios in the world; compared to the far more civilized and law-abiding population in the UK where this ratio is 1:151, it is 1:500 in a country like Pakistan. To make things worse, the police are faced with enormous handicaps–training quality, weaponry, protective gear, telecom devices, purpose-oriented screening gadgetry, transport equipment,

Rare example of good governanceGermany is among the few countries that set rare examples of good governance in the past two decades. The tough test was the reunification of Germany. After the collapse of the Berlin Wall, reopening of the Brandenburg Gate, and unifi-cation of Germany, there was an exodus of the former East Germans to West Germany but a tougher task was to devise ways wherein this huge influx – larger than the West German population–could be brought at par with the comparatively affluent West Germans to mitigate feelings of segregation. It took time and a lot of efforts on the part of the successive governments to restore visible economic parity between East and West Germans. It demanded recreation of a modern and sizeable industrial base in former East Germany, expansion of both domestic and foreign markets to absorb the increase in industrial output, and re-programme the psyche of East Germans to a new way of life–serving the private sector.At present, Germany is the country that has prevented a total EU collapse and saved the Euro. While all these have been outstanding achievements, there were lapses too such as the instances of bad management in Siemens and German banks ending up lending Euro 57bn to the Greek Government.

EEconomy

May 2012

by lowering tariff rates rather than earning less despite high tariff rates makes more sense and can kill the incentive for smuggling.Refund claimsThis is a very sensitive issue in the sense that not honouring these claims will hurt Pakistan’s business and industry that is being hurt by power load-shedding, rising inflation, depletion of Pak Rupee’s exchange rate, high mark-up rate and volatile law and order conditions. Honest businesses do their costing, and quote their product prices assuming refund of the specific taxes that they pay (in advance) as per the taxation policy in force. When they don’t get those refunds, or payment of their valid claims is delayed indefi-nitely, they either incur losses, or experience financial stress for extended periods that often leads to their falling in the defaulter category with their financing banks. Exporters are the worst sufferers because they commit prices to their buyers abroad, months in advance, and can’t go back on such commitments except at the expense of losing their reputa-tion and hard-earned foothold in competitive foreign market which, in any case are contracting courtesy the ongo-ing global economic recession.The darker side of the picture is that FBR paid refund claims running into billions of Rupees that were unjustified or were based on fake transactions that unethical businesses used as the

cover to obtain refunds of the taxes they never paid. Payment of unjustified tax refund claims essentially reflects two flaws: inability of the FBR bureaucrats to verify the truth of the claims–lack of scrutiny skills in distinguishing between fake and genuine transaction

papers and the related evidence, and connivance with unethical businesses for mutual benefit. Neither of these possibilities reflects well on the FBR; it is a matter of concern for all because on the one hand Pakistan is continuously faulted for its low tax-to-GDP ratio, and on the other there are accusations of not just waste but passing of tax revenue to fraudulent elements in business and industry.These flaws are a drain on the insufficient tax revenue, which consistently forces slashing the PSDP that renders Pakistan’s physical and social infrastructure steadily incapable of assur-ing economic growth consistent with the rise in the country’s popu-lation. While enlarging the tax net is by itself the biggest challenge, ensuring that the collected tax revenue is utilized optimally is no less important, and in that quest containing leaks in the revenue basket–unjustified tax refunds–is an area that demands utmost attention of the FBR. Insufficient focus on this area has damaging side-effects such as creation of a world-wide impression that fiscal deficits that plague the administra-tion and are used by successive regimes to justify demands for aid and external borrowing, are not as genuine as they are made to appear. This is a serious damage to credibility of the state, not just in Pakistan but abroad; this must not happen.Recent changes in the top brass of the FBR are an indication of

the fact that this credibility loss has, at long last, been realied by the incumbent regime. Misreporting of the taxrevenue collec-tion figure last year reinforced the impression that FBR is in need to a major overhaul to incorporate transparency in its operations and dealing with the taxpayers. It seems that a begin-ning in this regard has been made which is a positive indicator, and the FBR department that is being investigated to bring about greater transparency in the opera-tions of the FBR is the Expeditious Refund System–an effort that deserves commen-dation and support by all stakeholders whose reputation is at stake.Directorate-General of Intelligence and Investigation, Inland Revenue (IR) in the Federal Board of Revenue (FBR) recent-ly detected some hitherto undetected flaws and loopholes in FBR’s Expeditious Refund System (ERS) after he conducted an in-depth analysis of ERS, and discovered some areas that had never been checked in the past. For example, ERS can’t verify duties and taxes recoverable from the refund claimants nor does the system cover Special Excise Duty refund. Also, that presently, besides ERS, FBR’s field formations were manually processing refund claims that weren’t being entered into the FBR's computer database. As a result, thereof, FBR carried the risk of making duplicate refunds.The fact that while processing refunds ERS doesn’t take into account unpaid duties and taxes recoverable from claimants is a serious administrative gap that needs plugging. ERS also does not flash signals to warn about possible mis-declaration by the claimants. Another big loophole in the system is that ERS doesn’t cater to refunds of Special Excise Duty (SED), thus these claims aren’t being responded to.Because of the pressures created by the business community, especially the various chambers of commerce, FBR has been trying to facilitate honest taxpayers by simplifying its tax laws and procedures and simultaneously minimising human inter-face in corruption-prone field operations; institution of ERS was an effort that aimed at hassle-free, fast track processing of Sales Tax Refund claims of manufacturers and exporters. ERS falls within the ambit of Inland Revenue Service (IRS) but it has been developed in a way that IRS is not associated with it in its day-to-day working. According to a key insider, he acts just “as a cheque-signing machine without exercising effective control over the system".What can make ERS transparent and a truly effective system is a clearly defined fool-proof discipline incorporating rules for pre-refund analysis of claims (PRA). This analysis should be initiated not on the basis of information received through formal complaints or through informal channels, but for all claims received directly by ERS Office, or by the field forma-tions of the FBR. Red alerts should be generated on the basis of information received about a case and any additional facts gathered by FBR’s vigilance cells. Red alerts are advisory in their character; the risks identified by them must be verified. Finally, the alerts shouldn’t hamper the normal processing of refund claims. Besides, to initiate any actions based on PRA, FBR’s competent authority must authorize them.Although ERS was conceived as a system that will eliminate face-to-face interaction between refund claimants and FBR person-nel, this is not happening. The only way to ensure that this doesn’t happen is to require all claims to be filed with the ERS Office and handled by that office, not the FBR field formations.

34












call the Apartheid Wall, or the Berlin Wall – he [Fini] was forgiven his party's past." The Holocaust whiplash, obviously, descends only on those who are critical of Zionism and its policies of tormenting Palestinians-- Muslims and Christians, alike. The Israeli Prime Minister Benjamin Netan-yahu therefore jumped into the fray. Israel cannot be compared to Iran (a "shameful moral equivalence") because "in Iran there is a regime that denies the Holocaust and calls for destruc-tion of Israel," adding for good measure, "it is Iran, not Israel, which threatens to destroy other countries." While the first bit of what Netanyahu says is partly true, the second is an obvious lie. It is Israel which has repeatedly demonstrated its willingness to invade and "destroy" neigh-bours (Gaza, Lebanon, Syria, Egypt). It is Israel which is the only Middle Eastern nation to possess nuclear weapons, and has refused to sign the Non-Proliferation Treaty. While it damns Iran for declaring it will "wipe Israel off the map", it is Israel which looks the other way at the Likud Party Platform's declaration that Palestine shall never have a state west of the Jordan. Netanyahu’s response is typical. When the cover story is exposed as false, the Zionists never deny but always attack and divert (James M. Wall, Veterans Today, April 8, 2012).On the nuclear issue, on its part Israel maintains a policy of nuclear ambiguity, supposedly for three reasons: confirma-tion would lead Arab publics to pressurise their own government to acquire nuclear weapons. Secondly, accord-ing to US Congressional law, the government is prohibited from providing foreign aid to governments which have nuclear programmes not under international inspection, and finally, France, which had helped construct the Negev Nuclear Research Centre near Dimona in the 1950s, had insisted on absolute secrecy (Yoel Cohen, Israel Affairs, 2010).But Grass has declared that he has had enough, "[of] the West’s hypocrisy – and one can hope that many others too may free themselves from silence, challenge the instigator of known danger." Challenge Israel, he did. Mordechai Vanunu, who worked as a technician at Israel's nuclear plant in Dimona for 9 years (1976-1985), in an interview with The Sunday Times in 1986, blew the whistle on his country's clandestine nuclear activities. Vanunu had work-ed at Dimona when Israel had insist-ed that it would not be the first Middle Eastern nation to introduce nuclear weapons to the region (a big lie). Information and photos leaked by Vanunu disclosed that Israel had "secretly developed an extensive

unter Grass, who won the Nobel Prize for Literature in 1999, is no 'little man.' The press release which

announced his award, stated: "[In The Tin Drum, 1959, Grass] comes to grips with the enormous task of reviewing contemporary history by recalling the disavowed and the forgotten: the victims, losers and lies that people wanted to forget because they had once believed in them". But now that Grass writes what the West's writers and intellectuals, editors and journalists, and of course, its leaders, would rather, remain buried and forgotten in his recently-published poem "What must be said",The universal silence around this fact,under which my own silence lay,I feel now as a heavy lie – fury hath followed. The victims, of whom Grass speaks, are the Palestinians. They are being made to `pay' for the Holocaust, which had historical roots in Christian anti-Semitism. In "two millen-nia of Christian ideas and prejudices," which provided the major basis of anti-Semitism, culminating in the Holocaust (Robert Michael, Holy Hatred: Christianity, Anti-Semitism, and the Holocaust, 2006) had nothing to do with the Pales-tinians, or Islam.Because the state of Israel, which claims to speak for the Jews of the world, has not only been built on stolen and occupied Palestinian land--the founders say God had 'prom-ised' them the land, and to think that Muslims are accused of being blind believers of the Quran–but persists in build-ing more and more settlements. Grass felt compelled to write about it because of Germany's recent sale of a sub- marine to Israel, "whose speciality is to deliver warheads capable of ending all life," which he fears will be used by Israel to launch, "a strike to snuff out the Iranian people on suspicion that under his [Ahmadinejad's] influence an atom bomb’s being built...." If that happens, the Germans will become, "enablers of a crime," foreseeable, and therefore will not be absolved with any of the usual excuses.The fury is not because the poem's "literary qualities" are doubtful (Raymond Deane, Electronic Intifada), or maybe, because it is downright "bad" (Salman Rushdie), but because it breaks the code of silence that seals lips in the West, and that of their innumerable acolytes worldwide. The Israeli interior minister has banned Gunter Grass from entering Israel. Calls have been made to revoke his Nobel Prize. The Hebrew Writers Association in Israel has called on the international literary community to rebuke him. He has been called an anti-Semite; dubbed a Nazi – "traces of the swastika on his clothes" – a reference to Grass having been drafted into the Waffen-SS, which was the combat arm of the Nazis' paramilitary organisation, in the last months of World War II. An attack "beneath contempt" says Tariq Ali who reminds us that when Gianfranco Fini, the former Italian minister, whose party has directly descended from Mussolini's, went to Israel and praised the Wall – which Palestinians and other peace-loving peoples of the world

by Mustafa Ali Shaikh

FPCCI Proposal for Federal Budget 2012-13Multiple sales tax rates1. GST on POL may be fixed under the Sales Tax Act, 1990

as its cost of import is more than 43%, which is a suffi-cient incentive for smuggling.

2. Withdraw the multiple rates of Sales Tax and apply a uni-form rate of 9% on all products. This will not decrease the government’s revenue as smuggling will die down and all quantities will be imported through the legal channel, thereby reducing the size of the parallel economy.

Joint liability of registered persons U/S. 8-A1. It is suggested that Section 8A should be deleted from

the Act. Alternatively, in circumstances where the buyer has proved his transaction through banking channel, which is in compliance with Sec. 73, the buyer shouldn’t be held responsible for the default of the supplier. More-over, this section is also against the law of justice where a person is punished for an offence which he has not committed.

2. For doubtful/illegal refunds, only the claimant and refund issuing authority should be held responsible, instead of the importer, who has already paid all taxes at the import stage.

Adjustable input tax U/S. 8BMandatory restriction of input tax, and thereby creating tax liability, is against the business practice and may be removed in the forthcoming budget as a relief to the taxpayers.Retention of records U/S. 24Time period of 6 years for retention of record, particularly in the electronic age, where all the basic data of purchases and sales are reported online, has no justification. There-fore, it is suggested that the time limit for retention of records may be reverted back to three years, as prevailed in past, to reduce the cost of compliance.Multiple sales tax audits 1. Only one audit U/S 25 may be conducted thoroughly in

one financial year and all other audits may be withdrawn henceforth.

2. The Tax Department should follow the audit parameters as defined in Circular No. 5(49) ST-Int.Audit/2001 dated 17-11-2001.

Revision of return U/S. 26 – SRO 487(I)/20011. It is suggested that the taxpayer be allowed to revise the

return within 180 days without seeking the approval of the Tax department/authority upon payment of penalty, where incidence of tax payment is involved, permission should only be required upon expiry of 180 days.

It is also suggested that in cases where no revenue impact is involved, but where the purpose of the revision is just to correct minor particulars, e.g. the STR number, invoice number, GD, etc., prior approval of the Commissioners may not be required.

FPCCI proposals for inclusion in the Federal Budget 2012-13In line with its tradition of advising the Ministry of Finance

on measures to rationalize the Federal Budget, Federation of Pakistan Chambers of Commerce (FPCCI) has submitted a set of proposals, that it considers appropriate for increasing the momentum of economic activity, containing malpractices and increasing federal tax revenue. While in many ways the implementation of the proposals can reduce documentation and procedural hassles that strain the business entities, and may also serve as incentives for raising economic activity, as always, they are devoid of any reference to steps the FPCCI will initiate to impress upon the business community the importance of improving the country’s very low tax-to-GDP ratio – a self-regulatory that has repeatedly been pointed to by market observers of all shades. As before,

FPCCI proposals in the context of broadening the tax based are pretty vague and only ceremonial.

The proposals are as general and brief with regard to crucial improvements in infrastructure planning and the

measures to up the tax-to-GDP and investment-to-GDP ratios,

increase savings (and in that context, containing the rising mark-up spreads of the banking sector), stiffening of the regulations on asset valuation and the need for austerity, especially in the administration of the state that has taken a dive during the current democratic regime.However, FPCCI proposals in the context of incentivizing a significant rise in industrialization, though lacking details, are commendable, and deserve budget-makers’ attention because sentiment for investment has been the worst victim of what has gone on for the past four years, in virtually every field of state administration, and must be redressed forthwith if static economic growth has to be revived in the common interest of the rulers and the ruled. The proposals include tax holiday for new industrial ventures on the following conditions:• Minimum investment to qualify for this relief should be Rs

100 million with debt-equity ratio of 40:60, but for import-substitution industries, the debt-equity ratio could be 60:40

• Tax holiday period to be 5 years• Extension of the tax-holiday concession to ventures set up

effective July 1, 2012• Exemption from turnover tax under Sec. 113A controversial proposal in the same context, however, is the demand that the government should announce an ‘Amnesty Scheme’ similar to the one announced for inves-tors in stock markets. What the proposal confirms is the fact that business entities do indeed accumulate resources abroad by sidelining the tax system. This remedy was tried more than once in the past, but it is now clear that it never served the purpose. Had that not been the case, why would FPCCI demand it again? It implies that, despite these exemptions wealth continued to fly out of the country. It is that wealth that businesses aren’t prepared to bring back without another ‘Amnesty Scheme’.

EEconomy

May 201235

nuclear program, hiding its existence from the Israeli people and parliament, and the world" (Counterpunch, August 18, 2004). Vanunu claimed Israel had 150 to 200 atomic bombs, that it had started producing a hydrogen bomb and a neutron bomb. Vanunu, then 32-years old, was lured from London to Rome, beaten, drugged and kidnapped back to Israel by Mossad; an in-camera trial sentenced him to 18 years imprisonment–more than 11 of which were in solitary con- finement–on charges of having spied. He told American muckraker Eileen Fleming, "The Shin Beet, you know like the FBI and the Mossad, like your CIA were watching me. They tortured me by keeping a light on in my cell constantly for 2 years. They told me it was because they were afraid I would commit suicide, and the oppressive camera was for my safety. They recruited the guards and other prisoners to irritate me. They would deprive me of sleep by making loud noises near my cell all night long." Vanunu was released from prison on April 21, 2004 under strict government restrictions curtailing his speech and movement; he has since been arrested and imprisoned several times on charges of violation. Rejecting spy charges, Vanunu wrote this poem while imprisoned in Ashkelon. I reproduce it in its entirety because to me, it speaks of the best of the Nuremberg tradition, which had transformed the notion of personal culpability, making it a crime to follow the unconscionable orders of a superior. It is a scath-ing critique of the "big ones," the leaders, who assume that the diligent worker, the simple mechanic -- are "headless." Vanunu overturns this by reclaiming his "conscience," an ethical choice that landed him for long years in prison, and post-prison, being denied the right to leave Israel.

I Am Your Spy I am the clerk, the technician, the mechanic, the driver.They said, Do this, do that, don’t look left or right,don’t read the text. Don’t look at the whole machine. Youare only responsible for this one bolt. For this one rubber-stamp.This is your only concern. Don’t bother with what is above you.Don’t try to think for us. Go on, drive. Keep going. On, on.So they thought, the big ones, the smart ones, the futurologists.There is nothing to fear. Not to worry.Everything’s ticking just fine.Our little clerk is a diligent worker. He’s a simple mechanic.He’s a little man.Little men’s ears don’t hear, their eyes don’t see.We have heads, they don’t.Answer them, said he to himself, said the little man,the man with a head of his own. Who is in charge? Who knows where this train is going?Where is their head? I too have a head.Why don’t I see the whole engine?Why do I see the precipice–is there a driver on this train?The clerk driver technician mechanic looked up.He stepped . back and saw – what a monsterCan’t believe it; rubbed his eyes and–yes, it’s there all right. I’m all right. I do see

Therefore, import of medical X-Ray films may be completely exempted from Sales Tax and Income Tax. Medical facility should be cheap and available to poor masses.Jurisdiction of different directorates under sales tax actAll directorates should deal only with The Inland Revenue Department, and should not directly interact with taxpayers.Sales Tax on teaIt is suggested that sales tax on tea is brought down from 16% to 0%. This will reduce the gap in costing compared to legal imports and smuggling and so the revenue of GOP will increase.Fed on non-luxury itemsThere is the need to review the issue of overall incidence of indirect taxes so that possibilities and comparative advant-ages for evasion are reduced/minimized. A boost in business activity may be achieved by removal of FED on non-essen-tial items and goods that do not fall in the luxury category.Mandatory payment before filing appeal–Sec 37 of FEDIdentical provisions in income tax and sales tax laws have already been repealed. It is therefore suggested that the same may also be removed from the Excise Law. Streamlining of the Excise Law is accordance with set practices in Income Tax Ordinance-2001 and Sales Tax Act-1990.Adjustment of petroleum development levy (PDL)The said FEGO may be amended to allow such adjustment in case of other exports. Adjustment of PDL may be allowed by concerned refineries in a manner prevalent for adjustment of FED under the said FEGO. The removal of the anomaly will facilitate the Excise Department and the FBR in general.Key proposals for revising Income Tax rulesTax rate for first-time tax payerRate should be cut to 50% of the tax liability.Taxing very small businessA fixed rate of Rs 2,500 a year and issue of a FBR certificate to be displayed at the business premises.Deduction of WHT under Sec. 45 Part IV, 2nd Sch.a. WHT under Sec. 148(7) for commercial importers be reduced to 3% from 5%.b. WHT under Sec. 148(92) for manufacturer importers be reduced to 1% from 3%.Minimum tax on turnoverReduced to a flat rate of 5% for all tax payers.E-filing for refundsAs per SC judgment, time limit for filing should be increased to 2 years.

Recovery of tax U/S. 36The time period for serving the notice should not be more than 3 years in any case.Verification of transactions U/S. 73The basic intent of Section 73 is to document the economy and business transactions. This objective can be achieved where payment is made through a crossed cheque, and the name of the taxpayer on whose account it is paid is mention-ed on the cheque, and both the buyer and seller acknowledge the completion of the payment transaction. This step would ultimately lead to documentation. Recently, 1-time provision was granted in case of PEPCO and PSO. Furthermore, after the introduction of electronic verifica-tion of input/output, the provision of cross verification is already well achieved. Therefore, we suggest introducing suitable provisions to add-ress the issue.Condoning the time limit U/S. 74To facilitate the taxpayers, this power may be transferred to the relevant Chief Commissioners in order to save time. Alternative dispute resolution committee (ADRC)1. The taxpayers may be allowed to apply for ADRC at the

time of adjudication after receipt of show cause notices instead of waiting for the case to be decided against them by the department.

2. If ADRC unanimously sends its recommendations then it should be made mandatory for the Board to accept those recommendations and pass orders for implementation.

Separation of executive and adjudication Executives and adjudicating authorities of the Tax depart-ment should be separated from each other in order to restore the confidence of taxpayers and is also in confor-mity with the recent Constitutional amendment. Limit of cottage industry u/s. 2(5AB)These limits may be increased to Rs. 10.00 million and Rs. 1.20 million for utility bills of the cottage industry.Sales tax withholding from commercial importers by LTUIn order to remove the disparity and double taxation system, the commercial importer should be included under rule 5 of notification No. 660 pertaining to the exclusion provisions of tax withholding i.e. importer should not pay further 1% withholding tax to LTU.Undue zero rating on three agri-based itemsThe entry 9(i), (ii), and (iii) may be immediately deleted from notification No. 549(i)/2007. This step will eliminate bogus refunds regime, at least on this account. According to an estimate, the refund on this single account is in billions.16% sales tax on information technologyThe 16% GST on information technology may be exempted. Hardware and software are an integral part of IT and it can help in increasing economic activity.Exemption of sales tax and income tax on the import of medical x-ray films (PTC 3701.100)Medical x-ray films fall in the category of life saving medical products and also help in the early detection of diseases.

A very commendable proposalThe most commendable proposal is the institution of a fixed tax on small entities–the “annually renewable trade licenses” –which is the rational and the easy way of taxing the vast but largely un-taxed retail sector. FPCCI should have suggested credible bases for taxing the bigger, medium-size and small retailers differently by specifying three tax rates, but it didn’t. The absence of such details could help make the taxes reatis-tic for the various classes of the taxpayers in this category.

EEconomy

May 2012

EEconomy

May 201236

n the second half of April, Federal Finance Minister Hafeez Shaikh visited the US in the company of

Pakistan’s economic ‘managers’. Besides attending IMF and WB spring meetings, the visit was also meant to project Pakistan as an ideal loca-tion for investment. On April 18, he spoke at Washington's Brookings Institution wherein he said that, during FY12, Pak economy would grow by 4 percent. Reason: the democratic regime in power had taken a series of corrective steps to put the economy back on the track. According to him, in spite of the high oil price and uncer-tain global economic outlook, this GDP growth “although below Pakistan's potential, is the best in recent years”. The minister listed a host of ‘successes’ of the regime despite pretty bleak economic prospects after the ‘epic’ 2010 floods, and internal and external security threats. The successes included a check on inflation, unprecedented revenue generation, highest-ever level of foreign exchange reserves of $18 billion, 29 percent rise in exports in 2010-11, and upward trend in exports this year. Besides these positive trends, he cited the cap on public borrowing, success of the austerity drive, and consistent rise in remit-tances by overseas Pakistanis.Thereafter, he addressed the US-Pakistan Business Council, wherein he said what has been making newspaper front-lines: "I want to tell you the untold story of Pakistan-Pakistan is a great destination for investment." In his address he informed the American business community about the extraordinarily liberal investment regime Pakistan, and the huge enormous prospects that Pakistan’s economy offered. About liberalism, he said Pakistan’ incumbent regime allows foreign investors to earn phenom-enal returns and they could invest as much as they wanted, and could also pull out as much capital as they wanted. Besides, Pakistan welcomed foreign investment in all fields.Thereafter, the minister cited the stress that would be created by servicing of external debt, including that of international financial institutions that had accumulated over the years and now poses the biggest single challenge that could dilute the statistics and prospects he had earlier highlighted. Doing so, he rightly pointed to the cost Pakistan paid for accepting its role in the West’s ‘war on terror’, and the unfair treatment it suffered at the hands of those it had supported in this effort. On April 25, Wall Street Journal carried an article “Pakistan’s Untold Economic Story” authored by the finance minister to highlight what he had said in his address at the US-Pakistan Business Council. What the finance minister did was indeed commend-able-the effort to inform and rationalize the opinion of the American business community about Pakistan, its problems as well as prospects. But did he do a convincing job thereof ? The fact that he quoted some questionable estimates of Pakistan’s key economic indicators diluted the impact his promises could have had.

“Over the last four years, the Pakistani government has taken difficult but important steps to get our economy back on track. This year, real growth in gross domestic product is likely to reach 4%, nearly double last year's rate. During the first nine months of fiscal year 2012, tax collection has surged by 24%, remittances from Pakistanis abroad by 21% (to $9.7 billion), and our exports by 5.5% over last year's base of $25 billion. Inflation and consumer prices were down in March, easing pressure on small and medium-size companies. The Karachi Stock Exchange KSE100 Index now stands at 14,000, having been at 6,000 in 2008. Pakistan's foreign exchange reserves increased to $18 billion in 2011, the largest in history and our financial obligations are declin-ing. In 2015, Pakistan's annual repayment to the IMF will be a quarter of its 2012 obligation.

“Pakistan’s untold economic story” by Hafeez Shaikh, Wall Street Journal, April 25, 2012

The reality is that, according to latest reliable estimates: • GDP is unlikely to rise by 4 percent in FY12. IMF and WB

think it could, at best, touch 3.6 percent but now the view is that GDP growth could be just 3.2 percent. This is based on rational logical; if agriculture sector (that contributes 19 to 25 percent of the GDP) is likely to grow by 3.8 percent (government’s own estimate), and other sectors are likely to grow much less, how would the GDP grow be 4 percent?

• All market sources claim that exports are declining cour-tesy the rising import cost of inputs due a slide in the exchange rate of the Rupee and the ongoing power load-shedding. In this setting, there is very no likelihood of the exports show-ing any growth. Export growth last year too owed itself to a rise in cotton prices globally, not the ‘series’ of corrective steps taken by the regime.

• Inward foreign remittances too have gone up because CPI is continuously rising, forcing earners abroad to remit more to their dependents in Pakistan. This trend doesn’t support the logic about better governance; on the contrary, it takes the steam out of that logic.

• KSE-100 index has risen not because the corporate sector (oddly, except for the banking sector) is blooming. The real reason there for is a questionable ‘amnesty’ that the regime has granted to investors who bring back their black wealth stashed away abroad. If anything, this move is casting dark shadows over the integrity of Pakistan’s stock markets.

• The ‘largest in history’ exchange reserves which the finance minister proudly pointed to reflected more the borrowing from the IMF than a concerted attempt at building them.

• ‘Liberalism’ in attracting foreign investment that he talked about was an act of desperation. Investors seek security of their physical and financial assets, reliable civic services and fair regulation and taxation. Can the minister guarantee all this given the profile of the regime he praises so much?

EEconomy

May 2012

A case for alternate energy(Part II)by Tariq Iqbal Khan

Energy Sector is the lifeline of social and economic devel-opment of a country. Unfortunately Pakistan ranks amongst

the acutely energy-starved economies of the world. The energy consumption by different sectors is the same as the world average, but the availability is constrained. Electricity is available to only 57% of the population while natural gas to 21%. Only 43% of the rural population has access to electric-ity from the system.Currently, Pakistan is facing the shortage of 5,300 MW electric power. The supply of electricity in the country is almost 13000 MW against the demand of 18,300 MW. While shortage of gas is around 2 billion cubic feet per day, which causes 3 to 4% loss of GDP annually.The power sector has become financially unviable due to a large financial gap arising from high fuel import cost, massive theft and losses, mismanagement and corruption. On the other hand, Inter-corporate Circular Debt has increased to around Rs.330 billion in April 2012 which is growing at Rs.9.5 million a day. The oil import bill stood at $ 12.08 billion for the year 2010-2011 which is expected to cross $ 15 billion by the end of the current fiscal year.It is claimed that we have the world’s 2nd largest coal reserves (Thar) with 175 billion tons of coal through which 1000 MW electricity can be generated daily for the next 30 years but due to inappropriate development strategies it also remains unexploited.Roots of Pakistan’s Energy CrisisThere are four distinct causes of Pakistan’s energy crisis:• Lack of integrated energy planning.• Imbalanced primary energy mix with heavy reliance on natural gas (45%) and oil (35%) (8.4% imported at $ 12.08

billion/year) with the balance from hydel at 12%, coal at 6% and nuclear at 2% of the mix respectively which is unsus-tainable.

• Non utilisation of vast indigenous Thar coal and hydel energy resources.

• Lack of effective project structuring.It may not be out of place to ask as to why the Govt and Project planners should wait for development of Thar coal. The cost of coal in the international market is always lower than fossil fuels and electricity produced by this fuel would be a bit cheaper. Even the Cement Industry has benefitted from this shift. If the projects based on Coal are developed now, then subsequently these can be shifted to indigenous coal from Thar.Pakistan’s Primary Energy MixPakistan’s primary energy mix is imbalanced even on a world-wide comparative basis, with dependence on gas at 45%, oil at 35%, hydel at 12%, coal at 6%, and nuclear at 2%. Day by day the energy gap is increasing at an alarming rate. While quantitative gap is increasing due to rising demand for energy,the cost is increasing due to adverse energy mix. The supply side of the gas has certain constraints, hence additional quan-tity of energy is supplied through import of oil. The govern-ment has two possible options:

1. To pass on the cost to consumer.This creates cost push inflation and is unpopular with the vote bank.2. To subsidise the energy supply.There being no fiscal space it is impracticable. This is also the primary reason of Inter-corporate Circular Debt.There is clearly an essential need to plan a revised primary energy mix along with a revised electricity generation plan, because coal utilisation is just 6% in the energy mix and only 0.1% for power generation in Paki-stan v/s 70% in China, 39% in India, 40% in Germany and more than 50% in USA.

Nulcear PowerChashma Nuclear Power ComplexThe Chashma Nuclear Power Complex near Chashma city, Punjab, Pakistan, is a commercial nuclear power generation complex. It consists of:• Chashma Nuclear Power Plant – I (CHASNUPP-I)

(Completed)• Chashma Nuclear Power Plant – II (CHASNUPP-II)

(Completed)• CHASNUPP-III) (Planning stages)• CHASNUPP-IV) (Planning stages)Chashma Nuclear Power Plant’s reactors and other facilities are being built and operated by the Pakistan Atomic Energy Commission with Chinese help and support.

PRIMARY ENERGY MIX COMPARISON

41.61 70.4 39 65.63 17.9 24 3520.87 3.9* 7 4513.75 7.8** 1 215.57 29*** 122.25

Source World China India Pakistan

Coal BasedOil BasedGas basedNuclearHydroOthers

*Gas & hydro **Nuclear & Wind *** Hydro & Wind

37

he process of taxation reforms must be two-fold. First, we must reconsider the currently levied taxes. Without doubt

they are too many, and being collected by too many agencies. It has created too many headaches for the taxpayers and too many opportunities for tax collectors to extort help taxpayers evade taxes. Second, to be perceived as fair and thus rightly payable taxes must be related to provision of visible benefits. While FBR is the tax collector, it exercises no authority in the way tax revenue is spent by state offices. Consequently, FBR is seen as the ruthless tax collector of a tyrant king. In all civilized countries, tax demands are accompanied by a summary of what the taxing authorities did with taxpayers’ money last year and a summary of activities and projects to be undertaken next year put as the justification for the taxes being collected. While it is understandable that the federal government can’t provide these details because those details would be too exhaustive and may not interest every taxpayer, but such details must be provided by the provincial and local government tax collecting authorities because their activities directly impact the citizens and claims of these tax collecting authorities are also verifiable by the ordinary taxpayers. This culture must be introduced forthwith if the state is to regain its writ, which has nearly been lost, thanks to the conduct of the bureaucracy as the unquestionable masters of the state. Taxes on individuals, households, SMEs, agriculturists, and the corporate sector, must be so rationalized that:• taxes can realistically be related to the services and benefits

provided by the state,• in terms of rates, taxes shouldn’t stifle incentive to increase/expand

the level of productive effort, • taxes should serve as incentives for reducing consumption and

promoting saving and investment,• taxes are few in number and payable to fewer agencies so as to

contain the administrative cost of collection,• taxes are payable with minimum inconvenience in terms of paperwork and official formalities,

• taxes in broadly the same category are levied and collected by the same authority, and

• taxes are levied on bases which cannot be manipulated and therefore leave no leeway for collusion between taxpayers and the levying/collection agency.

As of now, the only way to tax the retail sector is via annually renewable trade licenses. Retail sector be divided into three categories–small, medium and large–and be taxed only once a year for a fixed amount for a 3-year period wherein retailers must learn to maintain proper books of account, to be taxed fairly based on profit actually earned. This will also facilitate the build-up of a retailer data-base that doesn’t exist now, to eventually bring all retailers into the net but after giving them time to remedy their financial illiteracy–a relief the state must feel obliged to offer, but for three years and no more. This is an advice that has repeatedly been sidelined by the FBR.These reforms must aim at encouraging people to pay taxes, not evade them, by simplifying and rationalizing tax structure keeping in view one objective i.e. justifying the incidence of tax. Indeed, we

must shun the old tradition of the federation levying the majority of the taxes. But this objective cannot be achieved credibly unless the provinces develop the ability to utilize tax revenue optimally. Provin-cial records of spending tax revenue don’t encourage such a move. Provinces must be goaded into acquiring this crucial ability. The logic that, by refusing to pay special grants, the federation could prod the provinces to play a more responsible role is a dangerous idea. In Yugoslavia, this policy did not inculcate prudence; it gave rise to demands for dismembering the federation. The federation must focus on building this capacity in the provincial administrations before devolving the authority to levy, collect and spend tax revenue. Another aspect that must be examined is the influence of the powerful landlord class on provincial administration in utilizing the tax revenue. Without effective checks to stamp out these distortions, devolution is bound to fail.One expects that the government would do away with the multiplic-ity of tax collection agencies. That it would institute a system whereby taxpayers would be paying their taxes to just three or four tax collection agencies. Sixty-four years was sufficient time for doing all that. Yet nothing of the sort was thought about, let alone institu-tionalized. In this background of grave omissions one wonders what the governments and the bureaucracy have been doing all this time. The multiplicity of taxes, particularly levy of surcharges that make little sense to the taxpayers, must be discontinued. An example of how unrealistic taxation can be is the surcharge in the form of excise duty imposed on bank borrowings. It is no more than a device to hike-up borrowing rates. Similarly, federal levies such as Employees' Old age Benefit Insurance, Workers' Welfare Fund, and provincial levies such as Social Security, and Education Cess are examples of how confusing and complex the taxation system is. It would have been a lot better if a composite tax for these employee benefits could be levied and collected by one agency. Revenues collected under one head can be allocated for all the above purposes, which is a prerogative that remains with the government. It does not require injection into the revenue collection system. Thinking along these lines is now imperative.

EEconomy

May 2012

Pakistan’s energy needs are expected to grow seven to eight times by 2030.In November 2006, the International Atomic Energy Agency approved an agreement with Pakistan Atomic Energy Com-mission for new nuclear power plants to be built in the country with Chinese assistance. The 35-member Board of Governors of the IAEA unanimously approved the safeguards agreement for any future Nuclear Power Plants that Pakistan will be constructing.Chashma Nuclear Power Plant IThe construction of Chashma Nuclear Power Plant Unit I (CHASNUPP-I), the second nuclear power plant in Pakistan, was started in 1992 with the help of the People’s Republic of China. It has been in commercial operation since September 2000. CHASNUPP-I is a two-loop PWR plant with gross Output of 325 MW and net output of 300 MW and a life span of 40 years.CHASHMA NUCLEAR POWER PLANT IIThe Chashma II Nuclear Plant was completed three months ahead of schedule due to the joint efforts of Chinese and Pakistani teams. At the end of 2008, steam generation plant, dome construction and grid interconnect were complete.As of April 10, 2011, the power plant has been completed, and is undergoing further testing, with a limited output of 330 MW of electricity being produced during the trial period.The 330 MW plant was the result of the Pakistan-China coop-eration in nuclear science and technology.CHASNUPP-II is part of Pakistan’s ‘Energy Security Plan’,that envisages an increase in nuclear power generation from the current 425 MW to 8800 MW by the year 2030 to meet the country’s growing energy demands.CHASHMA NUCLEAR POWER PLANT III & IVOn April 28, 2009, a general engineering and design contract for CHASNUPP-III and CHASNUPP-IV was signed with Shanghai Nuclear Engineering Research and Design Institute. Much of the design work has already been completed by SNERDI to meet lead-time requirements. The units will have generation capacity of 425 MW and a design life of 40 years.After the accident in Japan last year the whole world is revisiting the subject of civil nuclear energy. Various countries are shelving the projects in the pipeline. A few years ago Sweden had planned a nuclear power project on beach facing Denmark. Denmark objected to it that in case of accident Denmark’s population would suffer unnecessarily. Sweden after some negotiations shelved the project.WIND POWER IN PAKISTANPakistan is building wind power plants in• Jhimpir• Gharo, Keti Bandar and Bin Qasim in Sindh.Pakistan has recently launched several wind-farm projects expected to produce over 250 MW of power within the next two years.Europe accounted for 48% of the world’s total wind power generation capacity in 2009. In 2010, Spain became Europe’s leading producer of wind energy, achieving 42,976 GWh. Germany held the top spot in Europe in terms of installed capacity, with a total of 27,215 MW as of December 31, 2010. The following is a comparison of wind energy being produced in major countries.

GROWTH TRENDSGlobal Wind Energy Council (GWEC) figures show that 2007 recorded an increase of installed capacity of 20 GW, taking the total installed wind energy capacity to 94 GW, up from 74 GW in 2006. Despite constraints facing supply chains for wind turbines, the annual market for wind continued to increase at an estimated rate of 37%, following 32% growth in 2006.PROSPECTIVE AREAIn Balochistan and Sindh provinces, sufficient wind exists to power every coastal village in the country. There also exists a corridor between Gharo and Keti Bandar that alone could produce between 40,000 and 50,000 MW of electricity, says Ms. Katz who has studied and written about alternative energy potential in South Asia.Given this surplus potential, Pakistan has much to offer Asia with regard to wind energy. In recent years, the government has completed several projects to demonstrate that wind energy is viable in the country.Pakistan has also installed micro turbines which provide electricity to villages directly. In Mirpur Sakro, 85 micro turbines have been installed to power 356 homes. In Kund Maalir, 40 turbines have been installed, which power 111 homes.The Alternative Energy Development Board (AEDB) has also acquired 18,000 acres of land for building wind farms. Another area with potential is Swat which shows good wind conditions. Pakistan is also very fortunate to have many rivers and lakes. Wind turbines that are situated in or near water enjoy an uninterrupted flow of wind, which virtually guarantees that power will be available all the time. Within towns and cities, wind speeds can often change quickly due to the presence of buildings and other structures, which can damage wind turbines. In addition, many people do not wish for turbines to be sited near cities because of noise, though these problems are often exaggerated.INVESTMENTSIt is estimated that after the 50 MW FFC Energy project and5 MW Zorlu project, a further 200 MW projects are lined up. While 250 MW of wind power is very modest to fill the

Top 10 countries bynameplate wind power

capacity (2010)

CountryWind power

capacity (MW)

Top 10 EU countries byWind power electricity

production (2010)

CountryWind power electricity

Production (GWh)

ChinaUnited StatesGermanySpainIndiaItalyFranceUnited KingdomCanadaDenmark

SpainGermany United KingdomFrancePortugal DenmarkNetherlandsSwedenIreland Greece

44,73340,18027,21520,67613,0665,7975,6605,2044,0083,734

42,97635,50011,4409,6008,8527,8083,9723,5003,4732,200

38

he rising gap between tax revenue and public expen-

diture has caused a fiscal deficit which seems impossible to contain. Heavy public sector borrowing and printing of currency, to bridge the deficit, has resulted in a sustained bout of inflation. Economic policy-making-its cornerstone being budget-making, remains unsci-entific and unrealistic. In the past, budgets have been drafted by bureaucrats who lacked appreciation of what the budget-making exercise actually means. Their main objective was cutting the fiscal deficit to an ‘acceptable’ level, not simultaneously striving to induce higher investment and higher productivity therefrom. Conse-quently, these crucial objectives were never achieved credibly. Outstanding domestic public debt alone is now too high. Atop thereof is external debt that is incurred essentially to meet trade deficits year after year. At over US$ 60bn, this debt limits the government’s options (if any) to improve its fiscal management.Successive devaluations of the Rupee to help out inefficient exporters in raising exports achieved only massive increases in the Rupee value of imports and external debt. Rarely did exporters convert this benefit into a lasting advantage–add to their efficiency. In hindsight, offering this crutch was not the way to contain trade and Balance of Payments BoP deficits. The industry needs prodding to increase its efficiency if it has to genuinely compete with foreign manufacturers. That’s the route to meeting the dual objectives of increasing exports and progressively substituting imports with domestic output but the industry won’t mend its ways until the government rationalizes the tariff structure, freezes the surcharges on fuel and energy, cuts down on bureaucratic red tape in agreeing to just demands of the industry and ensures that trade bodies enforce their self-regulatory role (in promoting import subs-titution) by making them realize the gravity of the situation. Lack of vision in devising strategies to contain fiscal deficit led bureaucrats to propose additional taxes rather than adopt measures that tailor taxation to encourage economic growth, which will automatically result in higher tax revenues. What is more unfortunate is the fact that not enough attention was paid to improving tax collection. While proposing higher taxes it was overlooked that in a corrupt society like ours, increased taxes rarely lead to higher tax collection because such measures only induced taxpayers to evade taxes with the active connivance of tax collectors, as manifested by the ever-increasing fiscal deficits.Pursuing this myopic approach, policy-makers achieved little in terms of giving the country a fair and growth-oriented tax system that could nurture a culture of voluntary tax payment by all stakeholders.

What we have evolved is a system which is seen by taxpay-ers as unjust because it is devoid of a realistic appreciation of tax incidence. Ineptly prepared, and summarily adopted budgets, have created a clear class divide – those who pay unduly high taxes and thosewho either don't pay any taxes at all, or pay far too less compared to the benefits they derive from the state. Taxpayers have not had much say in designing the taxation structure or collection system, whether Pakistan was under a democratic dispensa-tion or groaning under a martial

law. All previous regimes left taxation entirely to the bureaucracy as long as the rulers’ interests were secured. All taxpayer efforts at transforming the system into a fair, workable, and future-oriented dispensation have failed. Every year, tax collection system is deliberately riddled with more anomalies, and so rendered even more complicated for taxpayers to comply with. Collection agencies connive with a clever bunch of taxpayers to exploit the new loopholes in the system for their mutual benefit. That being the case, taxpayers, more tragically tax collectors, use their energies to defeat the system. This is the ongoing saga of Pakistan that must come to an end.Individuals, with virtually zero vision, much less a desire to do something good for the country to make them true heroes, now rule the roost. To start with, we must admit that past govern-ments relied on imposing indirect (consumption) taxes on the flawed belief that collecting indirect taxes was cost-effective. This is evidenced by the fact that two thirds of tax revenue (import duty contributing the bulk) continues to be realized through indirect taxes. This was the major factor responsible for rising inflation, and increased misery among lower income groups because these taxes were simply passed on to them by businesses via the price mechanism. In fact, the guise of indirect taxes was used by many businesses to cover up unjustified price increases. The government ignores the fact that these taxes negate the principle of ‘ability to pay’ as the basis for fair taxation, and hence escalate poverty. Inflation, partly the product of these taxes, led to demands for higher wages since higher indirect taxes took away the benefits of increased wages.

EEconomy

May 2012

current supply-demand power gap of thousands of megawatts, it does represent a good start towards serious use of renewable sources to generate electricity in Pakistan. Given the uncer-tainty about cost, availability and environmental impact of hydrocarbons, it is important for Pakistan to rapidly diversify into renewable energy such as hydel, wind and solar.Future ProjectsPakistan has reportedly entered into another agreement to build a $375 million wind farm to produce 150 MW of electricity near Karachi, its largest industrial city. It is scheduled to be completed in two years by AES Corporation, a US company, with assistance from US Agency for International Develop-ment. The project would be set up at three sites in the Gharo corridor in Thatta district of Sindh. The financing origin of this wind power project could be Asian Development Bank (ADB) as it had committed $510 million for tapping renewable energy in Pakistan. The turbine manufacturer Fuhrländer of Germany and Access Energy Inc. of USA have signed an agreement with the Alternative Energy Development Board (AEDB) of Pakistan, to manufacture wind turbines in Pakistan to help establish wind power projects. US-based Access Energy would finance the project to set up a 50 MW wind power plant along the general wind corridor in Gharo, while the German company, Fuhrländer, would transfer the technology to Pakistan for manufacturing of wind turbines along with accessories, to set up a minimum of 1000 MW power plants.

FUTURE PROSPECTSCommercial-scale wind farms are being advocated as a potential solution. Comprising 93 wind farms and related infrastructure, the Gharo Wind Corridor is one of the first large-scale energy production schemes in the country.The United Nations Development Programme (UNDP), through its wind power production initiative, is helping Pakistan remove existing policy and regulatory barriers and encourage private-sector investment in utility-scale wind energy generation.Halcrow’s Pakistan team completed a series of environ-mental impact assessments and regional environmental assessments for the client partners – a joint venture between leading Spanish companies Taller and Eolic Partners SA. This monitoring has helped shape environ-mental guidelines for future wind power initiatives in Pakistan, and improved investor confidence by identifying risks and providing assessment to internationally recog-nised standards.

With increasing pressure on fossil fuel reserves, a global interest in renewable energy and a heightened demand for electricity, the Gharo Wind Corridor will make a much-needed sustainable contribution to Pakistan’s future power supply.Pakistan is ready to approve a Norwegian company’s request to build a 150-MW wind farm, the first part of a $ 1 billion plan that could boost by a third the announced capacity for clean-energy power plants.Pakistan has almost 1 gigawatt of projects under construction or with financing agreed and 498.5 MW more of wind programmes announced, according to Bloomberg News Energy Finance data. At present, only 6 MW of wind energy facilities are in operation. It is the ninth-poorest in the Asia-Pacific region with a 2009 gross domestic product per capita of $2.609, according to Bloomberg data.Alternative Energy Development Board (AEDB) is willing to allow a project proposed by NBT as a Lysaker-based clean energy company that plans to build the facility in Sindh province’s “wind corridor” north of Karachi, accord-ing to AEDB Chief Executive Arif Alauddin.Another Company envisions developing as much as 650 megawatts of wind power in Pakistan over the next few years. It purchased land suitable for 50 megawatts in Sindh province and is seeking partnership with Z.A.Bhutto Insti-tute of Science & Technology in Karachi, for land for another 100 megawatts, Mr Alauddin of AEDB said.RecommendationsThe energy crisis can be overcome through:• Proper utilisation of alternative energy sources i.e. wind, solar, biomass (waste to energy) bio fuels, micro hydels.• One of the more suitable alternate options to produce low cost energy in the private sector is “waste to energy”. Gov-ernment should also initiate a project for renewable biomass energy. It is estimated that Pakistan produces 50,000 tonnes waste, which can be used to produce 6000 MV energy. In Faisalabad alone 714,000 households produce 714 tonnes garbage which can be utilised for production of 86 MV. It does not include the waste produced by textile industries and factories.• Pakistan has an estimated Hydro Resources Potential of about 45,000 MW currently, whereas only 6,500 MW have been installed with 12% share in the energy mix. (Only Bhutan has a potential of 52,000 MW if we compare SAARC countries)• Increase the share of Hydro in Primary Energy from 6,500 MW (12%) at present, to about 32,100 MW (20%) in coming years.• India is exploiting more than 11,000 MW from wind power. Pakistan can take effective measures on wind power corridor.• Solar energy can be produced in some parts of Makran in Balochistan.• The industrial sector consumes around 45% of the total commercial energy. Industrial units are not energy efficient. A study carried out by ENERCON reveals that efficient use of electricity by the industrial sector could save up to 23% of electricity.• The project of energy savers to be used by the domestic consumers.

39

and documentation. That may be true to an extent, but it can’t be made an excuse for inadequate or improper record keeping. A business that can’t produce proper records based whereon its tax liability could be assessed correctly should be prepared to pay taxes that, in reality, could be unjustified. The state should not be expected to go on (virtually forever) making concessions for the illiteracy of the business owners and managers. Businesses have no option but to gear-up to meet the basic record keeping requirements, which is in their interest. Unless they do so, taxation will remain inequitable because it won’t permit taxation on the basis of consumption which is the most realistic basis for taxation. This cannot be done by mere policy announcements; the state must discover ways of facilitating book-keeping by the retailer community that is handicapped due to its lack of literacy. Simultaneously, trade associations should be goaded into enforcing codes of self-regulation on their members. It is time trade associations took these obligations seriously. The solution doesn’t lie in seeking exemptions in record keeping. The Chambers of Commerce must accept their obligations in developing jointly with the Chartered Accountants and tax authorities the standard record keeping formats to be used by SMEs, and a simple guide in all of the provincial languages on maintaining the books of accounts according to the tax regulations. It is indeed surpris-ing that, instead of adopting this course of action, the Chambers are supporting the demands for exemption from business record keeping. If businesses can't learn how to maintain their books, they will lose their right to be treated as businesses. Besides, there will always be room for their manipulation by Tax Authori-ties. Half the time they will hurt their businesses themselves. We have not heard of any such initiative on the part of the many Chambers of Commerce that we have. In the absence of such an initiative, that could inculcate the culture of sound and purpose-oriented book-keeping, things would slide from bad to worse, while businesses look for scapegoats to justify this clear weakness on their part. The tragedy of the business community is that it believes in seeking concessions too often; it hasn’t yet accepted that lack of state-provided services–power supply, street cleaning and lighting, sanitation, water supply and above all, security–owes itself to inadequacy of financial resources (tax revenue) at the disposal of the state. Indeed, corruption too bleeds the state, but the fact that state revenues are never enough for meeting the needs of maintaining even basic services much less adding to them, is undeniable. Stories about smuggling, under and over invoicing, tax evasion, fake tax refunds and, above all, not depos-iting with FBR hundreds of billions of rupees of indirect taxes (Sales Tax, Withholding Tax, Value-Added Tax, etc.) collected from the people, must come to an end.

by Syed Asif Ali

TT rade & Industry

May 2012

Pakistan pharma industrypoised to grow

akistan has a developing but forward looking pharma industry. At the time of independence in 1947, there was

hardly any pharma industry in the country. Today Pakistan has about 640 pharmaceutical manufacturing units including those operated by 30 multinationals present in the country. Pakistan pharmaceutical industry meets around 80% of the country's demand of finished medicines. The national pharma industry has shown a progressive growth over the years, particularly during the last decade. Currently the industry has the capacity to manufacture a variety of products ranging from simple pills to sophisticated Biotech, Oncology and Value Added Generic compounds.Pakistan pharma industry is relatively young in the international markets with an export turnover of around US$ 190 Million annually. The industry boasts of quality producers and many units are approved by regulatory authorities all over the world. Like domestic market the sales in international market have almost doubled during the last five years. The industry is reportedly focus-ing on meeting an export vision of USD 500 million by 2013.In the beginning of 2012, credibility of the pharma industry in Pakistan suffered a severe setback due to “Iso Tab” conundrum at the Punjab Institute of Cardiology which cost loss of 129 precious lives. The drug was found contaminated with lethal quantities of an anti-malarial drug and administered in excessive doses. The foreign lab report revealed ‘Isotab’ samples to be heavily contami-nated with Pyrimethamine, a commonly used antimalarial drug.

The pharma entrepreneurs are , however, optimistic about the revival of the industry’s credibility and consequent growth. This was revealed by the industry’s visionaries at the 8th Health Asia exhibition, held on April 24-26, 2012 at Karachi.The exhibitors belonging to the pharmaceutical, surgical items and technical lab apparatus & devices, from 11 different coun-tries, mainly from Asia, participated in the exhibition along with some local manufacturers. Health Asia Int’l Exhibition & Conferences is the only UFI (Paris) approved health sector event in Pakistan, which provides enormous opportunities of learning, information sharing, mutual cooperation and combined projects to the stakeholders. The exhibition served as a comprehensive showcase of the latest in technology, equip-ment and machinery as well as allied services, while providing investors with a definite outlook of the regional pharmaceutical industry and an opportunity to meet their prospective counter-parts and business partners.

In an interview with “Value Chain”, Dr. Muhammad Abid, Executive Director of Vision Pharmaceuticals, at the event, admitted that the medicine debacle we faced at the beginning of this year severely affected the pharmaceutical exports of Pakistan. “Even the small countries like Sri Lanka had imposed ban on the import of Pakistani medicines”, he said. However, he added, the situation is getting better now and would further improve in few months, thanks to the measures taken by the pharmaceutical companies to avoid recurrence of such incidents in future.To a question regarding general observation that the patients prefer foreign medicines to those manufactured in Pakistan, he replied that it is due to the lack of confidence at local pharma products. He underlined the need for adopting international standards to ensure the quality of medicines. However, he claimed that Pakistani medicines are still better than those manufactured in other regional countries including India. Regarding the MFN status being given to India, he said that this step will further damage the Pakistani pharmaceutical sector. The Indian medicines, he said, are cheaper than Pakistani medi-cines due to their low cost of production and availability of raw materials. Pakistani pharma sector cannot compete with Indian counterparts because there are more than 30000 pharma companies in India as compared to just around 640 in Pakistan. He demanded of the government that only internationally acclaimed and acknowledged Indian companies should be allowed to export medicines to Pakistani market. Thus alone will the Pakistan pharma industry be able to compete with the Indian counterparts. He further demanded that Pakistani government insist with Indian government to facilitate us in buying raw materials from their markets.

P

40

he rising population of tax evaders reflects on the short-sightedness of our financial managers–Tax Authorities.

Does it not surprise anyone that in a nation of 180 million, so far only 1.2 million ‘unfortunate' citizens have been targeted for paying taxes though the economy has grown manifold since 1971. By generating tax revenue from a limited population of taxpayers, Pakistan became one of the world’s highly taxed yet highly corrupt states–a development that doesn’t bother anyone. With so many businesses being taxed, supposedly on high rates, tax revenues ought to be enormous. The question is where “does the revenue go leaving massive deficits to be funded every year?” There are three possible explanations:• taxes are not collected fully, or • taxes are collected but are spent on causes not disclosed to the

public, or • both the above malpractices are in vogue.While making the use of tax revenue transparent is a subject in itself, and needs imposition of fresh tough administrative checks within the state offices (considering how the Auditor General and parliament’s Public Accounts Committee failed to discipline ministers, bureaucrats and executives in state-owned enter-prises), this article focuses on improving the tax collection system. Suggested improvements: Tax collection should no longer be perceived as merely an exercise in issuing often confusing circulars that disregard taxpayers' convenience. Government must realize that life is no longer as simple as it used to be fifty years ago; its routines are very demanding and complex. People now need to plan things much in advance to be able to appor-tion time and resources for them. They need to be helped in paying taxes on time. This is not a favour, but an obligation of the state towards its citizens. By giving this effort a helping and friendly face, the state can achieve much more in inculcating a tax paying culture rather than by insisting on an authoritarian style. It calls for:• rationalizing taxes on the basis of “ability-to-pay”, • credibly delivering against taxes, and• facilitating tax payments.Tax Returns: We have yet to adopt the practice of publishing booklets containing formats of the various tax returns to be filed by the citizens, guidance on filling them as well as the manner of paying the taxes including lists of the offices where these payments are to be made. Such booklets should be mailed to all existing taxpayers, at least six weeks before the last date for filing the tax returns. Government stationary offices should be set up in all sizable localities where all types of government stationary meant for use by the citizens is on sale at prices fixed by the government.Availability of Tax Returns: As for the efficiency of the tax collection system (and without going into the sordid detail of corruption which is its integral part), one only has to recall the scenes that take place in front of the Income Tax offices every year when taxpayers literally beg for tax return forms. It seems that, till date, none of the brilliant senior officials in the FBR was

MFN status to India mayboost our textile exports - Fayaz Anwar

Mr. Fayaz Anwar serves as Director Operations at Al- Karam Textile Mills. He is responsible for providing strategic and tactical support to Al Karam group of companies. Mr. Anwar has over nine years of professional experience in textile sector, ranging from planning, organizing, structuring and managing various estab-lishments of Al-Karam Group of Companies. Mr. Fayaz Anwar also serves as Director at Hiba Weaving Mills (Pvt.) Ltd. and at Amna Industries. He is also a Member of Alumni Association for Foreign Students as well as Entrepreneur Organization. The EO is a global network of more than 8,000 business owners in 40 countries. It was founded in 1987 by a group of young entrepreneurs. Different groups and forums are created in EO chap-ters in which local and global entrepreneurs share and discuss their issues, trends and future strategies. Value Chain has had an interview with him. Given below is what he said. -- Editor

Q: Power shortage, gas load shedding, law and order situation, political turmoil and similar other crises have adversely affected almost every segment of national economy. How have these crises affected the textile industry of Pakistan? What future do you fore-see in the coming months?A: The issues you mentioned have had an adverse impact on almost every sector of the national economy. Textile sector is one of the most affected sectors . Due to severe shortage of energy we are unable to meet the export orders on time making it difficult for us to compete with regional and international exporters. Indians, Chinese, Bangladeshis and Thai exporters deliver their orders on time. Al-Karam is a leading Pakistani textile exporter to the US, UK, China and the Gulf states. We have to make sure that our quality products are delivered to them on time. Otherwise we may lose our share in international markets. Al-Karam has its own display shelves in the leading retailer stores in foreign countries where we have to send our products in order to maintain the flow of our business. We are spending extra money on alternate energy sources to maintain the quality of our products and ensure their timely delivery although this has a nega-tive impact on our profit margin. Q: Do you think that these crises are going to be resolved in near future? A: Where there are problems, there are solutions too. What is needed is the will to resolve them. If the situation does not improve in near future, we would be unable to make further investment. The economic managers and policy makers have to find a way to bring industries on a progressive path. They should set the priorities and then implement the road map with consistency and commit-ment. Otherwise the desired targets for growth in Pakistan’s economy may not be achieved.Q: Being a textile giant, what are your expectations from the coming budget for the fiscal year 2012-2013?A: I don’t see any big relief in the next budget because the government’s tax targets are quite ambitious. We are already running our industries under immense pressure, losing the

profit margins day by day. Several Pakistani industries are on the verge of closure due to power shortage, law and order situation, political instability and other related crises. Smaller textile units are worst sufferers. Gover- nment needs to provide them relief in taxes or grant them privileges.Q: How do you look at MFN status being given to India by Pakistan? Will this step boost our textile exports? A: It is a good step. India is a big market where our textile products are in great demand. We can capitalize on it with better planning. We have high quality raw material and appeal-ing textile products. We are already manufacturing textile goods of international standard. This step will surely boost our textile exports . Pakistani textile manufacturers should also make value addition in their products. They can earn better rate of profit through value added garments sector.

Like many other textile manufacturers, designers and Pakistani industrialists, Al-Karam textiles also partici-pated in the “lifestyle exhibition” in New Delhi, India during April 12 to April 15. What was the response by Indian buyers?A: We got good but calculated response from Indian buyers. However, we enjoyed the hospitality and dialogues with their trade officials and industrialists. Pakistani lawn fabric has a great potential and it can create a great demand in Indian markets. Our designer lawn fabrics are considered to be one of the finest worldwide. The exhibition was definitely a good start and it would be helpful for us in “brand making” in Indian markets.Q: What is your opinion about the mark-up rates in Paki-stan as compared to those in other regional countries like India and Bangladesh?A: In Pakistan the mark-up rates are higher. It is the respon-sibility of the government regulator such as SBP to look into this issue. Higher mark up rates make the survival of Pakistani industries further difficult. Markup rates should not be more than a single digit in Pakistan as is the case in other regional countries. One hopes the regulators , especially SBP, will look into it.

TT rade & Industry

May 201241

Some suggestionsIn spite of all these negatives, the ways in which the willing taxpayers could be facilitated in paying taxes are:• Publishing booklets containing various tax returns to be

filed by citizens, and guidance on filling them as well as the manner of paying taxes. These booklets should be issued separately by federal, provincial and local governments and include lists of tax advisors, tax offices, and banks, where payments can be made

• These booklets should be mailed to all existing tax payers, at least 6 weeks before the closing date for filing returns.

• Besides mailing tax return formats and guidance booklets, government stationary offices should be set up in all sizable localities where all types of government stationary for use by citizens should be sold including application forms for obtaining birth/death certificates, NICs, passports, driving licenses, vehicle registration, business registration, stamp papers, revenue stamps as well as standard formats of the contracts like ‘Nikahnama’, domestic employment, etc.

• Taxation authorities responsible for collecting several taxes should always send a composite tax demand to cut down the number of payments to just one.

• Provincial and local government offices should be required to send along with their tax demands the summary of the manner in which last year’s tax revenue was spent, and as well as a summary of the plans for utilizing tax revenues of the current year.

• Tax advisory offices should be set up in all major localities to assist people in filing of their tax returns. Tax advisors appointed by the government should be available in these offices to provide free tax advice to the tax payers.

• Taxpayers should also be given the option of paying taxes either in lump sum or in quarterly/monthly instalments. Taxpayers wishing to pay in instalments should be advised to apply to the relevant taxation authority requesting for instalment payment booklets. For such payments, booklets should be published and taxpayers should be provided this booklet containing 4 or 12 tickets, each representing a tax demand of the requisite instalment amount.

• If filing tax returns via the internet really has to make sense it must also require filing scanned copies of all supporting documents along with returns. First, it won’t be possible even for those with PCs and access to internet. Second, will FBR be satisfied with scanned copies of supporting evidence that can cleverly be manipulated? Obviously not. So, filing electronic tax returns in addition to manually filed returns shouldn’t be made compulsory; it must be a choice that a taxpayer may exercise if it suits him or her.

curtains, lawn, bed linen, pillow covers and premium quality lathas. We are also exporting menswear and all types of fashion suiting. Bed linen and lawn are the most exported items of Al-Karam textile. 70 percent of our products is exported to various countries.Q: Recently, Al-Karam has entered the retail business also. What are your expectations from the retail sector of textiles?A: We actually studied the market and analyzed that there was a huge potential in retail sector of textiles especially in garmentsand apparels. We entered this sector and received good response from our custom-ers. Our already established brand of “Al-Karam Textiles” helped us a lot. Customers have a strong trust in our brand which help us to achieve our targets in this sector.

Our lawn is available at garment shops. We thought why don’t we add further value in it by collaborating with leading fashion designers and sell it in “ready-to-wear” shape? Basically we “value added” our products and are happy with the market response. Q: There is an intense competition in manufac-turing of lawn fabric and designer’s signature trend. How does Al-Karam look at it? What are your future plans in this regard?A: “Designer Collection” trend has reinvigorated the overall lawn fabric sector. Al-Karam launched its designer collection in collaboration with Umar Sayeed, one of the most talented Pakistani designers. We will definitely promote this trend and you will witness new trendy designs every season. We will also launch the designer collection of another versa-tile female fashion designer Faiza Sami, later this year. Q: What is the secret of success of Al-Karam textiles?A: We succeeded in our mission because we are a composite unit. We have in-house setup of every textile process from spinning to weaving, dyeing and designing to printing and cutting to stitching. This advantage matters. We ensure that the identity of Alkaram is not lost along the way. Q: You are also on EO local board; has the EO experience been helpful in your business? What are the plans for EO in the next 2-3 years?A: I learnt a lot from this orginization it‘s basically a learning institution which helps us slove our issues and increase knowledge via different forums. Differ-ent groups and forums are created in EO chapters in which local and global entrepreneur share and discuss their issues, trends and future strategies.

Q: Latin America is a big market. So may be other countries as well. Has your organization tapped these markets? If not, do you have any plan to do so in the near future?A: Due to the lack of trade relations and trust deficit, Pakistani exporters are not so common in the Latin America market. We shall definitely go there when the situation becomes favourable.Q: It has been observed that the foreign importers give extra favor to other countries rather than Paki-stani exporters? Do you agree? If so, what should be done?A: Yes, to some extent I agree with your observation. Basically the foreign importers demand the perfect quality and delivery on time. They prefer Indian, Bangladeshi or Chinese exporters over Pakistani exporters because we have not been able to meet the deadlines. Effective and strong lobbying of Indian and other coun-tries’ exporters is another important factor. Pakistani exporters have to adopt new marketing techniques to grab their share in the global market.Q: It has been published in various national newspa-pers that the export of Pakistani garments is likely to decline by 25% in current fiscal year? If this happens, what will be its overall impact on textile sector in Pakistan?A: It would certainly be unfortunate. Textile is one of the most important revenue generating industries of Pakistan. More than 9 percent of the country’s GDP is produced by this vital sector. In fact textile is the back-bone of Pakistan’s economy. Decline in exports of this sector will definitely shake the economic structure of Pakistan. It’s not just the garments sector; this will affect the entire textile chain of Pakistan, from farmer to spin-ning mills to the weaving mills to merchandisers and garments retailers. Government should handle this situa-tion very seriously and take concrete steps.Q: We are witnessing a consistent downfall in the value of Pakistani rupee against US dollar. How this trend is affecting Pakistani exports? A: The appreciating dollar viz-a-viz Pak rupee will be useful for pakistan’s economy in short term but in long term propositions, the overall impact would be negative. Because Pakistan will have to pay for its imports at higher rates. In term of exports, we shall be at a competi-tive advantage as our products will be comparatively cheaper.Q: What are the main textile products ranges of Al-Karam Textiles? What is your most exported product?A: We are manufacturing and exporting bed sheets,

TT rade & IndustryTT rade & Industry

3442 May 2012

n the past, the objective of taxation had been bridging fiscal gaps; pursued in isolation, it hurt the economy as

reflected in Pakistan’s sliding import substitution capacity and mounting trade deficit. Secondly, it has been established by experts that as long as impact of all the taxes on the net business income remains below 50% of incomes, they act as an incentive for increasing the output since, out of every additional Rupee of income, less than half is paid in taxes. Such taxation prods ever-higher economic activity, and discourages tax evasion. The government did that in the case of corporate taxes. But, what wasn’t appreciated was that, taxes at 50% of the income imply total of all taxes payable. While income tax levels have been reduced, the combined impact of applicable federal, provincial, and local taxes exceeds 50% of net incomes. Thus the claim that taxes have been lowered lacks credibility.Besides, levels of economic self-sufficiency were achieved by Newly Industrialized Countries of Latin America and Asia not by providing tax incentives only to the large corporations but by encouraging SMEs even more because they form the backbone of any economy. Economic progress can’t be sustained unless prosperity reaches the lowest income groups, not as charity, but as an incentive for expanding economic activity to make every household self-supporting. It is crucial to remember that efficient and enterprising SMEs grow into bigger businesses. The more of them we have the better it is. It is therefore imperative that taxation of SMEs should be kept at levels which serve:1. as an incentive to expand2. reasonable profits to bolster investor confidence, and3. permit profit retention so that businesses grow via inter-

nally generated resources and fresh equity.Criticality of self-sufficiency in foreign trade The key governance error of all regimes following the Ayub regime was that they did not strive to achieve self-sufficiency in foreign trade over time i.e. exports exceeding, or equalling imports. Ironically, under Gen. Musharuff we saw continued build-up of trade deficit year- after-year. The yawing trade deficit forced Pakistan yet again to accept the wholly illogical and economy-crippling terms of the IMF because Pakistan had no foreign exchange reserves and the Pak Rupee was depreciating very rapidly. The backlog accumulated since 2007-08 is massive and unless focused efforts are made to contract the deficit, it will lead to a state of bankruptcy. The 2012-13 Budget to be announced on May 25 must make a beginning in this regard because the developing scenario is worrisome.It is time the taxation system ensured that it serves as an incentive for setting up more domestic industrial units by allowing input cost benefits so that these emerging units are able to:

1. import plants and inputs at landed costs that give them competitive edge, and

2. also produce quality goods at prices that can compete with imported substitutes.

These objectives are achievable by bringing changes in import tariffs. We are under pressure from the WTO to reduce import tariffs. We must pursue a policy of rationaliza-tion of import tariffs keeping long-term objectives in view which are to curtail import of consumables and encourage imports of capital goods. By freezing tariffs on import of consumables, and reduction in those on capital goods’ import, we will comply with IMF conditionalities without jeopardizing our national objectives. Sadly, these issues were not assigned the urgency they deserved; we can’t dream of self-sufficiency by continuing to ignore the fact that economic prosperity won’t spread unless businesses grow, their productivity rises, substitution of imports is achieved at a steady pace and new employment opportunities are created.In the long run, the remedy lies in domestic production of substitutes to cut imports. But that’s possible only if an initial cost advantage is afforded for importing plant and machinery to commence production. To support the efforts of local industry to quickly start manufacturing goods on competitive prices, duty on import of goods being manufactured locally must not be lowered.Containing smugglingRationalizing import duties to permit domestic production of more goods, that deserves continuous debate and correc-tive action, could gradually wipe out smuggling. There is growing demand for goods that are either not produced locally, or are produced locally but at high costs leaving great incentive to smuggle them. In the short-term, there is no remedy for this problem except strengthening the preventive agencies. That, unfortunately, is in a pathetic state as proved by the ongoing investigation about the ‘missing’ containers. Blatant misuse of the Afghan Transit Trade (ATT) is a shameful example of what havoc the business community (in league with Customs Authorities) can rake on the economy. It is amazing that, in spite of ATT’s being faulted by all quarters, you keep hearing faulty logic in support of loosening the ATT terms. The sooner we strengthen the edge of the domestic sector to produce international quality at competi-tive prices the better. In the long-run, that’s the way to fight smuggling. Meantime, we can review import duties on the items that are imported because of domestic non-availability, and cut them to levels where it will become attractive to import rather than smuggle them. Earning higher revenue

TT rade & IndustryTT rade & Industry

In his inaugural address, India’s Commerce Minister pointed to the need for Pakistan and India to jointly work towards integration of regional economic relations and development. “An environ-ment should be created to normalize the trade relations between our two countries,” he stressed and said that it was the time to take courageous steps to strengthen linkages. “There are no other options for India and Pakistan but to develop trade and economic relations aimed at bringing about economic stability and prosperity.”Anand Sharma said that, presently the trade between the two countries was $2.8 billion. If both countries channelize trade in formal ways, it could be several times higher than its level now. He said that informal trade between the two countries was estimated to be around $ 10 billion. Efforts need to be made to ensure that the big gap between formal and informal trade is not just narrowed but eliminated. In this context, he appreciated Pakistan’s response to trade normalization, and said that it was very encouraging. In his speech, Zafar Mahmood, Secretary Pakistan’s Minis-try of Commerce said that considerable progress had been made towards normalization of trade over the past year, and as the key step in promoting dialogue between trading communities of the two countries, both India and Pakistan are expected to formally announce the finalization of a new visa regime to facilitate traveling by businessmen across the border. Recent meetings between government officials and business leaders of both countries have started yielding positive results. As a part of the initiatives to promote bilateral trade, India agreed to allow inflow of direct invest-ment from Pakistan. Another milestone event in this regard was held on April 13, wherein Indian and Pakistani political and business leaders formally opened an Integrated Check Post at Wagah Border in the Punjab to serve as the gateway of trade and prosperity. This is a major development because this new gateway also has substantial provisions for parking of trucks, inspection of goods, Customs Offices, and practi-cally all the facilities that transporters need while on long-distance travel. These, and several other measures, foretell improvement of bilateral relationship between the two countries that have been at ‘dagger’s drawn’ ever since they had emerged on the world map as independent, sovereign states. One hopes that the initiatives being taken – at long last – will usher in a new era of prosperity in both India and Pakistan to maxi-mize the benefits of low transportation cost which, after the crippling rise in oil prices, has become a major part of the landed cost of goods. Besides, what makes strategic and moral sense is the fact that countries must prioritize meet-ing the needs of the geographical regions of which they are a part rather than trading with nations across the globe. Poverty in the region must be contained to forestall chaos that could spillover their borders.

his first-ever four-day exhibition of Pakistani goods in New Delhi was one more positive step in the direction

of building mutually beneficial, wide-ranging trade connec-tions between India and Pakistan that were traditionally seen as adversaries. Although the ongoing economic reces-sion is being credited with inducing this much-needed (for long) realism between the two countries, the fact is that it also has to do with some hard work undertaken by the saner elements in the media on both sides of the border. On April 12, Pakistani and Indian leaders jointly inaugu-rated the “Lifestyle Pakistan” exhibition at Pragati Maidan in New Delhi. The Exhibition, held from April 12 to 15, was inaugurated by India’s Commerce Minister Anand Sharma. Speaker Sindh Assembly Nisar Khoro, Secretary, Pakistan’s Ministry of Commerce Zafar Mhmood, Pakistani High Commissioner in India Shahid Malik and Chief Executive Trade Development Authority of Pakistan (TDAP) Tariq Iqbal Puri joined the Indian Com-merce Minister on the occasion along with a delegation of over 600 Pakistani businessmen. The exhibition was the first-ever collaborative effort by India Trade Promotion Organisation and TDAP and is one of the many steps initiated by the two countries to enhance bilateral commerce. More than 100 top ranking Pakistani brands and designers in various categories participated in this exhibition. They showcased a wide variety of their high-end fashion and creative work. The items showcased included fashion textiles (made of cotton) especially printed ‘lawn’–the item in high demand in India as summer approaches–besides chiffon, “Khusas” of Multan, designer furniture, bangles (from Hyderabad), a wide variety of leather accessories, and intricate handi-crafts. Visitors to the exhibition were particularly impressed by the designing of the printed ‘lawn’, besides the other items displayed. The views expressed by visitors to the exhibition venue were very encouraging for the Pakistani exporters and led formation of some mutually beneficial trade relationships.

“Lifestyle Pakistan” exhibition in IndiaT

43 May 2012

by Ali Siddique Dadi

4. NEW PROCEDURE FOR ST REFUND CLAIMS

The Federal Board of Revenue has issued new rules called “Refund Claims of Recognised Agriculture Rules 2012” outlining new procedure for processing of sales tax refund claims of recognized agriculture tractors manufactures.The new rules haave been enforced through SRO 363(I)/2012 dated April 13, 2012 and shall be deemed to have taken effect on February 2, 2012. According to the new rules, the refund claimant shall file a refund application to the Com-missioner, Inland Revenue having jurisdiction, along with the necessary documents. The refund of admissible excess input tax shall be allowed on the basis of the relevant docu-ments within three days of receipt thereof. In case any amount already sanctioned and paid is found inadmissible, the same shall be recovered within seven days by encashing the bank guarantee to the extent of adjudged liabilities.

5. PROHIBITORY ORDERThe SECP has issued prohibitory order and warned the Faysal Bank Limited against entering into trade transac-tions in such patterns and manners that constitute to portray its better financial position, which in true sense is not the case or scenario, particularly close to its financial reporting period.

CAPITAL GAINS TAX ORDINANCE 2012

President Asif Ali Zardari has promulgated the Capital Gains Tax Ordinance 2012 to give a boost to liquidity on stock market. The Ordinance will become part of the Finance Bill 2012 to be placed before the National Assem-bly on May 25 and will only apply to investor portfolio on ready market. Under the revised CGT regime, 10 percent CGT would be collected on the holding of shares for the period of less than six months. On the holding of shares for a period between 6 to 12 months, the CGT would be at the rate of 8 percent. The filing of the tax returns will be compulsory along with wealth tax statements for all investors of stock market. The CGT collection and deduction would be carried out by Natinal Clearing Company of Pakistan Limited.

7. IPR ORDINANCE SIGNEDPresident Asif Ali Zardari on April 24 signed the Intellec-tual Property Rights IPR Ordinance 2012 on the advice of Prime Minister Yousuf Raza Gilani. IPR involve rights to protect trade-marks, patents, copyrights, industrial designs, plant breeders rights, traditional knowledge and folklore.

WHT ON CASH WITHDRAWALS ABOLISHED

The Federal Board of Revenue has issued SRO 383(I)/2012 on April 24 announcing abolishing 0.2 percent withholding tax on cash withdrawal from bank accounts exclusively dedicated for authorized business related transactions of the exchange companies duly licensed /authorized by the State Bank of Pakistan.

1. DEBT SECURITIES TRUSTEEREGULATION, 2012

Securities and Exchange Commission of Pakistan has approved the Debt Securities Trustee Regulations, 2012, which would provide guidance to the trustees in discharging their responsibilities under the Trust Deeds. The regulations empower the trustees to:a) Regularly monitor the payment of profit/mark up/interest

to the debt security holders and redemption of the securitiesb) Regularly monitor maintenance of the security, if any,

backing the debt instrumentc) Ensure compliance with the provisions of the Trust Deeds,

particularly their covenants , are adhered to d) Monitor that the debt security holders’ complaints are

resolved by the issuers.Under the regulations, registration with the SECP has been made mandatory and only scheduled banks, development finance institutions and investment finance companies can act as debt security trustees. The regulations will enable the trustees to play their role more proactively, which will help building investor confidence and lead to corporate debt market development.

2. SECP TO REGULATE MODARABASThe joint sitting of the parliament has unanimously approved the 2009 Modaraba Companies and Modaraba (Floatation & Control) Ordinance (Amendment ) Bill which seeks to empower the Securities and Exchange Commission of Pakistan to make regulations and issue circulars, code and guidelines so as to strengthen regulatory framework for the modaraba sector and to enable the SECP to safeguard the interest of stakeholders in a more proactive and effective manner.Through the Bill, three new sections have been added to the 1980 Modaraba Companies and Modaraba (Floatation and Control) Ordinance. After Section 40, a new Section 41A has been inserted which empowers the SECP to make such regula-tions as are necessary to carry out the purposes of Modaraba Ordinance. Any contravention of the regulation shall be punish-able with a fine which may extend to Rs. 1 million for every day after the first during which such contravention continues.Similarly, another new Section 41B has been inserted that empowers the Commission to issue such directives, circulars, codes, guidelines or notifications as are necessary to carry out the purposes of the Modaraba Ordinance and the rules and regulations made thereunder.

COST ACCOUNTING RECORDS ORDER 2012

The Securities and Exchange Commission of Pakistan has issued a draft Synthetic and Rayon Companies (Cost Account-ing Records) Order of 2012 to make it mandatory for compa-nies engaged in production, processing and manufacturing of any type of synthetic and rayon products to maintain compre-hensive records, including the quantity and cost of power generated and consumed in production process. The draft order has been placed on SECP’s website, for the information of all stakeholders to give their feedback and comments within 30 days of the publication of notification.

e ulator om lianceRR C y pg

May 201244

3.

8.

6.

by lowering tariff rates rather than earning less despite high tariff rates makes more sense and can kill the incentive for smuggling.Refund claimsThis is a very sensitive issue in the sense that not honouring these claims will hurt Pakistan’s business and industry that is being hurt by power load-shedding, rising inflation, depletion of Pak Rupee’s exchange rate, high mark-up rate and volatile law and order conditions. Honest businesses do their costing, and quote their product prices assuming refund of the specific taxes that they pay (in advance) as per the taxation policy in force. When they don’t get those refunds, or payment of their valid claims is delayed indefi-nitely, they either incur losses, or experience financial stress for extended periods that often leads to their falling in the defaulter category with their financing banks. Exporters are the worst sufferers because they commit prices to their buyers abroad, months in advance, and can’t go back on such commitments except at the expense of losing their reputa-tion and hard-earned foothold in competitive foreign market which, in any case are contracting courtesy the ongo-ing global economic recession.The darker side of the picture is that FBR paid refund claims running into billions of Rupees that were unjustified or were based on fake transactions that unethical businesses used as the

cover to obtain refunds of the taxes they never paid. Payment of unjustified tax refund claims essentially reflects two flaws: inability of the FBR bureaucrats to verify the truth of the claims–lack of scrutiny skills in distinguishing between fake and genuine transaction

papers and the related evidence, and connivance with unethical businesses for mutual benefit. Neither of these possibilities reflects well on the FBR; it is a matter of concern for all because on the one hand Pakistan is continuously faulted for its low tax-to-GDP ratio, and on the other there are accusations of not just waste but passing of tax revenue to fraudulent elements in business and industry.These flaws are a drain on the insufficient tax revenue, which consistently forces slashing the PSDP that renders Pakistan’s physical and social infrastructure steadily incapable of assur-ing economic growth consistent with the rise in the country’s popu-lation. While enlarging the tax net is by itself the biggest challenge, ensuring that the collected tax revenue is utilized optimally is no less important, and in that quest containing leaks in the revenue basket–unjustified tax refunds–is an area that demands utmost attention of the FBR. Insufficient focus on this area has damaging side-effects such as creation of a world-wide impression that fiscal deficits that plague the administra-tion and are used by successive regimes to justify demands for aid and external borrowing, are not as genuine as they are made to appear. This is a serious damage to credibility of the state, not just in Pakistan but abroad; this must not happen.Recent changes in the top brass of the FBR are an indication of

the fact that this credibility loss has, at long last, been realied by the incumbent regime. Misreporting of the taxrevenue collec-tion figure last year reinforced the impression that FBR is in need to a major overhaul to incorporate transparency in its operations and dealing with the taxpayers. It seems that a begin-ning in this regard has been made which is a positive indicator, and the FBR department that is being investigated to bring about greater transparency in the opera-tions of the FBR is the Expeditious Refund System–an effort that deserves commen-dation and support by all stakeholders whose reputation is at stake.Directorate-General of Intelligence and Investigation, Inland Revenue (IR) in the Federal Board of Revenue (FBR) recent-ly detected some hitherto undetected flaws and loopholes in FBR’s Expeditious Refund System (ERS) after he conducted an in-depth analysis of ERS, and discovered some areas that had never been checked in the past. For example, ERS can’t verify duties and taxes recoverable from the refund claimants nor does the system cover Special Excise Duty refund. Also, that presently, besides ERS, FBR’s field formations were manually processing refund claims that weren’t being entered into the FBR's computer database. As a result, thereof, FBR carried the risk of making duplicate refunds.The fact that while processing refunds ERS doesn’t take into account unpaid duties and taxes recoverable from claimants is a serious administrative gap that needs plugging. ERS also does not flash signals to warn about possible mis-declaration by the claimants. Another big loophole in the system is that ERS doesn’t cater to refunds of Special Excise Duty (SED), thus these claims aren’t being responded to.Because of the pressures created by the business community, especially the various chambers of commerce, FBR has been trying to facilitate honest taxpayers by simplifying its tax laws and procedures and simultaneously minimising human inter-face in corruption-prone field operations; institution of ERS was an effort that aimed at hassle-free, fast track processing of Sales Tax Refund claims of manufacturers and exporters. ERS falls within the ambit of Inland Revenue Service (IRS) but it has been developed in a way that IRS is not associated with it in its day-to-day working. According to a key insider, he acts just “as a cheque-signing machine without exercising effective control over the system".What can make ERS transparent and a truly effective system is a clearly defined fool-proof discipline incorporating rules for pre-refund analysis of claims (PRA). This analysis should be initiated not on the basis of information received through formal complaints or through informal channels, but for all claims received directly by ERS Office, or by the field forma-tions of the FBR. Red alerts should be generated on the basis of information received about a case and any additional facts gathered by FBR’s vigilance cells. Red alerts are advisory in their character; the risks identified by them must be verified. Finally, the alerts shouldn’t hamper the normal processing of refund claims. Besides, to initiate any actions based on PRA, FBR’s competent authority must authorize them.Although ERS was conceived as a system that will eliminate face-to-face interaction between refund claimants and FBR person-nel, this is not happening. The only way to ensure that this doesn’t happen is to require all claims to be filed with the ERS Office and handled by that office, not the FBR field formations.












n line with its tradition of advising the Ministry of Finance on measures to rationalize the Federal Budget, Federation

of Pakistan Chambers of Commerce (FPCCI) has submitted a set of proposals, that it considers appropriate for increasing the momentum of economic activity, containing malpractices and increasing federal tax revenue. While in many ways the implementation of the proposals can reduce documentation and procedural hassles that strain the business entities, and may also serve as incentives for raising economic activity, as always, they are devoid of any reference to steps the FPCCI will initiate to impress upon the business community the importance of improving the country’s very low tax-to-GDP ratio – a self-regulatory that has repeatedly been pointed to by market observers of all shades. As before,

FPCCI proposals in the context of broadening the tax based are pretty vague and only ceremonial.

The proposals are as general and brief with regard to crucial improvements in infrastructure planning and the

measures to up the tax-to-GDP and investment-to-GDP ratios,

increase savings (and in that context, containing the rising mark-up spreads of the banking sector), stiffening of the regulations on asset valuation and the need for austerity, especially in the administration of the state that has taken a dive during the current democratic regime.However, FPCCI proposals in the context of incentivizing a significant rise in industrialization, though lacking details, are commendable, and deserve budget-makers’ attention because sentiment for investment has been the worst victim of what has gone on for the past four years, in virtually every field of state administration, and must be redressed forthwith if static economic growth has to be revived in the common interest of the rulers and the ruled. The proposals include tax holiday for new industrial ventures on the following conditions:• Minimum investment to qualify for this relief should be Rs

100 million with debt-equity ratio of 40:60, but for import-substitution industries, the debt-equity ratio could be 60:40

• Tax holiday period to be 5 years• Extension of the tax-holiday concession to ventures set up

effective July 1, 2012• Exemption from turnover tax under Sec. 113A controversial proposal in the same context, however, is the demand that the government should announce an ‘Amnesty Scheme’ similar to the one announced for inves-tors in stock markets. What the proposal confirms is the fact that business entities do indeed accumulate resources abroad by sidelining the tax system. This remedy was tried more than once in the past, but it is now clear that it never served the purpose. Had that not been the case, why would FPCCI demand it again? It implies that, despite these exemptions wealth continued to fly out of the country. It is that wealth that businesses aren’t prepared to bring back without another ‘Amnesty Scheme’.

ventsEE

May 2012

by Jauhar Alipril 2012 will be remembered for some shocking incidents that took place in this month in Pakistan’s aviation history.

Whether incidents that took place in this month will serve to open the eyes of the Civil Aviation Authority (CAA) and the Ministry of Defence–CAA’s supervisor–wide enough to see the lurking dangers in their performance remains to be seen. On April 20, Pakistan witnessed another tragic air crash kill-ing all 127 aboard BhojaAir’s Boeing 737. That ill-fated air-craft crashed minutes before landing at Islamabad Airport. It was a tragedy that shook everyone because the aeroplane was destroyed completely and its debris were scattered over an area of 4sq. Km and, in many cases, human bodies were split into pieces–too disfigured to be identified. The pain all the diseased must have suffered magnified the grief of their kith and kin; sympathizing with them over their loss was far too little to contain their pain. Fortunately, despite the handicaps, doctors at PIMS hospital Islamabad were able to identify the dead and handover their remains to the bereaved families. All over the country people prayed for all the departed souls, but there were some who found the tragedy an opportunity to sift through the wreckage, and pocket the belongings of the dead–an utterly shameful act that reflected the steady loss of a sense of morality and social responsibility. Transporting dead bodies back to their bereaved families initially became a murky issue because, in spite of a presidential order that they be trans-ported free of charge, some of the bereaved families were made to pay for transportation of the dead bodies.BhojaAir’s tragedy was the second biggest in less than 2 years that afflicted a plane trying to land at Islamabad Airport. The first to crash–on July 28, 2010 was an Airbus 321 of Airblue that crashed into the hills in the outskirts of Islamabad while preparing to land at Islamabad Airport killing all 152 people aboard. Inquiry report of this crash has not yet been made public nor the families of the deceased compensated. BhojaAir had recently restarted its operations in the country. The ill-fated flight was the airline’s first flight from Karachi to Islamabad. It was its crash that brought to the surface the gaps in supervision of the operations of Pakistan’s private airlines that have been operating since the 1990s. The reason there for was that in less than 48 hours after this air crash, a Boeing 737-400 of Shaheen Air made an emergency landing at Karachi Airport because it had developed problems with its landing gear. Its left rear tyres burst damaging its landing gear. The, flight coming from Islamabad, had 160 passengers and 6 crew members on board.When the plane’s tyre burst, it was discovered that security and rescue arrangements were not fully functional. Even fire tenders arrived after 20 minutes, and the first of them didn’t even have water in it. Ironically, a day earlier, a mock rescue exercise was conducted at Karachi Airport to test the readi-ness of the rescue services. After this near-tragedy, Karachi Airport had to be closed for 8 hours delaying several incoming and outgoing flights, while some were diverted to other airports, because the specialized vehicle for moving Shaheen Air’s

damaged aircraft was either not functional or lacked the gadgetry for dragging the damaged aircraft to an hanger.Yet another incident took place at Lahore Airport the same day when another aircraft of the same airline had to be stop-ed from taking off because this time the problem was that fuel was reportedly leaking from one of the aircraft’s in-built tanks. The airline accused the fuel supplying company (PSO) of filling excess quantity of fuel into that tank.Next, on April 25, a PIA flight (PK-387) with 43 passengers on board had to hover above the Multan Airport for an hour because its rear wheels were jammed and it could not land. The flight was later diverted to Lahore where, by the grace of God, it was able to land. The flight was diverted to Lahore’s Airport because that airport has a better emergency handling set up compared to Multan Airport.Was inclement weather responsible for the BhojaAir tragedy, its pilot’s error, the condition of the equipment installed in the aircraft, laxity on the part of CAA, handling by air traffic controllers, or sabotage? The real causes of the tragedy are yet to be determined. As it did in case of Airblue tragedy in July 2010, the government has very quickly constituted a 3-member judicial commission to inquire into the causes of the crash, though certain quarters have dubbed the commission as ‘dubi-ous’ because of its composition. As if this was not enough to make the entire process dubious, an FIR has also been lodged with the police. This step, experts feel, is bound to slow down rather than help investigation into the tragedy.Tragedies like those mentioned earlier, require re-visiting the Air Traffic Control system as a whole, because they not only pose a threat to the safety and security of the passengers but also tarnish Pakistan’s image abroad where its air safety track record is already being viewed with increasing concern.On January 19 this year, Peshawar High Court had expressed its dissatisfaction over the condition of passenger planes of the PIA and the private airlines operating from Pakistan. The court had ordered them (through the federal government) to conduct safety audit of the entire system without delay. The court order seems to have been overlooked or set aside. The tragedies detailed earlier could, perhaps, be averted by timely implementa-tion of Peshawar High Court’s warning. At long last, indications

Bhoja Air tragedy, and other near-tragedies – what’s happening?A

45

Therefore, import of medical X-Ray films may be completely exempted from Sales Tax and Income Tax. Medical facility should be cheap and available to poor masses.Jurisdiction of different directorates under sales tax actAll directorates should deal only with The Inland Revenue Department, and should not directly interact with taxpayers.Sales Tax on teaIt is suggested that sales tax on tea is brought down from 16% to 0%. This will reduce the gap in costing compared to legal imports and smuggling and so the revenue of GOP will increase.Fed on non-luxury itemsThere is the need to review the issue of overall incidence of indirect taxes so that possibilities and comparative advant-ages for evasion are reduced/minimized. A boost in business activity may be achieved by removal of FED on non-essen-tial items and goods that do not fall in the luxury category.Mandatory payment before filing appeal–Sec 37 of FEDIdentical provisions in income tax and sales tax laws have already been repealed. It is therefore suggested that the same may also be removed from the Excise Law. Streamlining of the Excise Law is accordance with set practices in Income Tax Ordinance-2001 and Sales Tax Act-1990.Adjustment of petroleum development levy (PDL)The said FEGO may be amended to allow such adjustment in case of other exports. Adjustment of PDL may be allowed by concerned refineries in a manner prevalent for adjustment of FED under the said FEGO. The removal of the anomaly will facilitate the Excise Department and the FBR in general.Key proposals for revising Income Tax rulesTax rate for first-time tax payerRate should be cut to 50% of the tax liability.Taxing very small businessA fixed rate of Rs 2,500 a year and issue of a FBR certificate to be displayed at the business premises.Deduction of WHT under Sec. 45 Part IV, 2nd Sch.a. WHT under Sec. 148(7) for commercial importers be reduced to 3% from 5%.b. WHT under Sec. 148(92) for manufacturer importers be reduced to 1% from 3%.Minimum tax on turnoverReduced to a flat rate of 5% for all tax payers.E-filing for refundsAs per SC judgment, time limit for filing should be increased to 2 years.

ventsEE

May 2012

are that the reminder by the Chief Justice of Peshawar High court has moved the CAA to act.Subsequent to the April tragedy and near-tragedies, a process of comprehensive inspection of the aircraft of private airlines has been initiated to avert any possibility of the recurrence of the incident that took place in April. The inspection process too off on April 23 when a team of CAA inspectors started checking of the planes of private airlines, one by one.Meanwhile, the team of investigators formed to investigate the causes of the crash, has visited the site and is collecting evidence. The team has made its initial assessment by study-ing the spread/position of the wreckage of the aircraft i.e. its, wings, engine and other parts and devices at the crash scene. It is very confidence building that the ‘black box’ and voice recorder of the ill-fated aircraft have been found to relive the last minutes before the crash to establish what was the pilot’s view of the situation and how he was being guided by the Air Traffic controllers at Islamabad Airport. What caused the BhojaAir tragedy?While aviation experts have just begun investigations of the evidence and the possible cause(s) of this crash, the ordinary too would like to know answers to the following questions in simpler terms:• Given the two warnings issued (first at 3.00 p.m. and then at

5.00 p.m.) by the Metrological Bureau about extremely bad weather around Islamabad, was it prudent on the part of Air Traffic Controllers at Karachi Airport to permit the ill-fated BhojaAir flight to take off?

• Around 6.30 p.m. (10 minutes before the crash), how good was visibility at a height of 9,000 feet i.e. extent of clarity and the distance up to which the pilot could see?

• What was the wind speed at that time and direction of its blow? • Whether it was a huge air pocket that caused the aircraft to

suddenly plunge and go beyond control thereafter? • Was the aircraft hit by lightening since eyewitnesses talking to TV

reporters said the tail of the plane was on fire while it came down? • Was it the fault of the Air Traffic Controllers at Islamabad

Airport (who reportedly kept advising the plane’s pilot to continue the plane’s descent to land at Islamabad Airport?

• Or is it that the pilot disregarded the instructions of the Air Traffic Controllers who were advising him to head for Lahore Airport?

• Or was it the error of the airline’s own flight controller?All these issues may take time to investigate credibly because facts recorded on the ‘black box’ must be decoded and the conversation between Air Traffic Controllers and the plane’s pilot recorded on the ‘voice recorder’ may be heard over and over again by aviation experts to conclude who was at fault. Then there are issues relating to how exactly the plane fell i.e. which part of its body hit the ground first: the nose, the tail or the belly, and then which wing touched the ground first and which engine was damaged first. The key question would be whether the aircraft was already on fire before hitting the ground or did it catch fire after it crashed.While investigating all these facts is essential for conclusively fixing responsibility for this tragic event, it is as important that the investigators draw critical conclusions about the way the aviation sector is operating and the risks inherent therein, as

highlighted by this tragedy that (based on the facts disclos-ed so far) was the result of serious negligence by Air Traffic Control-lers, and the overall supervisory laxity in this sector.Airline regulation, supervision, inspectionThese unfortunate incidents raise several pertinent questions in the context of airline supervision. For instance:• Should any airline, state-owned or private, be permitted to buy

aircrafts that are as old as27 to 30 years? The ill-fated BhojAir Boeing 737, reportedly, was over 27 years.

• Who from the CAA inspected the aircrafts in South Africa from where they were acquired by BhojaAir? What exactly was the focus of that inspection, and on what bases these aircrafts were considered fit for operation, given the fact that their existing owners wanted to dispense with them?

• If such aircrafts were bought, how much of refurbishment these aircraft required to become ‘airworthy’, and who was made responsible for ensuring that this exercise is carried out in its entirety, and old parts are replaced with genuine, new parts?

• These being old aircrafts, was a special check list of aircraft fitness given to BhojaAir to comply with, as long as these aircrafts were in use? If so, were contents of that check-list approved by experts in aviation industry, especially experts of the Boeing Aircraft Industry?

• If such a checklist was indeed provided to BhojaAir, who was ensuring that the airline was routinely complying with its terms i.e. replacing all parts and equipment as soon as they became due for replacement (completed their useful life as per the manufacturer’s instructions)?

• Was it ensured, and if so, how, that BhojaAir wasn’t using used equipment to replace the parts of its aircrafts?

• What is the strength of the airline’s flying staff, especially pilots, first officers and those responsible for carrying out aircraft maintenance?

• Is the staff strength enough, or does its being inadequate implies that the airline’s staff remains over-worked?

• What is the policy of the airline on passenger and aircraft insurance, and is it buying insurance covers for its aircraft, passengers and flying staff from insurance companies with sound standing and claim payment record?

• The fact that a fire tender at Karachi Airport rushed to the scene of accident without ensuring that it had water in its tank, and the non-availability (or was it something else?) of specialized vehicles to two damaged aircraft, highlight very serious regulatory and supervisory lapses on CAA’s part.

Inquiring into these aspects is extremely important because, in the present circumstances i.e. rising inflation, depreciating exchange value of Pak Rupee, skyrocketing fuel prices and in spite thereof, airline owners’ craving for earnings, are airlines spending as much as they ought to, on these sensitive heads? If this isn’t the case, the airlines are in danger and so are their passengers and their aircraft. That the families of the victims of Airblue haven’t been compensated points to this flaw. It has been pointed out by several sources that BhojaAir was financially strained; in fact it remained inoperative since 2001 because of its inability to pay around Rs 6 million to CAA on account of its use of airport services. While permitting it to resume operations, was it verified that this stress was over?

46

nergy Sector is the lifeline of social and economic devel-opment of a country. Unfortunately Pakistan ranks amongst

the acutely energy-starved economies of the world. The energy consumption by different sectors is the same as the world average, but the availability is constrained. Electricity is available to only 57% of the population while natural gas to 21%. Only 43% of the rural population has access to electric-ity from the system.Currently, Pakistan is facing the shortage of 5,300 MW electric power. The supply of electricity in the country is almost 13000 MW against the demand of 18,300 MW. While shortage of gas is around 2 billion cubic feet per day, which causes 3 to 4% loss of GDP annually.The power sector has become financially unviable due to a large financial gap arising from high fuel import cost, massive theft and losses, mismanagement and corruption. On the other hand, Inter-corporate Circular Debt has increased to around Rs.330 billion in April 2012 which is growing at Rs.9.5 million a day. The oil import bill stood at $ 12.08 billion for the year 2010-2011 which is expected to cross $ 15 billion by the end of the current fiscal year.It is claimed that we have the world’s 2nd largest coal reserves (Thar) with 175 billion tons of coal through which 1000 MW electricity can be generated daily for the next 30 years but due to inappropriate development strategies it also remains unexploited.Roots of Pakistan’s Energy CrisisThere are four distinct causes of Pakistan’s energy crisis:• Lack of integrated energy planning.• Imbalanced primary energy mix with heavy reliance on natural gas (45%) and oil (35%) (8.4% imported at $ 12.08

billion/year) with the balance from hydel at 12%, coal at 6% and nuclear at 2% of the mix respectively which is unsus-tainable.

• Non utilisation of vast indigenous Thar coal and hydel energy resources.

• Lack of effective project structuring.It may not be out of place to ask as to why the Govt and Project planners should wait for development of Thar coal. The cost of coal in the international market is always lower than fossil fuels and electricity produced by this fuel would be a bit cheaper. Even the Cement Industry has benefitted from this shift. If the projects based on Coal are developed now, then subsequently these can be shifted to indigenous coal from Thar.Pakistan’s Primary Energy MixPakistan’s primary energy mix is imbalanced even on a world-wide comparative basis, with dependence on gas at 45%, oil at 35%, hydel at 12%, coal at 6%, and nuclear at 2%. Day by day the energy gap is increasing at an alarming rate. While quantitative gap is increasing due to rising demand for energy,the cost is increasing due to adverse energy mix. The supply side of the gas has certain constraints, hence additional quan-tity of energy is supplied through import of oil. The govern-ment has two possible options:

ventsEE

May 2012

ircrafts are vulnerable to a variety of threats. These include ignored technical defects in aircrafts, sudden

adverse weather changes, errors by pilots or by operators in air control towers at airports, or by flight controllers of aircraft-owning entities. The only exception was the C-130 Hercules carrying former President Gen. Zia-ul-Haq back to Islamabad from Multan; that crash was caused by a powerful bomb planted inside the aircraft.This page carries the saddening chronology of major crashes beginning 1965 involving aircrafts operated by Pakistani as well as foreign entities. Reports on causes of some of these crashes have not yet been released, which had created doubts about the investigative process. The last of the major crashes took place on July 28, 2008 i.e. nearly four years ago. Of the 15 crashes, 8 involved small aircraft (6 Fokker F27, 1 Cessna, and 1 small twin-engine aircraft). Rest of the crashes involved wide-bodied aircraft (2 Airbuses, 2 Boeings, 1 C130 Hercules, and 1 Ilyushin L76). Thus the loss of life caused by their crashes was much higher, point-ing to the need for extra care when such aircraft take-off for their destinations or land thereon. Seven air crashes took place while aircraft either took off or tried to land at airports at high altitudes: Gilgit, Islamabad, Kathmandu, Kohat, Peshawar, and Rawalpindi – all of them also involved mountainous routes. In case of 3 crashes, that took place in or near Karachi, all involved aircraft were small planes that crashed due technical faults. The basic issue is whether aircrafts that have outlived their utility, be licensed to fly. In the case of BojhaAir, the aircraft that crashed on April 20, there are strong reports that it was too old to fly, had been inoperative since 2000, and that such aircrafts are not allowed to land at the better regulated airports. If all this is true, how come it was licensed to fly by CAA? Secondly, should aircraft, that are unfit for flying, be allowed to take-off? Who has the ultimate responsibility for confirming airworthiness of an aircraft? This is a question that must be addressed by those responsible for ensuring that this does not happen. That this supervision is weak was also portrayed by two near-tragedies on April 22, involving two aircrafts of Shaheen Airlines. While thus far the view about BhojaAir tragedy is that it was caused by a sudden weather change that pushed the aircraft down by 600 feet, another view is that because fuel prices are very high, aircraft no longer carry fuel that is enough for a return flight – the globally practiced disci-pline. The BhojaAir aircraft opted to land at Islamabad and did not headed for Lahore, perhaps, because it didn’t have enough fuel. What the CAA must inquire into are all the possibilities. It is odd that it took CAA such incidents to go for inspection of aircrafts. It is time CAA revised its policy on periodic and spot aircraft inspection to alert all the operators, and its out-dated emergency handling routines that frustrated everyone.

May 20, 1965: On its inaugural flight, a Boeing 707 owned by PIA crashed in its attempt to land at Cairo Airport; death toll was 124. August 6, 1970: A PIA Fokker F27 aircraft crashed while it attempted to take off from Islamabad Airport in a thunder-storm; death toll was 30.December 8, 1972: A PIA Fokker F27 crashed near Rawal-pindi causing the death of all the 26 people on board. November 26, 1979: A PIA Boeing 707 crashed soon after taking-off from Jeddah airport killing 156 people on board. October 23, 1986: A PIA Fokker F27 crashed in its attempt to land at Peshawar Airport killing 13 of the 54 on board. August 17, 1988: A C-130 Hercules of the PAF crashed near Bahawalpur, killing Gen. Zia ul Haq and 30 others including Pakistani Generals and the erstwhile US ambassador. August 25, 1989: A PIA Fokker F27 disappeared soon after taking off from Gilgit Airport; its wreckage was never found and 54 people on board remain unaccounted for. September 28, 1992: A PIA Airbus A300 crashed into the cloud-covered hills while descending to land at Kathmandu Airport; the death toll was 167. February 19, 2003: A PAF Fokker F27 crashed into the fog-covered mountains near Kohat. Air Chief Marshal Mushaf Ali, his wife, and 15 others died in that tragedy. February 24, 2003: A chartered Cessna 402-B carrying the Afghan Mines & Industries Minister, four Afghan officials, a Chinese mining executive, and two Pakistani crew members, crashed into the Arabian Sea near Karachi. July 10, 2006: A PIA Fokker F27 burst into flames shortly after taking off from Multan, killing all the 45 on board. July 28, 2010: An Airbus 321 owned by Airblue crashed into hills in the outskirts of Islamabad while preparing to land at Islamabad Airport killing all the 152 people on board. November 5, 2010: A twin-engine plane operated by JS Air (a Pakistani charter service) crashed soon after take-off from Karachi Airport killing all the 21 people on board. November 28, 2010: An Ilyushin IL-76 cargo plane operat-ed by Georgia’s Sunway airline crashed soon after taking off from Karachi Airport killing all the 12 people on board. April 20, 2012: A Boeing 737 of Bhoja Air (reportedly hit by lightening) crashed near Islamabad in its attempt to land at Islamabad Airport. All the 127 people on board were killed. On April 22 two incidents took place at Karachi and Lahore.

Air crashes and thelesson they o�erA

47

Pakistan’s energy needs are expected to grow seven to eight times by 2030.In November 2006, the International Atomic Energy Agency approved an agreement with Pakistan Atomic Energy Com-mission for new nuclear power plants to be built in the country with Chinese assistance. The 35-member Board of Governors of the IAEA unanimously approved the safeguards agreement for any future Nuclear Power Plants that Pakistan will be constructing.Chashma Nuclear Power Plant IThe construction of Chashma Nuclear Power Plant Unit I (CHASNUPP-I), the second nuclear power plant in Pakistan, was started in 1992 with the help of the People’s Republic of China. It has been in commercial operation since September 2000. CHASNUPP-I is a two-loop PWR plant with gross Output of 325 MW and net output of 300 MW and a life span of 40 years.CHASHMA NUCLEAR POWER PLANT IIThe Chashma II Nuclear Plant was completed three months ahead of schedule due to the joint efforts of Chinese and Pakistani teams. At the end of 2008, steam generation plant, dome construction and grid interconnect were complete.As of April 10, 2011, the power plant has been completed, and is undergoing further testing, with a limited output of 330 MW of electricity being produced during the trial period.The 330 MW plant was the result of the Pakistan-China coop-eration in nuclear science and technology.CHASNUPP-II is part of Pakistan’s ‘Energy Security Plan’,that envisages an increase in nuclear power generation from the current 425 MW to 8800 MW by the year 2030 to meet the country’s growing energy demands.CHASHMA NUCLEAR POWER PLANT III & IVOn April 28, 2009, a general engineering and design contract for CHASNUPP-III and CHASNUPP-IV was signed with Shanghai Nuclear Engineering Research and Design Institute. Much of the design work has already been completed by SNERDI to meet lead-time requirements. The units will have generation capacity of 425 MW and a design life of 40 years.After the accident in Japan last year the whole world is revisiting the subject of civil nuclear energy. Various countries are shelving the projects in the pipeline. A few years ago Sweden had planned a nuclear power project on beach facing Denmark. Denmark objected to it that in case of accident Denmark’s population would suffer unnecessarily. Sweden after some negotiations shelved the project.WIND POWER IN PAKISTANPakistan is building wind power plants in• Jhimpir• Gharo, Keti Bandar and Bin Qasim in Sindh.Pakistan has recently launched several wind-farm projects expected to produce over 250 MW of power within the next two years.Europe accounted for 48% of the world’s total wind power generation capacity in 2009. In 2010, Spain became Europe’s leading producer of wind energy, achieving 42,976 GWh. Germany held the top spot in Europe in terms of installed capacity, with a total of 27,215 MW as of December 31, 2010. The following is a comparison of wind energy being produced in major countries.

by A.B. Shahid

Chase Manhattan Bank in acting as a conduit for arming the Mujahidin in Afghanistan, and Chemical Bank in money laundering, as early as 1977, are no secret. Accord-ing to The Econo-mist, in the 1990s, Barclays Bank, Morgan Guaranty as well as Citibank were involved in transferring state funds into Swiss bank accounts of Boris Yeltsin and his cronies. Half of these funds were IMF loans for badly needed structural adjustments to help Russia tied over its Balance of Payment problems. The 2005 Fed hearing implicated Citibank in large-scale money laundering. The charge, implicating the bank’s offices in several countries, amounted to over US$ 1.3bn. Citibank accepted its crime and paid a substantial fine there- for. In 2006, Citibank nearly lost its banking license in Britain as well as in Japan due to its faulty foreign exchange and debt paper trading practices. Reasons for sacking of its erstwhile CEO Chuk Prince included these indictments. The Florida branch of BCCI too was impli-cated in money laundering to the tune of US$14 million but it was proved that those funds flowed into an account maintained by an under-cover agent of the DEA. As for money laundering, no bank can match the centuries-old record of Swiss banks in facilitating this activity. Until recently, having a numbered account in a Swiss bank was a status symbol. Money laundering was not a crime as long as it helped to siphon off wealth from the poor countries to the prosperous West; it became a crime only after terrorists began using this channel to finance their nefarious operations. Only in 2005 was Citibank found guilty of the crime and fined heavily but is very much alive and kicking. But it was considered fit and proper to wipe BCCI off the map. There is no conclusive evidence about BCCI’s involvement in gunrunning for insurgent groups. All we have are half-truths (e.g. the unsubstantiated Abu Nidal connection). BCCI had no reason to assist any terrorist group because the bank never had any political affiliations. As far as assisting the supply of compo-nents for Pakistan’s nuclear plants is concerned, no evidence was ever produced in which BCCI knowingly allowed its branch network to be used for smuggling for this purpose. If anything, BCCI was associated with charity and assisting poor country governments in repaying their unmanageable external debt owed to the World Bank and the IMF. Not surprisingly therefore, Robert Leigh Pemberton–erstwhile governor of the Bank of England (BoE)–was against winding-up BCCI. He knew that closing down global banks entailed a formidable cost to depositors–a fate Central Banks are obliged to avert–but his deputy Eddie George ensured BCCI’s closure because his US counterpart had warned him that if BCCI was not shut down, he would

n May 17, the official liquidators of the Bank of Credit & Commerce International S.A. (UK) will hold

the final meeting of the bank’s creditors to end the winding up proceedings (that lasted 21 years) of the bank that returned about 90% of the principal amounts of the depositors’ funds.No one knows everything about BCCI’s collapse because those (the concerned Central Banks) who stood to lose from those disclosures, withheld its vital details. There is therefore a possibility that you too don’t know many hidden truths about BCCI. Many authors who wrote about BCCI made assumptions, some with the intention of releasing the pressure off today’s bankers (of the sub-prime mortgages fame), who engineered an unprecedented chaos that is now shaking the very foundations of the global financial markets. What commentators often overlooked were the regulatory lapses of the 1970s that partly account for BCCI’s collapse. It is frightening to recall the pace at which Central Banks allowed bank network expansion ignoring the gaps it left in their risk management capabilities. BCCI’s weaknesses too were rooted in the pace at which it expanded – 70 countries in just 17 years. The weaknesses were compounded by the fact that bankers from overly regulated markets (Pakistan and India) were exposed to deregulated environments. Many took flawed lending decisions, and blindly ventured into volatile exchange and commodity markets. This was BCCI’s terminal illness but not the cause of its demise. In late 1991, CNN telecast live an inquest by a Sub-committee of the US Senate into the collapse of BCCI. In the hearing, Masih-ur-Rehman (BCCI’s ex-CFO) made a detailed deposition. It was followed by depositions of the representatives of the Fed, Comptroller of Currency, FBI, DEA and CIA. After listening to them, the committee felt that, based on the evidence presented, BCCI should have been re-structured, not closed. The chairman therefore asked the CIA representative “why then was the bank closed down?” In spite of being monumentally brief, the CIA representative’s reply was enormous in what it covered up; he said “Sir, we had decided that the bank should be closed”, ‘we’ denoting the US that, since 1942, decides what should or shouldn’t happen on this planet. In his report on BCCI’s collapse, besides other factors, Lord Bingham blamed it on trading losses manifesting “incompetence and errors of unsophisticated amateurs ventur-ing into highly technical and sophisticated markets”. He highlighted two of the many losses, one (US$650 million) on lending to Gokal Shipping, and the other (US$285 million) on delayed covering of currency and commodity option contracts. But he too could not provide proof of BCCI’s criminal activities. By comparison, in the 1970s the roles of banks like Banca Commercial Italiana in the alleged Vatican-sponsored insur-gencies against regimes in Latin America, Barclays in sustaining apartheid in Africa’s erstwhile British colonies, BankAmerica in toppling socialist regimes in Latin America,

�e eventual death of a promising bankO

ankin & FinancegBB

4749 May 2012

FUTURE PROSPECTSCommercial-scale wind farms are being advocated as a potential solution. Comprising 93 wind farms and related infrastructure, the Gharo Wind Corridor is one of the first large-scale energy production schemes in the country.The United Nations Development Programme (UNDP), through its wind power production initiative, is helping Pakistan remove existing policy and regulatory barriers and encourage private-sector investment in utility-scale wind energy generation.Halcrow’s Pakistan team completed a series of environ-mental impact assessments and regional environmental assessments for the client partners – a joint venture between leading Spanish companies Taller and Eolic Partners SA. This monitoring has helped shape environ-mental guidelines for future wind power initiatives in Pakistan, and improved investor confidence by identifying risks and providing assessment to internationally recog-nised standards.

akistan has a developing but forward looking pharma industry. At the time of independence in 1947, there was

hardly any pharma industry in the country. Today Pakistan has about 640 pharmaceutical manufacturing units including those operated by 30 multinationals present in the country. Pakistan pharmaceutical industry meets around 80% of the country's demand of finished medicines. The national pharma industry has shown a progressive growth over the years, particularly during the last decade. Currently the industry has the capacity to manufacture a variety of products ranging from simple pills to sophisticated Biotech, Oncology and Value Added Generic compounds.Pakistan pharma industry is relatively young in the international markets with an export turnover of around US$ 190 Million annually. The industry boasts of quality producers and many units are approved by regulatory authorities all over the world. Like domestic market the sales in international market have almost doubled during the last five years. The industry is reportedly focus-ing on meeting an export vision of USD 500 million by 2013.In the beginning of 2012, credibility of the pharma industry in Pakistan suffered a severe setback due to “Iso Tab” conundrum at the Punjab Institute of Cardiology which cost loss of 129 precious lives. The drug was found contaminated with lethal quantities of an anti-malarial drug and administered in excessive doses. The foreign lab report revealed ‘Isotab’ samples to be heavily contami-nated with Pyrimethamine, a commonly used antimalarial drug.

The pharma entrepreneurs are , however, optimistic about the revival of the industry’s credibility and consequent growth. This was revealed by the industry’s visionaries at the 8th Health Asia exhibition, held on April 24-26, 2012 at Karachi.The exhibitors belonging to the pharmaceutical, surgical items and technical lab apparatus & devices, from 11 different coun-tries, mainly from Asia, participated in the exhibition along with some local manufacturers. Health Asia Int’l Exhibition & Conferences is the only UFI (Paris) approved health sector event in Pakistan, which provides enormous opportunities of learning, information sharing, mutual cooperation and combined projects to the stakeholders. The exhibition served as a comprehensive showcase of the latest in technology, equip-ment and machinery as well as allied services, while providing investors with a definite outlook of the regional pharmaceutical industry and an opportunity to meet their prospective counter-parts and business partners.

In an interview with “Value Chain”, Dr. Muhammad Abid, Executive Director of Vision Pharmaceuticals, at the event, admitted that the medicine debacle we faced at the beginning of this year severely affected the pharmaceutical exports of Pakistan. “Even the small countries like Sri Lanka had imposed ban on the import of Pakistani medicines”, he said. However, he added, the situation is getting better now and would further improve in few months, thanks to the measures taken by the pharmaceutical companies to avoid recurrence of such incidents in future.To a question regarding general observation that the patients prefer foreign medicines to those manufactured in Pakistan, he replied that it is due to the lack of confidence at local pharma products. He underlined the need for adopting international standards to ensure the quality of medicines. However, he claimed that Pakistani medicines are still better than those manufactured in other regional countries including India. Regarding the MFN status being given to India, he said that this step will further damage the Pakistani pharmaceutical sector. The Indian medicines, he said, are cheaper than Pakistani medi-cines due to their low cost of production and availability of raw materials. Pakistani pharma sector cannot compete with Indian counterparts because there are more than 30000 pharma companies in India as compared to just around 640 in Pakistan. He demanded of the government that only internationally acclaimed and acknowledged Indian companies should be allowed to export medicines to Pakistani market. Thus alone will the Pakistan pharma industry be able to compete with the Indian counterparts. He further demanded that Pakistani government insist with Indian government to facilitate us in buying raw materials from their markets.

Yes, there were unscrupulous and incompetent individuals in BCCI but they were a handful; the middle management and frontline staff were honest, diligent and well trained, and could beat their adversaries hollow when it came to facility structuring and service delivery. BCCI had excellent training facilities at its Management Development Centres in Bogotá, New York, London, Harare, Cairo, Abu Dhabi, Karachi, Bombay, Dhaka and Hong Kong. Today, hundreds of former BCCI employees trained at these centres are serving in senior capacities in banks everywhere, some of them heading country operations.BCCI showed the world that banks don’t have to look like pawnbroker shops; they can be attractive, comfortable and functional, all at the same time–something even the Euro-pean banks didn’t know. BCCI was the only institution in the world that inculcated a sense of social responsibility in its staff by giving everyone a sum besides his or her salary for ‘giving’ to social causes of his or her choice.In Pakistan, it made a commitment not to transfer even a penny of its profit. Instead, it was to be invested in social causes. GIK Institute of Technology, BCCI Foundation for Advancement of Science & Technology, the Infaq Founda-tion and the Orangi Township Scheme are proof thereof. No foreign bank operating in Pakistan then or now under-took social work of this sort. BCCI left a number of landmarks in other countries as well; the Cromwell Hospital in London, where hundreds were treated at BCCI’s expense, is one of them. Human history shows that no one is perfect, nor was Agha Hassan Abedi, but what distinguishes the great from the ordinary is their vision and their ability to transform it into reality. On these counts, Agha Hassan Abedi stands out as a remarkable person. As early as 1980, he used to talk about “vision 2000”. That’s why, in spite of coming from a grossly wronged country like Pakistan, he created the largest privately owned global bank the world ever saw. Even Bill Gates realized only in 1997 that when the last two digits in the date of an accounting transaction are two zeros, the computer will not post it. Agha Hassan Abedi came from a humble background and his aim in life was to change the fate of the poor, subjugated nations. Unlike the Western banks, that shamelessly pursue profit and power as their aim, he wanted BCCI to become a truly people’s bank. And like Napoleon, he was eliminated by the fraternity that has controlled the fate of the nations for centuries. But his example will inspire many. That is how he will live for years to come in spite of books like “A banker for all seasons.” The closure of BCCI will serve as an example of Central Banks shirking their responsibilities at the crunch time; they (many under pressure) preferred winding-up BCCI instead of re-structuring it. It proves that the depositors eventually pay for the errors of their Central Bankers as reflected in the fact that even after 21 years of its winding up, its deposi-tors in the UK haven’t been fully paid their claims that were grossly diluted and paid with historical delay by the BoE-appointed liquidators, who benefitted considerably from the operation. Three cheers for Edie George!

release evidence about the bank’s ‘crimes’ that could be highly embarrassing for the BoE. In the meeting on July 4, 1991 wherein Pemberton was to approve a meticulous plan to re-structure BCCI, Eddie George forced Pemberton to back down from his promise to approve the plan (which was accompanied by US$600 million worth of fresh equity injection into BCCI). Not surprisingly therefore, while the re-structuring plan was thrown into the dustbin, the funds (remitted through a US bank by BCCI’s majority shareholders), were promptly confiscated by the US authorities. The real reason why CIA decided to shut BCCI down had little to do with its links to Panama’s Gen. Noriega. American banks were in league with dictators the world over in more dreadful ways. What CIA disapproved of was BCCI’s gradual takeover of the liabilities Third World countries owed to WB and IMF. In his book ‘Globalisation and its discontents’, Joseph Stiglitz has vividly exposed what these institutions had been doing to these countries. BCCI also committed the cardinal sin of entering the US financial sector by trying to buy out a US bank. Even now, in spite of its avowed love for market access, the US doesn’t like foreigners getting a foothold in its markets. That is why the Middle Eastern and Chinese investors that, back in 2003, wanted to invest in the US failed in their attempts. Last but not least, after the stoppage of US arms supplies in 1979, Pakistan was left with no option but to secure itself against a nuclear India through a half-baked nuclear capa-bility of its own. The US didn’t approve of it and decided to teach Pakistan a lesson (yet unfinished) for disobeying its command. In that process, BCCI too had to be targeted because it was rescuing Pakistan out of its economic predicament while the US suspected BCCI of helping Pakistan nuclear programme. BCCI’s ability to rescue Pakistan was eventually eroded because its majority shareholders were being pushed by the US to divert resources to re-build Iraq’s war-torn defences. Quite unwittingly, BCCI’s shareholders shifted the pressure on to BCCI. Seventy loans (as per Bingham report) siphoned out of BCCI nearly US$ 4.5 billion making the bank illiquid. It is worth noting that even by end-1990 BCCI’s group balance sheet footing was US$17 billion, and these loans amounted to over 25% of its resources. The bank’s going bust after siphoning out of so much liquidity was not a surprise. The event shocked the whole world. Yet, deposi-tors everywhere were compensated fully except in the UK, the US and UAE, and operations in almost all countries except UK and the US were bought over by local or interna-tional banks.The view that BCCI didn’t have much in terms of informa-tion technology too is incorrect. As early as 1975, BCCI got NCR to develop customized computer software and by late 1970s, branches globally were on-line and data was consoli-dated at country offices in real-time. In Pakistan, BCCI was the first to provide on-line computer terminals to its customers. In its very short life, BCCI twice replaced its computer software. Even today, for financial analysis, banks in many countries use a computerized programme devel-oped by the bank’s International Management Division.

BBankin & Financeg

May 201250

Mr. Fayaz Anwar serves as Director Operations at Al- Karam Textile Mills. He is responsible for providing strategic and tactical support to Al Karam group of companies. Mr. Anwar has over nine years of professional experience in textile sector, ranging from planning, organizing, structuring and managing various estab-lishments of Al-Karam Group of Companies. Mr. Fayaz Anwar also serves as Director at Hiba Weaving Mills (Pvt.) Ltd. and at Amna Industries. He is also a Member of Alumni Association for Foreign Students as well as Entrepreneur Organization. The EO is a global network of more than 8,000 business owners in 40 countries. It was founded in 1987 by a group of young entrepreneurs. Different groups and forums are created in EO chap-ters in which local and global entrepreneurs share and discuss their issues, trends and future strategies. Value Chain has had an interview with him. Given below is what he said. -- Editor

Q: Power shortage, gas load shedding, law and order situation, political turmoil and similar other crises have adversely affected almost every segment of national economy. How have these crises affected the textile industry of Pakistan? What future do you fore-see in the coming months?A: The issues you mentioned have had an adverse impact on almost every sector of the national economy. Textile sector is one of the most affected sectors . Due to severe shortage of energy we are unable to meet the export orders on time making it difficult for us to compete with regional and international exporters. Indians, Chinese, Bangladeshis and Thai exporters deliver their orders on time. Al-Karam is a leading Pakistani textile exporter to the US, UK, China and the Gulf states. We have to make sure that our quality products are delivered to them on time. Otherwise we may lose our share in international markets. Al-Karam has its own display shelves in the leading retailer stores in foreign countries where we have to send our products in order to maintain the flow of our business. We are spending extra money on alternate energy sources to maintain the quality of our products and ensure their timely delivery although this has a nega-tive impact on our profit margin. Q: Do you think that these crises are going to be resolved in near future? A: Where there are problems, there are solutions too. What is needed is the will to resolve them. If the situation does not improve in near future, we would be unable to make further investment. The economic managers and policy makers have to find a way to bring industries on a progressive path. They should set the priorities and then implement the road map with consistency and commit-ment. Otherwise the desired targets for growth in Pakistan’s economy may not be achieved.Q: Being a textile giant, what are your expectations from the coming budget for the fiscal year 2012-2013?A: I don’t see any big relief in the next budget because the government’s tax targets are quite ambitious. We are already running our industries under immense pressure, losing the

profit margins day by day. Several Pakistani industries are on the verge of closure due to power shortage, law and order situation, political instability and other related crises. Smaller textile units are worst sufferers. Gover- nment needs to provide them relief in taxes or grant them privileges.Q: How do you look at MFN status being given to India by Pakistan? Will this step boost our textile exports? A: It is a good step. India is a big market where our textile products are in great demand. We can capitalize on it with better planning. We have high quality raw material and appeal-ing textile products. We are already manufacturing textile goods of international standard. This step will surely boost our textile exports . Pakistani textile manufacturers should also make value addition in their products. They can earn better rate of profit through value added garments sector.

Like many other textile manufacturers, designers and Pakistani industrialists, Al-Karam textiles also partici-pated in the “lifestyle exhibition” in New Delhi, India during April 12 to April 15. What was the response by Indian buyers?A: We got good but calculated response from Indian buyers. However, we enjoyed the hospitality and dialogues with their trade officials and industrialists. Pakistani lawn fabric has a great potential and it can create a great demand in Indian markets. Our designer lawn fabrics are considered to be one of the finest worldwide. The exhibition was definitely a good start and it would be helpful for us in “brand making” in Indian markets.Q: What is your opinion about the mark-up rates in Paki-stan as compared to those in other regional countries like India and Bangladesh?A: In Pakistan the mark-up rates are higher. It is the respon-sibility of the government regulator such as SBP to look into this issue. Higher mark up rates make the survival of Pakistani industries further difficult. Markup rates should not be more than a single digit in Pakistan as is the case in other regional countries. One hopes the regulators , especially SBP, will look into it.

51

by Shujat Ali Baigadvantages of mechanization and industrial efficiency,is today in a worse mess than ever before in history. The adoption of Western economic theory and practice will not help us in achiev-ing our goal of creating a happy and contended people. We must work our destiny in our own way and present to the world an economic system based on true Islamic concept of equality of manhood and social justice. We will thereby be fulfilling our mission as Muslims and giving to humanity the message of peace which alone can save and secure the welfare, happiness and prosperity of mankind.”Efforts for economy-wide elimination of Riba commenced during the 1970s, and most of the significant and practical steps were taken in the 1980s. The initiative to re-introduce Islamic Banking in Pakistan was launched back in 2001 when the government decided to promote Islamic Banking in a gradual manner and as a parallel and compatible system that is in line with the best international practices. Following the decision of the government to shift to interest-free economy in a phased manner without causing any disrup-tions, the effort was envisaged as a market-driven flexible approach. Furthermore, it should aim to build a broad based financial system in the country to enable all segments of the population to access financial services.Growth of Islamic Banking industry in Pakistan has been tremendous. Currently, Pakistan’s Islamic Banks sector is operating with:

• 5 Full Fledged banks having 416 branches• 13 Conventional Banks operating with 183 SAIBB and 68 Sub-Branches.Despite the above success story, there are several factors that are likely to constrain the development of Islamic

finance including:• The current Islamic banking model is based on replica-tion of conventional banking products. While this replica-tion is easy to understand for the customers, and helps Islamic banks offer replicated conventional services, the effort is insufficient to achieve the overall objectives of the Islamic financial system which is based on equitable distribution of economic gains on one hand and on the

other hand makes Islamic finance less efficient compared to its conventional counterpart.

• Not all conventional products have an Islamic equivalent like treasury and liquidity management tools.• Requisite changes in legal, regulatory and tax environ-

ments to accommodate Islamic finance without the customers incurring additional costs.

• The different interpretations of Shariah rulings have resulted in lack of standardization.Therefore a common understanding is needed to integrate local market with global market. This requires remedying the following:

early four decades ago, Islamic Finance was initiated to cater to the needs of faith-based Muslims. Once

looked upon as a patchwork of banking niches in the Arabian Gulf region and Malaysia, Islamic Finance has evolved into a globally accepted financial system. In the last thirty years, Islamic Finance service made considerable progress at the global front, but especially during the last decade wherein Islamic Financial Sector (IFS) has registered a robust growth (between 15 to 20 percent per annum) making it one of the fastest growing segments of the overall financial system. By the grace of Almighty Allah, Islamic finance now has taken roots in Muslim as well as non-Muslim economies. Presently, over 1,100 institutions offering IFS of operate across the globe which, supported by a number of dedicated academic, legal, regulatory and supervisory institutions, provide a solid platform for the future growth and development of Islamic finance services. With the passage of time, the global Islamic financial services market is becoming increasingly dynamic and diversified. Assets of 500 Islamic banks expanded 28.6% to $822bn at end-2009. Standard & Poor’s estimates that, globally, Shariah-compliant assets now total $1 trillion as a result of brisk growth during the past decade. Islamic fund management industry has also played its role in this exponential growth whereby number of Islamic funds has reached 517–more than double compared to the 207 investment funds available in Jan 2005. Due to the prevailing economic crisis, safety remains an important priority for the investors in Islamic funds. Of the 517 Islamic funds across the world (in Saudi Arabia, Malaysia, US, Kuwait, S. Africa, Indonesia, Pakistan, Luxembourg, Bahrain, and Japan), 274 are equity funds, 84 are funds represented by investment in a mix of assets, 75 are money market or commodity ‘murabaha’ funds, 67 are Sukuk funds and 17 capital funds. Major global banks and law firms have participated in structuring the offerings of a large number of sukuk issued so far. Access to Western economies means that Islamic financial institutions gain entry into large and diversified economies with a wide array of asset classes for investment, and in the case of the developed countries, the backing of strong legal frameworks.In Pakistan, the birth of Islamic Finance can be traced way back to 1948 when, while inaugurating the State Bank of Pakistan, founder of the nation Quaid-e-Azam Muhammad Ali Jinnah, said that: “I shall watch with keenness the work of your research organization in evolving banking practices compatible with Islamic ideas of social and economic life. The economic system of the West has created almost inso-luble problems for humanity and to many it appears that only a miracle can save it from disaster that is now facing the world. It has failed to do justice between men and to eradicate friction from the international field. On the contrary, it was largely responsible for two World Wars in the last half century. The Western World, in spite of its

Islamic Financial Services: past, present and futureN

BBankin & Financeg

May 2012

curtains, lawn, bed linen, pillow covers and premium quality lathas. We are also exporting menswear and all types of fashion suiting. Bed linen and lawn are the most exported items of Al-Karam textile. 70 percent of our products is exported to various countries.Q: Recently, Al-Karam has entered the retail business also. What are your expectations from the retail sector of textiles?A: We actually studied the market and analyzed that there was a huge potential in retail sector of textiles especially in garmentsand apparels. We entered this sector and received good response from our custom-ers. Our already established brand of “Al-Karam Textiles” helped us a lot. Customers have a strong trust in our brand which help us to achieve our targets in this sector.

Our lawn is available at garment shops. We thought why don’t we add further value in it by collaborating with leading fashion designers and sell it in “ready-to-wear” shape? Basically we “value added” our products and are happy with the market response. Q: There is an intense competition in manufac-turing of lawn fabric and designer’s signature trend. How does Al-Karam look at it? What are your future plans in this regard?A: “Designer Collection” trend has reinvigorated the overall lawn fabric sector. Al-Karam launched its designer collection in collaboration with Umar Sayeed, one of the most talented Pakistani designers. We will definitely promote this trend and you will witness new trendy designs every season. We will also launch the designer collection of another versa-tile female fashion designer Faiza Sami, later this year. Q: What is the secret of success of Al-Karam textiles?A: We succeeded in our mission because we are a composite unit. We have in-house setup of every textile process from spinning to weaving, dyeing and designing to printing and cutting to stitching. This advantage matters. We ensure that the identity of Alkaram is not lost along the way. Q: You are also on EO local board; has the EO experience been helpful in your business? What are the plans for EO in the next 2-3 years?A: I learnt a lot from this orginization it‘s basically a learning institution which helps us slove our issues and increase knowledge via different forums. Differ-ent groups and forums are created in EO chapters in which local and global entrepreneur share and discuss their issues, trends and future strategies.

Q: Latin America is a big market. So may be other countries as well. Has your organization tapped these markets? If not, do you have any plan to do so in the near future?A: Due to the lack of trade relations and trust deficit, Pakistani exporters are not so common in the Latin America market. We shall definitely go there when the situation becomes favourable.Q: It has been observed that the foreign importers give extra favor to other countries rather than Paki-stani exporters? Do you agree? If so, what should be done?A: Yes, to some extent I agree with your observation. Basically the foreign importers demand the perfect quality and delivery on time. They prefer Indian, Bangladeshi or Chinese exporters over Pakistani exporters because we have not been able to meet the deadlines. Effective and strong lobbying of Indian and other coun-tries’ exporters is another important factor. Pakistani exporters have to adopt new marketing techniques to grab their share in the global market.Q: It has been published in various national newspa-pers that the export of Pakistani garments is likely to decline by 25% in current fiscal year? If this happens, what will be its overall impact on textile sector in Pakistan?A: It would certainly be unfortunate. Textile is one of the most important revenue generating industries of Pakistan. More than 9 percent of the country’s GDP is produced by this vital sector. In fact textile is the back-bone of Pakistan’s economy. Decline in exports of this sector will definitely shake the economic structure of Pakistan. It’s not just the garments sector; this will affect the entire textile chain of Pakistan, from farmer to spin-ning mills to the weaving mills to merchandisers and garments retailers. Government should handle this situa-tion very seriously and take concrete steps.Q: We are witnessing a consistent downfall in the value of Pakistani rupee against US dollar. How this trend is affecting Pakistani exports? A: The appreciating dollar viz-a-viz Pak rupee will be useful for pakistan’s economy in short term but in long term propositions, the overall impact would be negative. Because Pakistan will have to pay for its imports at higher rates. In term of exports, we shall be at a competi-tive advantage as our products will be comparatively cheaper.Q: What are the main textile products ranges of Al-Karam Textiles? What is your most exported product?A: We are manufacturing and exporting bed sheets,

BBankin & Financeg

• Lack of necessary instruments for liquidity management.• Limited access to Lender of Last Resort facility by the

central bank due to lack of Shariah compliant investment securities for maintaining statutory reserves.

• While the Islamic markets have remained resilient to the current financial crisis, secondary market for Islamic instruments has remained inconsistent due to its infancy. Reason there for is the dearth of regular issuance of Sukuk.

• Expertise in Islamic finance is still in its infancy.

493 Shadman 1 Lahore, PakistanTel: 0423-7659692 Fax: 0423-7666314

IMPORTER & EXPORTERH.R,C.R, G.P, Colour Coils & Iron Steel Products

Dealer: Pakistan Steel Mill

The above considerations for developing of Islamic finan-cial sector in future may be helpful for establishing sound foot-ing of the industry and result in an Islamic financial regime which could compete with the international financial institutions.

HBL’s role in Islamic BankingDuring 2011, HBL’s Islamic Banking (IB) has increased its network of stand-alone Islamic Banking branches across the country; it now comprises 25 branches. As of Decem-ber 2011, the deposit and asset bases of HBL Islamic Bank-ing had increased to Rs 11.944bn. During 2012, HBL plans to convert another 20 of its branches into dedicated Islamic Banking branches, raising the number of Islamic Banking branches to over 40. Besides its dedicated branch network, HBL will be offering Islamic Banking products and services from 206 of its conventional branches and its Corporate and Commercial Centre.By capitalizing on its state of the art IT technology HBL will be enabling its patrons to avail Islamic Banking prod-ucts and services at their door step while maintaining accounts with the dedicated Islamic Banking branch in their regions. Thus, with this networking, HBL effectively has 227 outlets spread all across the country to meet Islamic Banking needs of the individuals and businesses. HBL has added various Islamic Banking products and services to its financial services menu and thus readied itself to meet every need of all segments of the society. Shortly, various new innovative products will be introduced by HBL.

In his inaugural address, India’s Commerce Minister pointed to the need for Pakistan and India to jointly work towards integration of regional economic relations and development. “An environ-ment should be created to normalize the trade relations between our two countries,” he stressed and said that it was the time to take courageous steps to strengthen linkages. “There are no other options for India and Pakistan but to develop trade and economic relations aimed at bringing about economic stability and prosperity.”Anand Sharma said that, presently the trade between the two countries was $2.8 billion. If both countries channelize trade in formal ways, it could be several times higher than its level now. He said that informal trade between the two countries was estimated to be around $ 10 billion. Efforts need to be made to ensure that the big gap between formal and informal trade is not just narrowed but eliminated. In this context, he appreciated Pakistan’s response to trade normalization, and said that it was very encouraging. In his speech, Zafar Mahmood, Secretary Pakistan’s Minis-try of Commerce said that considerable progress had been made towards normalization of trade over the past year, and as the key step in promoting dialogue between trading communities of the two countries, both India and Pakistan are expected to formally announce the finalization of a new visa regime to facilitate traveling by businessmen across the border. Recent meetings between government officials and business leaders of both countries have started yielding positive results. As a part of the initiatives to promote bilateral trade, India agreed to allow inflow of direct invest-ment from Pakistan. Another milestone event in this regard was held on April 13, wherein Indian and Pakistani political and business leaders formally opened an Integrated Check Post at Wagah Border in the Punjab to serve as the gateway of trade and prosperity. This is a major development because this new gateway also has substantial provisions for parking of trucks, inspection of goods, Customs Offices, and practi-cally all the facilities that transporters need while on long-distance travel. These, and several other measures, foretell improvement of bilateral relationship between the two countries that have been at ‘dagger’s drawn’ ever since they had emerged on the world map as independent, sovereign states. One hopes that the initiatives being taken – at long last – will usher in a new era of prosperity in both India and Pakistan to maxi-mize the benefits of low transportation cost which, after the crippling rise in oil prices, has become a major part of the landed cost of goods. Besides, what makes strategic and moral sense is the fact that countries must prioritize meet-ing the needs of the geographical regions of which they are a part rather than trading with nations across the globe. Poverty in the region must be contained to forestall chaos that could spillover their borders.

his first-ever four-day exhibition of Pakistani goods in New Delhi was one more positive step in the direction

of building mutually beneficial, wide-ranging trade connec-tions between India and Pakistan that were traditionally seen as adversaries. Although the ongoing economic reces-sion is being credited with inducing this much-needed (for long) realism between the two countries, the fact is that it also has to do with some hard work undertaken by the saner elements in the media on both sides of the border. On April 12, Pakistani and Indian leaders jointly inaugu-rated the “Lifestyle Pakistan” exhibition at Pragati Maidan in New Delhi. The Exhibition, held from April 12 to 15, was inaugurated by India’s Commerce Minister Anand Sharma. Speaker Sindh Assembly Nisar Khoro, Secretary, Pakistan’s Ministry of Commerce Zafar Mhmood, Pakistani High Commissioner in India Shahid Malik and Chief Executive Trade Development Authority of Pakistan (TDAP) Tariq Iqbal Puri joined the Indian Com-merce Minister on the occasion along with a delegation of over 600 Pakistani businessmen. The exhibition was the first-ever collaborative effort by India Trade Promotion Organisation and TDAP and is one of the many steps initiated by the two countries to enhance bilateral commerce. More than 100 top ranking Pakistani brands and designers in various categories participated in this exhibition. They showcased a wide variety of their high-end fashion and creative work. The items showcased included fashion textiles (made of cotton) especially printed ‘lawn’–the item in high demand in India as summer approaches–besides chiffon, “Khusas” of Multan, designer furniture, bangles (from Hyderabad), a wide variety of leather accessories, and intricate handi-crafts. Visitors to the exhibition were particularly impressed by the designing of the printed ‘lawn’, besides the other items displayed. The views expressed by visitors to the exhibition venue were very encouraging for the Pakistani exporters and led formation of some mutually beneficial trade relationships.

by Qurrat ul Ain Afzal, Soha Ahmed, Saqib Arif and Mubarik Ahmed

RResearch & Develo mentpRResearch & Develo mentp

Iron DeficiencyIron is the main component of hemoglobin and facilitates the binding and transportation of oxygen, as well as regulation of cell growth and its differentiation. Iron deficiency is the primary cause of anemia, although vitamin A deficiency, folate deficiency, malaria, and HIV also causes anemia. Iron deficiency anemia is most prevalent in South Asia and Sub-Saharan Africa. Iron deficiency results in neuro-logical impairment, which may not be fully reversible. Moreover iron

According to some other sources, the estimates of economic losses in Pakistan are much more than reported and may have exceeded many folds as a result of increasing population and poverty rate. The price hikes and inaccessibility to food has pushed the people to seek cheaper, unsafe and unbalanced food. The situation has further aggravated due to poor availability of sanitation facilities, clean drinking water, female literacy rate and overall food insecurity in the country.According to UNICEF (2005), Asia is paying the highest toll of hidden hunger. More than 13 million babies are born with mental impairment, accounting to 72% of the annual global burden of iodine deficiency disorder (IDD). The percentage of households consuming iodized salt varies widely, from 15 in Afghanistan and 55 in Pakistan, to 95 in Bhutan and 93 percent in China. Many countries in Asia have acquired high levels of vitamin A supplemen-tation for children, but others are still lagging behind. As many as 500,000 children under five die each year due to vitamin A deficiency (VAD), 33,000 women die due to severe anemia each year, and the estimated prevalence of iron deficiency anemia in children under five varies across the region, with nine countries close to or above 50 percent, and others to range between 75 to 80 percent. Folic acid and zinc deficiencies also pose serious negative consequences to the health of people. According to the “National Nutrition Survey (2002)” the percentage of underweight, stunned and iron deficient anemia in Pakistan was found to be 38,38 and 35.6 percent ,respectively among children under the age of five. Figure 3 reflects the occurrence of acute malnutrition in Sindh, Punjab and KPK. The result of National Nutrition Survey (2011) ispresented in Figure 4 that indicates that iron and Vitamin A deficiencies are the most prevalent among children followed by Vitamin D an d Zinc deficiencies.

alnutrition of micronutrients is termed as “hidden hunger”. It is an issue of serious concern all over the world. This

costs to the nation by affecting its physical and mental health as well as the economic progress; such chronic lack of micronutri-ents though exhibits no clinical symptoms but causes irreversible damages to human body and acts as a silent killer. Micronutrients largely include vitamins and mineral and their poor intake results into Vitamin Mineral Deficiency (VMD). VMD related health hazards may include the mental impairment, blighting the intellect, pestering the immune system, embedding the birth defects and ultimate debilitation of minds, bodies, energies and ultimately affects the economic prospects of the nation. Although vitamin and minerals are required in very small quantities by the body but they play very important role in the execution of the fundamental body functions. VMD leads to a drastic decline in nation's health status, poor performance of national and global economy and reduction in individual performance. The poor women and children are more vulnerable to hidden hunger.

According to the organization, Micronutrient Initiative (MI), the 10 percent of the global health problems is a result of VMD. About two million children are susceptible to die due to Vitamin A, Zinc and other nutrients deficiency and 18 million new born develop- mental impairment because of iodine deficiency every year. The report also states that severe anemia skill more than 50,000 women during child birth every year. Besides these fatal incidences and ailments the proximate impact of VMD on economy of some nations is very severe and is presented in figure. 2

Hidden Hunger

M

May 2012

Estimated % GDP Lost due to all forms of VMD

Afghanistan2.5

2

1.5

1

0.5

0

National Damage Assessments by VMD

-

-

-

-

-

-

Bangladesh

China

India

Pakistan

Turkey

Source: UNICEF 2004

Near East andNorth Africa 42

Latin America and theCaribbean 53

642 Asia and the Pacific

Sub-SaharanAfrica 265

Developed Countries15*

Worldwide Undernourished Population

Source: FAO 2009

ION DEFICIENCY IODINE DEFICIENCY

VITAMIN DEFICIENCY

FOLATE DEFICIENCY

Est

imat

ed p

reva

len

ce o

f ir

on

def

icie

ncy

an

emia

in

in ch

ildre

n un

der

5 ye

ars

(%)

Est

imat

ed p

reva

len

ce o

f ir

on d

efic

ienc

y an

emia

in w

omen

age

14-1

5(%

)

Est

imat

ed a

nn

ual n

o. o

f m

ater

nal

dea

ths

fro

m s

ever

e an

emia

Est

imat

ed a

nn

ual n

o. o

f ch

ildre

n b

orn

men

tally

imp

aire

d

To

tal G

oit

er R

ate(

%)

Est

imat

ed a

nnua

l no.

of

chi

ld d

eath

s pr

ecip

itate

d

Est

imat

ed %

of

child

ren

un

der 6

with

sub

-clin

ical

vita

min

A d

efic

ien

cy

Est

imat

ed a

nn

ual n

o. o

fn

eura

l tub

e b

irth

def

ects

AFGHANISTAN 65 61 - 535,000 48 50000 53 2250

BANGLADESH 55 36 2,800 750 18 28000 28 8400

CHINA 8 21 820 1,880,000 10 30500 16 38000

INDIA 75 51 22,000 6,600,000 26 330000 57 50000

PAKISTAN 56 59 - 2,100,000 38 56000 35 11000

TURKEY 23 33 100 335,000 23 2600 18 3000

Table 1.Vitamin Mineral Deficiency Assessment of Nations in Comparison to Pakistan

SOURCE :UNICEF 2004

Figure 1

Figure. 2

53

4. NEW PROCEDURE FOR ST REFUND CLAIMS

The Federal Board of Revenue has issued new rules called “Refund Claims of Recognised Agriculture Rules 2012” outlining new procedure for processing of sales tax refund claims of recognized agriculture tractors manufactures.The new rules haave been enforced through SRO 363(I)/2012 dated April 13, 2012 and shall be deemed to have taken effect on February 2, 2012. According to the new rules, the refund claimant shall file a refund application to the Com-missioner, Inland Revenue having jurisdiction, along with the necessary documents. The refund of admissible excess input tax shall be allowed on the basis of the relevant docu-ments within three days of receipt thereof. In case any amount already sanctioned and paid is found inadmissible, the same shall be recovered within seven days by encashing the bank guarantee to the extent of adjudged liabilities.

5. PROHIBITORY ORDERThe SECP has issued prohibitory order and warned the Faysal Bank Limited against entering into trade transac-tions in such patterns and manners that constitute to portray its better financial position, which in true sense is not the case or scenario, particularly close to its financial reporting period.

CAPITAL GAINS TAX ORDINANCE 2012

President Asif Ali Zardari has promulgated the Capital Gains Tax Ordinance 2012 to give a boost to liquidity on stock market. The Ordinance will become part of the Finance Bill 2012 to be placed before the National Assem-bly on May 25 and will only apply to investor portfolio on ready market. Under the revised CGT regime, 10 percent CGT would be collected on the holding of shares for the period of less than six months. On the holding of shares for a period between 6 to 12 months, the CGT would be at the rate of 8 percent. The filing of the tax returns will be compulsory along with wealth tax statements for all investors of stock market. The CGT collection and deduction would be carried out by Natinal Clearing Company of Pakistan Limited.

7. IPR ORDINANCE SIGNEDPresident Asif Ali Zardari on April 24 signed the Intellec-tual Property Rights IPR Ordinance 2012 on the advice of Prime Minister Yousuf Raza Gilani. IPR involve rights to protect trade-marks, patents, copyrights, industrial designs, plant breeders rights, traditional knowledge and folklore.

WHT ON CASH WITHDRAWALS ABOLISHED

The Federal Board of Revenue has issued SRO 383(I)/2012 on April 24 announcing abolishing 0.2 percent withholding tax on cash withdrawal from bank accounts exclusively dedicated for authorized business related transactions of the exchange companies duly licensed /authorized by the State Bank of Pakistan.

1. DEBT SECURITIES TRUSTEEREGULATION, 2012

Securities and Exchange Commission of Pakistan has approved the Debt Securities Trustee Regulations, 2012, which would provide guidance to the trustees in discharging their responsibilities under the Trust Deeds. The regulations empower the trustees to:a) Regularly monitor the payment of profit/mark up/interest

to the debt security holders and redemption of the securitiesb) Regularly monitor maintenance of the security, if any,

backing the debt instrumentc) Ensure compliance with the provisions of the Trust Deeds,

particularly their covenants , are adhered to d) Monitor that the debt security holders’ complaints are

resolved by the issuers.Under the regulations, registration with the SECP has been made mandatory and only scheduled banks, development finance institutions and investment finance companies can act as debt security trustees. The regulations will enable the trustees to play their role more proactively, which will help building investor confidence and lead to corporate debt market development.

2. SECP TO REGULATE MODARABASThe joint sitting of the parliament has unanimously approved the 2009 Modaraba Companies and Modaraba (Floatation & Control) Ordinance (Amendment ) Bill which seeks to empower the Securities and Exchange Commission of Pakistan to make regulations and issue circulars, code and guidelines so as to strengthen regulatory framework for the modaraba sector and to enable the SECP to safeguard the interest of stakeholders in a more proactive and effective manner.Through the Bill, three new sections have been added to the 1980 Modaraba Companies and Modaraba (Floatation and Control) Ordinance. After Section 40, a new Section 41A has been inserted which empowers the SECP to make such regula-tions as are necessary to carry out the purposes of Modaraba Ordinance. Any contravention of the regulation shall be punish-able with a fine which may extend to Rs. 1 million for every day after the first during which such contravention continues.Similarly, another new Section 41B has been inserted that empowers the Commission to issue such directives, circulars, codes, guidelines or notifications as are necessary to carry out the purposes of the Modaraba Ordinance and the rules and regulations made thereunder.

COST ACCOUNTING RECORDS ORDER 2012

The Securities and Exchange Commission of Pakistan has issued a draft Synthetic and Rayon Companies (Cost Account-ing Records) Order of 2012 to make it mandatory for compa-nies engaged in production, processing and manufacturing of any type of synthetic and rayon products to maintain compre-hensive records, including the quantity and cost of power generated and consumed in production process. The draft order has been placed on SECP’s website, for the information of all stakeholders to give their feedback and comments within 30 days of the publication of notification.

RResearch & Develo mentpRResearch & Develo mentp

Zinc DeficiencyZinc is ubiquitous within the body and is vital for protein synthesis, cellular growth, and cellular differentiation. Studies in children have demonstrated important role of zinc in relation to immune function, growth, and development. Clinical presentations of severe deficiency include growth retardation, impaired immune function, skin disorders, hypogonadism and cognitive dysfunction. Mild to moder-ate deficiency increase susceptibility to infection. The benefits of zinc supplementation on the immune system are well established.Vitamin AVitamin A deficiency (VAD) is a common cause of preventable

blindness and a risk factor for increased severity of infectious disease and mortality. Increased mortality is associated with VAD, most likely because of its detrimental effects on the immune system that results in an increased severity of illness.

WAY FORWARDPoverty management is the main tool to address the “Hidden Hunger Dilemma”. Hunger pains compel the poorer to feed for the sake of managing his starvation. They have no concern with what are their essential body requirements. On receiving wages, they buy staple foods like wheat, rice, barley etc for their hunger management while the vital fuel components of body are often neglected. Lack of awareness, especially among illiterate society further aggravates the problem. Choice of right to eat is also a very important factor that is not only over spread in Pakistan but all over the world. Healthy mothers and healthy children grow a healthy nation. Food based interventions are required to arrest the problem and provide sustainable solutions at national level. Multiple ways can be adopted to cope the RDA requirements of individuals that include fortification, bio fortification and supplementation. Food fortification and bio fortification are effective ways to manage the problem. A study carried out by Lancet (2008) revealed that micronutrient fortification and supplementation considerably decreases the incidence and severity of illness and results into overall improvement in women and children health. According to World Bank’s report (2006), “Repositioning Nutrition as Central to Devel-opment”, fortification of food is a rapid route towards success. Food fortification and bio-fortification are the cost effective means to improve the public health. Processed foods can be produced after fortification by adding single or multiple micronutrients by using advanced technical methods. Industries that can aid in fortification can be effectively identified as “targeted groups” As for “targeted consumers” like school going children can be specifically addressed by fortifying the foods like crisps, breads, noodles, macronis, butter, margarine etc. Similarly food for pregnant and lactating women can be fortified, specifiacally keeping in view their micronutrient require-ments. As most of our targeted population dealing with VMD is poor, a strong consideration of affordability and accessibility to fortified foods is required to be assured. Bio-fortification is another important food based approach to fix the problem. Advancements in research and technology are opening new era of bio-fortication that enables the consumer to get staple foods with additional micronutrient fortification. People who are at extreme risk should be located on mass level and should be supplied with micronutrient supplements in order to instantly meet their dietary requirements before it gets too late.Day by day increasing problems of price hike, unemployment, less nutrious food supplies etc. are pointing out to an alarming situation in our country. Pakistan has already ranked in the list of food insecure countries and the devastating progression in hidden hunger is dragging us to most insecure nations. Such situation can be minimized by undertaking eradication of hidden hunger problem by multi-sectoral coordination of the policy makers, researchers, nutritionists, food technologists, food processors etc. so as to generate some productive solutions. The new Ministry “Food Security & Research” is already in the process of initiating and launching a “Zero Hunger Program” as an effective solution to this problem. The programme should be planned keeping in view the affordability, effectiveness and proper selection of target groups.

May 2012

PREVALENCE OF ACUTE MALNUTRITION IN

SINDH,PUNJAB AND KPK

0

5

10

15

20

25

N.Sindh S.Sindh Punjab KPK

MALN

UTIR

TION

RATE

%

Global Acute MalnutritionSevere Acute Malnutrition

Micronutrient Defficiency amongChildren(NNS 2011)

Zinc Defficiency

Vitamin D Deficiency

Vitamin A Defficiency

Iron Defficiency

39%

40%

54.40%

61.90%

Figure 4.

Figure 3.

* Recommended daily allowance of adultsSource: Institute of Medicine of the National academies

Micronutrients–Daily Requirement and effects of their deficiency

Micronutrients *Recommended DailyAllowance Deficiency Effects

Calcium 1000 - 1300mg Rickets,OsteophoresisIodine 150µg Goiter,mental retardationIron 8- 18mg AnemiaSodium 1.5g Nausea,Fatigue,confusionZinc 8- 11mg Infections, DiarrhoeaVitamin A 900mg Night blindnessVitamin B9 400mg Birth defectsVitamin C 90mg ScurvyVitamin D 5- 10mg Rickets

deficiency is known to decrease immune function, but some investigators have also revealed that iron deficiency protects against some of the infectious diseases.

Source: FANS, Nov/Dec 2010

Source: (National Nutritional Survey 2011)

54












pril 2012 will be remembered for some shocking incidents that took place in this month in Pakistan’s aviation history.

Whether incidents that took place in this month will serve to open the eyes of the Civil Aviation Authority (CAA) and the Ministry of Defence–CAA’s supervisor–wide enough to see the lurking dangers in their performance remains to be seen. On April 20, Pakistan witnessed another tragic air crash kill-ing all 127 aboard BhojaAir’s Boeing 737. That ill-fated air-craft crashed minutes before landing at Islamabad Airport. It was a tragedy that shook everyone because the aeroplane was destroyed completely and its debris were scattered over an area of 4sq. Km and, in many cases, human bodies were split into pieces–too disfigured to be identified. The pain all the diseased must have suffered magnified the grief of their kith and kin; sympathizing with them over their loss was far too little to contain their pain. Fortunately, despite the handicaps, doctors at PIMS hospital Islamabad were able to identify the dead and handover their remains to the bereaved families. All over the country people prayed for all the departed souls, but there were some who found the tragedy an opportunity to sift through the wreckage, and pocket the belongings of the dead–an utterly shameful act that reflected the steady loss of a sense of morality and social responsibility. Transporting dead bodies back to their bereaved families initially became a murky issue because, in spite of a presidential order that they be trans-ported free of charge, some of the bereaved families were made to pay for transportation of the dead bodies.BhojaAir’s tragedy was the second biggest in less than 2 years that afflicted a plane trying to land at Islamabad Airport. The first to crash–on July 28, 2010 was an Airbus 321 of Airblue that crashed into the hills in the outskirts of Islamabad while preparing to land at Islamabad Airport killing all 152 people aboard. Inquiry report of this crash has not yet been made public nor the families of the deceased compensated. BhojaAir had recently restarted its operations in the country. The ill-fated flight was the airline’s first flight from Karachi to Islamabad. It was its crash that brought to the surface the gaps in supervision of the operations of Pakistan’s private airlines that have been operating since the 1990s. The reason there for was that in less than 48 hours after this air crash, a Boeing 737-400 of Shaheen Air made an emergency landing at Karachi Airport because it had developed problems with its landing gear. Its left rear tyres burst damaging its landing gear. The, flight coming from Islamabad, had 160 passengers and 6 crew members on board.When the plane’s tyre burst, it was discovered that security and rescue arrangements were not fully functional. Even fire tenders arrived after 20 minutes, and the first of them didn’t even have water in it. Ironically, a day earlier, a mock rescue exercise was conducted at Karachi Airport to test the readi-ness of the rescue services. After this near-tragedy, Karachi Airport had to be closed for 8 hours delaying several incoming and outgoing flights, while some were diverted to other airports, because the specialized vehicle for moving Shaheen Air’s

damaged aircraft was either not functional or lacked the gadgetry for dragging the damaged aircraft to an hanger.Yet another incident took place at Lahore Airport the same day when another aircraft of the same airline had to be stop-ed from taking off because this time the problem was that fuel was reportedly leaking from one of the aircraft’s in-built tanks. The airline accused the fuel supplying company (PSO) of filling excess quantity of fuel into that tank.Next, on April 25, a PIA flight (PK-387) with 43 passengers on board had to hover above the Multan Airport for an hour because its rear wheels were jammed and it could not land. The flight was later diverted to Lahore where, by the grace of God, it was able to land. The flight was diverted to Lahore’s Airport because that airport has a better emergency handling set up compared to Multan Airport.Was inclement weather responsible for the BhojaAir tragedy, its pilot’s error, the condition of the equipment installed in the aircraft, laxity on the part of CAA, handling by air traffic controllers, or sabotage? The real causes of the tragedy are yet to be determined. As it did in case of Airblue tragedy in July 2010, the government has very quickly constituted a 3-member judicial commission to inquire into the causes of the crash, though certain quarters have dubbed the commission as ‘dubi-ous’ because of its composition. As if this was not enough to make the entire process dubious, an FIR has also been lodged with the police. This step, experts feel, is bound to slow down rather than help investigation into the tragedy.Tragedies like those mentioned earlier, require re-visiting the Air Traffic Control system as a whole, because they not only pose a threat to the safety and security of the passengers but also tarnish Pakistan’s image abroad where its air safety track record is already being viewed with increasing concern.On January 19 this year, Peshawar High Court had expressed its dissatisfaction over the condition of passenger planes of the PIA and the private airlines operating from Pakistan. The court had ordered them (through the federal government) to conduct safety audit of the entire system without delay. The court order seems to have been overlooked or set aside. The tragedies detailed earlier could, perhaps, be averted by timely implementa-tion of Peshawar High Court’s warning. At long last, indications

by M.Abbas Bhutto, S. Aman, A. Ahmed and Mubarik Ahmeds a result of rapid industrial growth and depletion of natural resources the environmental contamination and

pollution has become a matter of serious problem all over the world. Moreover, as a result of human interferences huge quantities of organic and inorganic compound are released every year in the biosphere in the form of industrial emission or accidental chemical or oil spills etc. It is now well estab-lished that controlled and uncontrolled discharge of solid and liquid wastes, accidental discharges, fertilizers, pesticides, sewage disposal and tar are some of the key contributors to the increasing contamination all over the world. For protecting the atmosphere, scientists are working hard to minimize the contamination and environment friendly measures are being developed and adopted to save the world from the crisis.The current revolutionary developments in the field of microbiology have made this possible by applying potential micro-organisms to minimize the contamination. These living organisms have the capability of substantially immobi-lizing, degrading, removing or detoxifying environmental contaminants up to a larger extent. Method of application of such biological agents for utilizing their cleanup capabilities is known as the “bioremediation”. This involves the use of living organisms or their enzymes to convert complex toxic compounds into simpler forms, thereby rendering the environment less toxic or contaminant free. This widely adopted technique has emerged as an effective innovative method for saving the environment from various types of containments such as chlorinated hydrocarbons, some of the heavy metals etc. The organisms that are used for bioremediation includes bacteria, cyanobacteria, actinomycetes, fungi and few of the plant species. Major types of bioremediation being used to control the contamination include phyto-remediation: use of plants; rhizo-remediation: the use of plant and micro-organisms; myco-remediation: the use of fungi and the microbial remediation: use of bacteria for minimizing contamination.Microbial BioremediationMicrobial remediation is a complex process and involves the use of naturally occurring or laboratory cultivated microorganisms to reduce the contaminants either by eating organic compound or assimilating all harmful compounds

A viz. heavy metals into their bodies from the surround-ings. In order to utilize the degrading ability of these organisms a set of physiological conditions are provided to them that supports and stimulates the growth of these organisms, the process is termed as Biostimulation. In absence of natural culture, these organisms are multi-plied in laboratory and introduced into the contaminated environment or a bioreactor to initiate the process of bioaugmentaion. The bioaugumetation results into dena-turing the toxicants and their conversion into simpler form (immobilization) or complex forms (mobilization). During mobilization, microbial community produces chemicals viz. sulphuric acid etc. to disintegrate the contaminants. However immobilization occurs through a series of equilibrium shifts within the contaminants for changing the contaminants into soluble forms for their subsequent absorption by the microbes.

A. Bioremediation of waste water being used for irrigation in Karachi and suburb of other large citiesIn big cities where water shortage is a serious problem, the municipal waste water can be used for cultivation of crops, fruits and vegetables in and around the cities. The sewage and industrial waste water is generally rich in minerals and nutrients. However its use is linked to several risks. Besides the contamination by toxic inorganic materials in the food the use of untreated waste water involves the serious risk of transmission of excreta-associated infections to the consumers. Such pathogens that can be transmitted to humans include viruses, bacteria, protozoan and helmin-thes. These pathogens may enter the consumers system through the oral or contact rout and develop different types of ailments. In Karachi, much of the vegetables produced in the suburbs are irrigated with the industrial and sewage water that has not been treated. Such water can serve as a vector for the transmission of pathogenic bacte-ria like Salmonella, Shigella, Escherichia coli, and Compy-lobacter etc. The entry of the pathogens to the food chain can simply be reduced by treating the waste water through any of the bioremdiation technique. Bioremediation of waster water is carried out in three steps: primary process in which coarse particles are removed, secondary process in which aerobic microbial digestion is undertaken in open

bio-reactor or ponds and tertiary step in chemical precipitation is carried out. Solid waste can be bioreme-diated via Land fill technology or Com-posting. During com-posting the tempera-ture of the waste is increased up to 70°C which kills most of the pathogens.

ricultureAAgUtilizing waste waterfor agriculture

May 201255

are that the reminder by the Chief Justice of Peshawar High court has moved the CAA to act.Subsequent to the April tragedy and near-tragedies, a process of comprehensive inspection of the aircraft of private airlines has been initiated to avert any possibility of the recurrence of the incident that took place in April. The inspection process too off on April 23 when a team of CAA inspectors started checking of the planes of private airlines, one by one.Meanwhile, the team of investigators formed to investigate the causes of the crash, has visited the site and is collecting evidence. The team has made its initial assessment by study-ing the spread/position of the wreckage of the aircraft i.e. its, wings, engine and other parts and devices at the crash scene. It is very confidence building that the ‘black box’ and voice recorder of the ill-fated aircraft have been found to relive the last minutes before the crash to establish what was the pilot’s view of the situation and how he was being guided by the Air Traffic controllers at Islamabad Airport. What caused the BhojaAir tragedy?While aviation experts have just begun investigations of the evidence and the possible cause(s) of this crash, the ordinary too would like to know answers to the following questions in simpler terms:• Given the two warnings issued (first at 3.00 p.m. and then at

5.00 p.m.) by the Metrological Bureau about extremely bad weather around Islamabad, was it prudent on the part of Air Traffic Controllers at Karachi Airport to permit the ill-fated BhojaAir flight to take off?

• Around 6.30 p.m. (10 minutes before the crash), how good was visibility at a height of 9,000 feet i.e. extent of clarity and the distance up to which the pilot could see?

• What was the wind speed at that time and direction of its blow? • Whether it was a huge air pocket that caused the aircraft to

suddenly plunge and go beyond control thereafter? • Was the aircraft hit by lightening since eyewitnesses talking to TV

reporters said the tail of the plane was on fire while it came down? • Was it the fault of the Air Traffic Controllers at Islamabad

Airport (who reportedly kept advising the plane’s pilot to continue the plane’s descent to land at Islamabad Airport?

• Or is it that the pilot disregarded the instructions of the Air Traffic Controllers who were advising him to head for Lahore Airport?

• Or was it the error of the airline’s own flight controller?All these issues may take time to investigate credibly because facts recorded on the ‘black box’ must be decoded and the conversation between Air Traffic Controllers and the plane’s pilot recorded on the ‘voice recorder’ may be heard over and over again by aviation experts to conclude who was at fault. Then there are issues relating to how exactly the plane fell i.e. which part of its body hit the ground first: the nose, the tail or the belly, and then which wing touched the ground first and which engine was damaged first. The key question would be whether the aircraft was already on fire before hitting the ground or did it catch fire after it crashed.While investigating all these facts is essential for conclusively fixing responsibility for this tragic event, it is as important that the investigators draw critical conclusions about the way the aviation sector is operating and the risks inherent therein, as

highlighted by this tragedy that (based on the facts disclos-ed so far) was the result of serious negligence by Air Traffic Control-lers, and the overall supervisory laxity in this sector.Airline regulation, supervision, inspectionThese unfortunate incidents raise several pertinent questions in the context of airline supervision. For instance:• Should any airline, state-owned or private, be permitted to buy

aircrafts that are as old as27 to 30 years? The ill-fated BhojAir Boeing 737, reportedly, was over 27 years.

• Who from the CAA inspected the aircrafts in South Africa from where they were acquired by BhojaAir? What exactly was the focus of that inspection, and on what bases these aircrafts were considered fit for operation, given the fact that their existing owners wanted to dispense with them?

• If such aircrafts were bought, how much of refurbishment these aircraft required to become ‘airworthy’, and who was made responsible for ensuring that this exercise is carried out in its entirety, and old parts are replaced with genuine, new parts?

• These being old aircrafts, was a special check list of aircraft fitness given to BhojaAir to comply with, as long as these aircrafts were in use? If so, were contents of that check-list approved by experts in aviation industry, especially experts of the Boeing Aircraft Industry?

• If such a checklist was indeed provided to BhojaAir, who was ensuring that the airline was routinely complying with its terms i.e. replacing all parts and equipment as soon as they became due for replacement (completed their useful life as per the manufacturer’s instructions)?

• Was it ensured, and if so, how, that BhojaAir wasn’t using used equipment to replace the parts of its aircrafts?

• What is the strength of the airline’s flying staff, especially pilots, first officers and those responsible for carrying out aircraft maintenance?

• Is the staff strength enough, or does its being inadequate implies that the airline’s staff remains over-worked?

• What is the policy of the airline on passenger and aircraft insurance, and is it buying insurance covers for its aircraft, passengers and flying staff from insurance companies with sound standing and claim payment record?

• The fact that a fire tender at Karachi Airport rushed to the scene of accident without ensuring that it had water in its tank, and the non-availability (or was it something else?) of specialized vehicles to two damaged aircraft, highlight very serious regulatory and supervisory lapses on CAA’s part.

Inquiring into these aspects is extremely important because, in the present circumstances i.e. rising inflation, depreciating exchange value of Pak Rupee, skyrocketing fuel prices and in spite thereof, airline owners’ craving for earnings, are airlines spending as much as they ought to, on these sensitive heads? If this isn’t the case, the airlines are in danger and so are their passengers and their aircraft. That the families of the victims of Airblue haven’t been compensated points to this flaw. It has been pointed out by several sources that BhojaAir was financially strained; in fact it remained inoperative since 2001 because of its inability to pay around Rs 6 million to CAA on account of its use of airport services. While permitting it to resume operations, was it verified that this stress was over?

metal removal system is therefore the basal need to recycle the wastewater. Wid-ely used conventional chemi-cals methods for heavy metal removal are ineffective and even expensive. Physical and chemical methods such as: sedimentation, chemical precipitation, ion exchange, me- mbrane filtration, coales-cence and active carbon absorption are some of the usual purification processes. Any of these methods has its disadvantages to include huge investments and expl-oiting of costs necessity or sludge excretion prohibitions. Cost-effectively application of the biological met-hods is there-fore a relatively low-cost option.In the new world the

biological elimination of heavy metal ions utilizing the ability of some microorganisms for metal ion exchange is gaining popularity every day. Such microorganisms utilize their physical and chemical properties of absorption through their cell walls or utilize their metabolic activities for transportation and precipitation etc. The absorption mechanisms of dead or alive cells, uptake yields, recep-tion capacity and the ability to metabolize the nature and quantity of different metals are different in different micro-organisms.In microbial bioremediation use of free cells has some disadvantages viz. viability, sensitive to toxicity, durability and suitability. The immobilized biomass is likely to render benefits like better re-usability, high microbial load, less clogging etc. Some of the stains of multi-resistant fungi (LE48T1, RVT3, RVE48T3, LE48T4 and LT5) and bacteria are also used for treatment of polluted waters. Bacillus spp. among all bacterial species seems to have maximum potential of bio-sorption of metals, while others include are Streptomyces, Zoogloea, Ramigera, Pseudomonas, Rhodobacter sphaeroides, Alkaligens eutrophus and Staphylococcus. It is important to under-stand that the wastewater is a mixture of many heavy metals along with other contaminants. The single strain approach may thus give unsatisfactory response. On the other hand, mixed inocula or an association of bacteria is a better option of bioremediation contaminated water.Some of the benefits of bioremediation• Works on a variety of organic and inorganic com-

pounds• Can be done either on-site or off-site• Easy to implement and maintain• Low-cost compared to other treatment methods• Environmentally-friendly and aesthetically pleasing• Reduces the amount of wastes to be landfilled

B. Bioremediation of Heavy MetalsMetals with atomic masses between 54.63 and 200.59 and density more than 5 g/cm3 are classified as heavy metals. These elements are natural components of the earth crust and are released into the environment as a result of natu-ral or human interferences. Some of these metals can be absorbed into human body if ingested in food or through respiration. Non degradability of heavy metals and their tendency to accumulate in human body varies consider-ably from one another. However, the major toxicity reported so far is a result of Mercury, Lead, Cadmium, Arsenic, Chromium, Copper, Zinc and Manganese. According to WHO reports, many people are exposed to health risks caused by heavy metals that enter into human food chain as a result of using sewage and industrial waste water. Through the root system these metals enter the plant tissue and are thereafter passed on to the consumers.According to FAO/WHO if the quantities of Cd, Cr, Pb and Hg, Fe, Cu, Zn, Mn in irrigation water are not within the permissible limits it is likely to exert fatal effects on all living being exposed to these metals. An efficient heavy

ricultureAAg

May 2012

56

ircrafts are vulnerable to a variety of threats. These include ignored technical defects in aircrafts, sudden

adverse weather changes, errors by pilots or by operators in air control towers at airports, or by flight controllers of aircraft-owning entities. The only exception was the C-130 Hercules carrying former President Gen. Zia-ul-Haq back to Islamabad from Multan; that crash was caused by a powerful bomb planted inside the aircraft.This page carries the saddening chronology of major crashes beginning 1965 involving aircrafts operated by Pakistani as well as foreign entities. Reports on causes of some of these crashes have not yet been released, which had created doubts about the investigative process. The last of the major crashes took place on July 28, 2008 i.e. nearly four years ago. Of the 15 crashes, 8 involved small aircraft (6 Fokker F27, 1 Cessna, and 1 small twin-engine aircraft). Rest of the crashes involved wide-bodied aircraft (2 Airbuses, 2 Boeings, 1 C130 Hercules, and 1 Ilyushin L76). Thus the loss of life caused by their crashes was much higher, point-ing to the need for extra care when such aircraft take-off for their destinations or land thereon. Seven air crashes took place while aircraft either took off or tried to land at airports at high altitudes: Gilgit, Islamabad, Kathmandu, Kohat, Peshawar, and Rawalpindi – all of them also involved mountainous routes. In case of 3 crashes, that took place in or near Karachi, all involved aircraft were small planes that crashed due technical faults. The basic issue is whether aircrafts that have outlived their utility, be licensed to fly. In the case of BojhaAir, the aircraft that crashed on April 20, there are strong reports that it was too old to fly, had been inoperative since 2000, and that such aircrafts are not allowed to land at the better regulated airports. If all this is true, how come it was licensed to fly by CAA? Secondly, should aircraft, that are unfit for flying, be allowed to take-off? Who has the ultimate responsibility for confirming airworthiness of an aircraft? This is a question that must be addressed by those responsible for ensuring that this does not happen. That this supervision is weak was also portrayed by two near-tragedies on April 22, involving two aircrafts of Shaheen Airlines. While thus far the view about BhojaAir tragedy is that it was caused by a sudden weather change that pushed the aircraft down by 600 feet, another view is that because fuel prices are very high, aircraft no longer carry fuel that is enough for a return flight – the globally practiced disci-pline. The BhojaAir aircraft opted to land at Islamabad and did not headed for Lahore, perhaps, because it didn’t have enough fuel. What the CAA must inquire into are all the possibilities. It is odd that it took CAA such incidents to go for inspection of aircrafts. It is time CAA revised its policy on periodic and spot aircraft inspection to alert all the operators, and its out-dated emergency handling routines that frustrated everyone.

May 20, 1965: On its inaugural flight, a Boeing 707 owned by PIA crashed in its attempt to land at Cairo Airport; death toll was 124. August 6, 1970: A PIA Fokker F27 aircraft crashed while it attempted to take off from Islamabad Airport in a thunder-storm; death toll was 30.December 8, 1972: A PIA Fokker F27 crashed near Rawal-pindi causing the death of all the 26 people on board. November 26, 1979: A PIA Boeing 707 crashed soon after taking-off from Jeddah airport killing 156 people on board. October 23, 1986: A PIA Fokker F27 crashed in its attempt to land at Peshawar Airport killing 13 of the 54 on board. August 17, 1988: A C-130 Hercules of the PAF crashed near Bahawalpur, killing Gen. Zia ul Haq and 30 others including Pakistani Generals and the erstwhile US ambassador. August 25, 1989: A PIA Fokker F27 disappeared soon after taking off from Gilgit Airport; its wreckage was never found and 54 people on board remain unaccounted for. September 28, 1992: A PIA Airbus A300 crashed into the cloud-covered hills while descending to land at Kathmandu Airport; the death toll was 167. February 19, 2003: A PAF Fokker F27 crashed into the fog-covered mountains near Kohat. Air Chief Marshal Mushaf Ali, his wife, and 15 others died in that tragedy. February 24, 2003: A chartered Cessna 402-B carrying the Afghan Mines & Industries Minister, four Afghan officials, a Chinese mining executive, and two Pakistani crew members, crashed into the Arabian Sea near Karachi. July 10, 2006: A PIA Fokker F27 burst into flames shortly after taking off from Multan, killing all the 45 on board. July 28, 2010: An Airbus 321 owned by Airblue crashed into hills in the outskirts of Islamabad while preparing to land at Islamabad Airport killing all the 152 people on board. November 5, 2010: A twin-engine plane operated by JS Air (a Pakistani charter service) crashed soon after take-off from Karachi Airport killing all the 21 people on board. November 28, 2010: An Ilyushin IL-76 cargo plane operat-ed by Georgia’s Sunway airline crashed soon after taking off from Karachi Airport killing all the 12 people on board. April 20, 2012: A Boeing 737 of Bhoja Air (reportedly hit by lightening) crashed near Islamabad in its attempt to land at Islamabad Airport. All the 127 people on board were killed. On April 22 two incidents took place at Karachi and Lahore.

By Farhan Anwarrban areas occupy only 2.8 percent of the earth’s surface yet, as of 2008, more than 50 percent of the world’s popula-tion

inhabits urban areas. Rapid urbanization is occurring largely in developing countries where a massive demographic shift will have enormous implications: high poverty, scarcity of natural resources, and environmental degradation.In urban settlements, rapid population growth and resulting land development, that in the developing countries is often neither planned nor regulated, limits the chances of sustain-able use of the increasingly scarce land resources. The nexus between urban development and environmental degradation is not something that requires fresh understanding. Back in 1976, the Habitat conference identified “urban expansion” as a universal develop-ment challenge. At the Rio Summit, as early as 1992, the concept of ‘sustainable human settlements’ was introduced. At the Habitat II conference in 1996, the Habitat Agenda highlighted the need for new approaches to planning as well as managing rapid urban growth. However, evolving understanding of linkages of rapid urbanization and climate change has given urban development challenge a new impetus and sense of urgency. According to UN-HABITAT’s recently published “Cities and Climate Change: Global Report on Human Settlements (2011)” the proportion of human-induced or ‘anthropogenic’ greenhouse gas (GHG) emissions oozing out of cities could be between 40 to 70 percent, using production-based figures (i.e. figures calculated by adding up GHG emissions from the entities located within cities). This is in comparison with as high as 60 to 70 percent if a consumption-based method is used (i.e. figures calculated by adding up the GHG emissions from the production processes of goods consumed by urban residents, irrespective of the geographic location of their production).In Pakistan, demographic trends indicate that population has been urbanizing rapidly since 1951, with an average annual urbanization rate exceeding 4 percent. It is estimated that by 2030, Pakistan will predominantly be urban with 45.6 percent of its population living in urban areas and about 12 of its cities will house more than one million humans. The urban population recorded during the 1998 Census was nearly 43 million, and by 2010 it was estimated to be 63.1 million. The urban population is estimated to surpass 121 million by the year 2030. The level of urbanization at 45.6 percent would then be the highest among the South East Asian countries.In this regard, it is a matter of some concern that the recently notified Climate Change Policy (approved by Pakistan’s Federal Cabinet) that is to be implemented by the Federal Ministry of Disaster Management doesn’t focus on the ‘urban context’; instead, it directs attention mostly on ‘agriculture’, ‘forestry’ and ‘water resources’, and segregates ‘urban activities’ into a sector based categorization. This lack of focus the a subject that has been attracting global attention 1922 onwards, is an oddity that only our planners could afford. Karachi needs a Climate Change Adaptation StrategyKarachi is Pakistan’s largest, and the sixth most populated city in the world. It is also the country’s commercial capital, with per capita GDP of $5,400. According to latest official estimate, Karachi’s urban population is about 14.5 million. The city’s rapidly

U

changing profile reflects the fact that it is among the world’s fastest growing metropolises. Besides, its economy is a major hub of shipping, trade, finance, banking, information technology, small and large-scale manufacturing, real estate, media and education. Karachi is situated on a natural harbor facing the Arabian Sea, and also is Pakistan’s primary seaport. Due to its central location between India and the Middle East, Karachi has been an impor-tant trading port for centuries. Rapid growth in all these over the years escalated environmental challenges, and the city struggles to improve its basic infrastructure: roads, water supply lines and sanitation, to match rising demand thereon. The Asian Green City Index – a research project sponsored by Siemens and conducted by the Economist Intelligence Unit (EIU) last year – sought to measure and assess, the environmental perfor-mance of 22 major cities in Asia, across a range of criteria. That assessment placed Karachi at the bottom of the list. Besides the key environmental indicators, the EIU report also assessed these cities on indicators such as ‘land use and buildings’ and ‘environ-mental governance’. Karachi’s rating was ‘below average’ on all indicators other than water where it barely managed to score an ‘average’ score. The ProjectShehri-Citizens for a Better Environment in collaboration with the Department of Architecture & Planning, NED University of Engineering and Technology, Karachi, and financial support of the Friedrich Naumann Foundation, Pakistan, recently undertook a study that focused on addressing the challenge of improving environmental conditions in Karachi. The study focused on developing a ‘profile’ of Karachi City within the context of ‘Urbanization and Climate Change’.

Scope and ObjectivesTo provide a process based ‘framework’ and a ‘roadmap’ for developing a comprehensive ‘Climate Change Adaptation Strategy’ for Karachi city by:• Identifying the possible ‘impacts’ of climate change • Identifying critical ‘people’ and ‘assets’ at potential risk• Profiling the major ‘vulnerabilities’ in terms of critical

hindrances (research, policy, planning and its overall gover-nance context, etc.) in the way of enhancing the ‘adaptive capacity’ of Karachi City against climate change and climate variability

Providing a list of actions for strengthening the ‘resilience’ of Karachi City.

Climate Change – roadmap ofa strategy for Karachi

ealth & EnvironmentHHealth & EnvironmentHH

57 May 2012

The ‘profile’ prepared can be interpreted as a ‘roadmap’ for developing a ‘Climate Change Adaptation Strategy’ for this city focused on identifying some critical ‘vulnerabilities’ the city may be exposed to in the event of climate change. These ‘vulnerabilities’ are then placed in the context of the possible ‘consequences’ of climate change on key physical and natural environment and the resources and development and governance ‘processes’ and ‘activities’ relating to urbanization.Recommendations have been made to improve the ‘adaptive capacity’ of the city to prepare itself better to effectively cope with possible climate change scenarios and consequences. The study may serve as a ‘pioneering’ effort in the context of Kara-chi and Pakistan, and serve as a ‘guiding’ document for urban policy and decision making not just in Karachi but in other national urban centers by laying the basic ground work for further research and action. In this regard, a Stakeholder Workshop was organized on April 24, in Karachi to share the critical findings of the study with relevant stakeholders to stimulate a discussion and initiate a ‘visioning’ process to design a comprehensive ‘Climate Change Adaptation Strategy’ for Karachi. Ms. Amber Alibhai, General Secretary, Shehri-CBE, explained the context of the study by defining its scope and key objectives. Mr. Roland De’souza presented the global context of challenge of climate change. Dr. Noman Ahmed, Chairman, Department of Architecture & Planning, NED University of Engineering & Technology, Karachi spoke about research methodologies and analytical tools used while undertaking this study, and highlighted the importance of the findings in the larger context of making Karachi as a sustainable city. Farhan Anwar, Urban Planner and Member, Shehri-CBE (Project Team Leader) made a detailed presentation in which he shared the critical findings and recommendations of the study in relation to identification of the key communities and assets at risk in the likely climate change scenarios. He cited the lack of needed data for research and for quantifying the probability of likely risks and their impact. Key recomme-ndations included the establishment of ‘flood risk zones’, surface water manage-ment plan, a policy on ground water, containing water and energy loss by promoting conservation practices, preventing land use violations, increasing the green cover, sustaining urban agricultural practices etc. He strongly stressed the need to place the City Government at the top of the planning and coordina-tion pyramid of a possible Climate Change Adaptation Strategy and start thinking about how it could be done. He concluded by saying that the outcome of successful adaptation is ‘resilience’–product of governments, enterprises, civil society outfits, households and individuals with strong ‘adaptive capac-ity’. In urban neighborhoods, this indicates a capacity to main-tain core functions in the face of climatic threats, especially for the vulnerable populations. It requires a mindset to anticipate climate change and then plan adaptive strategies. The resilience of any population group to climate change depends on its resilience to other pressures including economic change, conflict and violence. A video documentary highlighted all key aspects of the study. Photographs and maps on the likely scenarios too were on display. A lively discussion session, wherein the participants appreciated Shehri’s efforts and offered their suggestions

and recommendations, followed the presentations wherein there was agreement on need for action on the recommen-dations of the study and initiation of an ‘advocacy campaign’ in the media through informative articles that create consciousness.

Earlier in April the National Disaster Management Authority (NDMA) had warned about heavy monsoon in some areas of country and had asked the provincial governments to submit their contingency plans by April 30, for meeting the emergency that is likely to surface this summer.Addressing a press conference, Chairman NDMA Dr Zafar Iqbal Qadir had said that this year heavy monsoon is expected in southern Punjab, lower Sindh and some districts of the Khyber Pakhtunkhwa, while famine is also expected in Chagi, Kharan and Cholistan. NDMA has also finalised a plan to raise its Rapid Response Force by the year’s end. Director General Rescue 1122 has been asked to help provide technical facilities.NDMA is also planning to initiate insurance of the people of vulnerable districts, so that in case of a future disaster, compensation could be paid immediately - something that usually never happens. But the fact that the rescue opera-tion of the crash of Bhoja Air plane was completed in five hours build the hope that things may take a turn for the better. NDMA did immediately mobilise the rescuers after the crash. However, there were some problems due to choked, narrow roads leading to the site of the accident. Besides, some equipment could not be transported to the site quickly enough.

The Author specializes as an urban planning and environmental management consultant. He has extended consulting services to the World Bank, Asian Development Bank (ADB), the Japanese International Corporation Agency (JICA), the World Conserva-tion Union (IUCN), WWF Pakistan and several prominent Pakistani consulting firms. He is also Visiting Faculty at the Department of Architecture and Planning, NED University of Engineering and Technology, Karachi where he teaches a Masters Course on Planning for Sustainable Development.

ealth & EnvironmentHH

May 201258

Chase Manhattan Bank in acting as a conduit for arming the Mujahidin in Afghanistan, and Chemical Bank in money laundering, as early as 1977, are no secret. Accord-ing to The Econo-mist, in the 1990s, Barclays Bank, Morgan Guaranty as well as Citibank were involved in transferring state funds into Swiss bank accounts of Boris Yeltsin and his cronies. Half of these funds were IMF loans for badly needed structural adjustments to help Russia tied over its Balance of Payment problems. The 2005 Fed hearing implicated Citibank in large-scale money laundering. The charge, implicating the bank’s offices in several countries, amounted to over US$ 1.3bn. Citibank accepted its crime and paid a substantial fine there- for. In 2006, Citibank nearly lost its banking license in Britain as well as in Japan due to its faulty foreign exchange and debt paper trading practices. Reasons for sacking of its erstwhile CEO Chuk Prince included these indictments. The Florida branch of BCCI too was impli-cated in money laundering to the tune of US$14 million but it was proved that those funds flowed into an account maintained by an under-cover agent of the DEA. As for money laundering, no bank can match the centuries-old record of Swiss banks in facilitating this activity. Until recently, having a numbered account in a Swiss bank was a status symbol. Money laundering was not a crime as long as it helped to siphon off wealth from the poor countries to the prosperous West; it became a crime only after terrorists began using this channel to finance their nefarious operations. Only in 2005 was Citibank found guilty of the crime and fined heavily but is very much alive and kicking. But it was considered fit and proper to wipe BCCI off the map. There is no conclusive evidence about BCCI’s involvement in gunrunning for insurgent groups. All we have are half-truths (e.g. the unsubstantiated Abu Nidal connection). BCCI had no reason to assist any terrorist group because the bank never had any political affiliations. As far as assisting the supply of compo-nents for Pakistan’s nuclear plants is concerned, no evidence was ever produced in which BCCI knowingly allowed its branch network to be used for smuggling for this purpose. If anything, BCCI was associated with charity and assisting poor country governments in repaying their unmanageable external debt owed to the World Bank and the IMF. Not surprisingly therefore, Robert Leigh Pemberton–erstwhile governor of the Bank of England (BoE)–was against winding-up BCCI. He knew that closing down global banks entailed a formidable cost to depositors–a fate Central Banks are obliged to avert–but his deputy Eddie George ensured BCCI’s closure because his US counterpart had warned him that if BCCI was not shut down, he would

n May 17, the official liquidators of the Bank of Credit & Commerce International S.A. (UK) will hold

the final meeting of the bank’s creditors to end the winding up proceedings (that lasted 21 years) of the bank that returned about 90% of the principal amounts of the depositors’ funds.No one knows everything about BCCI’s collapse because those (the concerned Central Banks) who stood to lose from those disclosures, withheld its vital details. There is therefore a possibility that you too don’t know many hidden truths about BCCI. Many authors who wrote about BCCI made assumptions, some with the intention of releasing the pressure off today’s bankers (of the sub-prime mortgages fame), who engineered an unprecedented chaos that is now shaking the very foundations of the global financial markets. What commentators often overlooked were the regulatory lapses of the 1970s that partly account for BCCI’s collapse. It is frightening to recall the pace at which Central Banks allowed bank network expansion ignoring the gaps it left in their risk management capabilities. BCCI’s weaknesses too were rooted in the pace at which it expanded – 70 countries in just 17 years. The weaknesses were compounded by the fact that bankers from overly regulated markets (Pakistan and India) were exposed to deregulated environments. Many took flawed lending decisions, and blindly ventured into volatile exchange and commodity markets. This was BCCI’s terminal illness but not the cause of its demise. In late 1991, CNN telecast live an inquest by a Sub-committee of the US Senate into the collapse of BCCI. In the hearing, Masih-ur-Rehman (BCCI’s ex-CFO) made a detailed deposition. It was followed by depositions of the representatives of the Fed, Comptroller of Currency, FBI, DEA and CIA. After listening to them, the committee felt that, based on the evidence presented, BCCI should have been re-structured, not closed. The chairman therefore asked the CIA representative “why then was the bank closed down?” In spite of being monumentally brief, the CIA representative’s reply was enormous in what it covered up; he said “Sir, we had decided that the bank should be closed”, ‘we’ denoting the US that, since 1942, decides what should or shouldn’t happen on this planet. In his report on BCCI’s collapse, besides other factors, Lord Bingham blamed it on trading losses manifesting “incompetence and errors of unsophisticated amateurs ventur-ing into highly technical and sophisticated markets”. He highlighted two of the many losses, one (US$650 million) on lending to Gokal Shipping, and the other (US$285 million) on delayed covering of currency and commodity option contracts. But he too could not provide proof of BCCI’s criminal activities. By comparison, in the 1970s the roles of banks like Banca Commercial Italiana in the alleged Vatican-sponsored insur-gencies against regimes in Latin America, Barclays in sustaining apartheid in Africa’s erstwhile British colonies, BankAmerica in toppling socialist regimes in Latin America,

Chinese manufacturing index rose in April, signaling that a

rebound in the world’s second-biggest economy may help to offset constraints on global growth from austerity measures in Europe.U.S. oil futures notched their biggest gain in two weeks on Tuesday, and copper and other commodities rose too, after the strongest U.S. manufac-turing data in 10 months boosted the outlook for raw materials demand in the world's largest economy.During April-2012, the traded volumes at the Exchange increased to Rs. 68.40 bn from Rs. 68.09 bn in the corre-sponding month of the previous year.

PMEX Commodity INDEX

GOLD [USD / t Oz]

that could have provided an underpin-ning for gold. It posted a small loss in April which marked the first time since 2000 it fell three months in a row. During April-2012, the traded volumes at the Exchange increased to Rs. 53.13 bn from Rs. 16.8 bn in the correspond-ing month previous year, a significant growth of 216 % has been witnessed.

CRUDE OIL [USD / barrel]

Oil climbed to a five-week high after U.S. manufacturing increased at the fastest pace in 10 months, signaling that economic growth will accelerate in the world’s biggest crude-consuming country.China’s manufacturing expanded for a fifth month in April. The Purchasing Managers’ Index rose to 53.3 from 53.1 in March, according to statistics bureau and logistics federation.During April-2012, the traded volumes at the Exchange decreased to Rs. 4.8 bn from Rs. 21.2 bn in the corresponding month previous year.

SILVER [USD / t Oz]

Silver is outperforming the market with a 15% year-to-date performance. And the

precious metal is still well below the all time 1980 high of $50 an ounce.The silver held by IShares Silver Trust, the world’s largest silver exchange-traded fund, rose 1 per cent to 9,633.95 tons Wednesday, 15 times the fund's holdings at inception in April 2006.During April-2012, the traded volumes at the Exchange decreased to Rs. 4.8 bn from Rs. 30.02 bn in the corresponding month previous year.

IRRI 6 [Rs. / 100 kg]

In the domestic market a downward trend in prices has been witnessed in the month of April. Price movement remained in a slightly narrow band, Maximum price was Rs 3,550 per 100 Kg on opening day of the month and Minimum price Rs 3,400 per 100 kg was on 17th of April of the month. A decrease of 3.52 % was observed.

PALMOLEIN [Rs./37.324 kg]

A rising trend was witnessed for palm olein prices in domestic markets 2012. Max price Rs 5,385 was on 10th of April and Min price was Rs. 5,300 per 37.324 kg on 18th of the month. An overall decrease of 0.47% was observed.

CCommodit Reviewy

Commodity Market ReviewApril-2012A

May 2012

PMEX COMMODITY INDEX

3,080

3,100

3,120

3,140

3,160

2-A

pr

5-A

pr

8-A

pr

11-A

pr

14-A

pr

17-A

pr

20-A

pr

23-A

pr

26-A

pr

29-A

pr

Open: 3,163 Low: 3,086Close: 3,092 High: 3,163Change: - 2.24 %

Open: 105.03 Low: 100.96Close: 106.04 High: 106.04Change: + 0.96 %

Open: 32.42 Low: 30.70Close: 30.97 High: 32.97Change: - 4.49 %

Open: 3,550 Low: 3,400Close: 3,425 High: 3,550Change: - 3.52 %

Open: 5,350 Low: 5,300Close: 5,325 High: 5,385Change: - 0.47 %Open: 1,677.80 Low: 1,621.00

Close: 1,662.40 High: 1,677.80Change: - 0.92 %The metal has lost $125 since Feb 28 after a strong run of U.S. economic indicators dashed hopes of Fed easing

GOLD US $/t Oz

1,610

1,625

1,640

1,655

1,670

1,685

2-A

pr

5-A

pr

8-A

pr

11-A

pr

14-A

pr

17-A

pr

20-A

pr

23-A

pr

26-A

pr

29-A

pr

April, 2012April, 2011May, 2011

Traded Volume Traded Lots (Rs) 68.40 bn 277,759 68.09 bn 157,526 72.99 bn 195,607

CRUDE OIL US $/aBarrel

101

102

103

104

105

106

2-A

pr

5-A

pr

8-A

pr

11-A

pr

14-A

pr

17-A

pr

20-A

pr

23-A

pr

26-A

pr

29-A

pr

SILVER US $/t Oz

31

32

33

34

2-A

pr

5-A

pr

8-A

pr

11-A

pr

14-A

pr

17-A

pr

20-A

pr

23-A

pr

26-A

pr

29-A

pr

IRRI-6 RS/100 kg

3,375

3,425

3,475

3,525

2-A

pr

5-A

pr

8-A

pr

11-A

pr

14-A

pr

17-A

pr

20-A

pr

23-A

pr

26-A

pr

29-A

pr

PALM OLEIN RS / 37.324 kg

5,275

5,300

5,325

5,350

5,375

5,400

2-A

pr

5-A

pr

8-A

pr

11-A

pr

14-A

pr

17-A

pr

20-A

pr

23-A

pr

26-A

pr

29-A

pr

59

release evidence about the bank’s ‘crimes’ that could be highly embarrassing for the BoE. In the meeting on July 4, 1991 wherein Pemberton was to approve a meticulous plan to re-structure BCCI, Eddie George forced Pemberton to back down from his promise to approve the plan (which was accompanied by US$600 million worth of fresh equity injection into BCCI). Not surprisingly therefore, while the re-structuring plan was thrown into the dustbin, the funds (remitted through a US bank by BCCI’s majority shareholders), were promptly confiscated by the US authorities. The real reason why CIA decided to shut BCCI down had little to do with its links to Panama’s Gen. Noriega. American banks were in league with dictators the world over in more dreadful ways. What CIA disapproved of was BCCI’s gradual takeover of the liabilities Third World countries owed to WB and IMF. In his book ‘Globalisation and its discontents’, Joseph Stiglitz has vividly exposed what these institutions had been doing to these countries. BCCI also committed the cardinal sin of entering the US financial sector by trying to buy out a US bank. Even now, in spite of its avowed love for market access, the US doesn’t like foreigners getting a foothold in its markets. That is why the Middle Eastern and Chinese investors that, back in 2003, wanted to invest in the US failed in their attempts. Last but not least, after the stoppage of US arms supplies in 1979, Pakistan was left with no option but to secure itself against a nuclear India through a half-baked nuclear capa-bility of its own. The US didn’t approve of it and decided to teach Pakistan a lesson (yet unfinished) for disobeying its command. In that process, BCCI too had to be targeted because it was rescuing Pakistan out of its economic predicament while the US suspected BCCI of helping Pakistan nuclear programme. BCCI’s ability to rescue Pakistan was eventually eroded because its majority shareholders were being pushed by the US to divert resources to re-build Iraq’s war-torn defences. Quite unwittingly, BCCI’s shareholders shifted the pressure on to BCCI. Seventy loans (as per Bingham report) siphoned out of BCCI nearly US$ 4.5 billion making the bank illiquid. It is worth noting that even by end-1990 BCCI’s group balance sheet footing was US$17 billion, and these loans amounted to over 25% of its resources. The bank’s going bust after siphoning out of so much liquidity was not a surprise. The event shocked the whole world. Yet, deposi-tors everywhere were compensated fully except in the UK, the US and UAE, and operations in almost all countries except UK and the US were bought over by local or interna-tional banks.The view that BCCI didn’t have much in terms of informa-tion technology too is incorrect. As early as 1975, BCCI got NCR to develop customized computer software and by late 1970s, branches globally were on-line and data was consoli-dated at country offices in real-time. In Pakistan, BCCI was the first to provide on-line computer terminals to its customers. In its very short life, BCCI twice replaced its computer software. Even today, for financial analysis, banks in many countries use a computerized programme devel-oped by the bank’s International Management Division.

The Karachi Stock Exchange (KSE) market witnessed a bullish trend. During the first week KSE – 100 index reached 13,875.53 points by gaining 113.77 points or 0.82 percent, and is just 124.47 points away from 14,000 points crucial level. The benchmark index managed to test 14,000 points crucial level in the weekend session after almost 4 years(since 16 May, 2008). Late profit-selling, however, dragged the index down to the closing level. KSE – 30 index reached 12,183.37 points by gaining 69.24 points or 0.57 percent. The average daily turnover improved by five percent to 387 million shares during the outgoing week. The market capitalisation surged by Rs37 billion to Rs3,565 billion. On the contrary, foreigners sold net shares worth $1.6 million in the week.Market remained range bound during the second week as investors kept on with the sell-on-strength stance, as the benchmark KSE100 declined to 13,799 pts level, losing 76pts (0.55% WoW). Intraday volumes also declined by 3.3% WoW averaging 347mn shares with average traded value also declining by 7.2% WoW to stand at USD 90.9mn. However, interestingly, foreign inves-tors stood as net buyers with total net FIPI inflows of USD2.3 mn during the week against net outflow of USD1.6mn last week. Monetary policy expectations of a status-quo and break-through in the Pak-US relations with resuming NATO supplies, kept the investors upbeat. In this regard, better sales numbers in auto sector (up 15% QoQ), possible re-initiation of cement exports to India through Wagha border and approval of heavy urea imports exces-sive to local demand also derived the trends in the market. On economic front, numbers that emerged during the week

posted gloomy picture as trade deficit of the country surged by 72% YoY to USD1.4bn on Mar-12. However, a sigh of optimism also intruded as ADB reiterated their expectations for Pak-GDP growth of 3.6% of FY12, whereas growth of 6.0% in LSM has also been witnessed for Feb-12. KSE-100 Index witnessed mixed movement during the Third week, as investors stayed put on the much-awaited SRO issuance by Presidency for implemen-tation of the reformed CGT regime, but remained cautious over further delay. The now prevailing uncertainty related to the timing of the issuance of the SRO seems to be subsiding the interest in the market while there are speculations that it can be delayed till budgetary announcement. Meanwhile, with relatively mixed corporate result announcements, KSE100 index gained 137pts to close at 13,936pts level. However, intra-day volumes declined by 28% WoW basis averaging 269mn shares while average traded value declined by only 9% WoW to stand at USD82mn. Foreign investors poured in more money in Pak equities this week as net foreign inflows stood at USD8.14mn against net inflows of only USD2.3mn last week. Current account stood in surplus of USD142mn and tax collection figure exceeded 9%YoY to Rs155bn (24% YoY during 9MFY12). In T-bills auction during the week, Gov’t raised Rs150bn with yields remaining unchanged. In negative developments, Gov’t borrowing for budgetary support exceeded by 110% YoY to Rs1.0tr while eight IPPs served final notices to Gov’t for sovereign guaran-tees for outstanding dues of Rs34bn.

During the fourth week KSE-100 index hovered around physiological level of 14,000pts yet gained 106pts to close at 14,042pts level. Average volumes during the week declined by 4% WoW to 256mn shares. Average traded value increased by 15% WoW to stand at USD95mn. Foreign investors were more aggressive this week as net inflows of USD12.8mn were recorded compared to net inflows of USD8.1mn last week (up 58%WoW). On economic front, the week witnessed the approval of USD1.8bn loan by WB for energy sector projects. Indefinite postponement of 3G license auction of USD630mn and low GDP figures of 3.2% during 9MFY12 against the target of 4% brought some negativity in the market.

Stock Market Review - April 2012 by Zeeshan Ahmed Mirza

SS tock Market

May 2012

Company Open Close Diff High Low Avg.Rate Turnover*JSCL 21.76 14.93 -6.83 23.2 14.92 19.38 517,705,176FCCL 5.62 6.52 0.9 7.42 5.44 6.45 448,713,390LPCL 4.82 4.83 0.01 5.85 4.55 5.21 433,139,038DGKC 36.37 39.93 3.56 45.45 36.16 40.59 379,156,101ANL 8.9 7.04 -1.86 10.33 6.91 9.01 299,965,369DCL 4.17 5.07 0.9 8.18 4.21 5.91 287,559,280NBP 45.62 45.05 -0.57 51.3 44.8 47.78 218,473,196WTL 3.13 2.81 -0.32 4.35 2.72 3.52 183,475,796PTCL 12.31 12.55 0.24 14.88 11.92 13.04 177,498,143BOP 9.21 8.95 -0.26 10.41 8.4 9.49 174,925,419

Company Open Close Diff High Low Avg.Rate TurnoverULEVER 5,601.00 6,326.29 725.29 6,494.00 5,450.01 5,950.74 2,729UPFL 1,811.25 2,459.99 648.74 2,460.00 1,750.00 2,046.78 629BATA 587.03 664.49 77.46 710 585.2 649.23 2,348PGCL 72.76 142.12 69.36 142.12 70.08 96.68 53,055INDU 238 290.18 52.18 292.95 235 263.34 40,206SHEZ 120.98 164.8 43.82 164.8 110.1 130.91 519,596ILTM 214.43 252.39 37.96 264.99 202 229.45 5,799NATF 104.32 140.7 36.38 140.99 100 115.66 156,802PSMC 66 91.7 25.7 91.7 66.16 74.45 2,312,281POL 365.24 386.74 21.5 399.99 362.5 375.89 14,849,088

Company Open Close Diff High Low Avg.Rate Turnover*NESTLE 4,447.00 4,155.30 -291.7 4,630.00 4,000.00 4,341.35 6,224SIEM 789 709.05 -79.95 800 703.5 741.36 4,169SHELL 202.38 145.55 -56.83 203.9 145.01 159.7 564,670RMPL 2,635.85 2,602.70 -33.15 2,800.00 2,460.80 2,621.31 1,380NRL 247.4 229.04 -18.36 255.01 227.5 244.46 1,298,075EFUG 88.23 71.52 -16.71 100.56 68 84.06 537,411SRVI 188.03 172 -16.03 186 171.22 177.14 14,755ATIL 41.98 29.62 -12.36 42.44 29.5 31.15 402,262ZILFZTM

70 58.03 -11.97 71.49 58.01 65.52 103,073226.5 215.46 -11.04 237.82 215.18 231.28 626

Top 10 Traded Companies(April 2012)

Top 10 Losers (April 2012)

Top 10 Gainers(April 2012)

T-Bills (3mth) 11.8742%T-Bills (6mth) 11.9420%T-Bills (12mth) RejectedDiscount Rate 12.00%Kibor (1mth) 12.03%Kibor (3mth) 11.95%Kibor (6mth) 12.10%Kibor (9mth) 12.31%Kibor (12mth) 12.36%P.I.B (3 year) 12.5890%P.I.B (5 year) 12.9389%P.I.B (10 year) 13.1999%

Money Market

Gross Buy Gross Sell Rs Rs Rs $

FIPI 8,622,549,931 6,636,763,837 1,985,786,092 22,064,290 Local Companies 59,356,596,287 (59,026,112,169) 330,484,116 3,672,046 Banks/DFI 10,486,242,083 (11,437,376,982) (951,134,893) (10,568,165) Mutual Funds 6,430,549,070 (8,627,884,550) (2,197,335,473) (24,414,839) NBFC 2,818,227,073 (2,906,613,632) (88,386,557) (982,073) Local Investor 99,297,208,519 (98,123,385,697) 1,173,822,815 13,042,476 Other Organization 1,580,105,290 (1,833,341,378) (253,236,084) (2,813,734)

Foreign Portfolio Investment Monthly (April 2012)Net Buy/Sell

60

advantages of mechanization and industrial efficiency,is today in a worse mess than ever before in history. The adoption of Western economic theory and practice will not help us in achiev-ing our goal of creating a happy and contended people. We must work our destiny in our own way and present to the world an economic system based on true Islamic concept of equality of manhood and social justice. We will thereby be fulfilling our mission as Muslims and giving to humanity the message of peace which alone can save and secure the welfare, happiness and prosperity of mankind.”Efforts for economy-wide elimination of Riba commenced during the 1970s, and most of the significant and practical steps were taken in the 1980s. The initiative to re-introduce Islamic Banking in Pakistan was launched back in 2001 when the government decided to promote Islamic Banking in a gradual manner and as a parallel and compatible system that is in line with the best international practices. Following the decision of the government to shift to interest-free economy in a phased manner without causing any disrup-tions, the effort was envisaged as a market-driven flexible approach. Furthermore, it should aim to build a broad based financial system in the country to enable all segments of the population to access financial services.Growth of Islamic Banking industry in Pakistan has been tremendous. Currently, Pakistan’s Islamic Banks sector is operating with:

• 5 Full Fledged banks having 416 branches• 13 Conventional Banks operating with 183 SAIBB and 68 Sub-Branches.Despite the above success story, there are several factors that are likely to constrain the development of Islamic

finance including:• The current Islamic banking model is based on replica-tion of conventional banking products. While this replica-tion is easy to understand for the customers, and helps Islamic banks offer replicated conventional services, the effort is insufficient to achieve the overall objectives of the Islamic financial system which is based on equitable distribution of economic gains on one hand and on the

other hand makes Islamic finance less efficient compared to its conventional counterpart.

• Not all conventional products have an Islamic equivalent like treasury and liquidity management tools.• Requisite changes in legal, regulatory and tax environ-

ments to accommodate Islamic finance without the customers incurring additional costs.

• The different interpretations of Shariah rulings have resulted in lack of standardization.Therefore a common understanding is needed to integrate local market with global market. This requires remedying the following:

early four decades ago, Islamic Finance was initiated to cater to the needs of faith-based Muslims. Once

looked upon as a patchwork of banking niches in the Arabian Gulf region and Malaysia, Islamic Finance has evolved into a globally accepted financial system. In the last thirty years, Islamic Finance service made considerable progress at the global front, but especially during the last decade wherein Islamic Financial Sector (IFS) has registered a robust growth (between 15 to 20 percent per annum) making it one of the fastest growing segments of the overall financial system. By the grace of Almighty Allah, Islamic finance now has taken roots in Muslim as well as non-Muslim economies. Presently, over 1,100 institutions offering IFS of operate across the globe which, supported by a number of dedicated academic, legal, regulatory and supervisory institutions, provide a solid platform for the future growth and development of Islamic finance services. With the passage of time, the global Islamic financial services market is becoming increasingly dynamic and diversified. Assets of 500 Islamic banks expanded 28.6% to $822bn at end-2009. Standard & Poor’s estimates that, globally, Shariah-compliant assets now total $1 trillion as a result of brisk growth during the past decade. Islamic fund management industry has also played its role in this exponential growth whereby number of Islamic funds has reached 517–more than double compared to the 207 investment funds available in Jan 2005. Due to the prevailing economic crisis, safety remains an important priority for the investors in Islamic funds. Of the 517 Islamic funds across the world (in Saudi Arabia, Malaysia, US, Kuwait, S. Africa, Indonesia, Pakistan, Luxembourg, Bahrain, and Japan), 274 are equity funds, 84 are funds represented by investment in a mix of assets, 75 are money market or commodity ‘murabaha’ funds, 67 are Sukuk funds and 17 capital funds. Major global banks and law firms have participated in structuring the offerings of a large number of sukuk issued so far. Access to Western economies means that Islamic financial institutions gain entry into large and diversified economies with a wide array of asset classes for investment, and in the case of the developed countries, the backing of strong legal frameworks.In Pakistan, the birth of Islamic Finance can be traced way back to 1948 when, while inaugurating the State Bank of Pakistan, founder of the nation Quaid-e-Azam Muhammad Ali Jinnah, said that: “I shall watch with keenness the work of your research organization in evolving banking practices compatible with Islamic ideas of social and economic life. The economic system of the West has created almost inso-luble problems for humanity and to many it appears that only a miracle can save it from disaster that is now facing the world. It has failed to do justice between men and to eradicate friction from the international field. On the contrary, it was largely responsible for two World Wars in the last half century. The Western World, in spite of its

ducation & TrainingEE

May 2012

Workshop on ‘�e Power of Entrepreneurship

A2-day Workshop on The Power of Entrepreneurship, organized under the auspices of Islamic Chamber of

Commerce and Industry in collaboration with Ozair Hanafi School of Learning was held on April 17-18, 2012 in Kara-chi. It was sponsored by National Bank of Pakistan, First Women Bank Limited, Bank of Khyber and Pak Oman Micro Finance Bank.Speaking at the inaugural session Ms. Attiya Nawazish Ali, Assistant Secretary General of Islamic Chamber of Com-merce & Industry, expressed her views on the concept of entrepreneurship and motivated the participants to practice onto starting their own enterprises and business through their innovative and original ideas Chief Guest, Dr. Mirza Abrar Baig talked about the impor-tance of young and aspiring entrepreneurs and focused on Small & Medium Enterprises being a strength of character to the economic growth and development and poverty diminution. He mentioned how young graduates from leading universities struggle and achieve their ultimate goals and are now on the path of success. He encouraged the participants to start with something small but with a big pioneering idea and later with little hard work they can be thriving and booming with their businesses.Earlier, in his opening remarks Mr. Ozair A. Hanafi, the lead trainer, spoke about the core concept of the workshop, and its value for a sustainable, independent Pakistan. He dilated on the true spirit of entrepreneurship, personality analysis and qualities of the entrepreneur and told the participants on how to start a new venture. Later, Mrs. Subeika Rizvi, Assistant Professor at ZSABIST presented an effective business plan. The participants, who were engaged

62

in the workshop through different communicative and interactive sessions, demonstrated keenness and passion.On the 2nd day of the Workshop, the participants were divided in groups and asked to prepare and present a business plan which they did commendably well..Mr. Tariq Mohar, Group Executive Director-Sales & Business Support of Tameer Micro Finance Bank Ltd, who was Chief Guest on the second day, expressed his views about the prospects ahead and potential opportunities for young entrepreneurs. He discussed the challenges faced by young capitalists and highlighted the significance of micro financing. He talked about how young entrepreneurs face environmental hindrances but real hard work and zeal lead them towards accomplishment of their goals. He encour-aged the participants that right direction, extensive informa-tion and optimistic approach can trigger off towards equip-ping themselves with knowledge at every step of the way.

(R to L) Mr. Ozair Hanafi, Founder President, OHSOL; Mr. Tariq Mohar,Group Executive Director, Head of Business, Tameer Micro Finance Bank Ltd.;

Ms. Attiya Nawazish Ali, Assistant Secretary General, ICCI andMr. El Sadig Gadalla Mokhair, Rep. ICCI at the closing session of the workshop.

Group of participants with guests and the lead trainer

Zinc DeficiencyZinc is ubiquitous within the body and is vital for protein synthesis, cellular growth, and cellular differentiation. Studies in children have demonstrated important role of zinc in relation to immune function, growth, and development. Clinical presentations of severe deficiency include growth retardation, impaired immune function, skin disorders, hypogonadism and cognitive dysfunction. Mild to moder-ate deficiency increase susceptibility to infection. The benefits of zinc supplementation on the immune system are well established.Vitamin AVitamin A deficiency (VAD) is a common cause of preventable

blindness and a risk factor for increased severity of infectious disease and mortality. Increased mortality is associated with VAD, most likely because of its detrimental effects on the immune system that results in an increased severity of illness.

WAY FORWARDPoverty management is the main tool to address the “Hidden Hunger Dilemma”. Hunger pains compel the poorer to feed for the sake of managing his starvation. They have no concern with what are their essential body requirements. On receiving wages, they buy staple foods like wheat, rice, barley etc for their hunger management while the vital fuel components of body are often neglected. Lack of awareness, especially among illiterate society further aggravates the problem. Choice of right to eat is also a very important factor that is not only over spread in Pakistan but all over the world. Healthy mothers and healthy children grow a healthy nation. Food based interventions are required to arrest the problem and provide sustainable solutions at national level. Multiple ways can be adopted to cope the RDA requirements of individuals that include fortification, bio fortification and supplementation. Food fortification and bio fortification are effective ways to manage the problem. A study carried out by Lancet (2008) revealed that micronutrient fortification and supplementation considerably decreases the incidence and severity of illness and results into overall improvement in women and children health. According to World Bank’s report (2006), “Repositioning Nutrition as Central to Devel-opment”, fortification of food is a rapid route towards success. Food fortification and bio-fortification are the cost effective means to improve the public health. Processed foods can be produced after fortification by adding single or multiple micronutrients by using advanced technical methods. Industries that can aid in fortification can be effectively identified as “targeted groups” As for “targeted consumers” like school going children can be specifically addressed by fortifying the foods like crisps, breads, noodles, macronis, butter, margarine etc. Similarly food for pregnant and lactating women can be fortified, specifiacally keeping in view their micronutrient require-ments. As most of our targeted population dealing with VMD is poor, a strong consideration of affordability and accessibility to fortified foods is required to be assured. Bio-fortification is another important food based approach to fix the problem. Advancements in research and technology are opening new era of bio-fortication that enables the consumer to get staple foods with additional micronutrient fortification. People who are at extreme risk should be located on mass level and should be supplied with micronutrient supplements in order to instantly meet their dietary requirements before it gets too late.Day by day increasing problems of price hike, unemployment, less nutrious food supplies etc. are pointing out to an alarming situation in our country. Pakistan has already ranked in the list of food insecure countries and the devastating progression in hidden hunger is dragging us to most insecure nations. Such situation can be minimized by undertaking eradication of hidden hunger problem by multi-sectoral coordination of the policy makers, researchers, nutritionists, food technologists, food processors etc. so as to generate some productive solutions. The new Ministry “Food Security & Research” is already in the process of initiating and launching a “Zero Hunger Program” as an effective solution to this problem. The programme should be planned keeping in view the affordability, effectiveness and proper selection of target groups.

Two-Day TrainingFair for WomenFirst Women Bank Ltd. organized two-day Training Fair

in Lahore and Karachi. The fair was an excellent oppor-tunity for women interested in acquiring capacity building and skill development trainings, with a view to setting up their own business or enhancing employment prospects. A large number of female students, NGO women members, business women, and housewives attended the informative sessions.Ms. Shafqat Sultana, President FWBL, was the Chief Guest at the concluding session. Addressing the participants of the Fair Ms. Shafqat Sultana said that FWBL is fully committed to work for the betterment of the society. She urged the women to play a vital role in economic development of the country. She also visited the stalls exhibited by the women.

Connecting Vision to RealityMs Shafqat Sultana, President and CEO, First Women Bank Limited, while addressing the Annual Conference of her bank in Karachi, under-lined the need for making ‘our business strategies and innovation processes more flexible, more agile and more participative to meet the demands of the chang-ing environment’. Speaking on the Confer-ence theme of “Connect-ing Vision to Reality with Strategic Thinking, Plan-ning and Action,” she said that a corporate strategy should no longer be seen as an ultimate solution, but rather as guidelines and directions that contain options or scenarios to enable the steering of future actions. Strategy is dynamic and must respond to the realities of the environment and market and should not be consid-ered fixed, she stressed.She said that the financial year 2011 proved to be a year of record perfor-mance for First Women Bank Ltd. (FWBL) which posted a pre-tax profit of Rs. 400 million. Total deposits of the bank increased from Rs.10,195 million to Rs.13,815 million while total advances portfolio reached the height ofof Rs. 7,901 million.

Ms. Shafqat Sultana President FWBL visiting the stalls displayed at the Training Fair In Karachi.

Ms. Shafqat Sultana, President FWBL with executives and FWBL- GEP sta� at the fair. Picture shows Ms Charmaine Hidayatullah, Head Legal & Chairperson WED, Ms. Shaheen Zamir, Head Market-ing, PR & Entrepreneurship Development, Ms. Shgufta Alizai, Senior Technical Consultant Develop-ment, Ms. Jeanne Ahmad, Head Admin, Ms Faida Faridi & others.

ducation & TrainingEE

May 201264






s a result of rapid industrial growth and depletion of natural resources the environmental contamination and

pollution has become a matter of serious problem all over the world. Moreover, as a result of human interferences huge quantities of organic and inorganic compound are released every year in the biosphere in the form of industrial emission or accidental chemical or oil spills etc. It is now well estab-lished that controlled and uncontrolled discharge of solid and liquid wastes, accidental discharges, fertilizers, pesticides, sewage disposal and tar are some of the key contributors to the increasing contamination all over the world. For protecting the atmosphere, scientists are working hard to minimize the contamination and environment friendly measures are being developed and adopted to save the world from the crisis.The current revolutionary developments in the field of microbiology have made this possible by applying potential micro-organisms to minimize the contamination. These living organisms have the capability of substantially immobi-lizing, degrading, removing or detoxifying environmental contaminants up to a larger extent. Method of application of such biological agents for utilizing their cleanup capabilities is known as the “bioremediation”. This involves the use of living organisms or their enzymes to convert complex toxic compounds into simpler forms, thereby rendering the environment less toxic or contaminant free. This widely adopted technique has emerged as an effective innovative method for saving the environment from various types of containments such as chlorinated hydrocarbons, some of the heavy metals etc. The organisms that are used for bioremediation includes bacteria, cyanobacteria, actinomycetes, fungi and few of the plant species. Major types of bioremediation being used to control the contamination include phyto-remediation: use of plants; rhizo-remediation: the use of plant and micro-organisms; myco-remediation: the use of fungi and the microbial remediation: use of bacteria for minimizing contamination.Microbial BioremediationMicrobial remediation is a complex process and involves the use of naturally occurring or laboratory cultivated microorganisms to reduce the contaminants either by eating organic compound or assimilating all harmful compounds

and the guidance and supervision that his teachers provided him helped him successfully accomplish the task, which was not only highly appreciated but was also followed by a request to make it more elaborate and convenient. Qasim gracefully acknowledged the valuable help and guidance provided by his teachers, and the prayers of his parents which crowned his efforts with success. It is said that those who are blessed with talents don’t neces-sarily outperform everyone else. It is the people with a commitment to follow-through on their initial discoveries who excel. Everyone has the talent but what is rare is the courage to elevate that talent to a pint where it results in benefits that are shared by vast sections of humanity. The topic of Qasim’s research was of critical importance. Diabetes is now becoming a common disease, which can be controlled but is hard to cure. Qasim is not going to stop here. He plans to utilize his talent for carrying out further research on the subject so as to be able to serve those in humanity afflicted by this disease.It is good to learn that in this arduous task, this young, talented student will not be alone. He will have the support and guidance of his school and his teachers who rightly deserve appreciation for their valuable help, guidance and support in this noble cause.

In Qasim’s success, the role of Pak-Turk International School and Colleges is also praiseworthy. As announced by Pak-Turk Education Director, Mr. Kamil Ture, “improving, educating and promoting the brightest Pakistani students has been their mission that has helped students to win 58 gold, 23 silver and 44 bronze medals, so far, at national and international competitions. Pak-Turk would continue to bear all the expenses of training teach-ers and participation of students in challenges to deepen their learning, and help them turn their vision into reality and make ever-more competitive.” This should serve as an example for others who must come forward and extend a helping hand for success not only in this particular task but also for research in other disciplines. If such help is forthcoming, one hopes that more of the talented would be discovered, helped to convert their talents into produc-tive results and bring in more laurels for Pakistan in the years to come. Congratulations to Qasim, his dedicated teachers and his supportive parents.

Another International Award for PakistanPakistan has received yet another international award – a

silver medal – thanks to the talented work of a very young Pakistani who found a treatment for patients suffer-ing from diabetes. This young Pakistani is Mohammad bin Qasim, a student who is hardly 14, and studying in Class 8 at a school in Peshawar. Talent is not a closed preserve of any individual or group of individuals belonging to any particular region, class, cast or creed; anyone, anywhere, anytime could discover this natural gift and make use of it. Pakistan and Pakistanis are no exception. What makes this exercise admirable is when that individual commits himself or herself to share its benefits with humanity. That is what young Qasim has done.Pakistan is a developing country that lacks the facilities and the environment for sharpening knowledge and skills compatible with those available in the developed world. Yet, there is no dearth of talent in the country. Despite limita-tions, Pakistan has been able to produce quite a number of talented people who earned name and fame not only within the country but also internationally. It is unfortunate, however, that many of our talented generally go undiscov-ered and hence unnoticed. Those fortunate to have been blessed with an opportunity to bring forth their talents, excel and leave their mark on the pages of history. Arfa Karim, the youngest Microsoft Certified Professional (who is no more in this world), Maria Toor Pakay, youngest female squash champion, Sharmeen Obaid, the first Pakistani woman to win the Oscar for her documentary “Saving Face”, Durdana Ansari, a journalist and former producer of the BBC who was awarded the Order of the British Empire (OBE) for her outstanding work with Ethnic Minorities Foundation. These are just few names that came to light recently. And now it is young Muhammad bin Qasim, who joins the team of the talented Pakistanis who brought pride and prestige to their country.Qasim, 14, a student at Pak-Turk International School and Colleges in Peshawar, participated in the 6th International Environmental Project Olympiad held in Baku, Azerbaijan. It was a tough competition as there were more than 100 projects from students representing 42 countries around the world that participated in the contest. Qasim won the second position and silver medal for his research on a subject of critical importance – diabetes – that inflicts an ever-increasing number of people all over the world.Qasim’s work was based on a critical analysis and research on a plant called Tecoma Stans, to discover a cure for patients suffering from diabetes. He assiduously worked on the plant, which is found abundantly in Khyber Pakh-tunkhwa. He undertook laboratory tests of the plant under different conditions and eventually succeeded in his efforts when he found out that the plant was helpful in treating and curing the diabetic patients.The task was hard and time-consuming, especially for a student of Qasim’s age. Yet, with his dedication, hard work,

wardsAA

May 2012

Muhammad Bin QasimTecoma Stans

6565

metal removal system is therefore the basal need to recycle the wastewater. Wid-ely used conventional chemi-cals methods for heavy metal removal are ineffective and even expensive. Physical and chemical methods such as: sedimentation, chemical precipitation, ion exchange, me- mbrane filtration, coales-cence and active carbon absorption are some of the usual purification processes. Any of these methods has its disadvantages to include huge investments and expl-oiting of costs necessity or sludge excretion prohibitions. Cost-effectively application of the biological met-hods is there-fore a relatively low-cost option.In the new world the

biological elimination of heavy metal ions utilizing the ability of some microorganisms for metal ion exchange is gaining popularity every day. Such microorganisms utilize their physical and chemical properties of absorption through their cell walls or utilize their metabolic activities for transportation and precipitation etc. The absorption mechanisms of dead or alive cells, uptake yields, recep-tion capacity and the ability to metabolize the nature and quantity of different metals are different in different micro-organisms.In microbial bioremediation use of free cells has some disadvantages viz. viability, sensitive to toxicity, durability and suitability. The immobilized biomass is likely to render benefits like better re-usability, high microbial load, less clogging etc. Some of the stains of multi-resistant fungi (LE48T1, RVT3, RVE48T3, LE48T4 and LT5) and bacteria are also used for treatment of polluted waters. Bacillus spp. among all bacterial species seems to have maximum potential of bio-sorption of metals, while others include are Streptomyces, Zoogloea, Ramigera, Pseudomonas, Rhodobacter sphaeroides, Alkaligens eutrophus and Staphylococcus. It is important to under-stand that the wastewater is a mixture of many heavy metals along with other contaminants. The single strain approach may thus give unsatisfactory response. On the other hand, mixed inocula or an association of bacteria is a better option of bioremediation contaminated water.Some of the benefits of bioremediation• Works on a variety of organic and inorganic com-

pounds• Can be done either on-site or off-site• Easy to implement and maintain• Low-cost compared to other treatment methods• Environmentally-friendly and aesthetically pleasing• Reduces the amount of wastes to be landfilled

B. Bioremediation of Heavy MetalsMetals with atomic masses between 54.63 and 200.59 and density more than 5 g/cm3 are classified as heavy metals. These elements are natural components of the earth crust and are released into the environment as a result of natu-ral or human interferences. Some of these metals can be absorbed into human body if ingested in food or through respiration. Non degradability of heavy metals and their tendency to accumulate in human body varies consider-ably from one another. However, the major toxicity reported so far is a result of Mercury, Lead, Cadmium, Arsenic, Chromium, Copper, Zinc and Manganese. According to WHO reports, many people are exposed to health risks caused by heavy metals that enter into human food chain as a result of using sewage and industrial waste water. Through the root system these metals enter the plant tissue and are thereafter passed on to the consumers.According to FAO/WHO if the quantities of Cd, Cr, Pb and Hg, Fe, Cu, Zn, Mn in irrigation water are not within the permissible limits it is likely to exert fatal effects on all living being exposed to these metals. An efficient heavy

Living' Micro-Robot coulddetect diseases in humansAtiny prototype robot that functions like a living creature is being developed

which one day could be safely used to pinpoint diseases within the human body. Called 'Cyberplasm', it will combine advanced microelectronics with latest research in ‘biomimicry’ (technology inspired by nature). The aim is for Cyber-plasm to have an electronic nervous system, 'eye' and 'nose' sensors derived from mammalian cells, as well as artificial muscles that use glucose as an energy source to propel it.The intention is to engineer and integrate robot components that respond to light and chemicals in the same way as biological systems. This is a completely innovative way of pushing robotics forward.Cyberplasm is being developed over the next few years as part of an international collaboration funded by the Engineering and Physical Sciences Research Council (EPSRC) in the UK and the National Science Foundation (NSF) in the USA. The UK-based work is taking place at Newcastle University. Cyberplasm will be designed to mimic key functions of the sea lamprey, a creature found mainly in the Atlantic Ocean. It is believed this approach will enable the micro-robot to be extremely sensitive and responsive to the environment it is put into. Future uses could include the ability to swim unobtrusively through the human body to detect a whole range of diseases.The sea lamprey has a very primitive nervous system, which is easier to mimic than more sophisticated nervous systems. This, together with the fact that it swims, made the sea lamprey the best candidate for the project team to base Cyberplasm on.Once it is developed the Cyberplasm prototype will be less than 1cm long. Future versions could potentially be less than 1mm long or even built on a nanoscale.Similarly, data on the chemical make-up of the robot's surroundings can be collected and stored via these systems for later recovery by the robot's operators."We're currently developing and testing Cyberplasm's individual components," says Daniel Frankel, one of the scientists working on the project. "We hope to get to the assembly stage within a couple of years. We believe Cyberplasm could start being used in real-world situations within five years."

merican government scientists simulate the moment a one megaton nuclear bomb destroys a massive asteroid heading for Earth. At a US government lab in New

Mexico, government scientists race to launch a one megaton nuclear weapon toward a giant asteroid, hoping the massive explosion will save the earth.While this may sound like the plot of a Hollywood blockbuster, in fact it is the latest hi-tech computer simulation carried out by government scientists.A team at Los Alamos National Laboratory, a United States Department of Energy facility in New Mexico, used a supercomputer to model a nuclear weapon's anti-asteroid effectiveness.Researchers were told to deal with a 1,650-foot-long (500-meter) space rock using a one-megaton nuclear weapon — about 50 times more powerful than the U.S. blast inflicted on Nagasaki, Japan during World War II.'Ultimately this one-megaton blast will disrupt all of the rocks in the rockpile of this aster-oid, and if this were an Earth-crossing asteroid, would fully mitigate the hazard represented by the initial asteroid itself,' Los Alamos scientist Bob Weaver said in a recent video released by the lab.‘If one of these objects is spotted at a distance of a few months away, there could be potentially devastation on a worldwide scale.’The team used the labs supercomputer, which has the power of 32,000 processors found in a normal computer, to recreate as accurately as possible exactly what would happen to the asteroid should the blast hit its surface.However the team stresses the giant nuclear weapon was only a last resort and researchers are also investigating other methods, including using spacecraft or even the gravitational pull of planets to alter its course.

Destroying an incoming killerasteroid with a nuclear blastA

SS cience & TechnologySS cience & Technology

May 20126666

rban areas occupy only 2.8 percent of the earth’s surface yet, as of 2008, more than 50 percent of the world’s popula-tion

inhabits urban areas. Rapid urbanization is occurring largely in developing countries where a massive demographic shift will have enormous implications: high poverty, scarcity of natural resources, and environmental degradation.In urban settlements, rapid population growth and resulting land development, that in the developing countries is often neither planned nor regulated, limits the chances of sustain-able use of the increasingly scarce land resources. The nexus between urban development and environmental degradation is not something that requires fresh understanding. Back in 1976, the Habitat conference identified “urban expansion” as a universal develop-ment challenge. At the Rio Summit, as early as 1992, the concept of ‘sustainable human settlements’ was introduced. At the Habitat II conference in 1996, the Habitat Agenda highlighted the need for new approaches to planning as well as managing rapid urban growth. However, evolving understanding of linkages of rapid urbanization and climate change has given urban development challenge a new impetus and sense of urgency. According to UN-HABITAT’s recently published “Cities and Climate Change: Global Report on Human Settlements (2011)” the proportion of human-induced or ‘anthropogenic’ greenhouse gas (GHG) emissions oozing out of cities could be between 40 to 70 percent, using production-based figures (i.e. figures calculated by adding up GHG emissions from the entities located within cities). This is in comparison with as high as 60 to 70 percent if a consumption-based method is used (i.e. figures calculated by adding up the GHG emissions from the production processes of goods consumed by urban residents, irrespective of the geographic location of their production).In Pakistan, demographic trends indicate that population has been urbanizing rapidly since 1951, with an average annual urbanization rate exceeding 4 percent. It is estimated that by 2030, Pakistan will predominantly be urban with 45.6 percent of its population living in urban areas and about 12 of its cities will house more than one million humans. The urban population recorded during the 1998 Census was nearly 43 million, and by 2010 it was estimated to be 63.1 million. The urban population is estimated to surpass 121 million by the year 2030. The level of urbanization at 45.6 percent would then be the highest among the South East Asian countries.In this regard, it is a matter of some concern that the recently notified Climate Change Policy (approved by Pakistan’s Federal Cabinet) that is to be implemented by the Federal Ministry of Disaster Management doesn’t focus on the ‘urban context’; instead, it directs attention mostly on ‘agriculture’, ‘forestry’ and ‘water resources’, and segregates ‘urban activities’ into a sector based categorization. This lack of focus the a subject that has been attracting global attention 1922 onwards, is an oddity that only our planners could afford. Karachi needs a Climate Change Adaptation StrategyKarachi is Pakistan’s largest, and the sixth most populated city in the world. It is also the country’s commercial capital, with per capita GDP of $5,400. According to latest official estimate, Karachi’s urban population is about 14.5 million. The city’s rapidly

changing profile reflects the fact that it is among the world’s fastest growing metropolises. Besides, its economy is a major hub of shipping, trade, finance, banking, information technology, small and large-scale manufacturing, real estate, media and education. Karachi is situated on a natural harbor facing the Arabian Sea, and also is Pakistan’s primary seaport. Due to its central location between India and the Middle East, Karachi has been an impor-tant trading port for centuries. Rapid growth in all these over the years escalated environmental challenges, and the city struggles to improve its basic infrastructure: roads, water supply lines and sanitation, to match rising demand thereon. The Asian Green City Index – a research project sponsored by Siemens and conducted by the Economist Intelligence Unit (EIU) last year – sought to measure and assess, the environmental perfor-mance of 22 major cities in Asia, across a range of criteria. That assessment placed Karachi at the bottom of the list. Besides the key environmental indicators, the EIU report also assessed these cities on indicators such as ‘land use and buildings’ and ‘environ-mental governance’. Karachi’s rating was ‘below average’ on all indicators other than water where it barely managed to score an ‘average’ score. The ProjectShehri-Citizens for a Better Environment in collaboration with the Department of Architecture & Planning, NED University of Engineering and Technology, Karachi, and financial support of the Friedrich Naumann Foundation, Pakistan, recently undertook a study that focused on addressing the challenge of improving environmental conditions in Karachi. The study focused on developing a ‘profile’ of Karachi City within the context of ‘Urbanization and Climate Change’.

Scope and ObjectivesTo provide a process based ‘framework’ and a ‘roadmap’ for developing a comprehensive ‘Climate Change Adaptation Strategy’ for Karachi city by:• Identifying the possible ‘impacts’ of climate change • Identifying critical ‘people’ and ‘assets’ at potential risk• Profiling the major ‘vulnerabilities’ in terms of critical

hindrances (research, policy, planning and its overall gover-nance context, etc.) in the way of enhancing the ‘adaptive capacity’ of Karachi City against climate change and climate variability

Providing a list of actions for strengthening the ‘resilience’ of Karachi City.

Located on the eastern bank of Ayeyaarwady River is Bagan, which is one of Southeast Asia’s most stunning archaeological sites. It is a pilgrimage centre , a world heritage site and a wonderful place to be with. The landscape is dotted with thousands of ancient temples, stupas(solid construction having nothing inside) and pagodas(hollow temples which can be visited in the interior). There are around 3000 well preserved pagodas and temples of the 11th to 13th centuries. The place is specified as one of the richest archaeological sites in Southeast Asia and is perhaps the most visited place in Myanmar. It became a very prosperous city and established itself as the capital of Myanmar during King Anawrahta (Anurudha) in 11th century AD. It stayed as the capital for more than 200 years until its destruction by Mongol invaders in 13th century AD. Many Bagan kings, queens, princes, nobles and ordinary citizens had built thousands of large and small pagodas, beautifully decorated in arts and mural paintings. The tourists coming to Bagan can enjoy the spectacular views from the bucket of the Bagan hot air balloon. About 50 kilometers southeast of Bagan is a 1500 meters high extinct volcano which has become a recreational resort for the tourists. To the north of Yangon, in Central Myanmar is located Mandalay, also known as the City of Gems. This is the second largest city of Myanmar and is regarded as the cultural and a trading centre due to its strategic central location. In Mandalay, there are several places of tourists attractions including Maha-muni Pagoda, the Golden Palace Monastry, the Kuthodaw Pagoda which contains a large number of marble slabs inscribed with Buddhist teachings. It was built by King Mindon of Konboun Dynesty in 1859 AD, and was ruled by two kings until its fall under British rule in 1885 (officially on 1st January 1886), during the reign of King Thibaw, the last king of Burma. Mahamuni is the most sacred Buddha Image in Myanmar.Yet another fascinating spot for the tourists is Inle Lake. This picturesque lake is Asia’s most beautiful natural lake worth seeing and enjoying. It is located 1328 meters above sea level. Tranquil waters in the lake dotted by patches of floating vegetations

by K. Jehangeer Khant was a profound moment in the history of Myanmar on April 1, 2012 when the pro-democracy opposition leader

Aung San Suu Kyi and her party National League for Democracy (NLD) achieved remarkable victory in the by-election. They won 43 out of 44 available seats they contested. With the landslide victory for the Nobel Peace Prize laureate Myanmar is poised to achieve accelerated economic growth and stability given the sanctions imposed by the West are lifted and the ruling military shows a fair degree of willingness to permit the country’s evolution into a functioning democracy. Myanmar, formerly known as Burma, is recognized as one of the great wonders of the world for its breathtaking beauty and charm. Snow-capped mountains dotted with tranquil lakes, fresh clean air, green environment, virgin jungles, and pristine golden beaches combined with rich and glorious heritage spanning more than two thousand years make this wonderful country a very interesting and unique travel destination in Asia. This fairy-tale land shares its boundaries with China, India, Laos, Bangladesh and Thailand. Blessed by nature with great physical diversity this resourfe-rich country has great poten-tial to grow into an economic engine of the region. Yet, having languished for over half a century under repressive military rule, the country fell far behind the rest of the skyscraper-rich Asia. In course of time, the military rulers entrenched this otherwise “goldmine”, as an impoverished country relegated as the second poorest in Asia.Myanmar has a number of tourist attractions famous all over the world. They include Yangon, Mandalay, Pindaya, Ngwe Saung, Kengtung, Kyiakhtiyo, Pyay, The Golden Rock of Kyaikhtiyo, Bagan, and many more. Tourism is consid-ered to be the most promising sector but, in the past, this important sector was not given the importance it deserved.Yangon, rightly called the Garden City of the East, is the largest city and the capital of Myanmar. Located on the Ayeyarwaddy delta, it is surrounded by water on three sides and is evergreen and cool with lush hot trees, shady parks and lakes .Yangon, officially known as Rangoon, is home to the gold-plated Shwedagon Pagoda, one of the world’s greatest Buddhist pagodas built 2,500 years ago and regarded as the most famous tourist attraction in Myanmar. Most of the shrines around Shwedagon are decorated in best Myanmar sculptures and wood curving. German businessman Axel Mueller has established digital textile business in Yangon since 1994. Using high-tech machines, Mueller’s staff of 80 women embroider shirts, T-shirts, caps and bags. They also provide computer designs for embroi-dery patterns. While visiting pagodas and temple areas, the visitors have to go barefooted as a mark of respect.Several other places in Yangon that tempt the visitors include Yongon River, Sule Pagoda, situated at the heart of the city centre, China Town, Botahtaung Pagoda situated near the Yongon River, Bogyoke market, besides Kaba Aye Pagoda, Mahapasana Caves, The City Hall, to name a few.

Myanmar-�e Hidden Paradise

I

ravel & TourismTT

May 2012

Shwedagon Pagoda

67

The ‘profile’ prepared can be interpreted as a ‘roadmap’ for developing a ‘Climate Change Adaptation Strategy’ for this city focused on identifying some critical ‘vulnerabilities’ the city may be exposed to in the event of climate change. These ‘vulnerabilities’ are then placed in the context of the possible ‘consequences’ of climate change on key physical and natural environment and the resources and development and governance ‘processes’ and ‘activities’ relating to urbanization.Recommendations have been made to improve the ‘adaptive capacity’ of the city to prepare itself better to effectively cope with possible climate change scenarios and consequences. The study may serve as a ‘pioneering’ effort in the context of Kara-chi and Pakistan, and serve as a ‘guiding’ document for urban policy and decision making not just in Karachi but in other national urban centers by laying the basic ground work for further research and action. In this regard, a Stakeholder Workshop was organized on April 24, in Karachi to share the critical findings of the study with relevant stakeholders to stimulate a discussion and initiate a ‘visioning’ process to design a comprehensive ‘Climate Change Adaptation Strategy’ for Karachi. Ms. Amber Alibhai, General Secretary, Shehri-CBE, explained the context of the study by defining its scope and key objectives. Mr. Roland De’souza presented the global context of challenge of climate change. Dr. Noman Ahmed, Chairman, Department of Architecture & Planning, NED University of Engineering & Technology, Karachi spoke about research methodologies and analytical tools used while undertaking this study, and highlighted the importance of the findings in the larger context of making Karachi as a sustainable city. Farhan Anwar, Urban Planner and Member, Shehri-CBE (Project Team Leader) made a detailed presentation in which he shared the critical findings and recommendations of the study in relation to identification of the key communities and assets at risk in the likely climate change scenarios. He cited the lack of needed data for research and for quantifying the probability of likely risks and their impact. Key recomme-ndations included the establishment of ‘flood risk zones’, surface water manage-ment plan, a policy on ground water, containing water and energy loss by promoting conservation practices, preventing land use violations, increasing the green cover, sustaining urban agricultural practices etc. He strongly stressed the need to place the City Government at the top of the planning and coordina-tion pyramid of a possible Climate Change Adaptation Strategy and start thinking about how it could be done. He concluded by saying that the outcome of successful adaptation is ‘resilience’–product of governments, enterprises, civil society outfits, households and individuals with strong ‘adaptive capac-ity’. In urban neighborhoods, this indicates a capacity to main-tain core functions in the face of climatic threats, especially for the vulnerable populations. It requires a mindset to anticipate climate change and then plan adaptive strategies. The resilience of any population group to climate change depends on its resilience to other pressures including economic change, conflict and violence. A video documentary highlighted all key aspects of the study. Photographs and maps on the likely scenarios too were on display. A lively discussion session, wherein the participants appreciated Shehri’s efforts and offered their suggestions

palms and casuarinas, the Ngapali area is a good place to relax and take a break from the stress. The water is transparent and the sea is tranquil. The best time to visit Ngapali Beach is from October to May.Located directly west of Yangon, also on the Bay of Bengal, is Ngwe Saung Beach which can be reached by a 25 minutes flight to the city of Pathein and then a one hour transfer to the beach. It takes about 5 hours to get to the place by car. The beach is similar in quality and has the same tranquil atmosphere as Ngapali beach.Kengtung, a remotely inhabited mountain valley, is one of Myanmar’s most scenic areas known for its beauty and cool, clean mountain air, diverse ethnic groups such as the Wa, Shan, Akha, Ann, and Lahu people. It can be easily reached by domes-tic flights. Kengtung is built around a small lake and has some fine examples of colonial architecture and older Buddhist temples as well.On the Chindwin river - one of the three major rivers in Myan-mar - is located Monywa - a major agricultural trade center which is one of the prime attractions. It is a colorful pagoda , quite different from most other pagodas in Myanmar. Also of interest are the Po Win Taung caves, located just across the river with their sandstone caves containing many Buddha images and interesting frescoes (paintings) on some of the cave wallsMentioned above are just a few of the many tourist attractions in Myanmar. The country has great tourist potential and many more attractions in different fields. Developed properly they can turn this impoverished country into a prosperous one. The success of Aung Suu Kyi and her party in the by-election has raised optimism for the development of tourism and resultant economic boom in times to come. The international response to the by-election results are quite encouraging as Europe and America have expressed their willingness to lift the sanctions. Several international business-men are queuing up to invest in Myanmar as the country opens up after decades under military dictatorship. EU nations are set to suspend sanctions against Myanmar thus opening the way to a potential trade and investment opportunities. US has already announced a series of rewards including an easing of long -standing restrictions on investment and financial services in this impoverished country. All this augurs well for the develop-ment of the country which has remained racked by ethnic tensions and civil conflict for over five decades.

ravel & TourismTTand busy fishing canoes present absorbing scenes. The entire lake area supports a population of over seventy thousand inhabitants. Here we see floating gardens, floating farms, floating villages and lots of the leg-rower fishermen. Some tourists may prefer to experience a night stay in one of the floating hotels, traditionally built by woods or bamboos. Such charming atmosphere may well be a ‘once in a life time’ experi-ence, One of the most revered Buddhist sites in Myanmar is Kyaikhtiyo which is located high on a mountain. The Golden Rock, as it is known to foreigners, is a large natural rock, covered in gold, which stabilizes itself on the edge of a natural rock pillar. Although the Rock lies at the edge of the rocky pillar, it does not fall down. Legend was that a powerful hermit thousands of years ago put this rock on the pillar before his death, so that his followers could worship the rock in his place after his death. Nobody knows if the legend is true or not, but Kyaikhtiyo remains one of most sacred places in Myanmar. It is believed that the Rock holds magical power.

Besides being an important place for pilgrimage for the Buddhists, The Golden Rock of Kyaikhtiyo is an inviting place for the tourists because of the mesmerizing view that it presents. It is open to visitors during the dry, cool season. It can be reached from Yangon (Rangoon) by bus or by car. Vehicles are not allowed near the top where the Golden Rock sits; visitors have to walk up the hill for about 45 minutes to reach the site.Yet another absorbing tourist spot is Ngapali Beach, a broad stretch of sand located on the Bay of Bengal. It is separated from several more beaches by small, easily negotiated rocky headlands. It is the prettiest in Myanmar Backed by swaying

May 2012

The Golden Rock of Kyaikhtiyo

Ngapali Beach

68

Chinese manufacturing index rose in April, signaling that a

rebound in the world’s second-biggest economy may help to offset constraints on global growth from austerity measures in Europe.U.S. oil futures notched their biggest gain in two weeks on Tuesday, and copper and other commodities rose too, after the strongest U.S. manufac-turing data in 10 months boosted the outlook for raw materials demand in the world's largest economy.During April-2012, the traded volumes at the Exchange increased to Rs. 68.40 bn from Rs. 68.09 bn in the corre-sponding month of the previous year.

PMEX Commodity INDEX

GOLD [USD / t Oz]

that could have provided an underpin-ning for gold. It posted a small loss in April which marked the first time since 2000 it fell three months in a row. During April-2012, the traded volumes at the Exchange increased to Rs. 53.13 bn from Rs. 16.8 bn in the correspond-ing month previous year, a significant growth of 216 % has been witnessed.

CRUDE OIL [USD / barrel]

Oil climbed to a five-week high after U.S. manufacturing increased at the fastest pace in 10 months, signaling that economic growth will accelerate in the world’s biggest crude-consuming country.China’s manufacturing expanded for a fifth month in April. The Purchasing Managers’ Index rose to 53.3 from 53.1 in March, according to statistics bureau and logistics federation.During April-2012, the traded volumes at the Exchange decreased to Rs. 4.8 bn from Rs. 21.2 bn in the corresponding month previous year.

SILVER [USD / t Oz]

Silver is outperforming the market with a 15% year-to-date performance. And the

precious metal is still well below the all time 1980 high of $50 an ounce.The silver held by IShares Silver Trust, the world’s largest silver exchange-traded fund, rose 1 per cent to 9,633.95 tons Wednesday, 15 times the fund's holdings at inception in April 2006.During April-2012, the traded volumes at the Exchange decreased to Rs. 4.8 bn from Rs. 30.02 bn in the corresponding month previous year.

IRRI 6 [Rs. / 100 kg]

In the domestic market a downward trend in prices has been witnessed in the month of April. Price movement remained in a slightly narrow band, Maximum price was Rs 3,550 per 100 Kg on opening day of the month and Minimum price Rs 3,400 per 100 kg was on 17th of April of the month. A decrease of 3.52 % was observed.

PALMOLEIN [Rs./37.324 kg]

A rising trend was witnessed for palm olein prices in domestic markets 2012. Max price Rs 5,385 was on 10th of April and Min price was Rs. 5,300 per 37.324 kg on 18th of the month. An overall decrease of 0.47% was observed.

Open: 1,677.80 Low: 1,621.00Close: 1,662.40 High: 1,677.80Change: - 0.92 %The metal has lost $125 since Feb 28 after a strong run of U.S. economic indicators dashed hopes of Fed easing


Maulana Abul Kalam Azad gave an inter-view to Shorish Kashmiri for a Lahore-based magazine, Chattan, in April 1946, when the Cabinet Mission was holding its proceedings in Delhi and Simla. Reproduced here are extracts of that interview that was printed by Matbooat-e-Chattan, a now-defunct publishing house. The excerpts show his remarkable visionary mindset.The key issue is economic development and progress, surely not religion. Muslim business leaders have doubts about their own ability and competitive spirit; they are

so used to official patronage and favours that they all fear freedom and liberty. They pursue the two-nation theory to conceal their fears and want to have a Muslim state where they have the monopoly to control the economy without competition from competent rivals. It would be interest-ing to see how long they keep this deception alive. I feel that, from its inception, Pakistan will face the following serious problems:1. Incompetent political leadership will make way for military

dictatorship as happened in many Muslim states. 2. The heavy burden of foreign debt. 3. Absence of friendly relationship with neighbours and the

possibility of armed conflict. 4. Internal unrest and regional conflicts. 5. Loot of national wealth by the neo-rich, and industrialists. 6. A class war as a result of exploitation by the neo-rich. 7. Dissatisfaction and alienation of the youth from religion

and the collapse of the theory of Pakistan. 8. Conspiracies of the global powers to control Pakistan. In this situation, stability of Pakistan will be under strain and Muslim states won’t be in a position to provide any worth-while help; help from other sources too won’t come without strings; it will force ideological and territorial compromises.”About Mr Jinnah, he said, “till 1937, he did not favour the demand to partition India. In his message to various student bodies he stressed the need to work for Hindu-Muslim unity, but felt aggrieved when the Congress formed governments in seven states and ignored the Muslim League. In 1940 he decided to pursue the partition to check Muslims’ political decline. In short, the demand for Pakistan is his response to his own political experiences…. I have no doubts about his intelligence. As a politician he has worked overtime to fortify Muslim communalism and demand for Pakistan. Now it has become a matter of prestige for him and won’t give it up.”One can question Maulana Azad’s view about administrative ‘manageability’ of a massive un-divided India, because even in its present divided state, it is in an economic mess, though his prediction about Pakistan becoming an ill-governed state has been proved right. His strongest quality – vision – made him a great leader, and Nehru always followed his advice.

aulana Azad was the only leader of the Indian National Congress who remained

its president for six consecutive years until 1946. In his book ‘India wins freedom’, he has regretted the fact he voluntarily gave up the party leadership, which allowed Pundit Nehru –the leader guilty of the division of India–to succeed him at a critical juncture in Indian history.According to him, “The political disputes we created in the name of religion have projected Islam as an instrument of political power and not what it is–a value system meant for the transformation of human soul. Under British influence, we turned Islam into a confined system, and following in the footsteps of the other communities like Jews, Parsis and Hindus we transformed ourselves into a hereditary clan. The Indian Muslims have frozen Islam and its message, and divided themselves into many sects. Some sects were clearly born at the instance of colonial power. Consequently, these sects became devoid of movement and dynamism and lost faith in Islamic values. The hallmark of Muslim existence was striving and now the very term is strange to them. Surely they are Muslims, but they follow their own whims and desires. In fact now they easily submit to political power, not to Islamic values. They prefer the religion of politics not the religion of the Quran. Pakistan is a political standpoint.The confidence of East Pakistan will not erode until Jinnah and Liaquat Ali are alive. But after them any small incident will create resentment and disaffection. I feel that it will not be possible for East Pakistan to stay with West Pakistan for any considerable period of time. There is nothing common between the two regions except that they all call themselves Muslims. But being Muslim never created durable political unity anywhere in the world. The Arab world is before us; they subscribe to a common religion, a common civilisation and culture and speak a common language. In fact, they all acknowledge even territorial unity. But there is no political unity among them. Their systems of government differ, and they are often engaged in mutual recrimination and hostility. On the other hand, the language, customs and the way of life of East Pakistan are totally different from West Pakistan. The moment the creative warmth of Pakistan cools down, these contradictions will emerge, and will acquire assertive overtones. These will be fuelled by the clash of interests of the global powers and consequently both wings will separate. After the separation of East Pakistan, whenever it happens, West Pakistan will become a battleground of regional contra-dictions and disputes. Assertion of sub-national identities of Punjab, Sind, Frontier and Balochistan, will open the doors for outside interference. It will not be long before the global powers to employ the diverse elements of Pakistani political leadership to break the country along the lines of Balkan and Arab states. May be, at that stage we will ask ourselves what have we gained and what have we lost.

Maulana Azad – the manwith an incredible visionM

HHistory

May 201269


The Karachi Stock Exchange (KSE) market witnessed a bullish trend. During the first week KSE – 100 index reached 13,875.53 points by gaining 113.77 points or 0.82 percent, and is just 124.47 points away from 14,000 points crucial level. The benchmark index managed to test 14,000 points crucial level in the weekend session after almost 4 years(since 16 May, 2008). Late profit-selling, however, dragged the index down to the closing level. KSE – 30 index reached 12,183.37 points by gaining 69.24 points or 0.57 percent. The average daily turnover improved by five percent to 387 million shares during the outgoing week. The market capitalisation surged by Rs37 billion to Rs3,565 billion. On the contrary, foreigners sold net shares worth $1.6 million in the week.Market remained range bound during the second week as investors kept on with the sell-on-strength stance, as the benchmark KSE100 declined to 13,799 pts level, losing 76pts (0.55% WoW). Intraday volumes also declined by 3.3% WoW averaging 347mn shares with average traded value also declining by 7.2% WoW to stand at USD 90.9mn. However, interestingly, foreign inves-tors stood as net buyers with total net FIPI inflows of USD2.3 mn during the week against net outflow of USD1.6mn last week. Monetary policy expectations of a status-quo and break-through in the Pak-US relations with resuming NATO supplies, kept the investors upbeat. In this regard, better sales numbers in auto sector (up 15% QoQ), possible re-initiation of cement exports to India through Wagha border and approval of heavy urea imports exces-sive to local demand also derived the trends in the market. On economic front, numbers that emerged during the week

posted gloomy picture as trade deficit of the country surged by 72% YoY to USD1.4bn on Mar-12. However, a sigh of optimism also intruded as ADB reiterated their expectations for Pak-GDP growth of 3.6% of FY12, whereas growth of 6.0% in LSM has also been witnessed for Feb-12. KSE-100 Index witnessed mixed movement during the Third week, as investors stayed put on the much-awaited SRO issuance by Presidency for implemen-tation of the reformed CGT regime, but remained cautious over further delay. The now prevailing uncertainty related to the timing of the issuance of the SRO seems to be subsiding the interest in the market while there are speculations that it can be delayed till budgetary announcement. Meanwhile, with relatively mixed corporate result announcements, KSE100 index gained 137pts to close at 13,936pts level. However, intra-day volumes declined by 28% WoW basis averaging 269mn shares while average traded value declined by only 9% WoW to stand at USD82mn. Foreign investors poured in more money in Pak equities this week as net foreign inflows stood at USD8.14mn against net inflows of only USD2.3mn last week. Current account stood in surplus of USD142mn and tax collection figure exceeded 9%YoY to Rs155bn (24% YoY during 9MFY12). In T-bills auction during the week, Gov’t raised Rs150bn with yields remaining unchanged. In negative developments, Gov’t borrowing for budgetary support exceeded by 110% YoY to Rs1.0tr while eight IPPs served final notices to Gov’t for sovereign guaran-tees for outstanding dues of Rs34bn.

During the fourth week KSE-100 index hovered around physiological level of 14,000pts yet gained 106pts to close at 14,042pts level. Average volumes during the week declined by 4% WoW to 256mn shares. Average traded value increased by 15% WoW to stand at USD95mn. Foreign investors were more aggressive this week as net inflows of USD12.8mn were recorded compared to net inflows of USD8.1mn last week (up 58%WoW). On economic front, the week witnessed the approval of USD1.8bn loan by WB for energy sector projects. Indefinite postponement of 3G license auction of USD630mn and low GDP figures of 3.2% during 9MFY12 against the target of 4% brought some negativity in the market.

by Khalid MZ

Günter Grass, the German intellectual who is now in the news every day, won the Nobel Prize for Litera-

ture in 1999 for his book The Tin Drum. He is now 84, and has witnessed a lot, beginning with the consequences of WW II. This long experience that includes the after-math of the “war on terror” convinced him that literature that does not portray the ground realities is a mere waste-ful exercise. And, as the case with all such realistic intellec-tuals, he is being branded as the projector of biased views.The tragedy of all such intellectuals is that since they fault the establishment, they are targeted for ridicule and those who show the courage of faulting the powers that be in the West, are, at first, made to suffer humiliations of a variety (courtesy the influence of the establishment in the media) to build a case for their eventual punishment. The idea is to make that punishment seem a popular demand.On April 4 the German newspaper Süddeutsche Zeitung published Günter Grass’ poem entitled “What must be said”, which created a stir not only in Germany, Israel and Iran, but also all across the globe. But the first country to react officially was Israel whose interior minister Eli Yishai promptly banned Günter Grass from entering Israel, as if the next thing Günter Grass would have done was to visit Israel. How dumb on the part of Eli Yishai!According to Hamid Dabashi, a professor at the Colom-bia University, the poem broke a long standing German taboo by publicly criticising Israel for its warmongering against Iran, identifying the Jewish state as a threat to world peace, accusing the “West" of hypocrisy, and fault-ing the German government for arming Israel with nuclear submarines. It is clear that the development that hurt Günter Grass most was the German act of arming a state (not its nation) that is seen as a warmonger. The covert reference to Iran in his poem was appreciated by those very rightly opposed to yet another (pending?) war in the region by pointing to the ‘big elephant’ in the room. While public figures in Germany were furious because the poem pointed to possible German share in the havoc that may be caused by the use of German provided submarines to launch an atomic attack on Iran, the poem continues to be condemned by the aggressive Jewish and establishment-backed non-Jewish groups in the Western media, for very understandable reasons.Whatever the critics might say, the fact is that this poem, blunt in its expression about what appears and increas-ingly likely event is more an eye-opener than a unique exercise in composing poetry. What it must be appreciated for is the realism, honesty and courage of its composer who is trying to warn the world about the coming tragedy, rather than condemning anyone. Knowing through expe-rience the way he would be faulted for being anti-Semitic, all he sought was a bit more of realism among the powers that be.As was expected, instead of giving him credit for what he is pointing to, media has dug out his links to the Nazi

Army and contrived stories about his being a part of the brigade that brutalized Jews in German concentration camps just to discredit his warnings by painting him as an anti Semite.In the body of the poem itself, Günter Grass says that he risks the danger of being called an anti-Semite because:Aged and with my last ink,That the nuclear power of Israel endangersThe already fragile world peace?Because it must be saidThat even tomorrow may be too late to say…Forcefully asserting the fact that remaining silent at these dire circumstances is irresponsible and dangerous he says:I am silent no longerBecause I am tired of the hypocrisyOf the West…For him, this is good enough a reason to break the silence (even if one is castigated for being an anti-Semite), about a pending war that "could erase the Iranian people". He pulls no punches as to the facts that we all know:Yet why do I forbid myselfTo name that other countryIn which, for years, even if secretly,There has been a growing nuclear potential at handBut beyond control, because no testing is available?Thereafter he points finger at Germany for its possible role in that tragedy by saying: Now, though, because in my countryWhich from time to time has sought and confrontedThe very crimeThat is without compareIn turn on a purely commercial basis, if alsoWith nimble lips calling it a reparation, declaresA further U-boat should be delivered to Israel,Whose specialty consists of guiding all-destroying warheads to whereThe existence of a single atomic bomb is unproven,But through fear of what may be conclusive,I say what must be said.In recent history of literature, not many authors have shown courage of the sort demonstrated by Günter Grass. In Pakistan, besides many others, the poets who did so as remarkably were Habib Jalib and Faiz Ahmed Faiz, and faced the consequences of annoying the establishment. But in Pakistan, the poets faced the wrath of the domestic pro-West regimes. Günter Grass has taken up a far bigger challenge by inviting the wrath of Israel’s Zionist regime that has taken the better of the senses of the US and EU regimes. God help Günter Grass because he is right!

Günter Grass – the man whoelevated the utility of literature

AArt & Literature

May 201270

Cricket: with Bangladesh ‘out’, could India be ‘in’ ?

he possibility of Bangladesh’s cricket team visiting Pakistan in the foreseeable future has become pretty

weak because it seems that some circles in Bangladesh have not accepted the defeat of their team in the recently concluded Asian One-day Cup. Bangladesh Cricket Board (BCB) had pleaded with the International Cricket Council (ICC) to reverse the result of the final (which Pakistan won on the last ball) by declaring Bangladesh the winner. These circles have not overcome their reservations over the filed-umpires’ decision, which the ICC declared as the deciding factor. That’s why these circles could not reconcile with the idea of their team becoming the first cricket team to visit and play (of all the countries) in Pakistan after the 2009 tragedy in which Sri Lankan cricketers were attacked in Lahore. Following a petition by a lawyer and a university teacher (the two forming part of this disgruntled group), on April 19, the Bangladesh High Court ordered the postponement of the Bangladeshi team’s planned tour of Pakistan due to fears about militants targeting foreign cricket sides. According to the visit programme agreed between BCB and Pakistan Cricket Board (PCB), Bangladesh were set to play a 50-over match and a T20 fixture on April 29 and 30, both in Lahore. The Bangladeshi Additional Attorney General M.K. Rehman told reporters that the High Court had ordered the BCB to explain why the tour was scheduled despite concerns over team safety; the court asked BCB to explain its reasons in the next four weeks and imposed an injunction on the team’s tour to Pakistan during the next four weeks.This court injunction came as a surprise to the PCB because, earlier, the BCB president Mustafa Kamal had paid a detailed visit to Lahore wherein he was briefed by the city’s security top brass on the security plan, measures and arrangements to ensure player security, both on and off field, which the BCB president found satisfactory and said that after seeking ICC opinion thereon, would give the go-ahead signal, which he finally did. His okay prompted preparations for the event at Lahore’s Gaddafi Stadium, but as they approached their final stages, came the news about the Dhaka High Court postponing the visit. What has come to light since is an odd story. Hassan Azim, the lawyer for the two petitioners informed the media that “We told the court that Pakistan tour would risk the lives of our cricketers... Pakistan isn’t a safe place for an interna-tional sports event. No other international teams are travel-ling to Pakistan. Why should Bangladesh [team] go?” The intriguing part of his discourse was the sentence wherein he said “The decision was imposed on the cricketers.” This is the line that, reportedly, has been taken by the Federation of International Cricketers’ Associations (FICA). What seems more likely is that this is the line adopted by the Bangladesh wing of the association not the federation itself because the media didn’t report adverse reactions of other cricket playing nations.

The same day, FICA accused BCB president Mustafa Kamal of agreeing to the tour in return for Pakistan nominating him vice president of the ICC. “What has resulted since has been a series of actions and comments [by Kamal] that only created heightened apprehensions rather than reassure everyone of safety of such a tour.” FICA’s target is Mustafa Kamal who it accused of giving “a series of indecisive and contradictory comments.” That besides the anti-visit lobbyists, he also lacked in-house support is reflected in the fact that BCB did not issue any statement supporting Mustafa Kamal’s stand on the tour. It was also reflected in the fact that Bangladesh’s coach Stuart Law (from Australia) had earlier expressed his fears about the team’s schedule and declined to confirm if he would go on the tour. Oddly, Pakistan’s cricket coaches too are white foreigners but aren’t afraid about losing their lives.In this messy scenario, it is hard to guess who really triggered the move to call-off the tour; apparently, there are splits even within the BCB. The fact that the Bangladeshi team was to arrive in Pakistan on April 28, play two matches on April 29 and 30, and depart on the night of April 30, didn’t imply the sort of extended exposure that could be considered as highly risky. Events of this sort don’t serve any purpose in getting over the past. The choice of living with sad memories (not all authentic) is a choice we have to make. Seemingly, many in our ranks still want to persist with this habit. But it certainly was a big disappointment for cricket lovers in Pakistan. That said, this development offers India an opportunity to capitalize on in its full-swing drive to normalize its relations with Pakistan. While a great deal of progress has been made on the trade relations front, normalization of relations, using all visibly friendly moves, is in the interest of both India and Pakistan. For a start, a visit to play two T20 and two one-day matches would be ideal. The T20 matches could be played at National Stadium in Karachi. Later, Rawalpindi’s overhauled stadium, besides Lahore’s Gaddafi stadium could be the ideal venues for the one-day matches. A brief visit can be managed fairly well by Pakistan and also could serve to contain the worries of any doubting circles in India. Building the image of the regional countries is in the interest of all South Asians.

T

SS ortsp

May 20127271

2-day Workshop on The Power of Entrepreneurship, organized under the auspices of Islamic Chamber of

Commerce and Industry in collaboration with Ozair Hanafi School of Learning was held on April 17-18, 2012 in Kara-chi. It was sponsored by National Bank of Pakistan, First Women Bank Limited, Bank of Khyber and Pak Oman Micro Finance Bank.Speaking at the inaugural session Ms. Attiya Nawazish Ali, Assistant Secretary General of Islamic Chamber of Com-merce & Industry, expressed her views on the concept of entrepreneurship and motivated the participants to practice onto starting their own enterprises and business through their innovative and original ideas Chief Guest, Dr. Mirza Abrar Baig talked about the impor-tance of young and aspiring entrepreneurs and focused on Small & Medium Enterprises being a strength of character to the economic growth and development and poverty diminution. He mentioned how young graduates from leading universities struggle and achieve their ultimate goals and are now on the path of success. He encouraged the participants to start with something small but with a big pioneering idea and later with little hard work they can be thriving and booming with their businesses.Earlier, in his opening remarks Mr. Ozair A. Hanafi, the lead trainer, spoke about the core concept of the workshop, and its value for a sustainable, independent Pakistan. He dilated on the true spirit of entrepreneurship, personality analysis and qualities of the entrepreneur and told the participants on how to start a new venture. Later, Mrs. Subeika Rizvi, Assistant Professor at ZSABIST presented an effective business plan. The participants, who were engaged

in the workshop through different communicative and interactive sessions, demonstrated keenness and passion.On the 2nd day of the Workshop, the participants were divided in groups and asked to prepare and present a business plan which they did commendably well..Mr. Tariq Mohar, Group Executive Director-Sales & Business Support of Tameer Micro Finance Bank Ltd, who was Chief Guest on the second day, expressed his views about the prospects ahead and potential opportunities for young entrepreneurs. He discussed the challenges faced by young capitalists and highlighted the significance of micro financing. He talked about how young entrepreneurs face environmental hindrances but real hard work and zeal lead them towards accomplishment of their goals. He encour-aged the participants that right direction, extensive informa-tion and optimistic approach can trigger off towards equip-ping themselves with knowledge at every step of the way.

ecently, Ahmed Ben Bella departed for the heavens at the age of 95. Ben Bella died after rising to the epitome

of fame as the liberator of Algeria, became its first president and then was victimised for over a quarter of a century by the nation that he liberated–a fate he didn’t deserve. But this ungrateful treatment makes him an even greater leader.Born in 1916 to a Moroccan family living on the border with Algeria, he enlisted in the French Army after coming of age. During WW II, he fought in Italy and also won a medal for his bravery, but gained fame as the frontline footballer in the French Army. However, as time passed it became increas-ingly clear to him that the French would never treat Algeri-ans as equals. After the end of WW II, the French again became as ruthless as they were before the war. Gen. Raoul Salan, who was the commander-in-chief of the French Army in Algeria, was dictatorial in his demeanour.This state of affairs convinced Ben Bella to rise against Raoul Salan’s ruthless measures. He began his assault by raiding a major regional post in Oran in 1949. The event also marked the launching of the Front Libération Natio-nale (FLN) – the movement that eventually forced France to liberate Algeria in 1962. Thereafter, it was FLN vs. Raoul Salan men fighting it out all over Algeria to the utter embar-rassment of France at all global forums. It is worth point-ing out that in the final negotiations with the French government in 1962, Algerian negotiators included a famous Pakistani intellectual, socialist, and freedom fighter – Eqbal Ahmed.Upon assuming power, De Gaulle tried to dilute the tensions in Algeria by promising to give Algerians French nationality, and to announce it he visited Algeria in 1960 but his visit was a disaster; it led to huge protests and the French Army shot dead over a hundred Algerians. Things worsened further and after a series of tough negotiations with the French on post-independence Franco-Algerian relations, Algeria became an independent state, and Ahmed Ben Bella its first president.Once FLN became a force to reckon with, Ben Bella sought support for it from Egypt and Morocco and coordinated the aid coming from these countries. In this effort he often visited these states on the quite. While returning from one such visit to Morocco, he was caught and imprisoned. Imprison-ment kept his reputation unblemished by the rivalry of the many different nationalist factions operating from outside Algeria, and in 1962, when Algeria became independent he emerged as the cleanest and the most credible figure and so fit to head the first government of independent Algeria.The challenge he faced was to refocus the energies of a badly tormented nation, and containing the risks posed by French collaborators within the ranks of Algeria’s administration–an effort wherein he had to rely on FLN, which was a combination of splinter groups. How handi-capped he was, is proved by the fact that he could not set up a credible system for fair and transparent distribution of the estate left behind by the fleeing French landlords. These properties were taken over by elements having the support

of the FLN calling it ‘autoges-tion’, a term meaning ‘self-management’, a flawed idea borrowed from Yugoslavia.A factor that hurt Ben Bella was his over-occupation with his global commitments because he had come to be recognized as the leader of a country that had taught a tougher lesson to the colonial-ists than did the Vietnamese to the US. What was taking his time was the Non-Aligned Movement (NAM)–the creation of Egypt’s Gamal Abdul Nasser, India’s Jawaharlal Nehru, Yugoslavia’s Broz Tito and Indonesia’s Sukarno. The fact is that this movement took much of the time of all these leaders, and gradually built-up dissent in their countries. Ben Bella’s inability to focus on Algeria’s domestic chal-lenges was a serious shortcoming because things were steadily going out of his control, and groups within the FLN were becoming increasingly disgruntled. At one stage, a border war with neighbouring Morocco was imminent. Frustrations reached their peak in 1965 when Colonel Houari Boumedienne over-threw and imprisoned Ben Bella. Ironically, it happened just before Ben Bella was to host a gathering of heads of state of the developing countries–the first by an independent Algeria. This tragedy shook the leadership of NAM and its image the world over.Boumedienne started Ben Bella’s trial with the intention of executing him. This long trial lasted 15 years and ended in 1980 without conclusively establishing any guilt on the part of Ben Bella. Meantime, popular resentment against his trial gained momentum in Algeria, as well as globally, because the trial was not able to produce evidence of serious misconduct or crimes against Ben Bella. Boumedienne then realized that he could not keep Ben Bella in prison any longer.Ben Bella was therefore released but forced to go in exile to Switzerland. Ben Bella left Algeria along with his wife Zohra Sellami, whom he married while he was in prison. He spent the next ten years quietly in Switzerland; politics ceased to be his passion. In 1990, when he was allowed to return, he was welcomed by a multitude of his admirers that overwhelmed him, but he did not participate in politics thereafter. Things had changed, and he realized that quarter of a century was too long a period of disconnect with the realities of Algeria to re-enter domestic politics.He was a believer in the now sidelined concepts of Social-ism and Pan-Arabism. Ben Bella said goodbye to politics and any role in the affairs of the state but, like Egypt’s Gamal Abdul Nasser (Ben Bella’s mentor), he is remem-bered and admired by the Algerians and those who value honest and committed leaders – the class that is becoming extinct. What a tragedy!

Ahmed Ben Bella - liberator of AlgeriaR

May 2012

ybituarOO

7272

Your Horoscope - May 2012ARIES: The presence of your ruling planet Mars in the 6th house of your chart is going to instill physi-cal and mental activity in your life. Your commitment and sense of responsibilty will definitely earn you a good position and recognition in your professional circle. Jupiter and Sun will be moving together in your house of money for half of this month; both of them will exert multiple wibes bearing positive and negative effects. On 14 and 15 May, Mercury and Mars will help you incxreasing the pace and quality of your work. On 16 and 17, Mars-Pluto trine will support clear planning, healthy paper-work, great strategic planning and empow-erment of convincing power in your personality. On 30 and 31 of this month, Mercury-Mars square will promise eradication of personal, professional and domestic problems. Beware of partici-pating into argumentative conflicts. When May will be coming to its end, Saturn will be moving in your seventh house; this particular aspect is going to encouarge business of mutual cooperation.

TAURUS: Your ruling planet Venus will stay in your house of money from 1 to 15 May. You are going to get multiple opportunities to double your earning. But, form 16 to 31 May, you are advised to spend wisely because Venus’s retrograde position is not at all favourable for you. Jupiter and Sun are going to rekindle religious and spiritual fires in your heart for the half of this month. Do not jump onto conclusions. Beware of impulsive people. Do not indulge into unnecessary gossip and arguments. On 4 and 5 of this month, Mercury-Venus sextile will develop strong bonding between you and your business partners. Misunderstandings will come to an absolute end. On 6 and 7, Mercury-Saturn opposition can put your financial position into the danger zone, so be careful while making any imoprtant decisions. Take opinion from experts!

GEMINI: From 1-9 of this month, your ruling planet Mercury will stay in 11th house of your chart; this peculair aspect will help you acquiring good reputation in literary circles. It will also ensure love from loved ones and relatives. Mercury’s position in the 12th house from 10 to 24 May requires you to control yourself because some unavoidable concern can keep you off guard. A very auspicious aspect on 25-31 May will earn you fame and plausible recognition. On 4 and 5 of this month, you will be in a position to make others trust your convictions and invest with you in the sphere of business. On 6 and 7, Mercury-Mars opposition indicates some financial loss and narrow-mindedness from people. So be careful of adversaries. 11 and 12 of this month, Mercury-Neptune sextile will polish your creative impulse and brilliant ideas are going to surface up again and again. On 14 and 15, Mercury-Mars trine will help you in getting recognition for your efforts. On 27 and 28 May, you are advised to take decisions only after consulting elders and experts.

CANCER: Your ruling planet Moon will stay in the third house of your chart from 1-3 of this month, this aspect will enable you to get extraordinary support from your siblings and neighbours. On 19 and 20, you will achieve helping wibes from your friends and relatives as well. Nagging attitude of people will end up on domes-tic grounds. 4 and 5 May are important days because they promise eradication of misunderstandings with some loved ones in your

life. On 13 and 14 Sun-Jupiter conjunction will boost your confidence and avenues for higher education open up surprisingly. 22 and 23 May are significant days because Mercury-Jupiter conjunction is going to take place at that time; its going to bring you into the soptlight. You will be in a strong position to decide for yourself. But, spend wisey!

LEO: Being your active ruling planet Sun is going to help you shine brilliantly from 1 to 20 of May. From 21-31 May, Sun will be visiting your 11th house, this aspect will benefit you in many ways and, in particular, you are going to find everyone supportive of you in the family sphere. On 13 and 14 May, Sun-Jupiter conjunction will require you to be content and prepared to compromise in any inescapable situation. But, decide realistically. On 24 and 25 May, Sun-Neptune square will instigate relationship tussles, misunderstandings and gnawing conflicts. On 27 and 28 Sun-Mercury conjunction will encourage you to take decisive steps; any travel opportunity will also benefit you. On 28 and 29 May, Sun-Uranus sextile will sharpen your mind and creative illumination will inspire you to look for in-depth details for your important projects. Coopertaion in the field of business is appreci-ated.VIRGO: From 1-9 May your key planet Mercury will stay in the 8th house of your chart and it palusibly encourages projects of mutual cooperation. From 10-24 May, presence of Mercury in the 9th house will bring good travel opportunities. From 25-31 of this month, Mercury’s entry into your 10th house will enable you to earn profit from your business endeavours. On 4-5 Venus-Mercury sextile will bring you under spotlight; your fame in the social circles will rise higher. On 6-7 of this month, Mercury-Saturn oppostion will put obstacles in your way. Some issues related to machinary or vehicle equipment can irritate you as well. On 11-12 May, Mercury-Neptune sextile will enhance your creativity. Mercury-Mars trine and Mercury-Pluto trine on 14 and 15 May demands psychological strength. You will be acknowledged for your efforts. On 22 and 23 May, your interest in the firld of education will enhance. On 28 and 29, think before you leap. On 31, you are advised not to make any major decision because Mercury-Mars square can intrigue your mind very easily.

LIBRA: Your ruling planet Venus’s retrograde pressence in the 9th house from 1 to 15 April will signal unexpected delays in the schedule of overseas travelling and business projects. From 16-31 May, stable position of Venus will bring invigoration in poetic, literary and beauty interests. Besides, the presence of Saturn in your chart is going to strengthen your thoughts and confidence by eliminating misunderstandings from your way. Moreover, Jupiter’s presence in the 8th house will help you in solving inheritance-related issues. On the other hand, the influence of Mars and Moon can bring any sort of drama into life, so be careful of jealous people and gossip-mongers. You are advised to think twice before spending money. On 4 and 5 May, Mercury-Venus sextile will erase complications from your life. New business projects will be signed in this period. On 13 and 14 May, Sun-Jupiter conjunction will boost your confidence and your performance will become better than ever.

by Dr. Aameer Mianwww.astrohope.com

stroloAA gy

May 201073

irst Women Bank Ltd. organized two-day Training Fair in Lahore and Karachi. The fair was an excellent oppor-

tunity for women interested in acquiring capacity building and skill development trainings, with a view to setting up their own business or enhancing employment prospects. A large number of female students, NGO women members, business women, and housewives attended the informative sessions.Ms. Shafqat Sultana, President FWBL, was the Chief Guest at the concluding session. Addressing the participants of the Fair Ms. Shafqat Sultana said that FWBL is fully committed to work for the betterment of the society. She urged the women to play a vital role in economic development of the country. She also visited the stalls exhibited by the women.

Connecting Vision to RealityMs Shafqat Sultana, President and CEO, First Women Bank Limited, while addressing the Annual Conference of her bank in Karachi, under-lined the need for making ‘our business strategies and innovation processes more flexible, more agile and more participative to meet the demands of the chang-ing environment’. Speaking on the Confer-ence theme of “Connect-ing Vision to Reality with Strategic Thinking, Plan-ning and Action,” she said that a corporate strategy should no longer be seen as an ultimate solution, but rather as guidelines and directions that contain options or scenarios to enable the steering of future actions. Strategy is dynamic and must respond to the realities of the environment and market and should not be consid-ered fixed, she stressed.She said that the financial year 2011 proved to be a year of record perfor-mance for First Women Bank Ltd. (FWBL) which posted a pre-tax profit of Rs. 400 million. Total deposits of the bank increased from Rs.10,195 million to Rs.13,815 million while total advances portfolio reached the height ofof Rs. 7,901 million.

SALEEM TRADERSIMPORTERS & STOCKIST

C.R.C., G.P COLOUR, STAINLESS STEEL PRODUCTS.

26 Meco Market Landa Bazar Lahore, PakistanTel: 0423-7650403, 0423-7637036 Fax: 0423-7666314

SCORPIO: The postion of your ruling planet Mars in the 11h house of your chart will let you shine extraordinarily and leadership qualities in your character will surface up exclusively. Pluto is your co-ruler; it will move in the thrid house in a retrograde postion, so drive carefully, control your vehicle calmly and keep your speed proper under check. Do not expect too much from others as well. On 13, 14 May, Mercury-Mars trine will ensure promptness in paperwork, healthy output in technical work and professional growth as well. On the same 13 and 14 May, Mercury-Pluto trine will also help you gaining clarity both in written work and verbal communication. On 16 and 17 of this month, Mars-Pluto trine will quicken the wheel of progress in your life. Try to focus on your work, do not impsoe anything uopon others. On 30 and 31 May, Mercury-Mars square demands positive thinking, calmness of your mind and ability to escape from any haughty fight. SAGITARIUS: Your key planet Jupiter will remain in the 6th house of your chart in this month of May. You will luckily earn good name and recog-nition from both: your boss and subordinates. Saturn will move in the 11th house, it is an auspicious period for you because your friends will support you wholeheartedly. Realtionship with your partner will be stronger, romantic and pleasant. On 12 and 13 of this month, Sun-Jupiter conjunction will endanger stability in your life if you do not stop distorting important facts. So be careful while choosing words to report a situation. On 22 and 23, Mercury-Sun conjunction requires you to work in a disciplined manner, think accurately, and take expert-opinion before deciding upon any important matter. Academically, you are going to be acknowledged for your intellectual enterprises. Enjoy the charm of your Luck!

AQUARIUS: Your ruling planet Saturn will stay in a retrograde position in your 9th house in the month of May; that is why your psychological equilib-rium can be victimsed through such a disturbing period. But, necessary improvements and benefits are witnessed in this period. Your co-ruling planet Uranus will be moving in the fourth house of your chart—domestic, transportation and inherit-ance related issues will come under focus during this time. On 6, 7 May, Mercury-Saturn opposition will create unexpected obtacles in your way. Waste of time will also create many other unseen problems, so try to manage everything in a disciplined manner. On 28 and 29 Mercury-Uranus sextile will bring luck because your keen attention is going to help you solve old technical issues. On 28-29 May, Sun-Uranus sextile will increase your interest in scientific gadgets. Projects of mutual cooperation are also favoured.

PISCES: Your ruling planet Jupiter will cling to your 3rd house—the aspect will provide opportunity to build up healthy relationship with your neighbours. Unexpected travel to some place is also favoured. Your co-ruling planet Neptune will be moving in its native house that is why your creativity will boost up vividly. Self-determination will become stronger than ever. Saturn’s presence into the 8th house will put an end to your current problems related to inheritance and mutual business projects. But, on the other hand, you are advised to be careful while discussing anything with your life partner. Do not use biting words because hurt sensibilities are hard to cure. On 13, 14 Sun-Jupiter conjunction will instill positivity and self-confidence in you. On 24, 25 May, Sun-Neptune square demands extraordinary attention to paperwork, try to do everything in an expected way. Some errors can put you in trouble. On 26, 27 May, Mercury-Neptune square will create gnawing misunderstandings, so be careful while speaking your mind.

CAPRICORN: Your birthchart is ruled by Saturn and it will boost confidence in you in this opportune May. Obstacles are too visible but your determination is what that can defeat all challenges. Keep working hard. Jupiter will move in your 5th house, so mixed response is possible in the domain of love relationships. But, the presence of Venus in the 6th house requires you to pay special attention

stroloAA gyto health issues and be careful of gossip-mongers. Besides, people who are planning to go abroad, will see positive developments. On 6 and 7 May, Mercury-Saturn opposition can target you with negativity, so decide carefully. Do not indulge in fighting. Avoid being rude. Accept challenges and opinions bravely. Behave like a sophisticated individual.

In Qasim’s success, the role of Pak-Turk International School and Colleges is also praiseworthy. As announced by Pak-Turk Education Director, Mr. Kamil Ture, “improving, educating and promoting the brightest Pakistani students has been their mission that has helped students to win 58 gold, 23 silver and 44 bronze medals, so far, at national and international competitions. Pak-Turk would continue to bear all the expenses of training teach-ers and participation of students in challenges to deepen their learning, and help them turn their vision into reality and make ever-more competitive.” This should serve as an example for others who must come forward and extend a helping hand for success not only in this particular task but also for research in other disciplines. If such help is forthcoming, one hopes that more of the talented would be discovered, helped to convert their talents into produc-tive results and bring in more laurels for Pakistan in the years to come. Congratulations to Qasim, his dedicated teachers and his supportive parents.

akistan has received yet another international award – a silver medal – thanks to the talented work of a very

young Pakistani who found a treatment for patients suffer-ing from diabetes. This young Pakistani is Mohammad bin Qasim, a student who is hardly 14, and studying in Class 8 at a school in Peshawar. Talent is not a closed preserve of any individual or group of individuals belonging to any particular region, class, cast or creed; anyone, anywhere, anytime could discover this natural gift and make use of it. Pakistan and Pakistanis are no exception. What makes this exercise admirable is when that individual commits himself or herself to share its benefits with humanity. That is what young Qasim has done.Pakistan is a developing country that lacks the facilities and the environment for sharpening knowledge and skills compatible with those available in the developed world. Yet, there is no dearth of talent in the country. Despite limita-tions, Pakistan has been able to produce quite a number of talented people who earned name and fame not only within the country but also internationally. It is unfortunate, however, that many of our talented generally go undiscov-ered and hence unnoticed. Those fortunate to have been blessed with an opportunity to bring forth their talents, excel and leave their mark on the pages of history. Arfa Karim, the youngest Microsoft Certified Professional (who is no more in this world), Maria Toor Pakay, youngest female squash champion, Sharmeen Obaid, the first Pakistani woman to win the Oscar for her documentary “Saving Face”, Durdana Ansari, a journalist and former producer of the BBC who was awarded the Order of the British Empire (OBE) for her outstanding work with Ethnic Minorities Foundation. These are just few names that came to light recently. And now it is young Muhammad bin Qasim, who joins the team of the talented Pakistanis who brought pride and prestige to their country.Qasim, 14, a student at Pak-Turk International School and Colleges in Peshawar, participated in the 6th International Environmental Project Olympiad held in Baku, Azerbaijan. It was a tough competition as there were more than 100 projects from students representing 42 countries around the world that participated in the contest. Qasim won the second position and silver medal for his research on a subject of critical importance – diabetes – that inflicts an ever-increasing number of people all over the world.Qasim’s work was based on a critical analysis and research on a plant called Tecoma Stans, to discover a cure for patients suffering from diabetes. He assiduously worked on the plant, which is found abundantly in Khyber Pakh-tunkhwa. He undertook laboratory tests of the plant under different conditions and eventually succeeded in his efforts when he found out that the plant was helpful in treating and curing the diabetic patients.The task was hard and time-consuming, especially for a student of Qasim’s age. Yet, with his dedication, hard work,

merican government scientists simulate the moment a one megaton nuclear bomb destroys a massive asteroid heading for Earth. At a US government lab in New

Mexico, government scientists race to launch a one megaton nuclear weapon toward a giant asteroid, hoping the massive explosion will save the earth.While this may sound like the plot of a Hollywood blockbuster, in fact it is the latest hi-tech computer simulation carried out by government scientists.A team at Los Alamos National Laboratory, a United States Department of Energy facility in New Mexico, used a supercomputer to model a nuclear weapon's anti-asteroid effectiveness.Researchers were told to deal with a 1,650-foot-long (500-meter) space rock using a one-megaton nuclear weapon — about 50 times more powerful than the U.S. blast inflicted on Nagasaki, Japan during World War II.'Ultimately this one-megaton blast will disrupt all of the rocks in the rockpile of this aster-oid, and if this were an Earth-crossing asteroid, would fully mitigate the hazard represented by the initial asteroid itself,' Los Alamos scientist Bob Weaver said in a recent video released by the lab.‘If one of these objects is spotted at a distance of a few months away, there could be potentially devastation on a worldwide scale.’The team used the labs supercomputer, which has the power of 32,000 processors found in a normal computer, to recreate as accurately as possible exactly what would happen to the asteroid should the blast hit its surface.However the team stresses the giant nuclear weapon was only a last resort and researchers are also investigating other methods, including using spacecraft or even the gravitational pull of planets to alter its course.

Value Chain (May 12)

Documents

habib bank

meezan bank

soneri bank

kasb bank

bank of punjab burj

national bank

mcb bank

nib bank