Monthly Economic Affairs June, 2013

Th er e ar e cer tain s oci o- e con o mi c, ge o- po lit i cal an d

ge o - s tra te gic i s su e s w hi ch wi l l hav e to b e ad dr es s e d

o n pr io r ity bas is ; ot he r wi se th e n e w p o pul ar

go ve rn me n t ma y fac e th e s ame fa te as o f PPPP.

June 2013

Issue-VI

MONTHLY

Volume-II,

Page 8-9

Firming up

Page 6-7 2-13

Economic Affairs | www.economicaffairs. info

EDITORIAL BOARD– Dr Ashfaq Hassan Khan

– Dr Abid Sulehri

– Pervez Amir

– Shah A Hassan

– Zubair Malik

– Haroon Akhtar Khan

– Shahid Khaqan Abbasi

– Hamidullah Jan Afridi

– Tausif ur Rehman

– F. M. Paracha

– Wahab Chughtai

– Muhammad Iqbal Qazi

– Avan Soft (Pvt) Limited

CONTACT

ADVISORY BOARD

EDITOR– Yassir Rasheed

OPERATIONS

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PHOTOGRAPHY

GRAPHICS

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ECONOMICAffairs

Monthly

Publisher: M S ajid Printers: R A P ri nters

audi Arabia is an old and trusted friend of Pakistan and has rescued the country

during the toughest of times in its history. There is a general expectation amongst

the people that with our "amiable" (PML-N) government in pla ce, the same

story may be repeated again. According to a newspaper report, Saudi Arabia is expected

to extend a bailout package of about $15 bi llion to Pakistan's highly-indebted energy

sector by supplyi ng crude and furnace oil on the deferred payments to enable it to

resolve the chronic circular debt issue.

Although PML (N) sources, in private conversations have denied the veracity of

this report and some cynics have termed it a tool used by vested interests to manipulate

the stock market. However, this expectation, of some sort of assistance from the kingdom

refuses to die . In specific terms, the news report had stated that Pakistan would seek

about 100,000 barrels of crude oil and 15,000 tons of furnace oil per day from Saudi

Arabia on deferred payments for three years, the cost of which works out to be between

12 to 15 billion dollars. The facility can be utilised to reduce acute electricity loadshedding

in the country, besides restructuring the power sector by minimising subsidies, eliminating

circular debt, ensuring recoveries a nd reducing system losses to a sustainable level.

Needless to say that Pakistan finds itself in dire straits on the energy front and the

fact that a formal denial of the news report has not been made by the PML (N) lends a

measure of credence that such an arrangement or a variation thereof is li kely to be

discussed at the highest level during Nawaz Sharif's expected visit to Saudi Arabia soon

after assuming the office of Prime Minister early next month. And that help from Saudi

Arabia is probable to the Nawaz government due to the strong fraternal relations

between Saudi Arabia and Pakistan in general and Sharif's close personal ties with King

Abdullah in particular. Thus Sharif's assumption of reins of government may prove to

be fortuitous for the Pakistan economy is becoming a matter of satisfaction for trade

and industry in the country.

According to the report, as soon as PML-N emerged as the majority party after the

May 11 elections, the Saudi Ambassador to Pakistan sought a briefing on the country's

oi l requirements from the foreign ministry before he called on Sharif. Prior to this, the

Saudi government had not taken any interest in the matter because of a visible chil l in

its relationship with the PPP government. It may be recalled that Saudi Arabia extended

a similar special package to Pakistan soon after this South Asian country went nuclear

in 1998 and faced international economic sanctions. Pakistan at that time had received

$3.5 billion worth of oil from Saudi Arabia on deferred payments, a part of which was

later converted into a grant.

Needless to say, that granting of such facility to Pakistan by Saudi Arabia at this

critical juncture would be of immense help to the country. From whatever way the

government looks at the problem, the measures contemplated to increase total energy

supply in the country, at least in the short run, would involve a huge amount of foreign

exchange, which the country cannot afford at the moment. Pakistan imports about

400,000 barrels of crude oil per day and 30,000 tons of furnace oil at a cost of about

$15 billion per annum. If Pakistan could get a good part of these products on a deferred

payment basis, the PML-N government could at least reduce the electricity crisis in the

short run and, in the meantime, could initiate a number of measures to augment energy

supplies in the country. This would provide a measure of relief to the people and the

industry and contribute to PML-N government's popularity. Those who believe that such

a facili ty could be used to stay away from the Iranian gas import may be mistaken

because the Iranian gas project has reached a stage that backtracking on it is not an easy

option. However, such a package could be used to r enegotiate gas price with Iran for

the Iran-Pakistan gas pipeline to bring it down to a more reasonable level . It needs to

be stressed, nonetheless, that such a stop-gap arrangement should not be used to avoid

hard and bold decisions in the energy sect or to make it v iable in the long-run.

From the Editor’s desk

S

– Maria Khalid

Deputy Editor

EDITORIAL4

Keeping IMF at bay

Flat # 5, Block # 23, PHA AppartmentsG-7/1, Islamabad, PakistanOffice: + 92-51-2890168 + 92-333-5439495 + 92-333-5536239Email: [email protected]: http://www.economicaffairs. info

– Manager Web / IT: Sohail Iqbal

June 2013

June 2013 EXCLUSIVEMONTHLY

6-7

Utmost care is taken to ensure that articles and other information published are up-to-date and accurate. Furthermore,

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D I S C L A I M E R

13-14

CONTENTSTHE COVER

NBP Performing Despite

Challenges.......................................28-29

12-13

16-17

19

18

15-16

30-31 32-33

The Leviathan Glides.... .......................8-9

Power Shortfall , the Spoiled Chi ld...12-13

Not the same old Mode of

Security.... .......................................14-15

Human Capital Investment,

The Only Way Forward.......................19

NAB Feels like a Million Dollars......16-17

News in Brief... ... .............................24-26

Taliban! F irmingup.... ...........................6-7

Pak Army Watching Sharif’s Cosying upto India............................................34-35

Pakistan needs to draw lessons from

Nepal’s Crop Insurance...................36-38

Economic Affairs | www.economicaffairs.info

The Leviathan

GLIDES

T he re a re ce rt ai n s oc i o-e co n o mic , ge o - p ol i t ic al a n d

g e o-s t ra t eg ic i ss u es w h ic h w i ll h a v e t o b e ad d r ess ed

o n p rio ri t y b a si s; o t h e rwi s e t he n ew p o p u la r

g o ve rn me n t m a y f a ce t h e sa me f a t e as o f P P P P .

June 2013Issue-VI

MONTHLYVolume-II,

P age 8-9

Firm ing up

P age 6-7 Page 12-13

Firming up

Performance portfolio in Pakistan’s

accountability

FE ELS LIKE A M ILL IO N DO LL ARSWhen Investing

Becomes Gambling

balancing the unbalanced

Security&

Armed to the teeth

theCapturingdemographic dividen d

th rough education

More Than A Pret ty Footnote

Fashion Week

June 2013TERRORISM6

Sajid Gondal

Peace and prosperity is thetop pri ority, says Nawaz

Sharif after taking oath as

Member of Parliament. Heis pinning hope on bringing

peace to this country by

pursuing the Taliban for apeace deal through negotiations. However,

the groun d real it ies suggest ot herwise.

Intell igence report s availabl e withMonthly Economic Affairs revealed that getting

advantage of politica l transition in Pakistan,

the Tehreek-e-Taliban Pakistan (TIP) gatheredits strength. It also hinted that the taliban will

only use negot iations as a time bargaining

practice and will never disarm themselves fora long lasting peace agreement.

The Commandant Frontier Corps recently

repo rted Ministr y o f Inter ior about anemergent threat erupting from the western

borders. The commandant in a report available

with Monthly Economic Affairs alarmed thatmiscreants who had fl ed from Swat and

Malakand and other areas are gathering across

the Chamman (Baluchistan) border and arecontemplating to send their agents in Pakistan.

Citing the report during a recent meeting

of interim federal cabinet, the ex- interimminister for interior Mr. Habib was of the view

that the misc reant groups were gettin g

instructions from their handlers across theborders. He informed the members that the

intellig ence services submi tted inevitable

evidences in this regard.The FC Commandant sta ted that the

provincial home departments were already

abreast of incoming threats to law and orderand internal security and advised to strengthen

the secur ity of important personalities and

installations.It was also suggested in the report that

as the army and security forces are tightening

their controls of t ribal area s along withnorthern borders, the miscreants have been

shifting their focus and men power to western

borders in Baluchistan.However, in con sideration of new

developments, the Frontier Crops as well asmilitary is also shifting their resources to

Baluchistan to defeat their nefarious designs.

The intelligence report also pointed outthat the security situation in Karachi is getting

complicated due to the presence of TTP and

Baloch mili tants. Thou gh the enhancedsecurity measures reduced the incidents of

target killings, yet t he polit ical parties ANP,

PPP and MQM are apprehensive of curtailingTTP and B aloch miscreant s in Karachi .

Peace Talks With the Taliban

The PML (N) chief Nawaz Sharif, Tehreek-

i-Insaf chairman Imran Khan, JUI -F leaderMaulana Fazlur Rehman and Jamaat-i-Islami

Chief Syed Munawar Hasan called for dialogue

with the Taliban. But while there seems to bea consensus on negotiations, the Taliban are

internally divi ded and unwil ling to meet

government’s demands to sever all ties withforeign miscreants, disarming themselves and

abide to the law of the land.

To understand the complexity of thesituation, it will be prerequisite to know about

the various factions of the militant groups —

Firming up


foreign, nationa l and loca l — operating in

Pakistan.

Tehreek-i-Taliban Pakistan: Led by

its ameer, Ha keemul lah Mehsud, it is the

largest network. Having been displaced fromits native South Waziristan, the TTP, now

headquartered in North Waziristan, serves asa platform for several other groups with cells

and operationa l capabilities across Pakistan.

It has a national agenda but collaborateswith other groups, too, both across the border

as well as inside Pakistan.

Then there are several affiliated groups,which though independent in operationa l

matters, have ideological and operationa l

l inkages with the TTP. These incl ude theTehreek-i-Taliban Mohmand, Tehreek-i-Taliban

Bajaur, Tehreek-i-Taliban Swat , Tehreek-i-

Taliban Darra Adam Khel, Orakzai and Khyber.The TT (B) and TT(S) in the past have had

separate peace ta lks with the government.

Hafiz Muhammad Gul Bahadar

Group: Th e Mi ran shah -b ased Ha fi zMohammad Gul Bahadar has also had a peace

agreement with the government since 2008

(revived), the terms of which have never beenimplemented amid attacks on security forces

and counter-art illery shelling. Authorities in

North Waziristan’s regional headquarters haveno control over the area whatsoever. The Gul

Bahadar group operate on the principle of live

and let-live.

Smaller & Independent Groups:These are all based in Khyber tribal region and

include Mangal Bagh’s Lashkar-i-Islam, Nahi-

wa-anil -Munkar, pro-government AnsarulIslam and another relatively smaller groups.

There a re a few independent groups also

operating in Darra Adam Khel and other places.

Pro-government group: The Wana-

based late Maulvi Nazir Group is the only so-called pro-government militant group, whose

interests lie across the border in Afghanistan

and has so far refused to be drawn into conflict

with the Pakistani security forces following an

agreement in 2007. That agreement still holds.Authorities in Sout h Wazir istan’s regi onal

headqu arters, therefore, enj oy so me

administrative control .

The Punjabi Taliban: There a re atleast nine known groups called the Punjabi

Taliban, many of them disillusioned by what

they saw as retired Gen Pervez Musharraf’sbetrayal of the Kashmiri freedom struggle.

Others have stri dently violent sectarian

agendas — all based in North Waziri stan.

Foreign Groups: In terms of strength,

chief among the foreign groups operating fromNor th Waziristan, are the Haqqani network

(the biggest group), followed by militants

affi l iated with Isl amic M ov eme nt ofUzbekistan, Al Qaeda Central, the Islamic Jihad

Union, Eastern Turkistan Islamic Movement,

Libyan Islamic Fighting Group, Turkish Gamaat,Dutch Tali ban, DT Mujah ideen, Isla mic

Movement of Turkestan, Azeri Jumaat, Taifatul

Mansurah and one other group.

What to negotiate?

Based on fai led peace agreements, aborted

talks and statements at di fferent t imes, theTTP’s m ain talking points could be summed

up as:

1) Establishment of caliphate and enforcementof Sharia to replace the exist ing “infidel”

democratic system and the Const ituti on.

2) Pakistan pulls out of the US-led war onTerror, end drone st rikes, sever ties with

Washington and for eign pol icy should be

within the dictates of Islam.3) Pak istan Army’s withdra wal from tribal

areas, relocation of security checks posts and

handing over securi ty to the Frontier Corps.4) Release of all TTP prisoners.

5) Th e TTP wi l l n ot lay do wn arms.

6) Support the Afghan Jihad.7) Compensation and war reparations.

What does the government say?1) Renounce militancy and

lay d ow n arms .

2) No parallel

administration.

3) Expel foreign militants.

4) Accept the state’s writ, constitution and lawof the land.

5) No prisoner exchange.

Given Taliban’s history, it ’s hard to be

optimistic. But with American troops leaving

Afghanistan, there should be an interest inadvancing a politi cal system t hat insurgents

might see as an alternative to armed conflict.

4TERRORISMJune 2013 7

Intelligence reports

available with

Monthly Economic

Affairs revealed that

getting advantage of

political transition

in Pakistan, the

Tehreek-e-Taliban

Pakistan (TIP)

gathered its

strength. It also

hinted that the

taliban will only use

negotiations as a

time bargaining

practice and will

never disarm

themselves for a

long lasting peace

agreement


June 20138 WAR ON TERROR

Tammy Swofford

I first became aware of the

movement of th e C. I.A.with the ir barrels-of-cash

program into Afghanistan

several years ago. Withyears o f n etwo rkin g

jour nal ism and research

under my belt I am aware of a distinct reality. Information is the Nasdaq of the Arab street.

Problematic, is how individuals adeptly play

both sides of the street. So it can be difficultto sort out the t ruth. So when receiving

information di scussi ng the movement of

money into Afghanistan, I merely filed it awayas an uncorroborated account. Today,

the information is both verified and

vi lified. The C.I.A. has been on quitethe spending spree.

The Leviathan glides into

Afghanistan, Pakistan and acrossth e globe. The bl under of

America in the Middle East and

beyond i s a basic one. Wehave taken an or gani zation

whose pr imary task is that of

information-gathering and reduced it to thetasteless task of i nfluence pandering. Two

consecutive administrations have attempted

to accomplish nation-building in Afghanistanby allowing our primary security apparatus to


The Leviathan

GLIDES

4June 2013 9WAR ON TERROR

function a s an ATM machine as opposed to

doing the gritty and dangerous work of HumInt. We have failed in Afghanistan because of a

paradigm shift. This new order of business has

allowed C.I.A. operatives to function as the firstlink in the cha in for international money

laundering schemes. American tax dollars are

laundered right into the hands of a lphabetorganizations run by Karzai kleptocrats. The

baron robbers then launder the money past

the noses of the citizens and into vaults ofpersonal wealth. The C.I.A. is involved in an

ugly business not befitting their oath of office.

It would be cheaper to train a circus troupe ofchimps to deliver the money. We might obtain

equivalent results.

The role of the C.I.A. is meant to be oneof information gathering, critical analysis, and

ongoing Threat Con evaluation to safeguard

our national sovereignty. This mission can onlybe accomplished by dedicated professionals

who have a high level of socioli nguistic,

ethnographic, and perceptual/conceptual skills.But into Afghanistan, the Leviathan glides. It

glides into every strata of society. It moves with

pay-offs to tribal warlords all the way up toeconomic inducements for the powerful morally

corrupt. And for the dowry, America has

received a tubercular cow. The various milkmaids within the Karzai administration continue

to squeeze the teats to this day.

The outcom e of our folly is less thanspectacular. Future historians will assess the

worth of our barrels-of-cash program and find

both administration and stewardship lacking.Our failures and lost opportunities will plague

us for decades to come.

The hemisphere has regional corruptionwhich seems insurmountable. Nepotism,

cronyism and tribal customs which dicta te

tribute for an audience are not confined to the

poverty belts within the tribal regions. These

societal ills extend into the corridors of powerand boardrooms of multinationals. We have

imagined that the best m anner in which to

enter the matrix is to respond in kind. But dirtyhands cannot wash dirty hands. And more than

anything, the emerging democracies which are

hybrids of Shari'ah pr inciples and Westernthought, require the extension of clean hands

of governance.

The ravages of British Colonialism nolonger suffice to cover the flanks of

th e p o we r f u l

corrupt and theirconsistently

n e f a r io u s

business dealings. This script no longer seduces

the underserved masses. My private corridorwriting predicted a vast social tumult two years

in advance of the Tunisian warning shot. The

thoughts which I no longer divulge trouble mysleep to this day. Perhaps our involvement in

the region is absolutely necessary because of

the nature of an asymmetrical battle space.But what remains to be rectified, is the use of

our spy agency to facilitate the ongoing and

rampant cor ru pt busi ness pr actices of

Afghanistan and beyond.

The digital age provides for a flood of

information which presents a different currentreality and truth than many care to assess. So

whilst facts may be hidden for a season, once

overtaken by discovery and digital nimbleness,there is hell to pay. Such is the case with the

unfoldi ng story o f the C. I.A. and their

involvement in money laundering of Americantax dollars into a matr ix of corruption. The

breadth of this financial occultus remains

indeterminate.Recognition of corruption is one thing.

Bu t because we have had a policy o f

encouraging corruption, we have decimatedany and all opportunities to establish interfacing

healthy governance models for the good of

Afghanistan. Instead of holding leadershipaccountable, we have satiated the desire for

enormous wealth . Inst ead of teaching

governance as stewardship, we have reinforcedgovernance without an ethical component.

The losers are those at the bottom of the foodchain. These are the ones who may not have

the strength to rise up against injustice. But

they will give their remaining strength to theirprogeny.

The United States must pull back and take

a good hard look at the mission of the C.I.A. Itis an increasingly dangerous world in which our

operatives must work. But perhaps we need to

pull in the leash and make ittaut again regarding the

responsibilities of the men

and women who serve.Their work should be confined

to that of information gathering with

the best available tools of the trade.Let the Leviathan glide. But let it glide

for the sake of intelligence. Let the

Leviathan glide. But let the movementbe to ward greater inte r- agen cy

collaboration amongst our various services

for the good of all.of a new century. It is the critical need within

an environment where asymmetrical terror

presents as the greatest risk to stability withinvolatile societal rims.

Wh en abuse of offic ial capacit y i s

accompli shed through a gift of monetaryrecompense, your l eadership must give full

account. When that gift is extended through

unofficial and untraceable channels, Americamust give account. Your nations are too fragile,

you are seated upon powder kegs of human

fl esh, and th e f uses must not b e l i t.Those who govern have been given a

trust. Turn the corner. With, or without us.

The role of the C.I.A. is meant to be one of

information gathering, critical analysis, and

ongoing Threat Con evaluation to safeguard our

national sovereignty. This mission can only be

accomplished by dedicated professionals who

have a high level of sociolinguistic, ethnographic,

and perceptual/conceptual skills. But into

Afghanistan, the Leviathan glides. It glides into

every strata of society. It moves with pay-offs

to tribal warlords all the way up to economic

inducements for the powerful morally corrupt.


The writer is a Freelance Journalist and author o fthe novel Arsenal. She can be reached at

[email protected]

Mehmood Ul Hassan Khan

Elections 2013 are over and

post elections political heat is

also going to simmer down.Different parts of the country

are confronti ng the dust of

defeat. PML-N Chi ef Mi anNawaz Sharif’s sher (lion) is

roaring. Tehrik-e-Insaaf Chairman Imran Khan’s

tsunami has already hit the mountainous areas ofKhyber Pakhtunkhwa. The new change has many

prospects and constrains. PML-N Chief Mian

Nawaz Sharif will have to live up to expectationsof the people to steer the sinking economy from

the choppy waters.

There are certain socio-econom ic, geo-political and geo-strategic issues which will have

to be addressed on prior ity basis; otherwise the

new popular government may face the same fateas of PPPP. Genie of acute energy shortage which

has been hovering over the country for the last

so many years badly needs a genuine effort. Thereis a skyrocketing budgetary deficit which needs

space-shuttle drive to manage. There is menace

of terror ism and extremism which needsappropriate short and long terms policies of the

heavy mandate.

Socio-Economic Challenges

Neither macro-economic indicators are ingood shape nor are its prospects bright and

healthy. The new

New

Chessboard

June 2013COVER STORY10


22COVER STORYJune 2013


government at center would face difficulties to

address the prevailing gigantic economic issueslike low tax-to-GDP ratio (lowest even in the

region) currently soaring around 10 percent;

high debts level (domestic & external) currentlyat 68 percent of GDP or Rs15.2 trillion, showing

that each Pakistani carries a loan burden of Rs.

80,000, rampant corr uption in the whiteelephants of public sector enterprises (PIA, PIA,

Railways, Pak Steel and Wapda) alone eat up

over Rs. 300 billion annually through budgetarysubsidies; widening fiscal deficit i.e. 8.5 percent

of GDP, which causes inflation and the abnormal

increase in government borrowing from theSBP/banks. The new government would also

confront weak private sector, low gross national

savings ratios, (lowest in the region 15 percent)and circular debt that needs hundreds of billions

of cash inj ections by the governm ent.

According to estimation the governmentneeds US$ 4 billion to get rid of circular debts.

Act ive comm erci al diplomacy may provide

breathing space to newly formed government.Opti on of supply of oil and other energy

resources on deferred payments ought to be

activated but not on the compromise of socio-econ omic o r geo-st rategic sovereign ty.

Reduction in line losses (40 percent), theft (20

percent), and capacity building measures forthe existing infrastructure and a paradigm shift

in the means of production would be ideal

com bina tion to cur b the waves of heatthroughout the country. Importing 1,000MW

electricity from India as part of short to medium

term strategy to end load-shedding would beanother option. Publi c-pr ivate str ategic

partnership in al l ind ustr ial area s l ike

(Faisalabad, Gujrat, Gujranwala, Karachi etc.)fo r the en ergy p ro duc tion f ro m th e

unconventional means should be encouraged.

Even coal (imported or local) should be usedfor energy production. Alternative energy drive

must be started. Strong relations with Turkish

and German entrepreneurs in the fields ofgreen energies mix should be further

strengthened.Moreover, the PML-N lead government

must take appropriate steps to negotiate with

the IMF for obtaining bailout package of $5-7billion to avert balance of payment crisis and

preparing ground for present ing a feasible

budget for 2013-14. Federal Budget 2013-14would be one of the toughest tasks of the

center. Dwindling foreign currency reserves,

vanishing FDI ratios a nd the last but not theleast, imbalanced parity between imports-

exports would cause serious challenges in the

days to come. The only good sign is high ratiosof worker remittances i.e. may surpass to US$

11 bi ll io n in the cur re nt fis cal yea r.

The complexity of the situation requirescomposite short and long term strategies. The

government will not depend on conventional

or traditional means to fix it by either tighteningthe belt by compressing imports to the tune of

$3 billion on immediate basis or approaching

the IMF to avoid default. Role of commercialdiplomacy would be crucial. The government

should approach its strategic partners like,

China, UAE, Saudi Arabia and Qatar to showerassistance in shape of joint venture projects

and financial support for the time being for

meeting the budgetary deficits.Unemployment is spreading like a cancer

in the society. According to Pakistan Survey

(2012) the country has more than four millionun emplo yed and eight to 10 mil l ion

underemployed people. New government must

be ready to face the music. Unemploymentcrisis has toppled the dynasties of most of the

Middle East region in the ongoing waves of

Arab spring. It may have bad consequences inthe near future.

Geo-Political Challenges

To achieve national consensus on the

imp ort ant national i ssues would be aparamount challenge in t he days t o come.

Working relations with MQM (law & order

situation, expected change of governorship),Baloc histan nationalists (marginaliza tion

process in shape of socio-economic isolation,

political discrimination) and to some extentwith Khyber Pa kht unkhwa on c ertain

conflicting real ities (war against terror ism,

drones and construction of water reservoirs)would be needed to tackle with coll ective

political wisdom and spirits of accommodation.

Geo-Strategic Challenges

Pakistan’s geographical positi on hasmultidimensional strategic nature. Pakistan is

gateway to Central Asian Countries and shortest

connected sea corridor which needs to beoptimally uti lized without indulging with

ongoing greater game around our soil. We have

abundant opportunities and numerous hurdles.Expected US withdrawal from Afghanistan

would bring paradigm shift in our notions of

security and stabi lity.Chinese premier Li Keqiang has recently

visited Pakistan for finalizing the handing over

formalities of Gawadar Port. It would be game

changer in the national economy and furtherenhance our strategic importance in the region.

Bilateral cooperation in the fields of peaceful

nuclear energy between Pakistan and Chinawould speed-up. Pak-Russia strong bilateral

relations would be beneficial for both countries,

for our stra tegic presence in the CIS andmaintaining strategic equilibrium in the region.

The government may face tough reaction

fr om the US esta bl ish ment and SaudiArabia/GCC cl ub on the burni ng i ssue of

Pakistan-Iran gas pipel ine. It has been kept

back burner for so many years but all of suddennational polit ical maneuver ing in the last

regime carried us at the wolf door. The PMN-

N lead government will face the two imminentscenarios, either: endorsing Pakistan-Iran gas

pipeline and facing the dragon’s fury i.e. US,

Saudi Arabia/GCC along with tough time atIMF & World Bank forums, no supply of energy

resources at deferred payments a nd BIG NO

to any substantial socio-economic assistanceof project. Or, discarding the Pakistan-Iran gas

pipeline and becoming a strong contender of

socio-economic bounties, geo-political stabilityand geo-st rategic cushion. The government

must negot iate w ith the US on the much

n eeded Pa k- US fr ee market ac ces s,establishment of economic free zones along

with sup pl y o f ci v i l nu cl ear p lant s.

Spirits of romance and honeymoon withIndia must not be dreamed at once. Elections

in India are going to be held in 2014. So,

making inroads on I ndian front woul d notproduce any substantial results before 2014.

Bilateral must be pursued with BRICS (Brazil,

Ru ssi a, India, C hina and South Afri ca).On the issue of death and l ife, i.e.

terror ism and drones, the government must

initiate composite national dialogue with allthe major stake holders in the political arena

and military junta to rea ch at one point

agenda. Meaningful talks with Taliban withinand out of the territory must be chalked-out.

US led drone policy has been proved counter-pro ducti ve in the war theater. The new

go vern ment may c o nv in ce th e U S

esta bl ishment for the sup ply of dro netechnologies for indigenous response to any

violation of sovereignty in the days to come.

Concluding Remarks

Issues are too big to resolve which need

bold steps and strong political commitment.People are hoping that Sher (lion) will eat the

high ratios of unemployment, discrimination,

denial of social justice and poverty. Let us hopefor the best because Mian Nawaz Sharif, the

new Prime Minister has a strong character.

June 2013ENERGY12

Yasmeen Ali

In Pakistan, depending on

yo ur pl ace of residing ,th ere i s no elect r ici ty

from six t o twenty hours

a day. Whereas it has hi thard th e l ives o f the

comm on man, mak ing i t

impossible to funct ion on day to day basis,i t h as also br ought down pr oduc tion in

ind ustr ial sec to rs d rast ica l ly, c ost ing

contracts and jobs of mill ions across thecount ry.

If we look at the issue- t wo r easons

emerge. F irst , the demand is far greaterthan the s upp ly. Pa kist an i s ju st no t

p rod uc ing en ough o f it to go arou nd.

Second, the government i s fa iling in paying

dues to pow er generation com panies thusgiving r ise to the phenomenon of “ci rcular

d eb t.” Th is i s bas ic al ly p i l in g up o f

government dues outstanding to the powersu pplying uni ts thereby di sab ling th em

f ro m co verin g the ir ov erh ead s an dp rod uci ng /impo rt in g power. Onc e th is

debt is paid off, the IPP’s can pay off their

p etro leu m impo rt ex pens es and st artp roduci ng at optimum level. The IPP’ s a t

c u rren t are res po n si b le to pr o v ide

electr ici ty to ha lf of our countr y. As thegovernm ent did not pay i ts debt so now

they are charging or demanding higher per

un it prices from the consumers. This hikein elect rici ty p rices i s af fecting no t only

our local industr ies and homes but is a lso

af fecti ng o ur exports of manuf actur ing

go ods. The go ver nment must interven eand pay out the circula r debt. Or pr ovi de

subsidy o n electr ici ty.

Most of th e systems h ere run oneither gas o r co al, i.e. they are t hermal

systems. B oth Gas and Coal are consideredscarce and expens ive c om mo di ties f or

electr icity production. We lack high quality

lo wer en d gr id s that are u sed to c arryelect r ic ity fr om p ower ho uses to th e

ulti mate consumers vi a grid stations . The

infrast ructure i s old a nd deter iorated. Thesy stem is u nabl e to s ustain ex t re me

weather conditions hence most of the grids

shut d own at ext rem e temperatur e oreither com pletely stops working. WAPDA

is facing huge li ne losses due to electr ici ty

Long-term solution requires focused attention. Pakistan cannot sustain flawed

judgment in taking of a final decision in this regard. It is exorbitantly expense nigh

impossible to convert present energy giving units into one with different source

of energy production. It will require virtual revamping of the entire existing set up.

However, government should look into the possibility of setting up energy units

with LNG (Liquefied Natural Gas).


th eft or i l le gal u sa ge o f elec t r ic i ty.

Th en also, we fac e th e very rea lpr oblem of for eign investors being shy to

invest b ig buck s i n Pakista n ow ing to the

soc io-p oli tica l-corrupt system.

There will be no honeymoon period for

the Nawaz Sharif Government. The test of his

government will be to provide immediate reliefto the people. Nawaz Sharif needs to put

together some sharp plans to address this

pressing issue. short-term plans should becombined with long-term ones.

Some short term steps to address t he

situation are: Line Losses & reasons must belooked into & steps must be taken to correct

the same, incoming government MUST look

into discrimination of electricity distribution.Why is Punjab (more particula rly) and in

particular Lahore, Faisalabad & some other

cities facing power outrage for 16 hours a day,whereas this is reportedly not happening to

this degree in other provinces. Upgrade Grid

Stations; government must convert inefficientgas plants to efficient ones in order to conserve

electric energy. In areas where over 80% of

bi lls are being pa id must not suffer poweroutrage as sharply as in areas where they are

no t. This wi ll not only encourage t imelypayment of bills but will also be seen as being

in the spirit of fairness.

Long-term sol ut ion requires focusedattention. Pakistan cannot susta in flawed

judgment in taking of a final decision in this

regar d. It i s exor bit ant ly exp ense nighimposs ible to convert present energy giving

units into one with different source of energy

production. It will require virtual revampingo f the enti re exist ing set up. However,

government should look into the possibil ity

of setting up energy units with LNG (liquefiednatural gas). I am told this is cheaper in terms

of setting up and operational costs . LNG is

cheap (comparatively).Very cheap. Qatar isthe biggest producer/exporter for LNG and

can export gas in liquefied form anywhere in

the world and focus on the places where thestate earns the most income for the gas. The

idea at first was to ship LNG by boat to t he

US , which was supposed to he lp meet thed emand o f hun gry Americans, but the

continuously low natural gas prices in the US

means that it is more profi table for Qatar to

suppl y i ts gas elsewhere, e.g. the Uni ted

Kingdom, India , Japan and other countries in

south-eastern Asia and Europe. Demand forQatar’s l iquid gas increased immediately in

Japan after the ear thquake on March 18 –

supplying gas over such a distance through asystem of pipe l ines would be practi cal ly

impossible, especially when there is more than

just dry land between the two locations. Inadd it ion to these distant places, some

neighbors of Qatar have also shown an interest

in buying gas from the country, especial lyBahrain, Dubai and Abu Dhabi. Four of the six

GCC countries – Saudi Arabia, Bahrain, Kuwait

and the United Arab Emirates – are importersof natural gas a nd only two are exporters –

Qatar and Oman. As the gas exports of Oman

are ca 10% of the gas exports of Qatar, thereis no doubt that Qatar is the most influential

supplier of natural gas in the region. There is

no reason to fear that Qatar will run out ofgas any time soon. The country has the third-

largest natural gas deposits after Iran andRussia – Qatar owns 14% of the total gas

reserves of the world. Qatar has enough gas

for more than 200 years at current productionquantity.

The incursion of foreign investment will

depend on a conducive atmosphere directlylinked to political and socia l stabili ty of the

countr y. Corr uption must be checked to

encourage it - with incentives.Nawaz Sharif will be well advised to

review and down size the massive increase of

Rs. 5.82 per unit price of electricity by thecaretaker government. This step i s being

te rmed as fac i li tatio n fo r in co min g

dispensation. In a sit uation where due tounavailability of gas & electricity the business

comm unity is st ruggling to do business ,

com mo n man i s st ru ggl ing to manageexpenses, the step is seen in direction of

lowering Nawaz Sharif government popularity

even befo re b eing s wor n to o ff ic e!

The writer is a lawyer and author of“A Comparative Analysis of Media & Media Laws inPakistan.” Her twitter handle is @yasmeen_9

13ENERGYJune 2013

ECONOMY TERMS OF THE DAY

1. Remembrance of what has been heard, seen, or otherwise experienced,

such as that of an advertisement, commercial, or demonstration. See also

recall test.

2. Removal or withdrawal of a contaminated or defective good from sale

by its manufacturer or producer, either voluntarily or when forced by a

watchdog agency. Sometimes a good (such as a motor vehicle) is recalled

af ter it has been sold, for rectification, exch ange , or refund.

3. Revocation of a judgment on a question of fact or a question of law.

Pool of investments, collection ofsamples of an artist or other creative

person, or group of complementary

or supplementary products marketed

together.

Portfolio

M Saeed Khalid

A basi c raison d ’et re ofstate is to provide security

to its citizens, internally as

well as on its frontier. Moststa tes d evo te a large

proportion of their budget

to d ef en c e a nd f ormaintaining law and order. The United States,

which accounts for nearly a fifth of the world’s

GDP, spends enormous sums on internal andexterna l security. Half of its federal budget

is spent on d efence . The nex t b iggest

economies, China and I n d i aare s tead i ly

incr easing

t h e i rdefence

bu dgets. Pa kistan being a much smallercountry, its economy cannot match I ndia . It

has followed the aim of maintaining a credible

d eterrent in convent io na l forces and amatching deterrent in nuclear weapons.

Critics of Pakistan’s defence expenditure

argue that its weak economy cannot sustaincurrent share of defence spending. They want

to increase budgetary provisions for economic

and soc ial sect or develo pm ent. Thesedemands are to be viewed in the context of

our regional security needs. India , Iran and

Afghanistan are devoti ng more, not lessresources to enhance their defence capability.

Pa kistan’s nuclear assets are the cause of

anxi ety to some countries and they are saidto have contingency pl ans to defang our

nuclear arsenal on the pretext of i ts g oing

under the contr ol of jihadist elements. Thish as add ed another di men si on to the

c onven tional needs of deterren ce and

vigilance and in case of need to defend ourinstallations.

In the prevailing threat scenario,

it is not feas ibl e to ignore ourprimary security needs to make

fun ds avai lab le f or o th er

nationa l needs even if theyare of high priority. But that

does not stop us from scrutinizing whetherwe are getting value for money allocated to

defence. Secondly, are efforts being made to

prune wasteful expenditure? War has takena new connotation after 9/11. But the armed

forces, as an institution had diffi culty in

acknowledging that the good and the badTaliban stand for the same goal.

Pakistan has often been called a security

state implying that defence takes precedenceov er ever ythi ng else and th e defen ce

establi shment has an overridi ng voice in

shaping the country’s foreign policy. This maybe changing as the army’s doctrines on India

and Afghanistan show signs of modification.

The army ch ief ’s recen t st ate ment shighl ighting the threat from Pakistani Taliban

and all ied outfit s are sig nifi cant. General

Kayani wants to make it clear that army’soutlook on militant groups has undergone

an important change.

If the war on militancy is our own war,the entire methodology must be reviewed.

Ther e shoul d be a two-pr onged effort to

improve intelligence, and to better react toterrorist attacks. Unfortunately, the militants

are roaming around freely carrying weapons

and explos ives all over the countr y. Thisrequi res deploy ment of peop le in pla in

June 2013SECURITY14

model of securityNot the same old


15SECURITYJune 2013

cl othes to spot suspici ous cha racters onpubl ic transport and in public places. An

armed guard or two outsi de a mosque orshrine cannot pr event a terrorist attack.

Even more disturbing is the way security

personnel react to attacks. In most cases, theterrorists a re abl e to inflict damage before

escaping. They are able to hit their targets

with impunity. This stat e of affairs ca n becontrolled by better training security staff in

response techniques. The public officials and

legislators should be given training in raisingtheir level of threat awareness and methods

to sav e their l ives when under attack .

It is worth recall ing that Pr esidentRonald Reagan had a narrow escape due to

his presence of mi nd, i n an attempt to ki ll

him in Washington DC. He was hurt but actedintelligently to avoid more bullets. Lying in

hospital bed, he was able to tell hi s wife

Nancy rather pr oudly : ho ney, I duc ked .The secur ity forces and intell igence

services have to figure out better ways to

detect , int ercept and respond to terrorattacks. In short, a new kind o f capacit y

building i s needed to succeed against people

who send their foot soldiers to kill and getki lled, while the ringleaders are di recting

operations from the relative security of theircaves, and sometimes from hideouts in the

urban areas.

It is not clear what impact greater publicawar eness c an have on detec ting the

whereabouts of terrorists and their handlers.

Strict methods may l ead to accusations ofrunning a police state but individual freedoms

may have to face some erosion to ensure the

col lective safety of a ll.Time has com e to cr ack do wn on

madrassahs known for training mili tants.

Many countries resort to counter intelligenceand covert operations. They train agents to

carry out covert operations without letting

non-state a ctors to create training camps.Pakistan must act on lessons learnt the hard

way as there is no room for complacency

after losing forty thousand l ives in terrorattacks on its soil .

Th e wr iter is a former ambassador of

Pakistan to Argentina, Belgium and the EuropeanUnion.

Time has come to crackdown on madrassahs

known for training militants. Many countries

resort to counter inte lligence and covert

operations. They train agents to carry out covert

operations without letting non-state actors to

create training camps. Pakistan must act on

lessons learnt the hard way as there is no room

for complacency after losing 40,000 lives in

terror attacks on its soil

Pakistan can get a massive blow to its

remittances as Kingdom of Saudi Arabia (KSA)

has declared 30,000 Pakistani expatriates

illegal immigrants following new employmentlaw Ni taqat , accordi ng to Saud i media

reports.

It has been learnt that KSA announced

that 30,000 Pakistani immigrants have been

found il legal and they would be depor tedsoon. According to the new l aw, the KSA’s

government declared that any work or job,

different from the one declared on visa would

be considered illegal. Saudi Arabia has termed

the latest move a measure to prov ideemployment to locals.

It is t o be noted t hat approximately

500,000 Pakistanis working in Saudi Arabia

have been faci ng problems due to stri ct

empl oy men t ru les in the co untry.Analyst s suggested to up com in g

government that the Embassy of Pakistan in

Riyadh should contact the Saudi government

immediately to resolve this issue as it could

cause substantial losses to the nationa lexch equer in terms of rem ittances.

It is worth adding that KSA government

earlier announced deferment of imposition

of this law for three months and asked illegal

expatriates to set tle thei r i ssues, b utsu rpr ising ly before the expi ry o f this

deferment they have stated 30,000 Pakistanis

illegal, which is a clear violation of deferment

which was announced by Saudi Arabia’s King

Abdullah last month.

It is yet to be known that whether Saudiauthorities would deport these i llegal

Pakistani expatr iates or imprison them.

Meanwhi le, remittances in 10 months

of the current fiscal year 2012-13 have shown

a growth of 6.37 percent or $692.83 millionwhen compared with $10, 876.99 million

received during the same period of last FY,

accor din g to State Bank of Pa kista n.

S ignificantly, the inflow of remittances

in July-April 2012-13 alone from Saudi Arabiawas $3,371.59 million while i n April 2013,

the inflow of remittances from Saudi Arabia

was $392.28 million. It shows that probable

deportation of 30,000 Pakistani expatriates

from Saudi Arabia could bring the above-mentioned figures down.

Dent in remittancesfeared: Saudi declares

30,000 Pakistani

workers illegal


June 201316 REPORT

Muhammad Bilal Khan

The economic situation ofthe country is extremely

bad down owing to the mal

governance and bad or nopolicies in the PPPP’s five

years term. The stories of

Bhutto’s glory and BenazirBhutto’s sacri fice couldn’t feed and sat isfy

people. That wasn’t enoug h to answer

unbridled inflation, deteriorating law and ordersi tuat io n, ever- risi ng c rimes , rampant

corruption, increasing unemployment, growing

injustice, l oom ing energy crises and l ots ofother problems emanating from administrative

lapses involving mal governance. The irony of

the matter is, in spite of all this unpleasantness,NAB managed to perfor m well in 2012.

NAB received 7, 565 com p laint s,

completed 392 inquiries, filed 95 references,and r ecovered Rs. 25 Bil lion: Says Bureau’s

Annual Report.

The Nationa l Acco untabi li ty Bureau(NAB) released its annual report 2012 - a

watershed year in the history of the bureau.The report says, on the enforcement s ide of

NAB activities recoveries throug h VoluntaryReturn (VR) and Plea Bargain (PB) amounted

to Rs. 25 Billion. Despite constraints and deficits

in Human Resource quality and quantity, megacorruption cases are being prosecuted as best

as possible.

The NAB worked with Bureaucracy fortheir re-st ruct ur ing , str eng th eni ng of

regulatory mechanism, and for removal of rule

violations to prevent corruption in plannedpr ocu rem ents and pr oj ects. N umerous

committees of bureaucrats were formed in all

major area s of gov ernance to improveperformance on sustainable basis. Rs1.5 trillion

worth of projects and procurements worth

Rs1.5 tri llion were processed to save overRs200 Bi llion, invol ving pl anning and pre-

tendering irregularities.

The bureau processed 7889 complaints,completed 392 inquiries and filed 95 references

in the accountabi lity courts. The influx of

complaints increased during the year as theor ganizat ion received 7,565 com pl aints

reaching a total of 9353 complaints, includingthe backlog of 1788.

The report further reveals that theBureau authorized 232 fresh inquiries in 2012,

raising pendency to 978 including the backlog

of 746 inquiries.“A total of 392 inquiries were finalized

(including closures and conversion into formal

investigation), whereas, 586 inquiries remainedunder com pletion,” sai d the report, adding

th at th e B ur eau aut ho rized 86 ne w

investigations, thus reaching to a total of 379.Out of total investigation cases, 147 have

been finali zed whi le the remaining 232 are

under process, said the annual report that isa statutory requirement.

During 2012, the NAB also recommended

placement of 192 accused on the Exit ControlList (ECL) through the Ministry of Interior. The

burea u also fi led 95 references in th e

Accountability Courts, making a total of 719cases, including 624 cases already pending in

the trial courts.

The year 2012 also saw the start of aninduction and training programme of over 250

Performance portfolio in Pakistan’s

accountability

FEELS LIKE A MILLION DOLLARS


4REPORTJune 2013 17

new investigators for NAB to be trained by a

mix of local and foreign faculty.

The annual report says that in this yearthe traditional emphasis on Enforcement as

a primary tool gave way to prevention as a

primary tool for accountability; as is the casein most developed countries of t he world.

former Cha irman NAB Admiral Retired

Fasih Bokhari in his comments says that for 65years and t hroug h 59 different legislations

‘Enforcement ’ as the pr imary anti-corruption

tool has not worked. Pak istan’s absolutecorruption index has remained unchanged at

2. 5/10 si nce the st art of Transparenc y

International Cor rupt ion Perception Index.Pakistan’s corruption is therefore, not party,

event, or form of government specific. The

constant corruption index is a clear indicationof major system flaws in Consti tuti onal,

Legislative, Regulatory, and Gover nance

structureThe Prevention framework started in

March 2012 is in compliance with the United

Nations Conventi on against C orruption(UNCAC). It is based on the international ly

recognized nexus between the Bureaucratic,

Political, and Private Sector interests that leadto Grand Corr uption when and i f they join

hands to work in an exploitative framework.

It is the job of agencies like NAB to not allowthis collusion to happen. The separation of

these three interest groups is essential to curb

corrupt practices that can reach the levels of‘mega corruption’. Restructuring of the state’s

governance system and regulatory mechanisms

is the key to redu cti on of corr upt ion.The report says that focus on the Private

Sector is not the best starting point because

this is the sector that is the engine of growth.

It i s the funct ion of businessmen to make

maximum profit. It is the function of the state’s

Regulatory mechanism to control the level ofprofit. In Pakistan we see that the Regulatory

mechanisms are either nonexistent or have

collapsed under pressure from political andbusiness interests.

Focus on the politicians by an agency such

as NAB is unrealistic in the current heavilypol i t ic ized env iron ment o f Pa kist an.

Focus on the Bureaucracy was the best

starting point in the given environment. Theseare the regulators of the state and need to be

given support and independence from political

and financial pressures. T he legislative andRegulatory structures of the State need to be

reviewed to remove discretionary and service

anomalies.The report says that in order to allow

greater autonomy to Regional Bureaus and

ensure speedy process of decision making, theChai rman, NAB, has delegated suffi cient

operational as well as administrative powersto the Director Generals of Regional Bureaus.

The NAB report highlighted the role of

Chairman Admiral (Retired) Fasih Bokhari whoset priorities of prevention as a mechanism to

precede enforcement, emergent and quick

recovery of looted money, mega cases to beaccorded priorit y and interaction through

meetings with stakeholders.

The report further indicates that a seriesof presentations by US Embassy to Senior

Management of NAB and Prosecutors was

organized during February and March 2012.These presentations provided an opportunity to

benefit from the investigation techniques of FBI

and Department of Justice used in the field ofInvestigation and Prosecution in intricate cases.

Dur ing the preceding year, the NAB

International Cooperation W ing (ICW) heldnumber of meetings with foreign delegates to

strengthen international cooperation for anti

corruption as per United Nations ConventionAgainst Corruption (UNCAC) charter and to

arrange foreign trainings for NAB officials to

st rengthen their invest igation ski lls andcapacities. Twenty five meetings were held with

the embassies of USA, UK, UAE, Switzerland,

Canada, Germany, Malaysia, China, Japan,Australia and European Union.

According to the annual report, the year

2013 has been titled ‘Consol idation Year’ soas to consolidate the initiatives and strategy

formulated by Mr. Fasih Bokhari during the

last year, with specific reference to awareness,prevention, training, development and welfare

measures for employees.

The 2012 annual report 2012 covers theachievements, shortfalls, statistics and way

forward to eliminate corruption and corrupt

practices.

NAB worked with Bureaucracy

for their re-structuring,

strengthening of regulatory

mechanism, and for removal of

rule violations to prevent

corruption in planned

procurements and projects.

Numerous committees of

bureaucrats were formed in all

major areas of governance to

improve performance on

sustainable basis. Rs 1.5 trillion

worth of projects and

procurements were processed

to save over Rs200 Billion,

involving planning and pre-

tendering irregularities

The Supreme Court’s decision was nearly

three years in the waiting, but its order was

short and decisive.

A five-judge bench on May 28 declared

National Accountabi lity Bureau Cha irmanAdmiral (retd) FasihBokhari ’s appointment

null and void and directed the government

to swiftly appoint a new chief for the anti-

corruption watchdog.The ben ch – headed by Ju sti ce

Tassaduq Hussain Jilani and com prising

Justice Anwar Zaheer Jamali, Justice Asi f

Saeed Khan Khosa, Justice Amir Hani Muslim

and Justice Muhammad Ather Saeed –announced its decision i n a short order.

The order stated that the criterion for

appointing the NAB chief was not followed

in accordance with Rule 6 (i) of the NationalAccountabi lity Ordinance 1999.

“For the reasons to be recorded later

in the detailed judg ment, we hold and

declare that consultation in the appointmentof c ha irman NAB was no t made in

accordance with Section 6 of the National

Accountability Ordinance 1999 and the law

declared by this court. Consequently, this

consti tuti onal petit ion is allowed, theimpugned appoi ntm ent of B okha ri i s

declared to be without lawful authority and

is set aside with immediate effect. The

federal government is directed to make freshappointment without further loss of time,”

the apex court bench ruled in its short order.

Bokhari is the third chairman of NAB

sent packing through a judicial verdict.

Earlier NawidAhsan was removed as NA Bchief in December 2009 and Justice (retd)

Deedar Hussai n Shah was disqua lified i n

March 2011.

Former leader of the opposition in theNational Assembly Chaudhry Nisar Ali Khan

had petitioned t he apex court on October

22, 2011 seeking a declaration against the

appointment of Bokhari as void ab initi o

(illegal from the beginning), saying i t wasnot made by President Asif Ali Zardari in

consultation with the leader of the house

(prime minister), leader of the opposition

or the chief justice.In his petition, Chaudhry Nisar had not

raised any objection to the eligibi lity of

Bokhari as NAB chairman and only disagreed

with the proposed nomination of PresidentZardari.

DismissedNAB chief sent packing


June 2013ECONOMY18

Naukhaiz Saleem

Though Pakistan proffers

a hu ge po tent ial for

internationa l investors,many com panies have

lately been pulling their

o perations out of thecountry primarily due to

security and economic concerns. I would like

to look at some of the important economicindicators which foreign (both direct, indirect

and portfoli o) investors pore over before

investing in a country. Ironically, most ofthese indicators give a red signal to those

keen on investing in Pakistan

The most important ratio investor sstudy is the fiscal deficit to GDP ratio. Most

of the emerging economies suffer from huge

fiscal defi cits due to huge governmentspen di ng an d sub sid ies alon g with

weaknesses in tax collection. Though fiscal

defic it is not bad for an econom y, apersistently high fiscal deficit over several

years i s a bad signal for foreign investors.Generally speaking, a persistent fiscal deficit

of less than 2% is considered healthy where

has a fiscal deficit of higher than 4% of GDPover a long period is a sign of caution for

investors. Pakistan has had a persistent fiscal

deficit of around 6.8% of GDP for last fiveyears. This deficit increased to 8.5% of GDP

in 2012 primarily due to circular debt crisis,

public sector enterprises’ mounting losses,hi gher int erest paymen ts and fl ood.

Countries with growth in real GDP are

heavens for foreig n investor s. Economicgrowth in Pakistan had been averaging around

3% during the last 5 years which is deemed

to be slow. Primary reasons behind the slowgrowth have been the energy crisis along with

floods in two consecutive years and security

co ncerns. Moreover, with incr easingpopulation putting stress on the per capi ta

income, Pakistan is having a general social

and political unrest. Though the governmentis targeting GDP growth of 4.3% during FY13,

it looks quite optimistic scenario considering

structural problems like energy cris is l oss,making public sector and fiscal side policies.

Thou gh some ana lyst s con sid erupcoming government of Pakistan to revive

economic acti vity, persistent growth in

economy needs a number of str ucturalreforms. Pakistan has been unable to bring

structural reforms for long and has consistently

shown resistance towards reforms, which isalso indicated by the decline in rank of our

country to 112th position in the most recent

Economic Freedom Index (the index has hada positive correlation with economic growth).

Depreciation of Pakistani rupee, about

45% during last 5 years, has been a big reasonbehind decline in business confidence and

investment in Pak ista n. A t il t towards

consumption and lack of investment has lead

to a stress on external account of Pakistan,which in turn has impacted the domestic

currency. Despite continuous increase in

remittances over years, negative trade balancehas kept its pressure on the current account.

Though the current account deficit of around

2% in 2012 can arguably be consideredmanageable, it can cause problems going

forwa rd if there is no t foreign di rect

investment and government keeps funding itwith debt.

Any country has to borrow domestically

or from foreign sources to fund its persistentfi scal deficit. A country with debt levels of

more than 65% of GDP is considered a matter

of concern. Pakistan’s debt to GDP averagedaround 65% during last 5 years which is a

matter of concern for the economy. Though

debt to GDP of advanced economies averaged106% during 2012, a high debt level of

emerging economies is considered more fatal

than it is for advanced econom ies. It i simportant to mention that external debt to

GDP is only 28% while the remaining is being

financed domestically.Foreign reserves of the government

indicate liquidi ty in the system when they

are compared to the trade flows and shortterm debt. Traditionally, reserves of worth

more than 3 mont hs of imports were

considered adequate. By this rule, Pakistan’sreserves of $US61 million in 2012 adequately

covered 3 months of imports worth US62mn

of im por ts. However, owing to i ncr easingimportant of debt levels, another ratio of

reserves to short term debt provides a good

insight to liquidity position of the country.Short term debt is 3.5% of official reserves

of Pakistan which indicates some liquidity

problems for the country. Naukhaiz Saleem, CFA is a fund manager,

investment analyst and entrepreneur who tweets

at @na ukhaiz a nd b logs at naukhaiz .com/blog

When

Investing

Becomes

Gambling


19EDUCATIONJune 2013

Khaula Khalid

Great civilization flourished

when its philosophies were

based on acqui siti on ofk n o w l e d g e . T h e

Me so p ot am ian s, th e

Greeks, the Romans, theMuslims and the modern

West attained their heights

through seeking knowledg e and advancingeducation. Qarawiyyin University founded in

859AD was the first institution of higher

learning which eventually led to the foundingof great universities like Al-Azhar (972AD),

O xford ( 1167A D), Cambr idge (1209AD),

Harvard (1636AD) and others. The Muslimcivilization ruled the world for over 1000 years

based on its contributi on to the growth of

kno wled ge and ed uca t io n. Th e basi cinspiration was through the first verse of the

Qur'an "Read in the name of your Lord who

cr eated" and the Prophet Muhammad'scommand that "Acquisition of knowledge is

obligatory for every Muslim male and female".

The colonial period had its toll on thenations of the East in terms of education.

Pa kistan is one of the countri es that has

suffered in this regard and continues to haveits share of problems due to lack of education.

This has led to intolerance, extremism and a

narrow worldview and is becoming the chiefcause for underdevelopment.

After 9/11, the global scenario took a

360 degree turn. The war on terrorism affectedthe global political scene and Pakistan was not

an exception. Being a frontline state, we were

in a tight spot. I believe that it is the lack ofeducation and wakefulness that such acts of

terrorism crop up recurrently here. The HDI

(Human Development Index) value for Pakistan

in 2012 sta nds at 0.515 (i n the low HDI

categor y), which ranked the country at 146out of 187 countries and territories. In Pakistan,

the l iteracy rate is on ly 58% w hi ch

d emon strates that roug hl y ha lf of ou rpopulation is untaught.

Education augments a person’s thinking

and perspectives. A person when educated isau fai t with his rights in addi tion to his

obl igations. Peopl e fal l prey to malicious

groups who brainwash them owing to the lack

of tr ue rel igious erudition. Ki lling innocent

people and shedding their blood is utterly inopposition to the teachings of I slam. Islam is

a religion of peace, love and harmony like all

the other religions of the world. No religiongives its blessings to the followers to commit

such inhumane acts. The last sermon of

pro phet Muhammad (PB UH) in 622ADespecially focused on human rights a nd the

UN charter of human rights, 1945 is derived

from the same principles.The madrassah system hasn’t been held

accountable in the past that led to a certain

way of upbringing and a certain l imited viewof Islam. Their syllabus was never checked;

such is the slackness of our governing elite.Moral development is impor tant and the

previous gover nment hasn’t taken their

educational development into account. Peopleshouldn’t be so deprived of their basic r ights

that they have no other alternative but to

stand up against the state.It is down to the lack of education that

some people blindly follow fanatics who make

them commit such inhumane crime as suicidebom bings. We ought to educate our people

and make them famil iar with the actua l

teachings of I slam. We need to develop ourhuman capital and for developing hum an

capital, first we need moral development and

values. We need to address the core issues inorder to end militancy. Only capturing or killing

militants may not help because militancy is

the name of thinking and you can’t simply killthinking. Through our personal conduct a nd

subsequent actions, we shoul d send this

message to the whole world that Muslims andPakistanis are not terrorists. We, like all other

nations want to see the world as a peaceful

and a better place for our generations to come.

Human z

Education augments a person’sthinking and perspectives. A

person when educated is au faitwith his rights in addition to hisobligations. People fall prey to

malicious groups whobrainwash them owing to the

lack of true religious erudition.Killing innocent people and

shedding their blood is utterlyin opposition to the teachingsof Islam. Islam is a religion ofpeace, love and harmony likeall the other religions of the

world

the only way forward


June 2013FASHION20

Afrah Jamal

There was a conferenceon counter-terrori sm

underway in Hyderabad

as fashion week waswinding down in Lahore.

One of the presenters, aDutch with a PhD and a

thesis on the effects of fear on social

behavior had indicated resil ience as part ofthe counter-terrorism strategy. ‘We had a

fashion show, does that count?’ I later asked

Dr. Mark Dechesne who was in townrecently. If he was startled, he did not show

it.

Two thing s have been t rending ontwitter since April 2013. Fashion week finds

itself i n the same time slot as politics a nd

as pol iticians perfect their str ut on the

political ramp, the fashionistas have taken

to the red carpet and designer-wear floods

the catwalk. Though fear overshadows botheven ts , p eop le ref us e to let th e

claustrophobic environment dictate their

social calendar.The famed fashion week which started

from Karachi and c oncluded in Lahor e

represents the beautiful bubble that existsin the midst of madness and mayhem and

mirrors the resilient core of a nation. The

existence of this oasis when every sectorhas suffered set-backs from tourism and film

to sp or ts is an enc ou ra gin g s ign .

As designers gathered to put their bestfoot forward, their elegant statements and

edgy vision define their region’s stylish new

trajectory. The industry is young and to gofrom being a mere blip on the local map to

a substantial presence in the international

arena, it needs a well designed roadmap

and a proper platfor m. Pantene’s Br idal

Couture Week (BCW) runs for three days,has six shows and comes twice a year. For a

city like Karachi, a hairs tri gger away from

violence, prolonged outages and shutterdown st rikes, putting together a show of

this magnitude is a major achievement. For

the fashion industry that gets a chance tohonor Pakistan’s contribution to couture

while keeping the dazzling spotlight on the

best and the brightest from its ranks, it is aniconic victory.

This year the B ridal Couture Week

featur ed 18 desi gners and 14 H auteCouturiers. The parade of models floating

by included cricketing legends, film/stage

performers, TV actors and a news a nchor;their presence was hailed by cheers and

gave the show some add ed p izzazz .

More Than A Pretty Footnote

Fashion Week

‘Artists are the gatekeeper of truth. We are civilizations radical voice’. – Paul Robeson

1 http:/ /www.rcci.org.pk/wp-content/ uploads/2012/12/gtopti.pdf

2 http:/ /www.ebuzztoday.com/pantene-bridal-couture-week-2013-pbcw-maliha-sheikh-13015/

3 http:/ /www.brecorder.com/pakistan/business-a-economy/114948-pakistan-10th-largest-market-of-gold-fpcci-chief.html

21FASHIONJune 2013

Sumptuous designs by seasoned players like

Deepak Perwani, HSY, Lajwanti or Nadya Mistrygraced the walkway. For some, like Zaheer

Abbas, this would be a first. For others like

Tabassum Mughal whose majestic creationgot to take not one but two turns down the

runway – the second time because her model

Ayaan Ali snagged ‘best dressed on red carpetaward’, it is a chance to be part of an ensemble

cast of trailblazers out to ta ke on the design

worl d by storm. They included Nadda S.Aadamjee, Imraan Rajput, Mussarat Bushra

and 10 others chosen to feature one piece in

a special segment. The resident social mediateam was required to be on their toes ready

to spin the few designer faux pas into 140characters or less . But there weren’t many

misses. Earlier, a models predicament on the

ramp had been sk illfull y covered up by animpromptu dance routine by her partner Tipu,

giving chiva lry a memorable litt le cameo.

But for a society, dealing with a spiralingeconomy and escalating extremism – where

does such pageantry fit in especially given the

deeply conservative r oots? There are manyreasons for enlisting vanity-fair in the counter-

narrative. Bridals, according to Shanaz Ramzi

– GM Publications & PR at HUM Network Ltd,falls into neither prêt nor couture. The ramps

were not willing to give it a place. More than

three years have passed since BCW introduced

bridal couture to the mainstream. Since thenthere has been a waiting line for designers

a nd o pen ing s fo r make- u p art i st s ,

choreographers and entertainers. The eventis beamed to thirty or so countries. This time

it was available online via the magic of live

streaming. An international clientele awaitsbeyond the gates who can now avail the cyber

services (style360labelestore) to view and/or

order.Pakistan ranks among the top 10 textile

exporters of the world and as sales skyrocket,

the increased visibility ensure that its vibrantfashion scene gets global recognition. These

are promising indicators of growth and a steptowards prosperity – if only in select sectors. A

portion of the show was dedicated to Nadia

Chottani’s jewelry collection out to showcasethe ‘lost splendours of Empress Noor Jehan’s

Haveli’ alongside the debut of Maliha Sheikh’s

designs known for incorporating trace elementsof ‘Sindhi heritage’ with a contemporary twist.

Pakistan reportedly lacks gem cutting/polishing

facilities and is forced to export gems in rawform, losing revenue. On the bright side, the

gem/jewelry export business has spiked to

“16.99 percent and 138.73 percent respectivelyduring first eight months of current financial

year... .” (Asad Naeem – Business Recorder)

Tending to the cultura l roots helps in

building up the Pakistani brand. The infusion ofpatriotic fervor came in the form of the national

anthem that made a sudden appearance from

the second day onwards. It continued whenFuzon – a popular band took the stage driving

the shrieking volunteers wild. That many were

later overheard wondering who they were justcheering for underscores the importance of

promoting local talent above all else lest their

voices get lost in the din of cultural invasion.Also, choreography heavily reliant on Indian

music interferes with the process of crafting a

distinct identity devised under that ‘Made InPakistan’ banner. Bollywood does not need our

patronage. Pakistan does. Ironically Indiandesigners Anjalee and Arjum Kapoor marched

to the beat of X-Men First Class and Pirates of

The Caribbean, though their bright lookingcollection stayed on the fringes of bridal wear.

The month long festivities dedicated to

fashion makes it much more than a charminglittle foot-note in the style directory. The brief

conversation with Dr. Dechesne assigns it as part

of the resilience narrative.

The writer is Columnist for “Daily Times”. She can

be reached at [email protected]


June 2013OPINION22

Ambassador Javid Husain

Mian Nawaz Sharif, after theconvincing victory of his party

in the general elections, was

right in assigning top priorityto the economy of the country

in his public comments. This

wa s h ard ly su rp r is ingconsidering the mess in which the outgoing PPP-

led government has left the economy. Long hours

of load-shedding and gas shortages a re a dailyreminder of the severe energy crisis from which

the countr y is suffering. The econom y has

virtually stalled with hardly any improvement inthe standard of living of the people. Instead, the

problems of widespread poverty, and high rates

of unemployment and inflation have broken theback of the common man. The social and physical

infrastructure of the country is in a deplorable

state. We are nowhere near the attainment ofth e m i l len ni u m d evel op men t go als.

On top of that, the federal government’s

ability to overcome these serious problems isseverely circumscribed by the high levels of

budgetary and external account deficits. Because

of the high level of nationa l debt, we havereached a stage w here debt servicing claims

almost two-thirds of the net federal revenues.

According to the budgetary estimates for thecurrent financial year (2012-13), the net federal

revenues were expected to be Rs1775

billion whereasthe tot al

d e b t

Economic growth is a function of investment.

Other things remaining the same, the higher the

national investment rate, the higher would be the

growth rate of the economy. For raising our current

low level of national investment rate (13% of GDP)

to 25% of GDP or above, which is necessary for a

respectable GDP growth rate, we should raise our

national saving rate as much as possible so as to

reduce our dependence on loans from international

financial institutions and donor countries for

financing our development programmes. A high

degree of dependence on external loans for

financing our developmental activities can be

extremely risky for the country as it gives foreign

governments and IFIs a handle to control our

national decision making in the fields of national

security, foreign policy and economy

balancing the unbalanced

Security&


23OPINIONJune 2013

servicing liability was estimated to be Rs. 1140

billi on, that is, about 64% of t he net federal

revenues!In add ition, the tota l al loca tion of

resources to the defence sector worked out

to be Rs793 bi llion including Rs. 545 bi llionallocated explicitl y to defence, Rs . 98 bi llion

provided for military pensions and reportedly

another amount of Rs150 billion provided fordefence elsewhere. Thus, the total budgetary

allocation for debt servicing and defence alone

amounted to Rs1993 billion exceeding by farthe net federal revenues and leaving nothing

for runni ng th e ci vi l admin istr ation or

economic development. The fact that we havebeen using loans at high rates of interest for

financing our current expenditure year after

year is a sure recipe for getting into a debttrap.

It is true that economic progress can take

place only in an environment of peace andsecuri ty, both internal and external, where

the investors and entrepreneurs are preparedto take the risk of investing their resources

with the certainty of getting back an attractive

return. But this condition alone is not sufficientto generate high growth rates that our country

needs for enhancing the welfare of the people

and acquiring a respectable pos ition i n thecomity of nations.

Econo mic gro wth i s a fu ncti on of

investment. Other things remaining the same,the higher the national investment rate, the

hi gher would be the growth rate of the

economy. For raising our current low level ofnational investment rate (13% of GDP) to 25%

of GDP or above, which is necessary for a

respectable GDP growth rate, we should raiseour national saving rate as much as possible

so as to reduce our dependence on loans from

international financial institutions and donor

cou ntries for fi nanci ng our development

programmes. A high degree of dependenceo n ext erna l lo ans fo r fi nan ci ng ou r

developmental act ivities can be extremely

r isk y for th e count ry as it gives foreig ngovernments and IFI’s a handle to control our

national decision making in the fi elds of

national security, foreign policy and economy.Obviously both the government and the

people have a role to pl ay in raising our

national saving rate which was as low as 10.7%of GDP duri ng the last financial year. Just to

put the matter in proper perspective, China’s

national saving rate is estimated to be about50% of GDP which enables it to achieve a high

national investment rate and consequently a

hi gh economic growth rate. Even Indi a’snational saving rate is above 30% of GDP. Thus,

a national programme of austerity is a must

if we wish to achieve a high economic growthrate like a dignified nation and not as a nation

with a begging bowl in its hand. This is wherethe PML (N) leaders in the government at the

centre and in the provinces would have to set

an example of simple life style in their personall ives and avoid wasteful expenditure in their

st yle of governance. O f course, besid es

practicing austerity, the government wouldhave to introduce specific policy measures to

encourage people to save and invest as much

as possible.The fi rst test o f the new federal

government of the country would be in t he

bu dget to be pr esented to the Nationa lAssembly. Obviously the government must

put an end to the present practice in which

the budgetary allocations for debt servicingand defence exceed the net revenues of the

federal government. Some drastic measures

would be required to restore fiscal stabi lity to

the federal government’s finances. For this

purpose, the new government would have totake urgent steps to raise the tax-to-GDP ratio

to over 15% from the current level of about

9% by widening the tax base, el iminating taxexempt ions and improv ing tax col lection

through reform of the FBR.

Simultaneously, the government mustundertake steps to eliminate t he drain of

res ou rc es du e to c or r up t io n a nd

mism anagement of stat e enterpr ises likeWAP DA/PEPCO, railway s, PIA, etc . The

increased resources which become available

through higher collection of tax revenues,elimination of waste and corruption in state

enterp rises, and avoi dance of wasteful

expenditure should be di verted mostly todevelopmental activities rather than increase

in the d efen ce ex penditu re. We must

remember that the more resources we allocatefor defence, the less would be available for

economic development. Over-empha sis on defence at the

expense of economic development would

weaken a country economically and expose itto internal and external dangers in the long

run as happened to the Soviet Union. On the

ot her hand , neglec t of the esse nti alrequirements of nat iona l secur ity would

expose a countr y to serious threats in the

short run. The test of a leadership is to str ikethe right balance between the requirements

of security and development by practicing the

concept of comprehensive security in whichdevelopment and securit y are treated as

integral components of the national security

policy.

ECONOMYTERM OF THE DAYBroadly, social heritage of a group (organized community or society). It is a pattern of responses discovered, developed,

or invented during the group's history of handling problems which arise from interactions among its members, and

between them and their environment. These responses are considered the correct way to perceive, feel, think, andact, and are passed on to the new members through immersion and teaching. Culture determines what is acceptable

or unacceptable, important or unimportant, right or wrong, workable or unworkable. It encompasses all learned

and shared, explicit or tacit, assumptions, beliefs, knowledge, norms, and values, as well as attitudes, behavior, dress,

and language. See also organizational culture.

“Culture”

The writer is a former ambassador to

the Nethe r lands, South Korea and Iran

BriefJune 2013NEWS IN BRIEF24

Kuwait O il Company, a subsidiary of the government

owned Kuwait Petroleum Company, has set a target

o f 4 million barrels per d ay (m bpd) by 2020.The country’s current capacity is approximately

3 bpd with an additional 200,000 bpd produced

from the divided zone with Saudi Arabia currently.The target i s expected to be reached mostly by

development pl ans in Nort h Kuwait with some

d evel opments in th e di vided zone as well . “To achieve the 4 million target , we aim to

produce 3.65 mbpd from Kuwait and 350,000bpd

f rom the di vided zone,” sa id Sami al-Rushaid,c ha irman and managin g di re ct or of KOC .

“Som e of t he increase will come from the

developm ent of heavy oil, we are planning toproduce 60,000 bpd of heavy oil by 2017 and 2018,

but some will also come from the Jurassic light oil

which is coming out with gas, we expect to producearound 400,000 bpd of light oil from the Jurassic by

2020,” he added.

Going beyond i ts 2020 deadli ne, al-Rushaidstated that the company plans to have production

capacit y plateau at 4 mbpd from 2020 to 2030.

“Generally speaking, what we will be seeing from2020 to 2030 wil l be more of what we call the

unconventi ona l, heavy oil and Jurass ic l ight oil.”

Developing the new fields in Kuwait will notbe an easy task. “It is a very complex reservoir, it is

deep, has high pressure, high temperature fractured

and has H2S, it has everything and dealing with thatis one of the main cha llenges. However we are

making very good progress on this so far,” he said.

Kuwait to hit 4

million bpd by 2020

Pakistan to give wheat

to Iran for powerPakistan will export

of 100,000 tonnes ofwheat to Iran to

sett le the dues for

electricity supplied tothe country’s energy-

starved border areas.

The shipmentof 100,000 tonnes was to have been delivered to Iran in mid-February but was delayed

by preparations for Pakistan’s May 11 election. “The wheat is being given to Iran againstthe outstanding payment of $53 m illion for electricity supplied to Pakistani border

areas from the Iranian grid,” ministry spokesman Mohammad Ashraf said. “The interim

cabinet has approved the decision and exports wil l be initiated as early as possible.”The European Union and the United States have imposed toughened sanctions

meant to discourage Tehran’s nuclear programme, which they say has a military purpose.

Iran rejects that claim, saying its programme a ims at the peaceful product ion ofelectrici ty.

Western sanctions do not target food shipments, but financial measures ha ve

frozen Iranian companies out of much of the global banking system, hindering paymentsfor imports, on which Iran relies for much of its food.Electricity from Iran costs Pakistan

around $3 million a month and is supplied to towns near the Iranian border, including

the port city of Gwadar.

The Securities a nd Exchange Commission of Pakistan (SECP) has issued a license toSahara Insurance Compa ny Limited (SICL), a wholly-owned subsidiary of Employees

Old-age Benefi ts Institution (EOBI), al lowing it to conduct non-life insurance business

in the country.It has been after a gap of four years that the SECP has given license to an insurance

company. Last time, it issued license to an insurance firm was in 2009 and that was to

a life insurer.Following the registration of the SICL, the total number of active non-life insurers

has reached 40, while the total number of active insurance companies (life and non-

li fe), incl uding Pak ista n R einsuranc e Com pany Li mited, now sta nds at 50.With continuing emphasis on social insurance, EOBI decided to incorporate SICL

with the primary objective of providing health insurance coverage to EOBI pensioners

aged between 60 and 70. In addition, accidental death and disability coverage wi ll beprovided to Pakistanis working abroad.

SECPIssues a Sahara

Insurance Company Ltd

in


25NEWS IN BRIEFJune 2013

Borrowing by Govt crosses Rs1 trillionThe borrowing for budgetary support finally crossed the Rs1 trillion-mark, while the government suddenly increased its borrowing from State Bankspeeding fast towards half a trillion rupees.

The State Bank reported that the borrowing for budgetary support rose to Rs1.042tr during ten months and 10 days of the current fiscal. However,this is still less than the borrowing of Rs1.076tr made last year during the same period.

The expected fiscal gap of about 4 per cent of GDP in the budget could not be controlled to its limit which might be around 8pc at the end of the

cur rent fi sc al. This large fiscal gap demands large size of borrowings l ike prev ious year when the fiscal gap was ov er 8pc.The size of the budgetary borrowing is almost same with fractional difference. The borrowing from State Bank rose to Rs454bn; it was Rs424bn

during the same period last year.The growth rate of monetary expansion for this period was 9.86pc while the growth rate was 9.06pc last year.The government has so far borrowed Rs631bn from commercial banks; the amount was Rs624bn last year. The biggest difference was noted in

the credit off take by the private sector which shrunk to record low this year in the 10 months. The private sector credit off take during this period wasjust Rs92bn compared to Rs235bn last year. Even the last year was not significant for economic growth and participation of private sector. The poor

amount o f credi t of f take by the pr ivate sec tor reflects th at the econ omic growth could be even lower th an last yea r.The current fiscal could prove the worst year for the economic growth in the last five years. While the high hopes are attached with the new incoming

government, it would not reflect in the current fiscal that is to be ended on June 30.

Iran has offered insurance for

Indi an refiners to boost its

crude sales. US and European

Unio n sanc tions aimed at

choking the flow of oil money

into Iran and forcing Tehran to

n eg ot iate c u rb in g i t s

c o n tro ve rs ia l n uc lea r

programme slashed i ts crude

exports in half in 2012, costing

it as much as $5 billion a month.

The sanctions have forced refiners in India, Iran’s second-largest

oil buyer, to reduce imports because Indian insurers have sai d they

can no longer cover refineries that process Iranian crude. “They (Iran)

said they can provide insurance for our refineries,” said one of the

sources, after a meeting between Indian O il Minister Veerappa Moily

with his Iranian counterpart Rostam Qasemi.

“We had a fruitful meeting...Our meetings are about the energy

sector,” Qasemi told reporters, without elaborating. Qasemi is on a

three-day visit to India from Sunday to woo New Delhi for stepping

up oil imports and invest in the Opec-member’s oil and gas sector.

Two refiners — Hindustan Petroleum Corp, and Mangalore Refinery

and Petrochemicals Ltd — halted Iranian oil purchases in April due to

insurance problems.

India cut imports of Iranian oil by 26.5 per cent in the fiscal year

which ended March 31, and had reduced shipments by 56.5pc in April,

according to data from trade sources.

Iran also offered to ship gas to India in liquefied form via Oman,

they said. Iran does not have the technology to l iquefy gas so they

have asked India to use Oman for liquefying the gas for further supplies

to New Delhi, said a second source.

“Both of us expressed our desire to continue with business with

each other. We need to nurture business with them...there are problems

which will be sorted out,” said Moily after the meeting. India has asked

Iran to participate in tenders seeking oil supplies for its strategic storage

being buil t at two places with a combined capacity of 18.55 million

barrels by 2014.—Reuters

Iran offers insurance to

Indian refiners

PIA to induct 12 narrow body

aircraft in its fleetPakistan Inter-national Airline (PIA) is in an urgent need to inductnew aircraft in its fleet to meet demand and capacity; this was

di sclosed at the 56th Ann ual General Meet in g of PI A.Managing Director PIA Junaid Yunus said the Airline was in

the process to acquire 12 narrow body fuel efficient aircraft in itsfleet which would enable the Airline to offer better services to its

customers and would have savings with regard to fuel costs andmaintenance costs, as presently the Airline fuel cost was around

60 percent as compared to the industry average of 35 percent.Hussain Lawai senior m ember PIA Board of Di rectors sai d

good news was very soon in first phase PIA would be getting fournewer narrow body aircraft on lease from its own resources and

no further loans would be obtained. He said a complaint cell wouldbe esta bl ished with act ive participa tion of sharehol ders.

PIA shareholders appreciated present management's role inmaintaining the airline operations with a fleet constraint and other

factors affecting the airline especially inconsistency and frequentchange of management.

France has drawn up a blacklist of 17 countries in cluding Switzerland

that do not help investigate foreign aid fraud, banning the use of theirbanks to help distribute development funds .

Aides to development minister Pascal Canfin were unable to say

how much French foreign aid currently transits via banks in the countriesfeatured on the n ew b lacklist.The blacklist expands on an already-established register of eight “non-cooperative states and territories” that

already includes Botswana, Brunei, Nauru, Guatemala and the Philippines.It adds Switzerland, Lebanon, Panama, Costa Rica, the United Arab

Emirates, Dominica, Liberia, Trinidad and Tobago, and Vanuatu.The officials

justified the move by s aying there was a lack of transp are ncy in thenations on the list, adding that poor and developing countries were often

the main victims of fraud. “The aim is primarily preventative, to putpressure o n these countries by public ising this list to progress towardsmore transparency,” they said.

France blacklists 17 co untries for handling foreign aid


June 2013NEWS IN BRIEF26

Amb ass ado r of Rep ub l ic o f

Indo nesia to Pa kista n, Bur hanM uhammad has sa id that hi s

priorities were to enhance economic

cooperation between Indonesia andPakistan and to connect the business

c ommunit ies of two count ries,which woul d further st rengthen

mut ual link ages b etween two

Muslim countr ies.He highlighted that during his

v isi t to Isl ama bad Cha mber of

Comm erce and Industry (ICCI). Hesa id that the Indonesia-Paki stan

Preferential Trade Agreement (PTA)

was a landmark development in thebi lateral hi story of two countries

which will not only raise bilateral

trade volume but also open doorsf or Pa kista ni busi nessmen to

penetrate i n the emerging Asean

market.The Ambassador apprised that

there was some delay in the

enforcement of PTA as notificationhas not been issued yet. He sa id

that in this connection he wil l also

v isit J akarta to meet IndonesianTrade Minister. He st ated that

besides economic and commercial

c oo pe rat ion , Ind on esi a alsointended to invest in power projects

as wel l as Pakistan can get benefi t

of Indonesia n expertise in coa lsector for producing electricity. He

said that Pakistan and Indonesia are

also negotiating to start a project ofC oal Power Pl an in Karachi for

generating electr ic ity by using

domestic coal while the rest willcome from Indonesia.

He sai d that Indonesia and

Pa kistan have had a remarkablehistory of brotherly relationship and

two countries have enjoyed sound

and steady commercial interactionsince last several decades. He said

that President of Indonesia, Susilo

Bambang sent him to Pakistan forimproving the trade and economic

l inks between the two countries.

Indonesia ready to investin power projects

'Pakistan can attract

$5b in foreign

investment'

KARACHI: The Overseas Investors Chamber of

Com merce and Industry (OICCI) expects that thenew government can prov ide right environm ent

and support to Pakistan's economy and the country

can attract as much as $5 to $6 bi llion in foreigndirect investment annually.

The chamber is optimistic that the incoming

government will set a clear and focused directionto address key issues of governance, security, energy

and inconsistent policy implementation, which in

the recent past has severely affected inflow offoreign d irect in vestmen t in the co untry.

In a statement the OICCI President Kimihide

Ando sai d that as the country moves towards asmooth t ransi tion of power at the Centre and in

provi nces, Ando sai d the ongoing democrat ic

proc ess is creating a posi tive internationalpercept ion, which i s partially reflected in the

increasi ng forei gn portfolio investment in the

country's stock market.This window of opportunity can be used to

ch annel lo ng er term FD I to bolst er the

manufactur in g and infrastr ucture sec tor forsustained business a ctivities, which will cause an

increase in employment and economic growth, he

suggested.Seeing the country's potential, he expressed

confidence th at a few bold economic policy

initiatives by the new government can dramaticallychange the economic situation.

The Competition Commission of Pakistan (CCP) fined two dominant urea manufacturers around

Rs 8.6 bi llion on unreasonable price increase and the matter was currently subjudice. The CCP said

this case was instructive in the industry offered huge subsidy of around Rs 23.75 billion in only oneyear.

The companies maintain they transferred this subsidy by keeping their prices lower than the

international price. Import, thus cannot give domestic manufacturers any competition and in anycase urea is imported only to meet the shortfall and since government has to absorb its cost to make

urea available at an affordable price to farmers, there is a little incentive left to import, Ms Rahat

chairperson of CCP said. Whatever the peculiar reasons may be, it is clear the subsidy offered hasonly skewed the market and has not reached the intended beneficiary.

It has impacted not only the price but even made the availability of the product scarce, she

said. The domestic industry has the installed capacity to meet the local demand, which is constrainedby supply of gas. Parties hiked the pr ice upto 86 percent in a year, whereas gas curtailment, which

was the major ground taken behind such price increase impacted only 27 percent of production ofthe entire industry, there was also not much change in input costs. The 2 dominant companies

together availed Rs 15 billion of subsidy in one year (still higher than the penalty imposed). One of

the companies doubled its net profit from Rs 11 billion to Rs 22.5 billion. The Commission imposedthe maximum penalty i.e 10 percent of the turnover taking into account significance of urea for an

agri-based economy.

CCP fines dominant urea manufacturers around Rs 8.6bn

Foreign exchange

reserves rise to $11.62bnPakistan’s foreign exchange reserves rose

to $11.62 billion in the week ending May

24 from $11.43 billion the previous week,the central bank announced on May 30.

The r eserves held by the State Bank of

Pak ista n stood at $6. 56bil lion, afterincreasing 2.83 percent from $6.38 billion

in the pr evious week, wherea s th e

reserves held by commercial banks surgedby 0.17 percent to $5.059 bi ll ion as

com pared with $5.05 bil lion in th e

pr ev io us week. Remittances f ro mPakistanis abroad rose 6.37 percent to

$11.57 bill ion in the first 10 months of

the FY-2012-13, from $10.87 bi llion in thesame period last year. The fiscal year runs

from July to June.

SCB unveils digital banking

vision in PakistanStandard Chartered Bank announced its

digital banking vision aimed at enhancing

the cu stomer bank ing experience in

Pakistan. This is part of the Bank’s global

focus on ‘Digitisation’-socialising personal

banking and extending customers’ digital

li festy le into bank ing. Bank launc hed

‘Breeze’, its award-winning Mobile Banking

application, making Pakistan the second

market in the MEPA region where thisappli cation i s available. Breeze Mobil e

banking is designed to address the needs

of globally connected customers who are

on-the-go, tech-savv y and who value

transaction freedom and conveni ence.


27June 2013


InterviewMaria Khalid

The energy sector projects

are o ur top pr ior i tybecause the entire country

is facing a serious cr isis

of energy followedby m o u nt i n g

circular debt that

has brought theindustrial development into a stand

still. The bank is a lso planning to

extend its financing to the energysector. The financing of energy-

related project is on the top priority

of NBP. So far, some 10 wind energyprojects have been initiated in the

country, of which seven have been

financed by the NBP. Of theseseven, five have a lready

c o m m e n c e d

operat io ns an dtwo mo re are

ex p ec ted to

becom e

operational shortly. On the whole, as much asfinancing facility worth Rs 125 billion had been

extended to the energy sector.

What is your strategy to strengthen the

core banking application of NBP?

The National Bank had successful ly

implemented core banking application in its

main branch to provi de 'superb' customerservices, besides ensuring efficiency across

the bank ing functions. This core banki ng

application aimed to strengthen NBP’s internalbanki ng system. After the successful launch

of the main branch, the bank i s planning to

introduce core banking application in al l itsbranches. According to the plan, core banking

appl ication will be implemented in 250

branches over the next four months. We havealready com pleted a pilot project of online

system and at present, with 1, 300 online

branches, the bank has become the country'slargest bank with 100 percent online branch

network.

How do you see the demand of business

community for a cut in SBP policy rate?

2012 was a difficult year for commercialbanks because of persistent reducti on in

discount rates that significant ly impacted

the net interest income of all banks. Anyfurther reduction in policy rate will bind

to have negative impact on inflation andas wel l as n et inc om e of b ank s.

Under a decli ning int erest rate

scenar io, the bank was redefining its

June 2013INTERVIEW28

Dr. Brohi has rich experience in all

disciplines of contemporary banking. His

dynamism and professional deep insightis a great source to promote the bank’s

business a nd to maintain and improveits present position among the domestic

industry.

He joined the bank in 1984 a ndheld numerous Senior Management

positions at the Regional and Head Office

leve l. Dr. Broh i, pr io r to becom ingPresident of the NBP, was serving as

Chief Operating Officer and Head of

Commercial & Retail Banking Group ofNBP, and ca rries rich experience in all

spheres of banking spanning over almost

three decades. In the past, he has beenthe head of Bank’s Operations Group,

Strategic Planning Group, Information

Techn olog y Gro up, Cu ltur e Chan geP ro gramme Gr ou p an d Traini ng .

Pr io r to joi ni ng NB P, he was

Assistant Professor of Management,taught in various Universiti es in the

United S tates of America. He holds a

Bachelor ’s Degree in Law, a Master’sDegree in Literature from the

Univ ers ity of Sind h, a

Master’s Degree inB u s i n e s s

Adm ini st rat io n

from USA and aD oc to rate in

P u b l i c

Administrationfr om Karach i

Universi ty.

Portfolio

President and CEO of National Bank of

Pakistan Dr. Asif A Brohi

performing

despite challenges

NBP


29INTERVIEWJune 2013

business model and at present, while most

comm ercial banks are investing heavil y ingovernment securities, the NBP has effectively

kept its fresh investment in government

securities at a minimum level and is trying tofulfill the demand of the private sector.The

bank is planning to offset the impact of low

interest rate by expanding (its investment) inhigh-yield and low-risk product s, low-cost

deposit mobilization branch expansion and a

reduction in non-performing loans (NPL) andyou wil l witness posi tive resul ts from this

quarter onwards.

Has NBP introduced any products to

facilitate the masses in general?

Advance sal ary, consumer gold andagriculture loan are three main products of

the NBP to facilitate masses, particularly people

in rural areas, who have previously beendeprived of banki ng facilit ies. A sig ni ficant

growth has been witnessed in agriculture and

consumer loans over the past few years andat present, the NBP has the largest market

share in terms of agr iculture and consumer

loans among domestic commercial banks.Consumer loans, let me share, especially

against gold, have grown by 51 percent

whereas the growth in agricultural loans was

30 percent during 2012. Total agriculture andconsumer loans stood at Rs 131 billion at the

end of December last year.

What are the NBP’s preferred areas for

investment?

Whil e m any local banks preferred to

invest in government securi ties , the NBP

witnessed a significant growth in advancesloca lly as well as internationally. With an

increase of 25 percent, total advances grew

to Rs 657 billion by the end of December lastyear from Rs 525 billion in December 2011.

NBP achieved a massive growth in lending to

farmers: the bank achieved its target for thisfiscal year by di sbursing Rs 52 bil lion on

account of a gricultural credit disbursement

during July-Apri l of FY13. "The (bank's) overallinvestment had surged to Rs 343.5 billion at

the end of December last year, up from Rs

319.5 billion at the end of December 2011.”

Do you have any plan to further expand

the NBP’s branch network?

Yes, we are planning to set up 55 new

branches across the country, i ncluding 40

convent iona l and 15 of I slamic banking. Weare focusing on rural areas--we have decided

to open more branches in less developed areas,

instead of urban areas, out of 40 branches, asmany as 30-32 branches would be established

in r ural areas.We will also gradually expand

the bank' s foreign operatio ns. The NBPcurrently has 29 overseas branches and the

Bank is planning to set up a branch in Sri Lanka

to facilitate trade and industry. Talks with thecentral bank of Sri Lanka are in final stages.

The NBP will a lso set up a branch in Russia

very soon. You may know that the NBP is alsosuccessful ly operatin g fou r br anc hes in

Afghanistan and six in Central Asian Republics.

Every other bank is introducing Islamicbanking products. Is NBP making any strategy

to make achi evements in this fl ourishing

sector?Like all other commercial banks, the NBP

is also revital izi ng its Isl amic bank ingoperations. With the opening up of 15 new

designated Islamic banking branches this year,

the total number of such branches would riseto twenty three. Recently, Mr. Zubair Haider

has joined NBP as the head of Islamic banking

and I hope that he would provide new impetusto NBP's Islamic banking services.

What role is the NBP playing to facilitate

home remittances?

NBP is the leader in home remittances

business and this is also an area of top priority.

The NBP has agg ressiv ely exten ded itsremittance correspondence base across the

globe with the aim of facilitating overseas

Pakistanis. Cumulatively, the NBP has struckagreements with 30 leading overseas remitting

partners. Striking a major strategic move, the

NBP created a separate independent groupna med G lo ba l H om e R em it tan ce s

Management Group in 2009 to focus on inward

home remittances business.

The NBP currently has 29

overseas branches and the Bank

is planning to set up a branch in

Sri Lanka to facilitate trade and

industry. Talks with the central

ba nk of Sr i Lanka are in final

stages. The NBP will also set up

a branch in Russia very soon. You

may know that the NBP is also

su ccessfu ll y o per ating fou r

branches in Afghanistan and six

in Cen tral Asian Rep ubl ics.

E ver y ot her b ank is

introduci ng Islami c ba nking

products. Is NBP making any

strategy to make achievements in

this flourishing sector?

Like all other commercial

banks, the NBP is also revitalizing

its Islamic banking operations.

With the opening up of 15 new

d esignated Islamic b anking

b ranches thi s ye ar, the total

number of such branches would

rise to twenty three.


June 2013WORLD30

Armed to the teeth“A well regulated militia, being necessary to the

security of a free state, the right of the people

to keep and bear arms, shall not be infringed.”–The Second Amendment to the US Constitution


4WORLDJune 2013 31

Sabria Balland Chowdhury

The Second Amendment

to the US Constitution isthe backbone of the entire

gun control or rather, the

lack of gun control debatewhich has part icu larly

been an i ssue in the

spotlight in recent times even more so thanbefore. The December 2012 mass shootings

of 20 children and 6 adults in an elementary

school in Connecticut by a crazed shooterwas supposed to be the “tipping point ” in

the gun control debate but very sadly, even

this most horri fic and tragic of incidents hasnot been the cause of any successful gun

control legislations in the US as ha s been

seen in the past in Great Britain and Australia.One of the main reasons for this is

si mpl y the in terp ret at io n o r rath er

misinterpretation of the famous SecondAmendment to the US Constitution. Although

written in 1791, when it was believed that

arming the ci tizenry against a tyrannica lgovernment was necessary, it is st ill used

today in rhetoric and unfortunately in practice

as the right to carry arms for the protectionof individuals and their families. There is also

some romanticism and nostalgia in this love

of bearing arms which dates back to the daysof the pioneers and the opening of the West

in order to defend themselves against Native

Amer ican s, bandits and wild ani mal s.Ho weve r, th is rom ant ic i sm and

nosta lgia which is well-eng rained in the

American mindset and cult ure is kept wellalive and notoriously politically strong by the

National Rifle association (NRA), which has

strong interest groups among Congressmenand protects the arm’s industry’s interests

comm erci ally. It is the lethal mixture of acult ure w hich feels the constant need to

protect itself against enemies and the highly

potent lobbying of the NRA which has made

the US the most armed country in the world.

Today, i t i s es timated th at the lawenforcement agencies and th e mil itary

possess four million weapons while American

ci vi lians possess 310 mil lion assor tedweapons, including assault weapons which

are found in the batt lefields of Iraq and

Afghanistan. To add to these shocking facts,approximately 50% of all gun sales involve

pri vate se ller s and do no t requi re any

background check.This leads to the nightmares that have

resul ted in the high school shoot ings in

Col om bin e in C olor ado, V i rgin ia TechUniv ers ity in Virginia , the Sikh Temple

shootings in Wisconsin and the elementary

school shootings in Sandy Hook, Connecticut,just to name a few incidents. More young

people each year are killed and m aimed by

gunfi re in the United States than all UScasualties in Iraq and Afghanistan pu t

together and gun homicides is one of the

biggest causes of death among t he youth.There are 30,000 g un r elated deaths in the

United States every year.

The statistics and life stories are chilling.Recently, a two year old girl was accidentally

shot and killed by her five year old brother…

by his own personal gun. In April in Tennessee,a four year old boy shot and killed a 48 year

old woman. A few days later, a six year old

boy was accidentally shot by another fouryear old. Parental responsibility is no doubt

an issue in cases such as these but a great

deal has to do with the gun culture in Americaand the interests of the NRA which seeks to

arm its members with guns in order to protect

cit izens from what it cal ls go vernmenttyranny. There are no doubts th at this

intense ly strong lobbying by the NRA has

imbedded itself into the American culturewell enough to actually have people believe

that they must arm themselves to the teeth

i n o rde r to p rot e c t th e ms elve s

from….themselves.The horr ifi c resul ts are that the

continual spiral of deaths caused by homicides

and accidents due to guns increases, with nohopes of any legislations being passed by the

C ongress which controls the sell ing and

purchasing of guns in any way. The startlingresponse of the Conservatives and the NRA

after the Sandy Hook shootings was far from

one which advocates gun controls. Rather,the argument suppor ted more guns in

schools, even arming teachers in order to

defend t heir students against any attacks.Under such circum stances, how can any

intelligent and sound decisions be made in

constructing a safe society?President Roosevelt had said, “The only

thing we have to fear i s fear itsel f”. This

statement could not be more appropriate forthe gun cult ure which has fri ghtening ly

materialized in the United States. Between

misinterpreting the Second Amendment andlosing complete perspective of its place in a

set period in history, the aggressive lobbying

of the NRA and citizens’ fear of not beingable to protect themselves against violence

(yet in the process causing it also), the vicious

cy cle of the lack of gun control continuesfiercely and more and more innocent lives

are lost.


June 2013EDUCATION32

Mehnaz Aziz

Cur rent de mo grap hi cs

changes in Pak istan posean interesting scenario of

tough challenges coupled

w i th e n c o u r a g i n gopportuniti es. Pakistan is

experiencing rapid growth

in population with slow decline in fertility andmortality rates. A lot is written on the effect

of demographic changes on economic growth.

Declining fertility and mortality rates due toimproved health care and awareness, a

process known as ‘demographic transition’,

leads to a bulg ing population of youth readyto work and save. This demographic transition

i f channelled to product ive avenues through

relevant policy interventions will lead to rapideconomic growth - an outcome known as

“demographic dividend”. Sathar, Royan and

Bongaarts in their latest book “Capturing theDemographic Dividend in Pakistan” published

by Population Council, 2013 has addressed

key areas to focus, in order to capture thisvaluable demographic divi dend. Key areas

identif ied were educat ion coverage and

reproducti ve healt h awareness. Call it acha llenge or opportunity ; policy makers can

harness the power of Pakistan’s increasing

cohort of population in their prime years tof uel ec ono mic gro wth . Ot herwise , i f

uncontrolled, this rising population tide will

c ause agitation, unrest, v io len ce and

political/civil conflict.

Important policy questions here a re;How to control the unsustainable growth of

population through voluntary measures? How

to secure the demo graphi c div idend bybuilding capacity and increase productivity of

this new young populat ion? Are the present

infrastructure, industry and economy capableof absorbing this increasing tide of working

population? The a nswer to all these policy

questions is linked directly or indirectly to theprovision of quality education. Internationally

the strong connection between education and

population wellbeing is recognized and welldocumented at all stages of development. The

next few decades are crucial for Pakistan as

the majority of population will be of working


theCapturing

The positive effects of education

are not limited to lowering fertility

rates. Universal access to education

is the key ingredient for Pakistan

to transform demographic

transition into demographic

dividend. The population of

Pakistan is growing at a soaring

rate of 1.8 and is projected to

reach close to an astounding

300 million by 2050

demographic dividend

through education

33EDUCATIONJune 2013

age and hence we need to start planning

for i ts wellbeing no w. Investm ent in

education is the need of the time and ourfocus area should be pri mary educat ion

with particular attention to gir ls’ education.

The most direct impact of education(particularly girls’ education) is on lowering

fertility rates. Educated women are found

to have low fertil ity rates. In the case ofPa kistan increased investm ent in girls’

education and wider outr each of family

pl anning awareness will direct ly lowerfert ili ty rates. As per the most recent

Demographic and Health survey of Pakistan

the fertility rate of educated women is 2.3but for uneducated women it is a striking

4.8. Also the median age of marriage for

educated women is 6 years older than foruneducated women.

The positive effects of education are

not l imited to lowering fertil ity rates.Universal access to educa tion is the key

ing redient fo r Pakista n to transfo rmdemographic transit ion into demographic

div idend. The population of Pa kistan is

growing at a soaring rate of 1.8 and isprojected to reach close to an astounding

300 million by 2050. A major proportion

(49%) of this 300 mill ion will consist ofyoung people (24 - 64). This working age

population cohort wil l be a catalyst for

future growth, if educated and providedthe employment opportunities to serve the

country.

In 2050, close to 59% of this bulgingworking age population will be women.

Considering the present female literacy rate

of only 38%, in working age population (20-64), a large portion of the working age

pop ulation (62%) is a burden on the

economy. This trend will continue to 2050,

where the pro port ion o f uneducated

females in work ing age population are

nearly double than males. Realizing thecurrent sad state of education provision for

females and to ensure the productive and

active involvement of this large portion offuture population, there is an urgent need

to invest heavily and on pr iority basis in

girls’ education.The futur e of Pak ista n is heavily

dependent on the provision of equitable

education to all and i s in line with themandate of article 25 A. The need of time

is investment in primary education and to

achieve provision of education for everyoneas a basi c human r ight. The c hang ing

demographic of Pakistan is a double edged

sword. If not used in a productive and rightway to spur future economic growth, it will

hu rt Pak ista n soc ially, p oli tical ly and

economically in the future. To harvest thef ru i ts of lo ng term human capi tal

develo pment, we should act now anddevelop a nationwide education strategy.

Post eight een amend ments we see a

disparity in quality and provision in all fourprovinces - A National Counci l to ensure

st andard s an d in co ord in atio n with

implementation in Provinces. Also a districtbased accountability mechanism is the need

of the day. The ball is in the court of the

new government post May 2013 electionsto ensure that the prom ises made in

manifestoes see the light of the day. Any

e du cat io n po l icy to c ap tur e th edemographic dividend has to be inclusive

of all four provinces.

Th e author is the found ing direc tor ofChildren’s Global Network and is the member ofth e G lob a l Age nda Counci l for Paki sta n-

[email protected]


TERM

OF THE DAY

“Resolution”

1. Formal authorization or

expression of an action,decision, intention, opinion,

transaction, etc.

2. Proposition put before ame eting of stockholders

( shareholders ) or thedirectors of a firm for

discussion, approval or

adoption. Resolutions are offour common types: (1 )

Elective ( see electiver e s o l u t i o n ) , ( 2 )

E x t r a o r d i n a r y ( se eextraordinary resolution),

(3) Ordinary (see ordinary

resolution), and (4) Special

(s ee special resolution).

3. Appropriate disposition

of a complaint or protestthrou gh prescribed or

stan dard pro ced ures .

4. Sharpness or clarity of amonitor, printer, or scanner

image , expressed in anappropriate unit: pixels per

inch (PPI) for monitors, dots

per inch (DPI) for printers,and samples per inch (SPI)

f o r sc an n e r s . F o rphotographic.

ECONOMY

June 2013REPORT34

Reuters

Pa kist an 's all -powerful mi li taryoverthrew Nawaz Sharif 14 years ago and

hustled him off into exile in handcuffs. Now

he's back as prime minister-elect, with thearmy watching his every move, especially

steps planned to ease tension with arch-

rival India.Sharif's Pak istan Musli m League-

Nawaz (PML-N) won 124 of 272 contested

seats in this month's parliamentary election.Its nearest rival, the Pakistan People's Party

(PPP), won just 31 in the first democratic

handover of power since independence in1947.

But Sharif is inheriting an almost-

broke nat ion that has been ruled by themilitary for more than half the 66 years

sin ce then. It i s wracked by a Tali ban

insurgency, sectarian violence, daily powercuts and spi raling unemployment among

its 180 million people.

“Pakistan has so many problems thath e n eeds th e h elp an d supp or t of

everybody, including the army,” said Shazad

Cha udhr y, a former air vice marsha l.The question is: will the army give

Sharif the freedom to do w hat he wants?

The top source of potential friction is hisaim to boost trade and t ies with India.

Sharif's policies towards India will be

heavily scrutinised, but there are signs themilitary may be slightly more amenable to

overtures than in the past.

In 1999, the army torpedoed Sharif'sattempts to improve relations by secretly

sending soldiers disguised as mi litants to

capture Indian outposts in the heights ofKargil, in the north of Indian-administered

Kashmi r. When Sharif tried to fire Pervez

Musharraf, his then-chi ef of army staff,Mu sharraf took p ower in a co up.

Sharif has promised an inquiry into

the Kargil invasion. Most officers be lievethat is a poli tical move aimed mostly at

containing Musharraf, who is now under

house arrest i n the capital, rather than aplan to punish senior officers.

Sharif was at pains to absolve the

military of blame for his overthrow at arecent news conference. “I never had any

trouble with the army. The coup was staged

PAK ARMYwatching

The army wanted to

know if Sharif could

unite Pakistan's four

provinces, each most

likely headed by a

different party, to rein inmilitancy, said Major

General Mahmud

Durrani, national

security adviser under

the previous government

Sharif’s cosying up to India


35REPORTJune 2013

by one single person,” he said. “The rest ofthe army was not taken into confidence.

We have to work together.”

Officers say they are watching threethi ng s c lo se ly: th e fo rmat io n o f a

commission to investigate the 1999 invasion;

who replaces the army chief in Novemberwhen his term expires; and how Sharif plans

to tackle mil itants, especially the Pakistan

Taliban. The a rmy distinguishes between“good” Taliban - who do not attack Pakistani

security forces and fig ht i n Afghanistan -and “bad” Taliban, who have killed tens of

tho usands of soldiers and civ il ians in

Pakistan.Sharif favours talks with the Pakistani

Taliban. Many in the military believe this

co uld h elp address some ind iv id ua lgriev anc es but they do not want any

compromise on things l ike changing the

Pakistani constitution.The army wanted to know if Sharif

could unite Pakistan's four provinces, each

most likely headed by a di fferent party, torei n in mi li tancy, said Major General

Mahmud Durrani, national security adviser

u nd er th e pr ev io u s go vern men t .No sl ink ing b ack to barrac ks

Pakistani mili tants have, alleged ly,

previously enjoyed the backing of the army.That has changed, officers insist, although

elem ents with in the mili tary are st il l

sometimes accused of supporting militantgroups.

India blamed elements of the Pakistani

security forces for supporting gunmen whoattacked the Indian city of Mumbai in 2008,

somethi ng Pa kist an str ongly denied .

Durrani sa id attitudes to India were

slowly changing, meaning that top officers

are unlikely to stand in the way of Sharif'soutreach this time. “For Pakistan to move

ahead, it needs peace with India,” he said.

“But the military will not just s link back to(the) barracks. It still has a lot of input on

foreign policy and needs to be weaned off

that gradually.”The current army chief, Ashfaq Kayani,

obliquely refers to India as an “external

threat” in speeches but also now mentionsthe “ internal thr eat ” of mili tancy - a

significant change in rhetoric. “The army is

now enlightened enough to understand thesignificance of peace with India,” one high-

ranking officer said. “Everybody wants the

Kashmir issue to be resolved.”But any changes would need to be

slow and be matched with concessions from

India, cautioned Durrani and Chaudhry, thefor mer air vice marsha l. “It's a fallacy to

imagine that foreign policy can be changed

overnight,” Chaudhry said. “Can you wishaway the problems with India? Can you wish

away the problem of Kashmir?”

Sharif may also benefit from divisionsbetween generals over the contr oversial

extension of the term of the chief of army

staff, said analyst Ayesha Siddiqua, who haswritten extensively about the Pa kistani

military. Kayani has served two three-year

terms, sowing dissent among some of thosewho had been in line to move up the ranks,

she said.

Kayani's term is up in November, andSharif will at least nominally have to approve

his replacement. He had signalled he would

accept the mil itary's recommendation, shesaid.

"I t seems like he's learned from his

past mistakes," she said. "He might use theKargil commission (of inquiry) as a political

tool to get some space to negotiate with

India ."Sharif had three hours of tal ks with

Kayani on Saturday. "The army chief and

Nawaz Sharif expressed their determinationto fight terrorism," an English-language daily

quoted a PML-N official as saying. "Mr Sharif

also praised the army's role in strengtheningdemocracy and providing securit y during

the election."

The past five years had shown thatwhi le the military rem ained the mo st

powerful force behind the scenes, i t no

longer wanted to take direct power, sai dretired Lieutenant General Talat Masood.

Musharraf, the last military dictator,

was in detention. Generals had been hauledu p before Pak ista n's feisty courts and

accused of vote-rigging, cor ruption and

extrajudicial killings." The army d oes n ot have the

monopoly on power it once did," Masood

s aid. "The p erf ormanc e of the lastgovernment was pathetic, but the army

d id n' t st ep in - the jud ic iary di d. "

The past five years had shown that while the military

remained the most powerful force behind the scenes, it

no longer wanted to take direct power, said retired

Lieutenant General Talat Masood


June 2013AGRICULTURE36

Saleem Shaikh

Farmer Sa rsw at i

Bhetwal in Nepal’s remote

scenic mountain valley hadall blessings in the first year

of her cr op insu rance .

She survived the freakfrost in January this year

that ruined her standing potato crop, just two-

three weeks before harvest.“Had my crop been not insured, I would

have suffered recoverable financia l losses,

plunging me i nto apo ss ibl e deb t

t r a p a n d

leaving me

unable to prepare for the next crop,” said

Bhetwal, the 47-year-farmer in Lamdihe scenic

mountain village of Duli khel town, about 30km (18.64 miles) southeast of Kathmandu,

Nepal’s capital.

C ro p in suranc e i s p ur ch as ed b yagricult ural producers, including farmers,

ranchers and others t o protect themselves

against either the crop losses due to naturaldi sasters, such as frost, hail , drought, and

floods, or the loss of revenue due to declines

in the prices of agricul tural comm odi ties.The two general categories of crop

insurance are called crop-yield insurance and

crop-revenue insurance.Sarswati Bhetwal says in November last

year she had culti vated potato on ha lf a

hectare that cost her NRs. 15,000 ($176.5)and insured it with a private insurance

company.

1,125 ($13.25) ofm y

investment in the crop and equal amount was

paid by the government as a premium. And,

after crop damage assessments, the insurancecompany pa id to me 80 percent of th e

damages or NRs. 12,000 ($141) within a month

of th e d ama ge,” she tol d th is scr ibe.This payment from the insurance cover

means a lot for Ms. Bhetwal.

In Nepal, potato crop is sown in Octoberand harvested by end of January.

“This amount [paid by an insurance firm

against the crop losses] enabled me to sowgarlic and cauliflower crop in February. I hope

profit from these vegetables after their harvest

in May will be financially helpful,” she saidwith delight obvious on her face.

Around 35 to 40 farmers have suffered

economic losses due to potato crop damagescaused by the fr ost in mid-January when

temperature dived below -2 all of sudden that

lasted for over 10 days.Sarswati Bhetwal says she

Pakistan needs to drawlessons from

Pakistan can tackle climate change vagaries with insurance cover

Nepal’s crop insurance


37AGRICULTUREJune 2013

never witnessed frost in her life as devastating

as this year’s. The frost obliterated pota tocrops on hundr eds of hectares in her and

several other adjoining villages.

Local government agriculture officialsDhuli khel town say while they are yet to

estimate the damages, initial situation pains

a horrible situation of damages to potato andother winter vegetable crops.

Arjun Bahadur, another potato far mer

in the vil lage, suffered estimated NRs. 14,35,000 ($1,588) worth financial losses as he

lost his entire potato crop on 4.5 hectares to

the freak frost. Left high and dry, the tenantfarmer now plans to obtain money from a

private moneylender against his two-room

house as col lateral. Yet , he will have to payhigher rate of interest, possibly over 20 percent

per annum.

“I really need to borrow to pay rent tofarmland owner, buy essential farm inputs for

next vegetable crops to recover the financial

losses if, God forbid, there is no unfavourableweather condit ions ,” Bahadur sa id whi le

uprooting damaged potato plants with sickle.

Local farmers say Sarswati Bhetwal’s cropinsurance experience has brought good lessons

for them.

“Now, we have learnt enough that bydint of crop insurance we farmers can survive

crop failures caused due to bad, unpredictable

weather conditions,” 40-year-old Bahadur said.He confessing that downplaying importance

of crop insurance has cost them a lot.

Meanwhile, Sarswati Bhetwalsays arefarmers come to her to get know about more

details, procedures a nd benefits as well as

help in getting their crops insured to avoid

financial losses. “I’ve noticed interest among

farmers about crop insurance is r ising ,” shesays.

Bed Mani Dahal, environmental scientist

at the Kathmandu University said during lastfew years the weather has become increasingly

erratic, unpredictable and unpromising for

mountain farmers, whose crops have becomehighly vulnerable to rainfall variability and

rap id ly ch an ging cl imate pa ttern s.

“The crop insurance, however, can helpfarmers avoid financial losses due to erratic

weather patterns and keep the farming activity

continue unaffected, which can otherwise

disrupt food supply in the local market and

spiral up the grain and vegetable prices,” the

environmental scientist said.Nand Kishor Agrawal, coordinator of the

Nor way-funded Himalayan Climate Change

Adaptation Programme (HICAP) launched bythe Intern ationa l Centr e for Integrated

Mountain Devel opment (ICIMO D) sai d

weather scientists in Nepal’s meteorologicaldepartment may have predicted the cold snap,

but that information was not conveyed to

farmers.“Understandingly, there is an apparent

lack of communication or an interaction gap

between the government’s weather scientists,extension department off ici als and the

farmers, which must be br idged to help

farmers mitigate damage from extreme eventswith improved, timely weather forecasts,”

Agrawal said.

In Pakistan, farmers are also gr ipped bysimilar conditions due to changing weather

patters, scarce, erratic rainfalls and need suchprotective measures to help them stave off

impacts fr eak weather events in shape of

natur al di sasters on their livel ih oods.Insurance, Pakistani government officials

say, may be one way of coping with the

enormous social, economic consequences ofsuch extreme weather events.

Zafar I qba l Qadir, for mer cha irman of

the National Disaster Management Authority(NDMA), in Islamabad, sa id the NDMA has

already hammered out a plan to introduce

national disaster r isk insurance. It aims toeventual ly make it mandatory for Pakistan’s

entire population to be insured against disaster

risks, he added.

Arjun Bahadur, a pota to far mer in L amdi he sceni c mo unta in village a t Dhulikhel tow n -

about 30 km ( 18.64 miles) southeast of Kathmandu, Nepal’s capital city - checks damaged

po tato plant standing in his potato field devastated by the recent frost

A woman farmer pulls a plastic w ater pipe to supply wa ter to vegeta ble farmland in

Pa nityanki picturesque mountain vi llage of Kavrepalanchowk district, some 35 kms from

Ka thmandu, N epal’s capi ta l city


A pilot phase of the programme, to be

implemented starting any time this year withfunding support from the World Bank, will

extend free or subsidized insurance to those

judg ed the count ry’s poo rest and mo stvulnerable. Eventually, officials hope farmers,

livestock producers and others will be included

as well, said Ahmad Raza Sarwar, director-general of the National Insti tute of Disaster

Management in Islamabad.

Sarwar told this scribe over phone thatthe size of the insurance premiums each

person or family might pay i s sti ll being

negot iated with insurance fi rms, as is theamount of coverage.

Some details of the insurance have been

worked out and more are sti ll being workedout among the disaster management authority,

the Ministry of Climate Change, the Finance

Ministry, and the Federal Economic Affa irsDivision, but authorities are confident it will

soo n be com pleted, sa id offici als in the

Pakist ani cl imate cha ng e min ist ry sa y.

The insurance, developed after extensive

consul tations with insurance com panies,fina ncial regula tors, banks, businesses and

international fina nci al institutions, aims to

cover the risks posed by the climate-inducednatural disasters that are becomi ng more

frequent in the country.

Meanwhile, Zafar Iqbal Qadir said theWorld Bank will set aside around five percent

of th e developm ent funds the Bank has

comm itted for Pakistan for the nationwideinsurance project.

According to the World Bank’s Country

Partnership Strategy (CPS) document, the Bankhas committed $5 billion to Pakistan for 30

uplift projects over several years.

The pro gramme, which the disastermanagement author ity say s would be the

biggest insurance venture of its k ind in the

world, aims to eventually cover Pakistan’s 180million people for the loss of human lives,

livelihoods, shelter and livestock.

But one early question raised about the

insurance effort is how the poor wi ll be able

to afford premiums for insur ance cover.

"This matter has also com e underdiscussion and it has been now decided that

premiums for those who can't afford will be

subsidized and full premium for t hose livingbelow the poverty line will be pa id by the

government," Qadir said.

Independent climate change and disasterexperts said that although this is a welcome

move, it remains to be seen whether the

NDMA would be able to effectively implementits plan.

“In the past, we have seen the launching

of good initiatives with much fanfare. But thesethen remain on paper only. What is seriously

needed is a mechanism that allows for disaster

mitigat ion and adapt ation proj ects to beimplemented in a true spir it,” sa id Sattar

Zangejo, a disaster management expert who

has worked with Oxfam International, the U.N.Development Programme, Australian AID and

Plan International.Across Pakistan, the devastating 2010

deluge caused agriculture and infrastructure

damage worth over $84 million, while floodsin 2011 cost the natio nal exch equ er an

estimated $63 million, according to the federal

finance ministry.Economic damages from 2012 year’s

torrential monsoon rain during the first three

weeks of September were estimated at $35million, according to the NDMA.

-

Crop insurance is purchased by agricultural

producers, including farmers, ranchers and

others to protect themselves against either

the crop losses due to natural disasters, such

as frost, hail, drought, and floods, or the loss

of revenue due to declines in the prices of

agricultural commodities

A farmer covers his v egetable crop to avo id fr ost attack in Lam dihe scenic mo untain villa ge

at Dhul ikhel town - abo ut 30 km (18.64 m iles) southeast of Kathmandu, Nepa l’s ca pital

Sarswati Bhetwal, a 47-year- farmer shows a potato- fill ed bucket

in Lamdihe scenic mountain v ill age Dhulikhel town - about 30 km

(18.64 miles) southeast of Kathmandu, Nepal’s capital city - standing

in her potato field destroyed by the recent frost

June 2013AGRICULTURE38


Monthly Economic Affairs June, 2013

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Transcript of Monthly Economic Affairs June, 2013