Value Chain (Nov 11)

Mon

thly

Occupy Wall Street; We got sold out,banks got bailed out; Strike back; No cuts;Goldman Sach is the work of the devil!; Solidarity is the people’s weapon.Occupy Wall Street; We got sold out,banks got bailed out; Strike back; No cuts;Goldman Sach is the work of the devil!; Solidarity is the people’s weapon.Occupy Wall Street; We got sold out,banks got bailed out; Strike back; No cuts;Goldman Sach is the work of the devil!; Solidarity is the people’s weapon.Occupy Wall Street; We got sold out,banks got bailed out; Strike back; No cuts;Goldman Sach is the work of the devil!; Solidarity is the people’s weapon.Occupy Wall Street; We got sold out,banks got bailed out; Strike back; No cuts;Goldman Sach is the work of the devil!; Solidarity is the people’s weapon.Occupy Wall Street; We got sold out,banks got bailed out; Strike back; No cuts;Goldman Sach is the work of the devil!; Solidarity is the people’s weapon.Occupy Wall Street; We got sold out,banks got bailed out; Strike back; No cuts;Goldman Sach is the work of the devil!; Solidarity is the people’s weapon.Occupy Wall Street; We got sold out,banks got bailed out; Strike back; No cuts;Goldman Sach is the work of the devil!; Solidarity is the people’s weapon.Occupy Wall Street; We got sold out,banks got bailed out; Strike back; No cuts;Goldman Sach is the work of the devil!; Solidarity is the people’s weapon.Occupy Wall Street; We got sold out,banks got bailed out; Strike back; No cuts;Goldman Sach is the work of the devil!; Solidarity is the people’s weapon.Occupy Wall Street; We got sold out,banks got bailed out; Strike back; No cuts;Goldman Sach is the work of the devil!; Solidarity is the people’s weapon.Occupy Wall Street; We got sold out,banks got bailed out; Strike back; No cuts;Goldman Sach is the work of the devil!; Solidarity is the people’s weapon.Occupy Wall Street; We got sold out,banks got bailed out; Strike back; No cuts;Goldman Sach is the work of the devil!; Solidarity is the people’s weapon.Occupy Wall Street; We got sold out,banks got bailed out; Strike back; No cuts;Goldman Sach is the work of the devil!; Solidarity is the people’s weapon.Occupy Wall Street; We got sold out,banks got bailed out; Strike back; No cuts;Goldman Sach is the work of the devil!; Solidarity is the people’s weapon.Occupy Wall Street; We got sold out,banks got bailed out; Strike back; No cuts;Goldman Sach is the work of the devil!; Solidarity is the people’s weapon.Occupy Wall Street; We got sold out,banks got bailed out; Strike back; No cuts;Goldman Sach is the work of the devil!; Solidarity is the people’s weapon.Occupy Wall Street; We got sold out,banks got bailed out; Strike back; No cuts;Goldman Sach is the work of the devil!; Solidarity is the people’s weapon.Occupy Wall Street; We got sold out,banks got bailed out; Strike back; No cuts;Goldman Sach is the work of the devil!; Solidarity is the people’s weapon.Occupy Wall Street; We got sold out,banks got bailed out; Strike back; No cuts;Goldman Sach is the work of the devil!; Solidarity is the people’s weapon.Occupy Wall Street; We got sold out,banks got bailed out; Strike back; No cuts;Goldman Sach is the work of the devil!; Solidarity is the people’s weapon.Occupy Wall Street; We got sold out,banks got bailed out; Strike back; No cuts;Goldman Sach is the work of the devil!; Solidarity is the people’s weapon.Occupy Wall Street; We got sold out,banks got bailed out; Strike back; No cuts;Goldman Sach is the work of the devil!; Solidarity is the people’s weapon.Occupy Wall Street; We got sold out,banks got bailed out; Strike back; No cuts;Goldman Sach is the work of the devil!; Solidarity is the people’s weapon.Occupy Wall Street; We got sold out,banks got bailed out; Strike back; No cuts;Goldman Sach is the work of the devil!; Solidarity is the people’s weapon.Occupy Wall Street; We got sold out,banks got bailed out; Strike back; No cuts;Goldman Sach is the work of the devil!; Solidarity is the people’s weapon.Occupy Wall Street; We got sold out,banks got bailed out; Strike back; No cuts;Goldman Sach is the work of the devil!; Solidarity is the people’s weapon.Occupy Wall Street; We got sold out,banks got bailed out; Strike back; No cuts;Goldman Sach is the work of the devil!; Solidarity is the people’s weapon.Occupy Wall Street; We got sold out,banks got bailed out; Strike back; No cuts;Goldman Sach is the work of the devil!; Solidarity is the people’s weapon.Occupy Wall Street; We got sold out,banks got bailed out; Strike back; No cuts;Goldman Sach is the work of the devil!; Solidarity is the people’s weapon.Occupy Wall Street; We got sold out,banks got bailed out; Strike back; No cuts;Goldman Sach is the work of the devil!; Solidarity is the people’s weapon.Occupy Wall Street; We got sold out,banks got bailed out; Strike back; No cuts;Goldman Sach is the work of the devil!; Solidarity is the people’s weapon.Occupy Wall Street; We got sold out,banks got bailed out; Strike back; No cuts;Goldman Sach is the work of the devil!; Solidarity is the people’s weapon.Occupy Wall Street; We got sold out,banks got bailed out; Strike back; No cuts;Goldman Sach is the work of the devil!; Solidarity is the people’s weapon.Occupy Wall Street; We got sold out,banks got bailed out; Strike back; No cuts;Goldman Sach is the work of the devil!; Solidarity is the people’s weapon.Occupy Wall Street; We got sold out,banks got bailed out; Strike back; No cuts;Goldman Sach is the work of the devil!; Solidarity is the people’s weapon.Occupy Wall Street; We got sold out,banks got bailed out; Strike back; No cuts;Goldman Sach is the work of the devil!; Solidarity is the people’s weapon.Occupy Wall Street; We got sold out,banks got bailed out; Strike back; No cuts;Goldman Sach is the work of the devil!; Solidarity is the people’s weapon.Occupy Wall Street; We got sold out,banks got bailed out; Strike back; No cuts;Goldman Sach is the work of the devil!; Solidarity is the people’s weapon.Occupy Wall Street; We got sold out,banks got bailed out; Strike back; No cuts;Goldman Sach is the work of the devil!; Solidarity is the people’s weapon.Occupy Wall Street; We got sold out,banks got bailed out; Strike back; No cuts;Goldman Sach is the work of the devil!; Solidarity is the people’s weapon.Occupy Wall Street; We got sold out,banks got bailed out; Strike back; No cuts;Goldman Sach is the work of the devil!; Solidarity is the people’s weapon.Occupy Wall Street; We got sold out,banks got bailed out; Strike back; No cuts;Goldman Sach is the work of the devil!; Solidarity is the people’s weapon.Occupy Wall Street; We got sold out,banks got bailed out; Strike back; No cuts;Goldman Sach is the work of the devil!; Solidarity is the people’s weapon.Occupy Wall Street; We got sold out,banks got bailed out; Strike back; No cuts;Goldman Sach is the

Quality at all cost - Dr. Navaid-ul-Zafar

Unbridled capitalismits deniers have a tough timeUnbridled capitalismits deniers have a tough time

Diamer Bhasha Dam: lifeline for national economyFood insecurity in Islamic countries

6th Expo Pakistan-2011

MD, Hamdard Laboratories(Waqf)

International Coal Conference-2011Cement Sector: turmoil & the way forward

Increasing trend of frauds in BanksEnvironmental impact of pesticides

November 2011

35th FPCCI

Export

Awards

Pakistan taken for ridein the Afghan theatrePakistan taken for ridein the Afghan theatre

Poverty: Flawed definitions can’tcover failure it containsPoverty: Flawed definitions can’tcover failure it contains

Information & Technology

Obituary

LiteratureSports

Events

Agriculture

Economy

Volume - 1 Issue - VII Nov 2011

CC

Parliamentarians’ suspension: the issue it will give rise to

Power load-shedding: its crippling falloutBanks in the West: history has lessons for them and the rest

New Monetary Policy: the key missing link

Unbridled capitalism: its deniers have a tough time Poverty: flawed definitions can’t cover the failure in containing itDiamer Bhasha Dam Project: A life line for the national economy35th FPCCI Export Awards: winners deserve a pat on the back

EXPO Pakistan 2011 “SCALP 2011”International Coal Conference 2011

Xenel’s Exit: Is this a significant move? Cement Sector: turmoil and the way forward

PoliticsPakistan taken for a ride in the Afghan theatreGaddafi’s sad exit: end of an era of resistance

Banking: going back to the basics is the only optionIncreasing trend of frauds in banks

Retail Price: *PKR 100

Environmental impact of pesticides

Science

Research & DevelopmentFood insecurity in Islamic Countries

InterveiwHamdard: Pioneers in Herbo-Mineral Products

Rauf NizamaniTariq Iqbal Khan

CSRCorporate Social Responsibility: the many ways of manifesting it

Regulatory Compliance

Bank profitability: up despite a recession

Contracting business: regulating the tendering authorities

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sGlobal & National Briefs

Financial Services

EditorialChief EditorDr Zeeshan [email protected]

EditorNadeem Abdul [email protected]

Advisor Editorial TeamA.B [email protected]

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Bureau Chief, LahoreMuhammad [email protected]

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Bureau Chief, MultanAjmal [email protected]

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Jauhar Ali

Saqib Arif

Entrepreneurship

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

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

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etters to the EditorLL

November 2011

Sir, “Value Chain” is indeed a value addition for its readers. Some important areas though have already been highlighted in the publications till date. However, the importance of “entrepreneurship” in its true essence with emphasis on the national economy, duly addressing the problem of unemployment should also be focused upon and it should also encompass the importance, role and approach of business schools that have been flooding the market with “job seekers” instead of “job creators”. On an in-depth analysis of diverse business areas and opportunities that are not too much capital intensive but can prove or be of substance for integrating smaller businesses into bigger business units thereby spurring/augmenting self reliance at national level, and may prove to be of immense importance for the business community, especially the budding entrepreneurs with fresh ideas and spirit to make their mark. Salman Tanvir, Islamabad

Value ChainSir, I got the magazine, Value Chain; for a start, the magazine is impressive. It could become Pakistan’s version of the ‘Economist' if you continue to improve its quality and contents.Saw the article on MBA, and advisory of Hugh McCulloch, how deceptively simple, and keeps coming back the same old adage, don't lend beyond borrower's CCC, and CCCCs. Congratulations to and associates.Prof. Dr. Shakil Faruqi, Lahore

Priorities of the regimeSir, the new chief of APTMA is sounding very pessimistic about meeting the optimistic export growth target set by the Ministry of Commerce. I for one agree with him because the government is not really serious about cutting power load-shedding. Indeed we have a fiscal gap – courtesy the massive waste and corrupt practices of the ministries and state owned entities – but a good government looks at all the priorities and ranks them according to how they will impact the society. This regime simply doesn’t and that’s what increases our miseries.Engineer Khalid Raza, Karachi

US withdrawal from IraqSir, On October 21, President Obama announced that the US will withdraw its 39,000 soldiers and officers from Iraq by the end of 2011. Good for the Iraqis! But the nuttiest part of Obama’s brief speech was that he thought the soldiers will be returning home with “their heads high”. Is it because the US invasion killed nearly 650,000 Iraqis? Or is it because the invasion was a complete fraud because no weapons of mass destruction were found in Iraq? Or is it because this invasion shattered America’s image as well as its economy?It is important to note that withdrawal from Iraq by December end is unlikely because the US will have to lift back 1.5 million pieces of equipment and close its 18 bases in Iraq. Finally, even after the US withdraws its troops it will leave behind another army - 10,000 US contractors. It is no wonder that Obama didn’t answer any questions posed by the press reporters after his press briefing.Kausar Ali, Karachi

Gaddafi’s endSir, I found it wholly shocking that the Libyans appeared overjoyed at killing their leader at the behest of the NATO states. Gaddafi had his faults, but is this what he deserved? The truth is that he accumulated and saved Libya’s national wealth, which no Arab leader has done, and that invited the NATO’s anger. Now the Libyans will be licked by the US and EU because, after ensuring that most of Libya was destroyed in the civil war, contractors from the Western states will get business worth billions.Farriel Anwar, Karachi

FBR BluesSir, this year the FBR must have set a record of indiscretions. Although the last date for submission of income tax returns by the salaried lot was re-set at October 25, until October 20, the FBR couldn’t decide on what should be the format of the tax return to be filed by this lot, and whether, in total defiance of logic, FBR should be asking for details of the expenses the taxpayers had incurred.The message to the salaried lot – that pays its taxes more honestly than any other taxpayer group – was blunt; it was “we can make you run for any number of lapes of lunacy.” Is this how the FBR proposes to encourage tax payments? My tax advisor told me that I fall in the category of “loyal fools” because I want to pay all my taxes, and do so honestly. The slowly building revolt on the street is clearly telling the bureaucrats that their time may be up, if they don’t mend their ways.Azfar, Karachi

What the Election Commission did on October 21 was a highly commendable act because what needed to be exposed was the true character of our parliamentarians. With some notable exceptions – all praise to them for their sense of morality – if parliamentarians set a highly regrettable example of a sense of civic obligations, how can the electorate learn lessons.If, in spite of being the “law makers”, the parliamentarians don’t pay taxes, are they left with any authority to act as lawmakers? In all fairness, none. The Election Commission established that. More importantly, after being suspended from representing their constituencies in the parliament, do they retain the right, or are they legally qualified to hold any office of the state? I suppose not because they become ministers only by virtue of their being members of the parliament. But if, despite being suspended, they are allowed to continue in these offices, will it not be unconstitutional and thus illegal?Ibne Shaheed, Karachi

Election Commission’s verdict

6

US Defence Secretary Leon Panetta, on a visit to Israel on October 3, warned Israel about its isolation in the Middle East and its reliance on its military might.

French court of appeals ordered the Agha Khan to pay Euro 60 million to his divorced wife who is a German princess.

Republican presidential hopeful Mitt Romney warned Pakistan of significant consequence if it did not side with the US in its withdrawal from Afghanistan.

A study by European Brain Council published on October 4 says that annual cost of treating various brain disorders among Europeans has shot up to 798 bn Euros and is a “ticking bomb” as people face a political, social and financial crises.

Russia and China vetoed a European- sponsored resolution in the US Security Council condemning a crackdown on the pro-democracy dissenters by the Syrian government that has killed 3,000 civilians.

President Obama promised on Oct. 21 the definite withdrawal of all US forces from Iraq by end-2011 and reduction in US forces fighting in Afghanistan and Iraq to half by 2014.

Pakistan won membership of the UN Security Council (as its non-permanent member) for the 7th time; on October 21 it secured 129 of the total 193 votes in the UN General Assembly.

On Oct. 21 the UN ordered an inquiry into the reported killing of Moammar Gaddafi, because he had to be captured alive, to stand trial for his alleged crimes.

Over 600 people died on October 23, when a massive earthquake struck south-eastern Turkish city of Van, after victims were trapped in the debris of dozens of buildings that collapsed.

On October 10 India's Supreme Court stayed the death sentence until hearing of an appeal filed by Ajmal Kassab - the sole surviving gunman

Hundreds of people marched through the streets of Kabul on October 6, a day ahead of the 10th anniversary of the US invasion of Afghanistan following 9/11, and demanded the immediate withdrawal of US and Nato forces.

On October 12 Amnesty International asked the Canadian government to arrest and to prosecute the former US president George W. Bush saying that he authorised torture while directing the US-led war on terror. Bush will be attending an economic summit in Canada on October 20.

Saudi Arabia and the US accused Iran on October 12 over an alleged plot to kill the Saudi ambassador in Washington, of which the US Attorney General and FBI spokespersons provided only incomplete details.

Libyan forces and rebel units pursuing Qaddafi regime’s remnants in the city of Sirte, claimed that they captured Qadhafi's son Mo'tassim on October 12.

An Indian army helicopter that strayed into Pakistan’s Skardu area in the North on October 23 due to bad weather was released by Pakistan within hours.

The US withdrew its ambassador to Syria on October 23, due what it called as credible threats to his person. The Syrian government too withdrew its ambassador to the US.

Libya’s interim leader Mustafa Abdel Jalil ordered on October 24 an inquiry

into the killing of Gaddafi and also banned public viewing of his dead body that had gone on since Gaddafi’s killing.

US Secretary of State indicated on Oct. 12 that the US had been in touch with the Haqqani group–the Taliban group it wants Pakistan to hit in North Waziristan.

Francois Hollande was elected by the French Socialist party on October 16 for contesting the presidential elections next year. President Sarkozy may stand for re-election but all recent opinion polls show he could lose to a left-wing challenger.

Former Indian Supreme Court Judge Makandey Katju said on October 18 that the police often falsely accused Muslims of terrorism simply because it can’t do a professional job of investigation.

Israeli soldier Gilad Shalit was released from captivity in Gaza on October 18, in exchange for 1,000 Palestinians jailed in Israel. Initially, 477 Palestinians prisoners were released. The remaining 523 will be released later on.

Common Wealth Heads of Government moot will commence in Perth, and Britain’s Queen Elizabeth-II will preside over the proceedings of the meeting. She arrived in Australia on October 25.

from the gang accused of the 2008 terrorist attack on Mumbai.

lobal BriefsGGGlobal events last month

November 2011

The Solidarity Party of Afghanistan, October 7

7

Saudi Crown Prince Sultan bin Abdul Aziz, Saudi Kingdom's first deputy prime minister and minister of defence, died on October 21, as per a CNN report.

Gold price during September was driven by doubts over Euro zone leaders' ability to tackle the critical sovereign and bank debt crisis. The crisis drove gold price to a record high of $1,920/oz from a low of $1,534.49/oz.

Morgan Stanley and Goldman Sachs have forecast that the Brent Crude price would average $130/barrel during 2012.

German unemployment fell to 6.7% in September – the lowest level of the past 20 years i.e. since German unification. In spite of the on-going recession, German employment has been improving.

Raja Rajaratnam, the hedge contract seller was sentenced to 11 years in prison by a New York court on charges of insider trading in Goldman Sachs Inc, Intel Corp, IBM and McKinsey & Co.

S&P and Fitch rating agencies down-graded New Zealand’s long-term foreign currency rating from ‘AA+’ to ‘AA’ and its long-term local currency rating from ‘AAA’ to ‘AA+’ on September 30 after its external debt hit 70% of its GDP.

Euro fell to its lowest level against the Yen in the last three years when it fell to 103.66 Yens per Euro on September 30.

India’s National Economic Planning Commission withdrew its definition of poverty line on September 30 that it had earlier provided to India’s Supreme Court after strong protests were lodged by the social groups questioning the definition.

S&P’s trial began in Australia on Oct. 4 for giving top ratings to

Swiss parliament’s lower house voted on September 29 in favour of imposing on Swiss banks a Tier-1 minimum capital requirement of 10%, compared to 7% as required by Basle Accord-III.

UN Social Comm. on Asia & Pacific released its Statistical Yearbook for 2011 on October 16, which contains a warning of increased water scarcity.

Swiss parliament asked Swiss banks on October 16 to attend a parliamentary hearing and identify the Swiss laws they used to legalize their business relations with private entities in the US.

British government released figures on October 18 that showed that inflation was 5.2%, the highest in the past 3 years.

S&P lowered the credit ratings of 24 Italian banks on October 19 due renewed tensions in the Euro zone, particularly in Italy.

A WB report on ‘Doing Business’ that was released on October 20, says that the most conducive business environment is available in Singapore. The report ranked Pakistan at 105.

World Economic Forum commenced its proceedings at Jordan’s King Hussain Dead Sea Convention Centre on Oct. 22. Over 1,000 delegates from 50 countries and eight heads of state and government, including President of Pakistan, took part in the event.

UN Office on Drugs & Crime claims that, during 2009 money laundering was estimated at $1.6 trillion of which only 1 percent was ceased and frozen.

Basle Committee on bank regulations agreed on October 25, to exempt trade transactions for allocation of bank capital based on floor sovereign risk ratings so as to cut their cost.

Common Wealth Business Forum that preceded the Common Wealth Heads of Government meeting in Perth completed its discussions on Oct. 26 on measures to increase trade between the members of the Common Wealth.

controversial financial products – credit default swaps and collateralized debt obligations backed by mortgages that collapsed in the build-up to the 2008 economic recession.

Brent crude fell below $100 a barrel, the lowest since February 2011.

India’s DataWind launched its cheapest tablet computer so far called Aakash. It has a 7 inch screen and will be sold for $35 to school children.

Moody’s downgraded Italian sovereign debt’s credit rating by three notches citing its concerns over Italy’s sluggish economic growth prospects.

Fitch downgraded Italy’s credit rating by one notch and that of Spain by two notches on account of the worsening EU financial crisis.

By October 10, in Shanghai market, by touching the 6.3486/$ level the Chinese Yuan accumulated a 30% rise against the US Dollar since July 2005.

On October 10, the BlackBerry users in Europe, the Middle East and India began suffering e-mail outages (which lasted for four days) due to a problem of which details weren’t disclosed then.

Pennsylvania’s capital city declared itself bankrupt on October 12, accepting its inability to retire liabilities exceeding $310 million, raising the spectre of other US states declaring bankruptcies.

British government released figures on October 12 indicate that with 2.57 million on the jobless list, unemployment at 8.1% was the highest in the past 17 years.

Occupy LSX- an anti-corporate protest movement on the lines of the one recently launched on New York’s Wall Street is to begin protests at London Stock Exchange.

Rating agency Fitch lowered its long-term issuer default rating from 'AA-' to 'A' for (the recently bailed out) Royal Bank of Scotland and Lloyds Bank Group, citing reduced chances of further state support.

lobal BriefsGGGlobal economy last month

November 20118

Karachi’s Session Court instructed the Karachi police on September 29, to book KESC’s Chief Executive Tabish Gauhar, GM Security Col (r) Wahid Asghar and Chief Security Officer Col. (r) Asif Saeed for an attempt to murder KESC union office holders.

Afghan President accused Pakistan’s ISI on October 1, of its involvement in the assassination of former Afghan President Burhanuddin Rabbani. Afghan intelligence agency claimed having provided Pakistan the evidence of ISI’s involvement.

Pakistan firmly rejected on October 4 the Afghan accusations that Pakistan had refused to assist an investigation into the assassination of Burhanuddin Rabbani.

In its verdict on the suo moto action (on total break-down of law and order in Karachi) on October 6, Supreme Court blamed Sindh government for the bad state of law and order in Karachi pointing to its failure in taking effective steps against targeted killings and extortion.

Former captain of Pakistan’s cricket team Salman Butt accepted before a law court in London on October 6 that, as a part of a betting scam, he agreed to score no runs in a crucial over during a match against England.

A briefing on implementing Supreme Court's verdict in its suo moto case about Karachi’s law and order situation was given to the President on October 8 in a meeting held in the Presidency.

IG Frontier Corps Balochistan, Maj. Gen. Obaidullah Khan Khattak disclosed on October 8 that Pakistan had credible proofs of India’s role (via Afghanistan) in the unrest in Balochistan.

Sindh Home Department has banned political and social activities of People's Amn Committee. A TV channel said that a notification was issued on October 10.

Army Headquarter extended the date of a briefing to the parliament on current security situation and operations at the request of National Assembly's

Standing Committee on Defence. The briefing, due on October 13, postponed at the eleventh hour, “would now be held on October 18 at Army Headquarter".

Supreme Court announced on Oct. 23 that it will function on Saturdays despite the working week being reduced to 5 days.

Muhammad Zaka Ashraf, President of Zarai-Taraqqiati Bank Ltd. was appointed as Chairman of Pakistan Cricket Board on October 12. On October 14, the Supreme Court accepted a petition filed by Zarai-Taraqqiati Bank’s SEVP Mohammad Nadeem Chohan accusing Zaka Ashraf of making illegal appointments during his tenure as the president of the bank.

The Ministry of Law & Parliamentary Affairs notified on October 16 that Adm. (r) Fasih Bukhari was appointed Chairman of the National Accountability Bureau by the President, setting aside all reservations expressed by the PML-N. On October 22, leader of the opposition in the National Assembly challenged this appointment in the Supreme Court.

Ministry of Finance at last released Rs 1 billion for payment of salaries and pensions of the employees of Pakistan Railways. It ended employee strike and railway service was resumed.

US Secretary of State Hillary Clinton arrived in Pakistan on October 20. She was accompanied by Gen. (r) David Petraeus, now head of CIA, Gen. Martin Dempsey, Chairman Joint Chiefs of Staff, and Lt. Gen. Douglas Lute. Before leaving Kabul on her way to Pakistan, she had said “we intend to push Pakistan very hard.”

The Election Commission suspended the membership of 231 parliamentarians on Oct. 21, because they failed to declare details of their assets to the Commission. According to a former Secretary of the Commission, suspended members cannot exercise their rights as parliamentarians and also cannot hold a public office.

Federal government appointed Mushtaq Shahas Inspector General Sindh Police with effect from Oct 21.

Pak politics last month

Geo TV aired on Oct. 22 an interview with Afghan President Hamid Karzai in which he vowed that Afghanistan will be on Pakistan’s side if attacked either by the US or India. Two days later, a spokesman of the Afghan presidency denied that the Afghan President expressed such views.

Begum Nusrat Bhutto, wife of former premier Zulfiqar Ali Bhutto, expired in UAE on October 23. She was bed ridden for years, and was suffering from cancer. She was posthumously awarded Nishan-e-Imtiaz and the Madar- e-Jamhooriyat title.

AJK High Court Chief Justice was shot on October 25, while taking a walk. He was immediately operated upon and is reported to be out of danger.

The Prime Minister created on Oct. 26, four new federal ministries: National Heritage & Integration, Food Security & Research, Disaster Management, and the National Regulations & Services.

Sixteen religious and political parties joined hands on October 26 to promote sectarian harmony and defend country's ideology by removing differences among themselves.

A Pakistan Railways pensioner lost his life on October 26 while he stood in a queue before NBP's Headquarter Branch in Lahore since early morning. Supreme Court took suo moto notice of delay in pension payments and will begin hearing the case on October 28.

Supreme Court formed a commission on October 26 to investigate the alleged corruption and reasons behind delays in the installation of Rental Power Projects.

International Monetary Fund expects that Pakistan's fiscal deficit in 2011-12 will rise to 6.5% of GDP, blowing past government estimate of 4%; analysts also expect the gap to be much higher.

ational BriefsNN

November 20119

Pak economy last month

ational BriefsNNFBR confirmed on Sept. 29 findings of Tax Ombudsman according to which 28900 containers in transit to Kabul were disposed off in Pakistan causing around Rs 55bn worth of tax revenue loss.

Electricity shortfall crossed 7,000 MW or 40% of total demand due insufficient fuel availability to power plants. On Sept. 29 Secretary Ministry of Water & Power disclosed this to the National Assembly.

ADB Country Director for Pakistan said on September 29 that further ADB lending to Pakistan could stop unless it assures stability by implementing macro-economic reforms or gets a Letter of Comfort from the IMF.

Pak fiscal deficit reached Rs 1.336trn or 6.6% of the GDP as per the data released by the finance ministry. After excluding electricity subsidies, the deficit was still at Rs1.194 trillion or 5.9 per cent of GDP.

After repaying the existing debt raised from T-Bills, government will borrow Rs 1.07trn in the Q-2 FY12, as stated by the Finance Ministry on Sept. 29.

KES-100 index declined by cumulative 734.06 points or by 5.9% during the July-September, due to huge foreign portfolio investment outflow.

CPI swelled to 11.5% in July-September over same period in 2010-11. FBS data released on October 2 showed that SPI went up by 10.68% and WPI by 18.62%.

The gap in electricity generation and consumption shot up to 9000MW. After violent protests, the PM said on October 3, that the government will resolve the crisis within 24-36 hours.

FBR confirmed provisional collection of Rs 373.819bn during July-September 2011-12 showing increase of 27.4% over the same period in 2010-11

Finance Ministry and Pakistani banks agreed to split the total circular debt of Rs 400bn into two chunks of Rs 200bn each. The first chunk would be converted into 5-year PIBs at the

The rupee recovered against the US$ on October 13 gaining 36 paisa for buying and 37 paisa for selling, after SBP started monitoring dollar overbought positions of the banking sector.

National Assembly passed on Oct. 14 the Private Power & Infrastructure Board Bill-2010 to facilitate private investment in the power sector.

Thousands of Pak Railway employees came on the streets on October 15. They were demanding their salaries that were not being paid for the past four months.

July-Sept. Current Account deficit was $.1.2bn compared with $597 million in same period during 2010-11.

IMF team will visit Pakistan starting November 18, for Article IV talks based on economic developments, outlook and economy strengthening policies.

FBR agreed not to ask for break-up of personal and household expenses in the tax returns for the 2010-11 period.

SBP banned on October 19 recovering of any service charges on cash handling or sorting while accepting cash deposits.

Sixth Expo Pakistan exhibition began on October 20. The PM formally opened the exhibition a day earlier.

SBP revised on October 21 its rules on loss provisioning against classified assets waiving its condition that, at the time of classification, a full-scope valuation shall not be more than one year old.

KSE-100 index fell by 462.84 points to close at 11,525.25. Huge foreign outflows and investor concerns over the prevailing gas shortage for the fertiliser sector were cause of this decline.

Dubai Islamic Bank Pak Ltd. will add 25 more branches in 2012 to its existing network of 72 branches in Pakistan.

FBR extended the date for submitting IT returns by November 21.

IMF projected on Oct. 25, Pak CPI to reach 13.9% by end-2011.

Islamabad Electric Supply Co. issued on October 13, a list of its defaulters that included the President House, PM House, NAB, and Chairman Senate.

Acting SBP Governor, M. Yaseen Anwar was confirmed as Governor on October 19, for a 3-year term.

Foreign Minister Hina Rabbani Khar disclosed on October 12 that, in principle, Pakistan had decided to grant India the Most Favoured Nation status.

Global Finance awarded NBP its "Best Emerging Markets’ Bank-2011 in Asia" award. This was announced in a ceremony at the National Press Club in Washington.

An energy conservation plan approved by Federal Cabinet on October 12 relies on a 5-day work week, staggered holidays for industry, and early closure of markets.

All SBP and Public Debt Offices will observe a 5-day working week as per the Oct. 13 Federal Government notification.

November 201110

average rate of previous two auctions i.e. 13.3%, and the second chunk will be converted into 1-year T-bills at the rate fixed at the October 5 T-bill auction.

SBP announced a 150 basis points cut in its discount rate in its Monetary Policy statement issued on October 8.

On October 10, KIBOR fell by 86 basis points after a 150bps cut in the discount rate. Yield on 10-year PIBs fell to 12.15, but later settled within 12.25-12.30 range.

Trade deficit crossed $5.114bn for the first quarter of FY12 – up by 28.78% over $3.971bn during the same period last year. FBS disclosed this on October 10.

EEditorial

November 2011

Parliamentarians’ suspension:the issue it will give rise to

n October 21, the Election Commission (EC) wrote a new chapter in Pakistan’s history by formally sus-

pending the membership of not just a fistful but 231 parliamentarians for their failure, to submit the details of their assets to the EC in the time period allocated for that purpose. An EC official said that September 30 was the last date for filing of return under 'Representation of People Act-1976, Article 42 (A)'. Due to the non-availability of some EC members earlier, this information could not be released before October 21.The list of suspended parliamentarians is long and includes 103 MNAs, 13 Senators, and 115 MPAs. In the case of the National Assembly, the percentage of suspended members is 30 percent, or close to one in every three. That is shocking because the National Assembly is the key legislature.Not disclosing asset ownership and not paying taxes isn’t something new that our parliamentarians have done; what is new this time is their huge number. It only proves that, over the years, democracy and the high status it provided to the parliamentarians as “lawmakers” failed to imbibe in them the moral sense of responsibility that was expected. Apparently, it worked the other way. At least that’s the way it looks. One perception is that this trend is correlated to the rise in the number of landlords among the parliamentarians – the class that has consistently defied tax on agricultural income.There is a clear lack of appreciation among the lawmakers that, as lawmakers, they are supposed to set glaring examples of respect for the law that they expect the citizens to obey. But by showing scant respect for the law parliamentarians do the opposite. Given this perspective, is it any surprise that, in recent years, Pakistan’s tax-to-GDP ratio has declined from over 13 percent to 8.1 percent in 2010-11? The most disappointing part of the latest disclosure is the fact that, of all the people, Minister for Finance and Revenue Abdul Hafeez Sheikh is in the list of the suspended members of the parliament. Collecting taxes on incomes and assets is the solemn obligation of his ministry and Federal Board of Revenue–his ministry’s key arm. Logically, those reporting to him look up to him for setting a good example. Sadly, the EC list shows that he didn’t do that.The other Minister who shouldn’t have been on this list is the Federal Minister of Interior because he is expected to show the highest respect for every law of the country. Sadly, he too is on the list of the suspended parliamentarians. The list includes the names of six more Federal Ministers – all of them heading ministries with substantial allocations from the Federal Budget and therefore responsible for spending large chunks of taxpayers’ money. What you then begin to wonder is, given their suspension on violation of a key EC regulation should they be trusted with hard-earned taxpayer money?

The sad fact is that most political parties in Pakistan are not parties–organizations governed by strict codes of social and moral ethics that apply to every party member irrespective of his or her place in the party. It is a harsh reality that party top-brass is beyond any rules and regulations, whether of their parties or the common law of the land, and this primarily has to do with the fact that they generally consist of landlords – the lot that always remains above the law. The only time it had to face the law was when an adversary landlord or a ruler in the “khaki” made this lot obey the law, most of the time, for its own advantage.Mr. Nawaz Sharif is on record having said that the present regime is disfiguring the face of democracy, but so is the case with his party members who are on this shameful list. Should their names have been there? Isn’t this a clear sign of gross indiscipline in the party ranks? Can he still claim that PML-N is the alternative to the corrupt coalition regime? These sad realities apply in varying degrees to the other parties as well.Besides these questions, the bigger one is whether, with 30 percent of its strength dysfunctional, the National Assembly can be considered functional. Parties not in the parliament would argue, and with reasonable logic, that the National Assembly is no more functional but this would be denied by the parties present in the parliament, purely for their benefit. This may very well justify keeping the National Assembly in tact in spite of the questions over its reduced representative capacity. A more legally complex question is whether the ministers, whose membership of the parliament now stands suspended, should go on holding the public offices they hold. Former EC Secretary Kunwar Dilshad is strongly of the opinion that these gentlemen became ministers simply because they were the members of the parliament. After the suspension of their memberships, they have lost the fundamental qualification to hold any ministerial office. These issues will, in the days to come, create a major problem for the in-power regime. But it will have none to blame for it; by not enforcing disciple on party members, all affected parties may have to pay the price.

O Impact of EC suspension orderFederal ministries:• Water and Power • Pet. & Natural Resources• Interior• Finance and Revenue • Commerce • Defence • Special Education

Parliamentarians:• Senate • National Assembly • Punjab Assembly • Sindh Assembly• KP Assembly• Baluchistan AssemblyTotal

131035323236

231

11


ditorialEE

November 2011

New Monetary Policy: the key missing link

he latest Monetary Policy statement of the State Bank of Pakistan (SBP) was

welcomed by business and industry for an understandable reason–the hefty 150 bps cut in the Discount rate will reduce the borrowing costs of these traditionally over-leveraged sectors. Indeed the move will help businesses but the big unanswered questions are “first, will banks have the cash to lend to the private sector and, second, is lack of liquidity the only reason why credit to the private sector has been virtually stagnant?”The widespread riots in the Punjab during the fortnight ending October 6 shocked the government into realizing that if power load-shedding continued at its then pace (20 hours a day), it could be on its way out. Only then did the Finance Ministry rise to the occasion but coerced Pakistani banks into agreeing to buy T-bills with 1-year tenor for Rs 200bn, and 5-year tenor PIBs worth Rs 200bn so that government could pay off the various components of the circular debt.This repayment tactic will ‘settle’ the huge circular debt in a deceptive manner; convert it into ‘direct’ public debt instead of being routed via existing credit to refineries, oil marketing companies, IPPs, and PEPCO that they all had availed from banks because they were not paid their dues by the state. Effectively, it will only change the borrower; repayments won’t flow in; government will borrow from banks to pay off the liabilities these entities owe to banks. This mode of settlement of the circular debt will keep banks saddled with debt; they won’t recover it to channel more of credit to the private sector. In effect, public debt will continue impeding the ability of the banking sector to increase the much needed credit to the private sector.How government squeezes liquidity out of the system is portrayed by its borrowing practices. In FY11, low tax revenue collection compared to fiscal needs fuelled public borrowing; that scenario didn’t change. According to the Monetary Policy statement, “requirements are substantial and increasing.” The proof thereof is that, “compared to an announced T-bill auction target of Rs 750bn for Q1-FY12 the government raised Rs 851bn.”The SBP Monetary Policy admits the lack of liquidity in the market by accepting that, besides the seasonal factors “liquidity position of the market is under stress”. That this is the case was indicated by the fact that SBP had to inject Rs 292bn worth of liquidity into the system on 7th October – a day before its policy announcement. But in this context the monetary policy did not do what was required even though, at Rs 1.57 trillion, currency in circulation remained excessive, and could fuel much higher inflation. Without requiring banks to increase profit rates

T on saving deposits from the current low of 5 percent p.a., new savings will not enter the

banking system to increase credit to the private sector nor will currency in circulation contract and to check consumption and

prevent another inflationary hike. As per the figures released by the FBS in early October, in the first quarter of FY12, trade deficit was $5.114bn; it rose

by 28.78 percent over the deficit –$3.97bn–recorded during the corres

-ponding period in FY11. Also, inflow of inward foreign remittances dropped from

over $1.3bn to $0.890bn in September 2011. Pakistan is also not keen on further IMF

borrowing (after failing to meet all its tough targets). That is the background wherein SBP warns that “in the wake of declining external budgetary support, it is imperative to increase the tax-to-GDP ratio to scale down the reliance on borrowing from the banking system.” While FBR has confirmed exceeding the tax collection target for Q1 FY12, the fact that Sales Tax recovery from imports rose by 62 percent but rise in collection from the industrial sector was only 9 percent implies that domestic industry is not registering the growth needed to meet the 3.8 percent targeted growth in GDP during FY12. What no one in the government realizes is the fact that, by squeezing the private sector credit the one thing that is becoming increasingly certain is reduced (or nil) growth in GDP. SBP’s Monetary Policy warns about materialization of this possibility and therefore points to the continuing “fiscal weaknesses”– an expression that sums up its fears.What really pushed SBP into cutting its Discount Rate was the widely expressed concern over the slide in private sector credit, and zero investment in the real sector due to the high mark-up rates that, along with rising country and sovereign risks, were inducing risk aversion among banks.While the government appears oblivious to escalation in these risks, SBP points to these trends with concern when it asserts that “energy crisis and precarious law and order conditions render domestic economic environment least conducive for productive activities.”While deteriorating sovereign risk bothers banks, their big reason for risk-aversion is the un-ending power load-shedding that forces most borrowers to operate below the break-even levels of their productive capacities, their loss of supply contracts, inability to sell enough and generate enough cash to repay credit. This failure (not dishonesty) that led to a rise in the non-performing loans. Though the scenario doesn’t augur well for more credit to the private sector, the rate cut does offer some relief; it may revive investor confidence and the slow capital flight, but can’t undo the glaring inefficiencies of the state.

12


Power load-shedding:its crippling fallout

eginning the last week of September until October 6, there

were widespread street riots that disrupted life and caused substantial damage to public and private property. This surge in violence, that has become virtually the order of the day, was triggered by power load-shedding that, in some cases, exceeded 20 hours per day in several cities and towns of the Punjab. On October 3, the government tried to assure the opposition in the National Assembly that it would sort out the power crisis within 24 to 36 hours after the opposition severely criticised the power load-shedding and also walked out. The Minister of Water & Power dismissed the view that the government was pursuing short-term solution to the power crisis, saying that his ministry’s measures were aimed at easing load shedding in the long run. He also dismissed the perception that relief in load shedding was momentary. But to some this crisis seems the “beginning of the end”. Apparently, their view wasn’t entirely the traditional whim.The key question that wasn’t addressed by the Minister was “why did it take people to resort to violence on the streets in Punjab to bring home to his Ministry the obvious reality – acute power shortages that crippled even “hospitals”. The pressure under which his Ministry finally reacted was indicative more of cheap politicking than of financial stress. Rumours were that beneficiaries of this part payment may have been kept begging for some “unholy” reasons. The Finance Ministry did release Rs. 11bn to fractionally settle the “circular debt” but, as expected, that amount was enough to keep electricity supply on for just about 11 days. Reports are again coming in about power load-shedding. It is obvious that this amount represented just 2.5 percent of the circular debt and thus couldn’t help beyond 11 days. It was ironical that the very day the Minister of Water & Power accepted his ministry’s failure in the parliament, there was a huge function (oddly in the Presidency instead of the office of the FPCCI) to award trophies to exporters who had performed extremely well in FY-11. In that event, the President of FPCCI, made pointed references to power and gas supply shortages, and impliedly, told the President of Pakistan how difficult would it be to achieve the export growth target set by the Minister of Commerce and Trade. In days to follow, bleaker predictions were made by the Minister of Petroleum when he told the media that during the coming winter there will be acute shortage of natural gas, implying thereby increased gas load-shedding. What he too was at a loss to explain were the measures that would be taken to contain the impact of the expected gas shortage during the winter although, it is a known fact that since

2008, tenders for drilling gas were repeatedly cancelled. These tenders pertained to the Sinjoro, Tando Allah Yar, Qadir Pur, Dhodak gas fields. The Ministry of Petroleum never advised in clear terms the reasons for cancellation of the tenders nor did it do what was required to attract the sort of tenders it was interested in. As a consequence of this irresponsible attitude, four precious years were wasted without adding to gas supply, which is now crippling the industry, especially the textile sector that brings in almost two thirds of export earnings inflows. Besides the shortage of domestic energy

supply (gas and oil) lack of governance in the discos was accepted by the Minister as a challenge and he disclosed that new Boards of Directors for discos had already been constituted and only the CEOs were to be appointed. Besides, he had promised that PEPCO would be dissolved and discos would have no support from PEPCO. A key promise he had made at that time was to bring a bill in the parliament against power theft and had urged the Parliamentarians to support it by saying "It is about time to call a thief a thief and time to give him punishment". While it is important that the Board members be far more vigilant on the issue of theft and hold managers accountable for it, what the Minister didn’t promise the discos was help by the law enforcement agencies without whose protection disco staff fails to disconnect power supply to the defaulters.The Minister had hinted at policy changes–upfront tariff hikes to attract investment in this sector– alternative energy as well as hydro-power generation. What the Minister did not appreciate was the fact that increasing tariffs to pay for line losses and theft is virtually an invitation to indulge in more of these corrupt practices. In a period of sustained high inflation tariff hikes only inflame the electorate. Given the fact that PPP will push for re-election in less than two years time, this is not how it should go about wooing the electorate to vote for it. Indeed the world is confronting the worst post-WW-II recession but what prevents this regime from key initiatives such as increasing domestic energy production. In fact, it should have been its first priority, especially after oil price virtually froze at $100 a barrel. While there have been big failures all round, power shortages were the most damaging because they forced part or total closure of industrial units, large-scale employee layoffs, huge rise in non-performing loans, and banks’ risk-aversion as a result thereof. Together these negatives created a scenario wherein Pakistan’s risks, both sovereign and country, became high that added to the problems of business and industry because foreign banks now ask for huge commissions to either take on, or share Pakistan’s transaction risk with other banks.

B

ditorialEE

November 201113

Banks in the West: history has lessons for them and the rest

n a long talk show telecast by BBC in end-September, of the

four participating experts, IMF’s newly appointed MD, Christine Laggard, and Muhammad El Erian, CEO Pimco, made some interesting observations that deserve discussion. The exercise help get a clearer view of what went wrong with world’s economic management and the key flaws therein that still aren’t getting the focus they all deserve.Madam Laggard appeared greatly disappointed by the visible political reluctance to take the difficult decisions – actions that will inject a pronounced degree of austerity – and so will be politically unpopular among the electorate. Having served as the French Finance Minister, she knows fairly well the considerations that are dear to politicians.Indeed, in all EU member countries under stress, the big issue is the presentation of austerity remedies in a manner whereby people accept these painful measures as logical for the return of prosperity on a sustainable basis. However, this effort is proving a big stumbling block for most politicians, because until recently, they were promoting de-regulation and globalization as the drivers of prosperity with scant concern for developing domestic sufficiency in essentials, and big competitive advantages in what could be exported.What Madam Laggard seemed bent on was a resolve to implement austerity to lessen the current crisis though the crisis also calls for remedying something serious – lack of knowledge, capacity and commitment – among political leadership that allowed things to go wrong for decades, although parliaments in Western democracies considered themselves exemplary. A big question mark now hangs on this leadership’s competence as lawmakers. The fact that corporations, particularly financial institutions were permitted to become ‘too-big-to-fail’ (and thus too-big-to-save) proves that the ‘law-makers’ became the ‘protégé’ of their greed-stricken corporate sector courtesy the tactless de-regulation they willingly carried out from the moment the Reagan-Thatcher duo began changing the course of the world economy, followed by George Bush and Tony Blair.There is every justification for deregulation as long as it frees institutions to improve their capacity to deliver a progressively better value for money and makes markets even playing fields for competitors as well as the other stakeholders. Neither of these two key causes is served by overlooking, even legalizing hostile takeovers that create monstrosities of the likes of Enron (that failed in the 1990s) and a whole lot of others that failed in the current economic crisis.

One big blunder committed by the unwitting politicians was to re-combine commercial and investment banking in 1999. The step was in reckless defiance of the sound logic behind the Glass-Steagall Act passed by US lawmakers in the aftermath of the Great Depression. But the West was not alone in this mad spree. In Pakistan, SBP made history by allowing commercial banks to indulge in share-trading thus clubbing together commercial and investment

banking. As if that was not enough; Development Finance Institutions were packed up on the logic that commercial banking had come of age and could undertake every kind of financing from retail to project. The first country to undertake a corrective exercise after the ongoing recession peaked and proved beyond doubt that the market doesn’t have ‘self-corrective’ abilities (that the last Federal Reserve Bank Governor believed in, and advanced as his logic for more de-regulation) is Britain; it was compelled to do so because banks in Britain employ more people than any other economic sector. The British government instituted an inquiry by experts – Independent Commission on Banking (ICB) – to advise on a course of corrective action and the commission has concluded that Britain’s banks must be split in two parts: the retail-commercial and investment banking, impliedly a journey back to 1933. But the sad part is that it took the politicians a total disaster to grasp, though reluctantly, the need for containing the greed of the corporate sector.Even now, while the ICB recommendations require that retail-commercial banks hold minimum capital equal to 10% of their assets (versus 7% under by Basle Accord-II), the ICB recommendations allow these banks to meet this target by 2019. Reason: give the high capital requirement, profitability of retail-commercial banks will fall and make them unattractive for investment. These banks therefore need time to earn profits (now at lower rates), which they must accumulate to top-up their equities.Not surprisingly, therefore, fulfilling the revised capital adequacy requirement has been deferred until 2019. But splitting banks’ business must commence in 2012 and be finished well before 2019. This is not the first time Britain took the lead in initiating regulatory reform; it developed the Euro-Dollar market as well as the market for private finance but didn’t initiate the deceptive hedge instruments including derivatives, asset-backed (i.e. mortgage-backed) securities or credit-default swaps. It is time for the SBP to initiate reforms along these lines to revamp Pakistan’s banking system; there is ample evidence to suggest that such an exrcise is overdue.

I

November 2011

ditorialEE

Christine Laggard, and Muhammad El Erianin discussion

14

Pakistan taken for a ridein the Afghan theatre

oliticsPP

November 2011

At the end of WW-II, the US held out a promise to the whole world – help in rebuilding – especially the

war-torn Europe and Japan, and it did just that through its ‘Marshal Plan’. But what set the US off course was the ‘Cold War’ that had much to do with the greed of America’s military-industrial complex, far less with the Soviet threat. Let us not forget that selling arms to the Allied and Axis powers until 1942 had, by 1945, made America the richest nation in the world.Today the US accuses Pakistan of harbouring terrorists but very conveniently overlooks the fact that all dissident outfits in Afghanistan are its creation, be it Al Qaeda, the Mujahidin and the various splinter groups of the Taliban. What turned these otherwise US-creations against the US was the way America ‘used’ them and deserted them once its aim of defeating and then decimating the Soviet Union had been served, at formidable cost to Afghanistan – the destruction of virtually everything there.By the end of 1989 when the US exited Afghanistan to lure the Soviet Republics that were gaining independence, Afghans were deserted and left to fend for themselves – a betrayal that fuelled hate for the US, a fact admitted by Secretary of State Ms. Clinton on her last visit to Pakistan. Pressed financially by its failed invasions since 1952, America is left with no options but to exit Afghanistan but exiting this terror prone country (thanks to the US for turning it into one) without installing a pro-US regime is overly dangerous given the event known as 9/11. What is making the prospects far more uncertain is the fact that the US returned to Afghanistan not as a late riser who felt obliged to help the Afghans rebuild their war-torn country but as an invader. Could the US expect to be welcomed there? The US still can’t see this reality.Despite spending three decades in Afghanistan, the US didn’t realize that the war against Soviet Union split the Afghans into ethnicities – Pashtuns, Hazaras, Chechen and Uzbeks, and the broader Persian and Pashtu-speaking lots. The broader Persian and Pashtu-speaking communities are now fully armed and each bent on ruling Afghanistan. This scenario foretells a long-drawn civil war. Afghan terrorists, who keep moving virtually from one ‘cave’ to another, don’t have arms manufacturing factories. What mystifies the ordinary is the big unanswered question: “how big was the cache of arms and ammunition that the fleeing Russians left behind because terrorists often beat the combined Nato might, or is it that they were being supplied arms by some new source?” But in a US-Nato occupied Afghanistan, surely the Russians won’t be doing that.Arming these groups was a huge blunder of incalculable proportions because, individually, these groups owe their loyalties to Afghanistan’s neighbours i.e. India, Tajikistan, Iran and Pakistan. What compounds the blunder is that, rarely do Nato forces present in Afghanistan disclose the

either killed or arrested. Why this secrecy?Since October 7, 2001 when, in retaliation for 9/11, the US invaded Afghanistan, it had over a decade to get the warring factions to accept the idea of a coalition made up of the least controversial fellows from all groups so that, instead of settling their scores, these groups could rebuild Afghanistan. Clearly, progress on this issue was zero even though it could assure the US an early exit to cut its fiscal deficit, which is its biggest problem now.What the US cannot see is that this failure is costing it a lot. Wasn’t this suicidal blunder the product of America’s all powerful military-industrial complex? Despite massive media campaigns in Pakistan about large-scale corruption (Tax Ombudsman’s recent discovery of the ‘evaporation’ of 28,900 Afghanistan-bound shipping containers) the US remained silent instead of stating its position in this affair. Besides, there were stories in the US media as well about the waste and corruption worth billions of dollars in the use of state funds by US forces in Afghanistan. The US began forging a union between warring Afghan groups only after it was forced to announce its intentions about exiting Afghanistan because of the all-time high US fiscal deficit that led to downgrading of its sovereign debt rating. Until this happened, there was talk only of building more military bases all over Afghanistan to bolster the US strategic (anti-China?) presence in Central Asia. The recklessness with which the US was shipping arms to every Afghan tribe during 1979-89 and to a select band after 9/11, is taking its toll. Now, the Afghans comprising terrorist outfits don’t believe in living on resources earned through hard work; terrorists now want others to do that and handover those resources otherwise the terrorists will grab them and set an example by killing those who refuse to do so. Today, there is no such thing as the writ of the state or respect for law in Afghanistan. It’s a free for all.Pakistan’s role in the post-9/11 US retaliatory attack on Afghanistan, though mute, made it the target of terrorists. The price Pakistan continues to pay for the act of its great ally–the US– is huge. Yet the US keeps telling Pakistan to ‘do more’ but when it is time to compensate for the losses to the infrastructure (not for the lives being lost) the US lawmakers make it subject to killing more ‘US enemies’– a lot that is beyond the reach of even the US. Despite that the presidential hopeful Mitt Romney tells Pakistan “Listen guys, you can't play both sides of this game. You've got to decide if you're with us or with them. If you're with them it will have a very significant consequence. If you're with us, that's very good thing.”Reckless US arms shipments created a massive problem for Pakistan and the man (and his cronies) that inflicted this damage on Pakistan, was Gen. Zia-ul-Haq; he turned into a US proxy in return for America’s legalization of his act that he did. Internally he touted Pakistan’s role in the Afghan

Aby A.B. Shahid

15

Bureaucrats in Pakistan are content with quoting monetary value of the loss being caused to Pakistan by the ongoing Afghan war but forget the lasting damage to its risk perception abroad.That loss is reflected in high premiums Pakistan’s businesses have to pay – the escalating commissions charg- ed by banks abroad that keep escalating the cost of doing business has steadily eroded competitive edge of business and industry forcing many to close. Pakistan, that badly needs peace, would be least interested in Burhanuddin Rabbani’s exit from the scene because its main priority now is a stable regime in Afghanistan. The instability that has prevailed in Afghanistan since 9/11 has been the biggest contributor to the security and economic chaos in Pakistan. To blame Pakistan for this tragedy is gross misstatement of facts.Afghanistan’s claim that ISI is behind the assassination of the former Afghan President Burhanuddin Rabbani seemed a cover up. Despite being a Persian- speaking Tajik he took

upon himself the task of forging a union of the Persian and Pashtu- speaking lots backed by the US, Hamid Karzai and the Taliban–a fraternity that Rabbani always subscribed to. How could he be killed by the Taliban – Haqqani group?The country that, for its own good, will not want such a tragedy to happen is Pakistan. Then who stands to benefit from this assassination? The

hidden hand that committed that awful act has to be one that wants this war to go on for its own benefit. Couldn’t it be the big military-industrial complex about which, back in 1961, the erstwhile President Eisenhower had sounded a big warning? Until the US-backed Jihad began in 1979, lethal arms weren’t moving in Pakistan as easily as they do now; it is Pakistan’s key issue now because Pakistan has turned into the target of terror and it reached a point where its Supreme Court took action to intervene after it reached the conclusion that the state had lost its writ. Free availability of lethal arms (just recall the missing containers) turned the ordinary criminals into mortal threats for country’s law

As a US ally Pakistan’s

biggest loss has been its risk

perception abroad – the

high risk premiums the foreign banks

now charge

Or is it that the Persian-speaking Afghans didn’t like the way Rabbani was trying to soften up the ground for Pashtu-speaking Hamid Karzai, and so killed Rabbani?

oliticsPP

November 2011

enforcers. In this setting, it is wholly unjust for anyone least of all its strategic ally–the US–to insinuate that Pakistan’s armed forces tried to undermine reconciliation in Afghanistan. If for no other reason, the armed forces won’t do so because of the huge losses being suffered by them while fighting terrorists on a daily basis. Terrorism threat confounds Pakistan. The terrorists are well off

financially and equipped with the lethal arms needed to defeat peace-making efforts, and so don’t feel obliged to engage in any economic or productive effort. They believe they are there to rule in their own ruthless way especially when it comes to dealing with women. What is worse is the fact they have no credentials to rule–Islamic or of any other shade. Arms keep them in power. During his latest visit to Delhi, Afghanistan’s President Hamid Karzai signed a strategic partnership protocol with India, which raised suspicions in Pakistan given the likely shift in alliances after the US-Nato exit from Afghanistan. Although India has no land link with Afghanistan nor a cultural affinity anymore, it is bent on replacing the US in Afghanistan. It is investing heavily in south Afghanistan (Baluchistan’s border belt), and will now train the Afghan police (and later, the Afghan armed forces). Why so much love for a country that isn’t its immediate neighbour?

The only logic seems to be a strategy to put Pakistan in a horse-shoe trap. With the trained Afghan warlords, now a purchas-able commodity, they can prove a convenient tool for India to bleed Pakistan. T o make the terrorists appear acting independently in settling their (not India’s) scores with Pakistan, it is crucially important that they go on attacking Pakistan until 2014 to build a credible record of hate for Pakistan. After October 7, 2001 when the US invaded Afghanistan, the Afghans forgave the Indians for their pro-Soviet role in the Afghan Jihad but, ironically, forgot Pakistan’s helping role in that Jihad – a mindset inculcated by our joining the US invasion of Afghanistan.

16

n October 20, the brutal killing of the last Libyan president–Moammar

Gaddafi–marked, at least for the moment, the end of nearly four decades of resistance to the Western domination of the colonies that were liberated after WW-II. The so called Arab spring, that is supposed to “liberate” the Arabs from their despotic rulers, has a hidden angle to it–destruction of whatever was built by the despots to create business opportunities for the Western contracting agencies that are going bankrupt given the near zero growth of the economies in EU states and the US. Shamelessly, some EU ministers have already begun pointing to this developing opportunity.The way Gaddafi was killed foretells what is in store for the other dictators in the Middle East. An emotional desire is always there to butcher these fellows but such treatment to the dictators reduces the liberators to the same brutal level as that of the dictators if the liberators are not led by leaders with a sense of history – qualities that Nato-sponsored liberators of Libya don’t possess. South African President Jacob Zuma said the slain Libyan leader should have been handed over to the international war crimes court after his capture. "It was expected that Moamer Qadhafi would be held if he was caught," said Zuma who is on an African Union panel that failed to mediate a cease-fire in Libya. Russian Foreign Minister Sergei Lavrov reacted to Gaddafi’s killing by saying that his convoy carrying posed no threat when attacked by Nato aircraft, and questioned the circumstances of Gaddafi’s killing. He said Western leaders are prematurely celebrating Gaddafi’s death. In Brussels, a Nato spokesman reacted to Gaddafi’s killing saying that checks were under way to verify the NTC reports that a convoy with Gaddafi on board was stopped during air strikes by Nato implying that Nato field commanders were, perhaps, authority unto themselves although two days before Gaddafi’s killing, US Secretary of State Hillary Clinton told the media in Tripoli that “We hope he can be captured or killed soon so that you don’t have to fear him anymore.” While on October 22, the UN ordered an inquiry into the killing of Gaddafi, signs were that it would be thwarted. The Nato-sponsored Libyan National Transition Council (NTC) showed no urgency in burying Gaddafi; his body was placed in a vegetable freezer in Sirte for people to look at it and be sure that Gaddafi was dead. Within a day’s time the body had started decaying but Libya's information minister said "No decision has been taken about Gaddafi’s burial," and Military commanders in Misrata rejected the idea of a post-mortem of the body saying that "there will be no post-mortem today, nor any day…. No one is going

to open up idea of a post-mortem of the body saying that "there will be no post-mortem today, nor any day…. No one is going to open up his body." That defied the terms of the inquiry into Gaddafi’s death ordered by the UN. It seems that, as in the case of Osama Bin Laden, it would be ensured that no traces of Gaddafi are left for anyone to repent the way he was killed.Gaddafi – Arab world’s longest-lasting leader – personified the epitome of over-confidence and use of highly undiplomatic dictum; his belligerent outbursts that often angered the Western and Arab leaders. He could go to any extreme in insulting Arab kings that he

hated. It has been reported that, at an Arab summit, he donned a white glove to avoid “soiling his hand” when shaking hands with Arab kings. But about himself he said. “I am the leader of the Arab leaders, the king of kings of Africa and the imam of the Muslims.” He shunned pomp and glamour, and was known as ‘guide of the revolution’ not Libya’s President. Gaddafi’s ‘Green Book’ published back in 1977 gives a new theory of the world between capitalism and socialism that he considered as the only real solution for humanity. He proclaimed Libya a ‘Jamahiriya’ – the state of the masses run by local committees in March 1977.In July 2009, he called the UN Security Council as a form of “terrorism” during a speech he delivered at a summit of the Non-Aligned Movement. The same year, he insulted (the now Saudi King) Abdullah at an Arab summit by telling him “You are always lying and you’re facing the grave and you were made by Britain and protected by the United States.” Despite such outbursts, the truth is that after the Lockerbie affair, he had mellowed down. He eventually also agreed to the terms of settlement offered to him for two major events: US bombing of his compound in Libya in 1986 during the Reagan era, and damages for the Lockerbie tragedy. Insiders say that Libya was paid $300 million by the US for bombing his compound in 1986, and Libya paid $1.5 billion as compensation to the victims of the Lockerbie tragedy and the airline. What is interesting though is the fact that, while the compensation Libya paid for the Lockerbie tragedy was publicized to dent Libya’s image, compensation that the US paid to Libya for raiding Gaddafi’s residence was hushed up.Gaddafi was born in a Bedouin tent in the desert near Sirte on June 7, 1942, and in his childhood his father thought he was the most difficult child to bring up. After completing his education, he joined the Army. On September 1, 1969, as a young colonel aged just 27, he led a coup that overthrew the Western-backed elderly King Idris. After

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Gadda�’s sad exit: end of an era of resistance

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Moammar Gaddafi gone now

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Libya's NTC announced onOctober 25, that the remains ofMoammar Gaddafi had finallybeen buried at an undisclosedlocation in Libya.

Hundreds of people marched through the streets of Kabul on October 6, a day ahead of the 10th anniversary of the US invasion of Afghanistan following 9/11, and demanded the immediate withdrawal of US and Nato forces.

On October 12 Amnesty International asked the Canadian government to arrest and to prosecute the former US president George W. Bush saying that he authorised torture while directing the US-led war on terror. Bush will be attending an economic summit in Canada on October 20.

Saudi Arabia and the US accused Iran on October 12 over an alleged plot to kill the Saudi ambassador in Washington, of which the US Attorney General and FBI spokespersons provided only incomplete details.

Libyan forces and rebel units pursuing Qaddafi regime’s remnants in the city of Sirte, claimed that they captured Qadhafi's son Mo'tassim on October 12.

An Indian army helicopter that strayed into Pakistan’s Skardu area in the North on October 23 due to bad weather was released by Pakistan within hours.

The US withdrew its ambassador to Syria on October 23, due what it called as credible threats to his person. The Syrian government too withdrew its ambassador to the US.

Libya’s interim leader Mustafa Abdel Jalil ordered on October 24 an inquiry

taking over power, Gaddafi turned into a belligerent and unpredictable leader – a profile he never tried to soften; to the very end of his life, he remained a revolutionary (in the 1960s style) who wanted revenge from the imperial powers that had brutally governed Arab and African states as their colonies. According to Gaddafi, even after visibly “liberating” these countries, using the “so-called” international regulations of the West-contrived “global” outfits, the West was bent upon keeping the former colonies under-developed to ensure that they remain backward and never become anything more than mere suppliers of commodities and raw materials. As a consequence, after seizing power, he began alienating the West by accusing it of launching a “new crusade” against the Arabs. His idol was Egyptian president and fervent Arab nationalist Gamal Abdel Nasser and, at times, he would also declare himself a fan of Stalin and Hitler, which reflected deep-rooted hatred that could go to amazing extremes. This progressively made things difficult because, as shown by his compromise on the Lockerbie affair, Gaddafi may have been supporting revolutionary movements – ETA, Red Brigade, IRA and many freedom fighters in several African countries that were still ruled by Western colonizers; all of these outfits were challenging the regimes in Spain, Germany, Britain and other European countries.Libya was accused of using its oil wealth to fund and arm these rebel groups, right from the 1970s but Libya became a global pariah after the Lockerbie plane bombing in 1988. For the next five years, Libya was made the target of all kinds of sanctions. According to renowned columnist Simon Tisdall, “it was Gaddafi’s malign, murderous side that isolated him, and Libya, in the eyes of Western governments. His backing for groups such as the IRA and ETA, his links to numerous terrorist attacks and his crowning atrocity – the Lockerbie bombing—ensured Gaddafi’s pariah status. Ronald Reagan declared him the “mad dog of the Middle East” and bombed Tripoli in 1986 in a calculated attempt to kill him.”But relations began to thaw when Libya agreed in 2003 to pay compensation to the families of the 270 people killed in the Lockerbie crash. Gaddafi also renounced terrorism and declared in 2003 – the year of US-led invasion of Iraq – that Libya was giving up pursuit of weapons of mass destruction. In return therefore, the UN sanctions on Libya were lifted and then British Prime Minister sought Western pardon for Libya and for giving it its deserving status in the comity of nations. The UN declarations dramatically improved Libya’s ties with the West.It all began to work; in 2007, Libya released the Bulgarian doctors and nurses, who had spent eight years in jail by then for allegedly injecting HIV-tainted blood into hundreds of Libyan children. In September 2008, the then US secretary of state Condoleezza Rice also visited Libya. In 2009, Gaddafi was elected chairman of the African Union. But the same year an apology by Swiss President Hans-Rudolf Merz to the Libyan President over the 2007 arrest of Hannibal, one of Gaddafi’s sons, drew harsh criticism across Switzerland. This was an indication of how Gaddafi continued to be viewed in West. Events beginning February 2011 proved that Gaddafi was still the Western target. Despite doing their bidding, he

couldn’t be trusted – something Pakistanis understand fairly well; they too remain the West’s pariahs and must “do more” to please the West, especially the US. What the UN inquiry commission discovers is any body’s guess given the total chaos and rampant lawlessness in Libya. Simon Tisdall concludes that “there is no disguising the fact that, for regimes including those in London and Washington, Qadhafi’s sudden, final departure must be vastly preferable to the prospects of a prolonged desert guerilla war, costly Nato engagement, continuing instability affecting Libya and its neighbouring states, a lengthy, high-profile trial, wrangling over the jurisdiction of the international criminal court, or any of the other possible scenarios that might have played out should he have lived on.” But as in case of Afghanistan and Iraq, the Western coalition is shamefully oblivious to the chaos that Libya will remain engulfed in for years. There has been no disclosure about how many have died in the civil war thus far and how many have been wounded, both fighters and civilians, that were caught up in violence. Already these maimed survivors are attacking the NTC for its failure to bring them speedy relief. Much of the country’s infrastructure has been damaged and in need of quick repair, including vital oil installations on which rests the short-term salvation of Libya. Heavily armed militias, manned by young men with no obvious allegiance to anything other than their own idea of freedom, dominate Libya’s cities. As it is, Gaddafi left behind a country with no established state institutions or political parties, nor much in terms of an independent and professional civil service. Libya is a 1-track economy dependent wholly on revenues from oil exports. As of now, production has fallen to 350,000 barrels a day from its January 2011 level of 1.6 million barrels a day. The earliest when oil installations could return to full capacity operations is January 2014. Libya is tribal; it is like Afghanistan, with ethnic divides as between the Persian and the Pashtu-speaking lots. Besides, the fact that, as in Afghanistan, arms were distributed freely to the so-called Libyan rebels makes things similar to the big Afghan mess. Increasing incidents of violent score-settling, revenge killings, human rights abuses and the mistreatment of detainees are surfacing. Given this chaos, analysts foresee a mini-Afghanistan in the making: civil war, sectarian clashes, and possible break-up of Libya all for “democracy’s sake.”Hillary Clinton may have been brash in her latest outbursts but, earlier, in a reference to the mistakes made in Iraq after Saddam fell, she had admitted that based on that long and awful experience, a task that must be undertaken by Nato is “unifying the various militias into a single military and getting a national army under civilian command.”But, for now, Libya’s army is broken, its borders defiled, its sovereignty outraged, and Libya’s future direction is more a matter of fond hope than settled. Democracy in Libya is an idea; as yet, it has no roots and no substantive presence. On the other hand Islamism of various shades, and tribalism, are the vibrant forces; they may now feed on the power vacuum that won’t be filled easily in a lethally armed tribal society.

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he US-EU inspired Arab spring supposed to kick out the corrupt Middle Eastern rulers (until now Western

favourites) has become a threat; the belief that its flames won’t reach the West was dumb, as being proved now, virtually every day. The smart US-EU strategists must be garlanded for landing everyone in trouble. A harsh reality that is steadily manifesting itself is that, to an ever-increasing number of the domestic and foreign observers, the “Occupy Wall Street” chalking and slogans on New York’s Wall street are attracting ever increasing numbers of frustrated Americans, making it appear like the “Tahrir Square” in Cairo. There is consencus that the Arab spring is definitely inspiring the burst of protests in the US, EU and in many other countries. The worldwide protests, a response in the demands by the organizers of the “Occupy Wall Street” in New York, instigated calls for similar “occupations” in hundreds of cities beginning October 15. London police scuffled with people who were rallying in the financial district adjacent to Saint Paul’s Cathedral carrying banners saying “Strike back!”, “No cuts!”, and “Goldman Sachs is the work of the devil!” In New York protesters shouted “We got sold out, banks got bailed out” and in Athens the slogan was “Solidarity is people’s weapon.”That this is inevitable was proved by the fact that this global anti-corporate and anti-state crusade (that earlier began on the Wall Street) organized protests in Auckland, Athens, Brussels, Lisbon, London, Hong Kong, Geneva,

Melbourne, Madrid, Rome, Sydney, Tokyo, Taipei, even Zurich, and hundreds of other cities around the world. What, however, didn’t seem to worry governments (for now) was the fact that if visible corrective steps are not taken quickly, things could worsen. But the fact that it was necessary to impose midnight “curfew” in New York speaks volumes about what may be coming.The powerful are still unwilling to accept harsh realities created by prolonged corruption in the corporate sectors that was encouraged by market de-regulation initiated by the Reagan-Thatcher combine back in the 1980s. Of all the people, one Republican presidential hopeful views the protesters as “anti-American, and so jealously-ridden that they want to take somebody else’s Cadillac.”What these remarks reflect is the harsher reality of the United States–blurred, in fact biased perceptions of those who led the Americans – a great nation that is otherwise blessed with capacities that rival the very best in any other nation. Until the late 1960s, America was, by far, the most efficient producer of everything under the sun, and its competitive strength was phenomenal; that is now a part of history courtesy the advent of unbridled capitalism that prioritized profit at the cost of all other civilized values.Yet, many of the likes of this presidential hopeful have been intrigued by the “Occupy Wall Street” movement, which is against financial inequality that was engineered in the awe-inspiring bank offices on the Wall Street and then spread across the US from end to end. The Wall Street is

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Unbridled capitalism: its deniers have a tough time by A.B. Shahid

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Standing Committee on Defence. The briefing, due on October 13, postponed at the eleventh hour, “would now be held on October 18 at Army Headquarter".

Supreme Court announced on Oct. 23 that it will function on Saturdays despite the working week being reduced to 5 days.

Muhammad Zaka Ashraf, President of Zarai-Taraqqiati Bank Ltd. was appointed as Chairman of Pakistan Cricket Board on October 12. On October 14, the Supreme Court accepted a petition filed by Zarai-Taraqqiati Bank’s SEVP Mohammad Nadeem Chohan accusing Zaka Ashraf of making illegal appointments during his tenure as the president of the bank.

The Ministry of Law & Parliamentary Affairs notified on October 16 that Adm. (r) Fasih Bukhari was appointed Chairman of the National Accountability Bureau by the President, setting aside all reservations expressed by the PML-N. On October 22, leader of the opposition in the National Assembly challenged this appointment in the Supreme Court.

Ministry of Finance at last released Rs 1 billion for payment of salaries and pensions of the employees of Pakistan Railways. It ended employee strike and railway service was resumed.

US Secretary of State Hillary Clinton arrived in Pakistan on October 20. She was accompanied by Gen. (r) David Petraeus, now head of CIA, Gen. Martin Dempsey, Chairman Joint Chiefs of Staff, and Lt. Gen. Douglas Lute. Before leaving Kabul on her way to Pakistan, she had said “we intend to push Pakistan very hard.”

The Election Commission suspended the membership of 231 parliamentarians on Oct. 21, because they failed to declare details of their assets to the Commission. According to a former Secretary of the Commission, suspended members cannot exercise their rights as parliamentarians and also cannot hold a public office.

Federal government appointed Mushtaq Shahas Inspector General Sindh Police with effect from Oct 21.

now experiencing a reversal of that process – the ‘denied’ are trying to pay the Wall Street back in the ‘same coin’.The protestors are venting their anger at what they see as the criminal excesses of the powerful financiers of the Wall Street, whom they blame for the economic crises that engulf the US as well as the rest of the world, and quite rightly so.On October 15, when this movement had gained global recognition, some 200 people were arrested in the United States of which at least 88 people were arrested in New York after police on horseback clashed with thousands of protesters in the Times Square. Besides these, fourteen others were arrested in Washington Square Park because they violated the midnight “curfew”, a NYPD spokesman said. Demonstrations were held in dozens of cities that include Washington, Boston, Chicago and Los Angeles.Kalle Lasn, who is organizing the ‘Occupy Wall Street’, told Japan’s Kyodo news agency that his movement will inspire the jobless youth of Japan. According to Hong Kong’s Economic Journal, the movement “was sparked by the extreme disparity between the rich and the poor...Now it looks like that spark is being turned into a great fire that is spreading to other countries”. This fair view, though reflecting a bit of the traditional Chinese bias, is turning into a reality because the fire is indeed spreading. The spring that we now see in the US began in Europe though it was not focused exclusively on the European corporate sector; the anger was against the state. That has changed in the sense that Europeans too are now angry at their corporate sector, and the credit therefore goes to the “Occupy Wall Street” movement.The American “spring” crossed the Atlantic ocean and entered Britain, and was welcome there because Britain is going through a crisis that is only marginally softer than that being experienced by the rest of Europe. The British had their share of corporate cop outs, bail outs, layoffs and all the misery it caused. Courtesy all this, joblessness is at an historic high, and what is making things worse is profile of the austerity plan of the British government. In London (witness to rioting and looting by thousands of disaffected Britons in early August) organizers of the protest began by using the social media–Facebook and Twitter–to invite frustrated Britons to join their protests, and then began planning their protests; on October 15 their focus was London Stock Exchange. As in the US, these protests drew attention to unchecked corruption of “the economic systems that have caused terrible injustices around the world.”Here too police on horseback was after the protestors, as during the demonstrations in 1985 against capitalism in the Thatcher era. I still recall those horrible days because I was then working for a bank in London. At that time too, these tactics had failed and, eventually, Mrs Thatcher had to make an embarrassing exit from Downing Street.On October 15, when the global protests began, the worst scenes were witnessed in Rome; 70 protesters were injured by police baton-charge giving rise to loud cries of “Shame!” that embarrassed the policemen signaling their

frustration with what they all were being made to do. The scenario could change into a bigger chaos. Revolutions, with lethal consequences for politicians and the corporate top-brass, could erupt if law enforcers too finally joined the ranks of the demonstrators as witnessed very often during, what is popularly known as the “Arab spring”. At this stage of this movement, (that seems likely very to gain momentum over time) as more frustrated people join the protesters, some observers in the media were not supportive of the movement. Writing in the London Times, Giles Whittell faulted the movement for lack of coherent agenda and came to pre-mature conclusion which formed the headline of his article–“Passionate but Pointless”. Such views are not surprising; after all, capitalism has been the order of the day for the past three decades. This long period gave rise to and sustained an anti-reform mindset; accepting the failure of this set up will be hard for many though they lived through four recessions. But the fact that those recessions did not cripple economies the way done by the present recession, should serve as the wake-up call; chaos was inevitable unless regulatory systems were reformed–a fact that (with some admirable exceptions) the Western media didn’t highlight.Interestingly enough, an American opinion poll proved Whittell wrong the very next day. The poll indicated that, as many as 54% of those who formed the sample of the poll, thought the protesters had a valid cause. This high negative response is understandable; with unemployment at 8.1%, the highest in the past 17 years, what else could one expect.This high rate of unemployment owes itself to the bail outs that were offered to recklessly managed banks which forced the US government to cut many benefits that the people had gotten used to for decades, and had lost the habit of financing them from their own resources while executives of the bailed out corporations kept on drawing bonuses from the bail-out funds. Such open sidelining of essential public interests was bound to create hate for the corporate sector.

Will the movement gain momentum?Without a correctly focused and committed leadership the movement could fade into thin air. “Travelling this week from the protest camp at St Paul’s in London to Occupy Wall Street in New York, I found the message as thin as the attendance. These aren’t the mass movements that have briefly up heaved the Arab world, let alone those that toppled Euro-communism in the 1980s...What these protests have also done is to feed America’s gargantuan appetite for paranoia. New York’s rich are for the first time in my experience, imitating their Russian, Spanish and Mexican counter-parts….. Personal security firms are reporting a doubling and tripling of business. Goldman Sachs executives are building security gates all round their homes after one protester waved the effigy of Lloyd Blankfein, the bank`s boss, dripping with blood on a stake.

– Simon Jenkins, The Guardian, October 22

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There are indications that, since bonuses are eventually going to be barred, bonus-addicted and overly frightened executives are shifting to jobs in South East Asia – the region that will feel the pinch of the recession with a time lag after Western economies (especially US – their biggest buyer) finally adopt austerity as the accepted way of life. This implies that unless the corporate mindset turns the page, and accepts to focus far more on cutting prices via lowering profit to re-build demand, things could take a turn for the worse. Indeed as of now the protest movement may be lacking a coherent agenda and may not be as well coordinated as the media would like it to be to give it the importance it deserves, in days to come, this might happen. There is plenty that remains to be exposed. The fact that the Swiss parliament has finally decided to hold a hearing on which Swiss laws provided Swiss banks protection in developing (now globally questioned) account relations with suspect entities, is a landmark decision. As the “occupy” movement’s organizers and strategists begin to expose instances of corruption and malpractices in the corporate sector and the way governments either covered up for those malpractices, or just ignored them, the number of protest sympathisers could rise.In the developing countries, given the wide variety of exploitable loopholes in their taxation systems, corporate sector gained unfair benefits at the cost of the taxpayers and the state. Recently, rumours were rife that Pakistani banks were not surrendering to the state the full amount of Withholding Tax they were collecting on transactions as well as on the profit paid to depositors. The missing sum was around Rs 8 billion. Similar apprehensions have been expressed about surrender of other taxes that businesses collect on behalf of the state. Such conduct can hardly strengthen the public image of the corporate sector in the perception of the ordinary. This is the result of corporate executives’ love for profit without ensuring its judicious origins. All this foretells a stronger “occupy” movement.

What could materialize it are the expected disclosures about poverty that the regimes in India and Pakistan will soon be making under legal pressure. While both are high population-density states, and so their disclosures will certainly make a difference, smaller countries around the globe would also be making such disclosures, which may add to the fury of this movement. By the time this piece goes to the press, a lot will have happened but, hopefully, without loss of life although the reckless records of state response to widespread public dissent makes it unlikely. But let us hope that sanity does prevail before it costs too much in terms self-destruction.

Wealthy people consider leaving UKA Lloyds TSB International Wealth survey released on October 10 said that rioting in England during August this year has frightened a large number of wealthy people to consider leaving Britain.The survey with a sample size of 1,057 people said 17% of those with more than 250,000 pounds ($390,424) in savings and investments wanted to move overseas in the next two years, up from 14 percent six months ago.Of those actively considering an overseas move 61% said crime and antisocial behaviour was the key reason for their decision to leave Britain. This was up from the previous 43%, and reflected concerns caused by riots in London and other major cities in August.According to Nicholas Boys Smith, Managing Director Lloyds TSB International Wealth, “sadly it seems August riots, tax increases and rising cost of living have cast a pall over life in the UK for some wealthy people……It may re-ignite fears of a ‘wealth drain’ from our economy as rich people seek new pastures new”.Riots in August, that caused several deaths started after London Police shot dead a suspected criminal, who his family contends was innocent. Thereafter violence spread to several London districts and then to other cities with widespread damage to shops that were looted and burnt.

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Poverty: �awed de�nitions can’t cover the failure in containing it

overnments in emerging economies and Third World countries are trying to define poverty in “realistic”

ways that reflect their ground realities. The basis therefore is that, given the differences in the levels of prosperity in the first, second and third world, there can’t be a uniform poverty line (minimum per capita daily wages) that can be used to classify people above the poverty line; that global minimum at present is $1.25 per day. The logic makes sense but governments in most of the developing countries also want to use this excuse to cover up their failure in attaining more balanced distribution of national wealth year-after-year. It is therefore no surprise that while poverty kept rising the number of billionaires too kept rising and was seen as a sign of progress.Recently, a petition was filed in India’s Supreme Court over re-definition of the poverty line by India’s National Economic Planning Commission (NEPC). According to the revised definition, those earning a daily income of IRs 25 ($0.5) in villages, and IRs 35 ($0.7) in the cities, were classified in the ‘above poverty line category’.The part that infuriated India’s social groups, and very rightly so, was that these income levels were not enough even for buying two meals a day, let alone pay for basic necessities including clothing, housing, transport, health, etc. India’s social groups deserve praise for taking up this

issue very vocally and forcing the administration to beat a hasty retreat.NECP Chairman Montek Singh Ahluwalia, was forced to admit that the definition of poverty line submitted to the court “was clearly a rock bottom level of existence” as if the poverty line was something else. Besides, what that statement didn’t clarify was the profile of goods and services that this “rock bottom” level included.Some estimates indicate that around 52% of India’s population lives below the internationally accepted level of poverty line ($1.25). But official Indian estimates say that only 37% live below the poverty line. Hopefully, the official poverty line wasn’t the one that was provided to the Supreme Court by NECP. India is not the only government indulging in such self-deceiving tricks; Pakistan has a worse record on this count. Statistics released by Federal Bureau of Statistics are seen with as much scepticism, especially its inflation indices – Consumer, Wholesale, Sensitive and Core – and estimates of the population living below the poverty line. By not disclosing the real statistics, governments, seemingly on purpose, avoid disclosing and accepting the ground realities to their own ultimate disadvantage. Pakistan’s in-power democratic regime is getting a taste of it every day. But that is not rationalizing the regime’s flawed policies.

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billionaires and Pakistanis too accumulate wealth abroad. Over a decade ago, The Economist reported that Pakistanis could be holding anywhere between $100 to 140bn in accounts abroad. This figure did not include the value of physical assets i.e. business enterprises and real estate that Pakistanis owned abroad. On the other hand, whatever the regime did to contain poverty was based on a convoluted thinking – giving alms instead of helping the poor to stand on their own feet to become value-contributing, self-sufficient citizens; what government policies reflected was ignorance of this prime obligation of the state. It has remained a distinguishing and continuing failure of successive regimes. The unanswered question, however, is “can we resolve this grave issue via handouts that last a month or so?” Of course not. Resolving this issue requires far more, which isn’t being done. The starting point should be revision of the tax rates to fairly tax the rich to raise resources for creating that socio-physical infrastructure that, on the one hand creates job opportunities and helps people to live on earned income not handouts, and on the other hand imparts skills that prepare our young men and women to take on their share in the economy and earn honourably.Only towards the end of his regime did Gen. Musharuff realise the importance of imparting vocational training to millions of Pakistani young men and women, but ended up doing precious little in this vital area. This was one of the major failures of his regime besides neglect of energy and power sectors and reckless deregulation of Pakistan’s financial services sector. But failure to set up a country-wide network of vocational training institutions has been a big disaster since, even by that time, indications were that over half of Pakistan’s population comprised young men and women vulnerable to exploitation by the vested interests – the self-centred politicians and terrorist outfits.Setting up of specialised banks for Small & Medium Enterprise was an initiative that overtly appeared good but the fact that the state (run by PM Shaukat Aziz) took pride in the fact that these banks were not given any state support in terms of subsidised credit in the way given to exporters, was amazing. No wonder SME Banks couldn’t do as well and as rapidly as was required by a poverty stricken country like Pakistan. Even now this area continues to be ignored although we have in power a regime with claims to being people-friendly.It is tragic that, in spite of terrible on-going experiences – terrorism on top – neither India nor Pakistan takes this challenge as seriously as it should with consequences that impact the whole country. Last year, the Economist had published a detailed report on internal threats in India.

None, including the regime, doubts that poverty is on the rise. But we all remember the Benazir Cards, don’t we?Pakistan’s Poverty Assessment Update undertaken by the the ADB in 2006 noted that "reliability and credibility of the poverty database that is generated primarily through household surveys, has been debated for long. Issues of concern include updating of the sampling frame; survey comparability; availability when needed; frequent changes in field methodology and quality of questionnaires used" and pointed out that "validation of survey data enhances data quality considerably. This is usually done through a post-enumeration survey, which is not a common practice in Pakistan” highlighting lack of reliable and independent internal mechanisms of validating the surveys.Until now, the government had postponed a survey on poverty, but it might soon be forced to reveal the exact number of those living below the poverty line because the growing unrest proves that the poverty line has gone up substantially during the past four years. The Musharuff regime insisted that just about 17.2% were living below the poverty line – a claim rejected by international bodies who thought 32% Pakistanis lived below the poverty line.Given the high rate of increase in inflation and the slide in economic activity courtesy both inflation and electricity shortfalls during the last four years, well over 40% of the population could be below the poverty line. Had that not been true, the regime wouldn’t have come up with a wide variety of Poverty Cards that entitle the poor to a bit of relief, provided the cards are given to the poor without first establishing their political loyalties.According to press reports, Federal Bureau of Statistics (FBS) has completed the Household Income Expenditure Survey (HIES) that forms a part of Pakistan Social and Living Standard Measurement survey 2010-11. FBS released its findings but the Planning Commission seems as yet unaware of the HIES survey, which makes some startling revelations e.g. among the low-paid, almost half of the monthly household income is spent on food, (which reflects on high food inflation), and the poorest spend 69.2% of their food expenses on basic essentials.An aspect that goes virtually un-noticed by the trading community as well as the state is the rise of malpractices in the wholesale and retail markets that cause the prices to rise irrationally. What goes on in the sugar market is no secret. With powerful parliamentarians owning this huge industry, there is no way its practices could be checked by the FBR. Even the existing conditions for indentifying members of the supply chain in this industry for taxation purposes, were withdrawn by a SRO that the FBR issued recently. This is how regimes encourage the rich to go on enriching themselves at the expense of an ever-expanding majority of the poor.Things are as bad in India; the rich are becoming richer at the expense of increase in poverty. In 2010, according to foreign press reports, the number of billionaires went up by 17%. Recent press reports suggest that the Indians – many of them in the billionaire category – accumulated over $500bn in banks abroad over the years. Pakistan is far behind in this race but very much in it;we too have

SME Banks are staff-intensive

since they must monitor their

less literate borrowers more

closely to assure correct fund

utilization implies high

operating costs

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According to that report, out of the 624 districts in India, 290 were partly or wholly in the clutches of the Naxelites and Maoists. While this goes on, Indians are overly happy with scores of them being listed among the richest 500 in the world - yearning that depicts erosion of values. As for Pakistan, the glaring manifestation of worsening law and order was the suo moto action that the country’s Supreme Court had to take to establish whether the Sindh government as well as the federal government had failed in containing broad daylight crime that was costing scores of innocent lives every day. Sadly, the key conclusion the court reached was the failure of the state in providing the people the security that the constitution guarantees.To the saner elements, these are sure signs of failure in controlling poverty that turns thousands of the frustrated into hardened criminals. In Pakistan, what makes things worse is terrorism funded by hitherto unknown foreign and local entities that provide arms to this frustrated lot and pit them against every institution, state or non-state.If visible inaction on this crucial issue doesn’t amount to allowing a ‘free for all’ what else does? Yet Pakistan (ably advised by the IMF) claims to be working towards a fairer taxation system that will tax the rich more rationally to make them pay their fair share for doing what needs to be done to pull the poor above the poverty line. The convoluted belief that the law enforcers – too few in numbers compared to Pakistan’s rising population – must control the angry poverty-stricken public that keeps growing in number is pure self-deception. Law enforcers should be expected to check crime; they are not there to remedy the after effects of poverty, which is exclusively the obligation of the state. By sidelining this obligation, the managers of the state – bureaucrats and politicians – display gross irresponsibility. In the recent escalation in street violence in the Punjab against prolonged power load-shedding, it became clearly visible how frustrated is the police force since it is being forced to baton charge the poor demanding their rights, though after scuffles with the police, many demonstrators also flouted the law to their own eventual disadvantage. By damaging private and public properties and assets, they hurt their own cause. State offices will now have to be repaired at taxpayers’ expense implying that, instead of outlay on adding to and up-grading the infrastructure, funds will be spent on repairing it. Burning of transport vehicles will make travelling more difficult courtesy fewer buses, and expensive too because transporters will now be forced to replace their burnt vehicles at the current inflated costs, and build in this factor into the fares.That said, aren’t there ways of ensuring that frustration doesn’t rise to a level where public rage (partly fuelled by foreign interests) leads to a large-scale destruction? Yes, there are ways of doing that. It requires competence and commitment among the administrators, and availability of resources–men and money–to foresee and build what is required.But government’s waste of resources and its craving for

Two-weekly holidays may

be the solution to the

power shortages for

the short-term but can things

improve after the

short-term?

debt rather than collecting taxes fairly to cut fiscal deficit, and using them optimally, shows its convoluted vision, incompetence, lack of commitment, insincerity, and the much exposed corruption in state offices prevents the use of bulk of the resources for infrastructure improvement and expansion that can expand the economy’s productive capacity, job opportunities, and gradually contain poverty.What you find are wrong solutions to the problem. The government is not concerned about containing resource waste. Instead, it is keen on increasing the cost of utilities to bridge the resource gap without much concern for the remedies (cutting line losses in case of electricity)that are not being addressed to generate the economies that could partly cut the hikes in utility tariffs. On top thereof, the supply of essential utilities–gas and electricity–fail to meet even genuine requirements forcing economic sectors to operate well below even their break-even capacities. This frustrating scenario hurts economic activity and escalates unemployment which in turn causes poverty to rise. While hikes in utility tariffs penalize the honest among us, the harmful side-effect of the virtually irrational rate hikes in the power and energy sectors is rising corruption in these sectors–theft–that is ignored by the front-liners in utility services in return for petty favours. Is this how we remedy the problem of theft – the evil that is largely responsible for under recovery of utility cost structure?Cutting shopping time by four hours was blasted by the trade bodies (not wholly for the right reasons) but the harsh reality is that solutions such as these can’t deliver unless discipline imposed by them is enforced effectively. Do we really have enough of that capacity? Sorry, no. The coming winter will slow the flow of river water into Mangla and Tarbela dams, and hydro-power production will slide. While air conditioners will be switched off, gas consumption for heating homes and offices will go up, in Baluchistan and northern districts of Punjab and Khyber-Pakhtukhaw. At that time, reduced gas supplies will fuel protests because, after the 1960s, we neither added more dams to the infrastructure nor invested in exploration for oil or the wind and solar technology of power generation.Given these prospects, we are in for more disruption of economic activity as the angry millions rendered jobless due to closure of their own businesses, or those of their employers, resort to street protests reflecting a revengeful mindset devoid of rationality. This rage could escalate if mismanagement of state affairs continues at its current pace, which the opposition parties–equally clueless about a workable solution–would be only happy to exploit.

November 2011

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24

n a long talk show telecast by BBC in end-September, of the

four participating experts, IMF’s newly appointed MD, Christine Laggard, and Muhammad El Erian, CEO Pimco, made some interesting observations that deserve discussion. The exercise help get a clearer view of what went wrong with world’s economic management and the key flaws therein that still aren’t getting the focus they all deserve.Madam Laggard appeared greatly disappointed by the visible political reluctance to take the difficult decisions – actions that will inject a pronounced degree of austerity – and so will be politically unpopular among the electorate. Having served as the French Finance Minister, she knows fairly well the considerations that are dear to politicians.Indeed, in all EU member countries under stress, the big issue is the presentation of austerity remedies in a manner whereby people accept these painful measures as logical for the return of prosperity on a sustainable basis. However, this effort is proving a big stumbling block for most politicians, because until recently, they were promoting de-regulation and globalization as the drivers of prosperity with scant concern for developing domestic sufficiency in essentials, and big competitive advantages in what could be exported.What Madam Laggard seemed bent on was a resolve to implement austerity to lessen the current crisis though the crisis also calls for remedying something serious – lack of knowledge, capacity and commitment – among political leadership that allowed things to go wrong for decades, although parliaments in Western democracies considered themselves exemplary. A big question mark now hangs on this leadership’s competence as lawmakers. The fact that corporations, particularly financial institutions were permitted to become ‘too-big-to-fail’ (and thus too-big-to-save) proves that the ‘law-makers’ became the ‘protégé’ of their greed-stricken corporate sector courtesy the tactless de-regulation they willingly carried out from the moment the Reagan-Thatcher duo began changing the course of the world economy, followed by George Bush and Tony Blair.There is every justification for deregulation as long as it frees institutions to improve their capacity to deliver a progressively better value for money and makes markets even playing fields for competitors as well as the other stakeholders. Neither of these two key causes is served by overlooking, even legalizing hostile takeovers that create monstrosities of the likes of Enron (that failed in the 1990s) and a whole lot of others that failed in the current economic crisis.

One big blunder committed by the unwitting politicians was to re-combine commercial and investment banking in 1999. The step was in reckless defiance of the sound logic behind the Glass-Steagall Act passed by US lawmakers in the aftermath of the Great Depression. But the West was not alone in this mad spree. In Pakistan, SBP made history by allowing commercial banks to indulge in share-trading thus clubbing together commercial and investment

banking. As if that was not enough; Development Finance Institutions were packed up on the logic that commercial banking had come of age and could undertake every kind of financing from retail to project. The first country to undertake a corrective exercise after the ongoing recession peaked and proved beyond doubt that the market doesn’t have ‘self-corrective’ abilities (that the last Federal Reserve Bank Governor believed in, and advanced as his logic for more de-regulation) is Britain; it was compelled to do so because banks in Britain employ more people than any other economic sector. The British government instituted an inquiry by experts – Independent Commission on Banking (ICB) – to advise on a course of corrective action and the commission has concluded that Britain’s banks must be split in two parts: the retail-commercial and investment banking, impliedly a journey back to 1933. But the sad part is that it took the politicians a total disaster to grasp, though reluctantly, the need for containing the greed of the corporate sector.Even now, while the ICB recommendations require that retail-commercial banks hold minimum capital equal to 10% of their assets (versus 7% under by Basle Accord-II), the ICB recommendations allow these banks to meet this target by 2019. Reason: give the high capital requirement, profitability of retail-commercial banks will fall and make them unattractive for investment. These banks therefore need time to earn profits (now at lower rates), which they must accumulate to top-up their equities.Not surprisingly, therefore, fulfilling the revised capital adequacy requirement has been deferred until 2019. But splitting banks’ business must commence in 2012 and be finished well before 2019. This is not the first time Britain took the lead in initiating regulatory reform; it developed the Euro-Dollar market as well as the market for private finance but didn’t initiate the deceptive hedge instruments including derivatives, asset-backed (i.e. mortgage-backed) securities or credit-default swaps. It is time for the SBP to initiate reforms along these lines to revamp Pakistan’s banking system; there is ample evidence to suggest that such an exrcise is overdue.

Energy supports almost all human activities and is the backbone of industrialization. Dams and rivers are

important sources of energy generation and hence they continue to be pushed by governments and financiers as the wise choice to development particularly in developing and under-developed regions of the world. Despite being blessed with vast natural resources, Pakistan is facing one of the severest challenges of energy crisis caused due to exceeding demand against supply. Higher energy consumption has placed greater strains on the country’s energy resources demanding as a measure of highest priority for Pakistan to install new capacity for generation of energy. This in turn requires development of an integrated plan to combine energy projects with indigenous energy resources with programs emphasizing greater efficiency and management. Seen in this context, Diamer Bhasha Dam hydropower project, of which foundation was laid on 18th October 2011 by Mr. Yousuf Raza Gilani, Prime Minister of Pakistan, is a major step towards the efforts aimed at bridging the gap between energy demand and supply.With its capacity to generate 4500 MW of electricity and conserve 8.2 million acre feet of water, this over $12-billion project is expected to help meet the country’s future agricultural and power requirements and thus serve as a life-line for the national economy. Coupled with successful completion of other projects such as Thar Coalfield Project, the step would hopefully go a long way in making Pakistan not only an energy rich country but also help transform the country into a major exporter.The country’s present water and electricity reservoirs are losing their capacity. Tarbela, Mangla and Chashma reservoirs have already lost about 5.3 MAF due to sedimentation. It is estimated that by year 2016, this loss would increase to 6.6 MAF, almost equal to the original combined capacity of Mangla and Chashma reservoirs. The present demand of electricity in the country is above 17,000 MW, which is estimated to cross 30,000 MW by the year 2017. Diamir Bhasha Dam is the first major hydal power project after Mangla Dam built in 1967 and Tarbela Dam built in 1974 which is designed to serve as a large-scale power booster. The history of the dams projects in Pakistan dates as far back as in 1960, when Pakistan and India signed the Indus water treaty under which the Indus, Jhelum, and Chenab Rivers were assigned to Pakistan, and the eastern Ravi, Beas, and Sutlej Rivers were reserved for India. The

Diamer Bhasha Dam Project: A life line for the national economy

treaty provided for two major dams in Pakistan. Construction of the Mangla Dam on the Jhelum River started in 1962 and it was completed five years later. Tarbela, the world’s largest earth and rock filled dam (485 feet high and 9,000 feet long), was completed in 1974. There were two possible sites for the dam to be built on the Indus. The World Bank preferred Kalabagh due to technical reasons. However, political expediencies did not let it happen. As an alternative, therefore, the policy makers decided to go for Diamer Bhasha Dam which was also found technically feasible by an International Panel of Experts.The site of the dam is situated near a place called "Bhasha" in Gilgit-Baltistan's Diamer District, hence the name. The exact hydal location of the project is on Indus River, about

November 2011

EEconomy

by Syed Asif Ali

Location of Diamer-Bhasha Dam

Country

Location

Coordinates

Status

Pakistan

Gilgit- Baltistan

35 31’0” N 73 47’31” E

Construction ofdiversion tunnels and support facilities

Construction began

Construction Cost

18 October 2011

$12- 14 billion (2011 est.)

Owner WAPDA

Dam and spillways

Type of dam Roller-compactedconcrete

Height 272m (892ft)

Impounds Indus River

Reservoir

Capacity 10,000,000,000 m3

3Active capacity

(8,107,132 acre - ft)

(6,404,634 acre - ft)7,900,000,000m

Power stationTurbines 12 x 375 MW

Installed capacity 4,500 MW

Annual generation 19,028 GWh(est.)

25

15 km upstream of Tarbela Dam, 165 km downstream of the Northern Area capital Gilgit and 40 km downstream of Chilas (Latitude: 35°31'0.64"N Longitude: 73°47'31.98"E). The proposed dam would have a maximum height of 270 m, and impound a reservoir of about 7,500,000 acre feet (9.25×109 m3), with live storage of more than 6,400,000 acre feet (7.89×109 m3). Mean annual discharge of Indus River at the site is 50,000,000 acre feet (6.2×1010 m3). Thus the dam will impound 15% of the annual river flow. This project would cover an area of 110 km2 and extend 100 km upstream of the dam site up to Raikot Bridge on Karakoram Highway (KKH). Two underground power houses are being proposed, one on each side of the main dam having six turbines on each side with total installed capacity of 4500 MW via environmentally clean hydal power. The Initial Feasibility Report of Diamer Bhasha Dam Project was prepared by Canadian Consultants “Montreal Engineering Company (MONENCO) during 1981-1984 which was subsequently upgraded and the contract for review of Feasibility Studies, Detailed Engineering Design and preparation of Tender Documents was awarded to M/S Diamer Bhasha Consultants (DBC) (Joint Venture of local & foreign firms, with M/s Lahmeyer a leading firm). As per revised schedule, approved by Executive Committee of the National Economic Council (ECNEC) the construction of the Dam would be completed by 2019-20. Work on construction of housing colonies and facilities required for WAPDA and contractors’ staff in Thore valley, district Diamer has been initiated. Acquisition of priority land is in progress. Micro Seismic Monitoring System has also been installed at the dam site as well as climatologically data is collected regularly and an additional Automatic Meteorological Station is being established at dam site. To meet the cost involved in completion of this mega project, the government has already allocated Rs 15 billion in the annual budget. America has promised $2 billion and Asian Development Bank would grant $5 billion for the project. Negotiations with other international funding agencies are also underway to get loan for the project. There are positive signs for funding from China, Kuwait and other friendly countries, and the Islamic Development Bank (IDB). A total of Rs 420 billion is to be arranged locally for the project during a period of seven years. For this purpose, the ECNEC allowed WAPDA in January to raise Rs 20 billion from the market through issuance of bonds. Earlier in 2006-07, it had raised Rs 16 billion.The reservoir will affect around thirty villages consisting 3115 houses and, according to the feasibility report of the project, more than 17000 acres of agricultural land as well as 100 KM of Karakoram highway will be submerged in the proposed dam site. Estimated number of people

November 2011

EEconomy

displaced by this project is to be about 35000. In order to address these problems, the Government has now decided to secure and relocate all items of archaeological significance from the areas that will be inundated by the Diamer Bhasha Dam and its reservoir in a new museum near the Dam site. An amount of Rs 27.824 billion is required for the acquisition of land and resettlement of the people to be affected due to the construction of the dam. Under the proposed project, Rs 10.76 billion will be spent for the acquisition of agriculture-barren land, tree and nurseries and Rs 1.638 billion to be utilized for properties and infrastructure, Rs 8.8 billion for establishment of nine model villages, Rs 62.119 million for pay and allowances for administrative arrangements, and Rs.17.7 million for contingent administrative expenses. The project also includes an escalation cost of Rs 2.234 billion at the rate of 6 per cent per year for five years and interest of Rs 4.309 billion during the implementation phase at the rate of 9 per cent. It has been decided by the government that the local companies and contractors would be given priority in construction work of the project. Local people would be provided jobs on priority basis. Special quota would also be fixed for the local people in different categories of jobs so that people of Gilgit-Baltistan could fully benefit from the mega project. Pakistan is an energy deficient country and needs a quantum jump in electricity generation to avert the power crises. Diamir Bhasha Dam and similar other projects provide an answer to this problem. If cheap hydropower is not added to the system the electricity would become unaffordable and the industry in Pakistan shall become non-competitive. One hopes that effective steps would be taken to ensure that the project is completed on schedule at the currently estimated cost. Thus alone would it be possible for us to realize our cherished dream of achieving economic self-reliance, progress and prosperity.

26

n October 6, The 35th FPCCI export award ceremony was held in an exquisite manner at the President’s

House. The ceremony was presided over by President of Pakistan, Provincial Governors, parliamentarians, key government officials, FPCCI members, industrialists, and dignitaries. In his welcome address, Sen. Haji Ghulam Ali, President FPCCI, welcomed the President and other luminaries present at the occasion. The President FPCCI said that since 1976, as the apex forum of Pakistan’s private sector, FPCCI has been organizing Annual Export Trophy Award Ceremony to encourage and motivate the exporters. According to him, current achievement in export (US Dollar 25bn) is a milestone in the history of Pakistan’s export sector and assured the President of Pakistan that business community will continue its support for achieving more such milestones. Recounting FPCCI’s relief and rehabilitation efforts, he said that this forum has distributed food and non-food items worth Rs 100 million among the flood victims of various districts of Sindh province on the appeal of the President of Pakistan. FPCCI will also dispatch 30,000 additional bags of food among the flood victims in the current month.He said that the level of investment is related to the tax rate. But unfortunately, only 1 - 2% of the population is bearing the tax burden. He said that the corporate tax in Pakistan is 35% while it is 27.5% in Bangladesh, 25% in Indonesia, 20.5% in Turkey, China and Malaysia and as low as 16.5% in Hong Kong. Low tax rate encourages investment and volunteers tax payments.He then briefly described the trend in Pakistan’s export and said that exports were concentrated in the few items. More than 75% of exports originate from only 4 sectors – cotton, leather, rice, and sports goods – and traditionally, Pakistan's exports have been concentrated in a few export destinations like USA, UK, Germany, Hong Kong, U.A.E and Afghanistan which signifies the need for diversification and

increase in the exports production base and markets. He was of the view that Pakistan can play the role of middle man between key blocks of SAARC, ECO and EEC because of the attraction of the shortest land route to the Arabian Sea, Persian Gulf and the Black Sea. He emphasized that Pakistan should concentrate on economic and trade ties with these countries. The Caspian Sea in Central Asia contains the world's largest untapped oil and gas reserves. These countries could collaborate in numerous areas including scientific and technical, banking, insurance, IT, pharmaceuticals, tourism, media, as well as other sectors. The economies of Central Asian States and Pakistan are complementary to each other.Speaking on the occasion, the President, Mr Asif Ali Zardari praised Pakistan’s business community for its continued good performance and for the record exports in 2010-11 in spite of numerous domestic and external challenges including the problems of law and order, power shortages, circular debt, global economic slowdown and the reluctance of foreign investors to visit Pakistan.He appreciated the generosity of the business community in times of national calamity including the earthquake in 2005, the floods last year and the floods in Sindh this year. “FPCCI has played an active role in rehabilitating victims of natural disasters”, he said, and added that FPCCI was actively engaged in providing relief to internally displaced persons (IDPs) in Khyber Pakhtunkhwa in 2008.While highlighting the high level trade exchanges that have taken place between Pakistan and its neighbours including Tajikistan, Iran, Kazakhstan, Turkmenistan, and Afghanistan, the President told the business community that talks on the TAPI pipeline are well underway.The President said that it is time to focus on regional trade, especially with China, Iran, Afghanistan, India, Bangladesh and Sri Lanka, because these are our neighboring countries. China is particularly interested in trade with South Asian countries, especially Pakistan, and China is giving various chances to Pakistani exporters in the form of markets and industrial exhibitions. The President asked the Ministry of Commerce to compile a quarterly report on progress made by Pakistan’s commercial attaches posted in Pakistani missions abroad. He said that competitively priced manpower is our country key strength, which needs to be explored to make Pakistan a lucrative destination for investment. He also advised the Board of Investment to work more aggressively to attract foreign investors.The President referred to the power policy of the PPP during its previous tenure and said it was intended to take up the generation capacity to forty thousand megawatts. However, it was subsequently abandoned and the country is now paying a heavy price for the gap in demand and supply of electricity.

O

35th FPCCI Export Awards:winners deserve a pat on the back

November 2011

EEconomy

27

The President said that his government was taking special measures for restoring peace and stability in Karachi which was crucial for the national economy.At the end, the President distributed export trophies and awards won by Pakistan’s top performing exporters. Senator Haji Ghulam Ali was awarded a Gold Medal for his contributions to the business community.

List of Winners of the President of Pakistan Award: • CSR - Sardar M Yasin Malik, Hilton Pharma (Pvt) Ltd. • Exports - Shahid Nazir Ahmed, Masood Textile Mills• Port and Shipping - Nighat Tariq, Siddique Sons Ltd., and Sohail Shams, United Marine Agencies (Pvt) Ltd. • Fan Yunjun, China Mobile Pakistan (Zong)

Businessman of the Year Gold Medal Award• Mohammed Nadeem Khan, CEO, Raaziq Int’l (Pvt) Ltd. • Chaudhry Masood Iqbal, Iqbal Rice Mills • Mian Azhar Hussain Tarer, MD, Galaxy Rice Mills Pvt Ltd.• Gul Mohammed Lot, Chairman & CEO, Mehran Spice & Food Industries, Pakistan Accumulators (Pvt) Ltd.

Businesswoman of the year Gold Medal Award • Mrs. Madiha Moulvi, Proprietor M.M. Commodities• Mrs. Samar Amjad, Director Eden Housing Ltd.

Best Lady Exporter Award • Ms. Mahwish Moulvi, Executive, M.M. Commodities.

Special Merit Export Award • Mian Waqar Aziz, Chief Executive, Amir Rice Traders• Jawed Aslam Agha, CEO, Reem Rice Mills (Pvt) Ltd.• Arshad Jawed Warraich, CEO Punjab Enterprises • Muhammad Amir Nawaz, MD, Faisal Fabrics Ltd.• Muhammed Sikandar Sultan, Executive, Shan Foods(Pvt) Ltd.• Abid Raza Khan, Chairman, Qadri Trading Company• Amanullah, Executive, Wahid Industries Ltd. • Dr. Mirza Ikhtiar Baig, Chairman & CEO, Pak Denim Ltd. • Ansar Yahya, CEO & MD, Rafhan Maize Products Co. Ltd.

Businessman of the Year Gold Medal Award Winners

Businessman of the Year Gold Medal Award Winners

Mohd Nadeem Khan, Chaudhry Masood Iqbal, Mian Azhar Hussain Tarer & Gul Mohammed Lot.

Businesswoman of the year Gold Medal Award Winners

Mrs. Madiha Moulvi & Mrs. Samar Amjad

Best Lady Exporter Award Winner, Ms. Mahwish Moulvi

Sardar M Yasin Malik, Shahid Nazir Ahmed, Nighat Tariq & Fan Yunjun.

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EEconomy

Best Regional Export Awards • Brig. (Retd) M uhammed Sarwer, GM Marketing, Fauji Cement Company Ltd. • Nabeel Ahmed Ilyas, Director, General Fan Company(Pvt) Ltd. • Naveed Akram Shaikh, Executive, Naveed Enterprises.

Best Export Performance Award was bestowed to • Alhaj Rafiq Ahmed Minhas, Chairman, Tariq Pipe Ind. (Pvt) Ltd. • Shahid Nazeer Ahmed, CEO, Masood Textile Mills Ltd.• Muhammed Ammar Khan, Director, Raaziq Int’l (Pvt) Ltd., • Faizan Ali Ghori, MD, Matco Rice Processing (Pvt) Ltd.• Riaz Chinoy, CEO, Int’l Ind. Ltd.

28

• Muhammed Asghar Bajwa, GM Marketing, Colony Mills Ltd., • Muhammed Ajmal Cheema, CEO & Chairman, Leather Field (Pvt) Ltd. • Ali Altaf Saleem, Director, Shakarganj Mills Ltd.• Khalid Mehmood, MD & CEO, Getz Pharma (Pvt) Ltd.• Mirza Jawaid Iqbal, Chairman, Mughal Iron & Steel Ind. Pvt Ltd. • Muhammed Tariq Khan, Partner, Advance Metal Ind., • Gul Mohammed Lot, Chairman & Chief Executive, Mehran Spice & Food Ind. • Amir Iqbal, Director, Al-Noor Sugar Mills Ltd. • Khawaja Masood Akhter, CEO, Forward Sports Pvt Ltd.• Nadeem Khalid, CEO, Herbion Pakistan (Pvt) Ltd• Muhammed Tariq Saleem, Executive, Shahbaz Garments Pvt Ltd.• Shaikh Farhan Sarwer, Director & CEO, H. Sheikh Noor-ud -Din & Sons (Pvt) Ltd. • Sheikh Amjad Raheed, Chairman, Associated Ind. Ltd. • Shiekh Muhammad Rizwan, Director Marketing & Sales, COCO Traders Pvt Ltd. • Mustafa Shakil, Proprietor, USM Metal Trade & Recyclage • Tahir Saleem, Partner, Penna Overseas Corporation • Hafiz Abdul Qadeer, GM, Forward Gear (Pvt) Ltd.• Sohail Shams, CEO, United Marine Agencies (Pvt) Ltd.• Mr. Mohsin Aziz, CEO, Mohsin Match Factory (Pvt) Ltd.• Saleem Malik, Chairman, Kampala Industries Pvt Ltd.• Zubair H. Siddiq, Dir., Gujranwala Food Ind. (Pvt) Ltd.• M. Azhar Aslam, CEO, Bless Engineering Company

Merit Export Award • Muhammad Asif Khan, Partner Advance Metal Ind. • Muahmmad Usman Shaikh, CEO, United Traders • Dr. Navaid-ul-Zafar, MD, Hamdard Lab. (Waqf) Pakistan • Mrs. Mumtaz Maker, Chairperson, Royal Group • Sheraz Akram Bacha, Executive, Bacha Enterprises • Usman Zaki, Director, Quick Food Industries• Khawar Hussain Partner, Natural Gas Ind. • Dr. Abid Ata-ur-Rehman, Homeopathic Stores & Hospitals.

Young Entrepreneur Export Award • Shahid Hussain Tarer, MD, Galaxy Rice Mills Pvt Ltd.

It is worth mentioning here that since its inception, FPCCI has advocated and voiced the collective opinion, concern and aspiration of the private sector, and offered helpful advice and assistance to the Government in its efforts to promote exports, encourage foreign investment and stimulate economic activity in the country. The FPCCI has its fingers on the pulse of the economy and serves as a bridge between the private sector and the government.

Best Export Performance Award Winners

Alhaj Rafiq Ahmed Minhas, Shahid Nazeer Ahmed, MuhdAmmar Khan, Faizan Ali Ghori, Muhammed Asghar Bajwa, Muhammed Ajmal Cheema, Ali Altaf Saleem, Khalid Mehmood,Mirza Jawaid Iqbal, Muhammed Tariq Khan, Amir Iqbal, Khawaja Masood Akhter, Nadeem Khalid, Muhammed Tariq Saleem, Shaikh Farhan Sarwer, &

Sheikh Amjad Raheed

Jawed Aslam Agha, Arshad Jawed Warraich & Dr. Mirza Ikhtiar Baig

M uhammed Sarwer & Nabeel Ahmed Ilyas,

Merit Export Award Winners

Best Regional Export Awards

November 2011

EEconomy

29

November 2011

EEconomyXenel’s ExitIs this a signi�cant move?

n terms of aggregate market capitalization of PKR 3 trillion ($ 34 billion) net foreign investment stands at

$ 2.5 billion ($ 5.5 b in 2007) which appears to be important yet insignificant proportion. However, this is a critical juncture when Government of Pakistan wants more players from international markets to join hands in power sector development Xenel’s exit may be seen as significant particularly if it has taken place due to policy issues. The State Bank in its recent report acknowledged “though the volume of foreign portfolio investment is historically insignificant” but relevant movements in the flow may be seen as market volatility”.During mid-90’s Xenel International made its investment in Hubco whilst a dollar was equivalent to pak rupees 37 as compared to its current standing at PKR 88 against a dollar. One can work out how much a rupee has shrunk and its impact on foreign investments. Upon exit of Xenel from Hubco having 140 million shares i.e. 12 per cent of Hubco’s shares in the market, Hub Power Company (“Hubco”) remains the first and largest private sector operator in the energy sector in South Asia having capacity to generate 1292 MW. Hubco has also established country’s first Hydel IPP by the name of Laraib Energy on river Jhelum in AJ&K on Build-Own-Operate-Transfer (“Boot”) basis to be handed over after completion of 25 year term to government of AJ&K. It has an installed capacity of 84 MW. Hub Power Company, which is listed on Karachi, Lahore, Islamabad and Luxembourg Stock Exchanges, has the largest market capitalization of any private company in Pakistan and has over seventeen thousand (17,000) Pakistani and International shareholders. Hubco project was envisaged in 1985 and incorporated in Pakistan as a limited liability company in 1991 and now in October 2011 Xenel sold out its holding at PKR 37 / share ex-dividend and carried away approx $ 60 million. According to media outlets Xenel’s holding was bought by government-owned listed institutions National Investment Trust (NIT), National Bank of Pakistan (NBP), State Life Insurance and the Employees’ Old-Age Benefits Institution

(EOBI) for which Hubco’s financial performance and earning per share (“EPS”) and energy sector future prospects appeared to be the major incentives. Having looked at financials of Hubco analysts consider Xenel’s exit as an isolated incident and do not foresee any recurrence from other players. However, there are no reports available in the media giving Board of Investment etc. view point on the matter. What appears to be very important is to strengthen rupee, circular debt issue and serious efforts to ensure growth in FPI and FDI. If we are able to attract and retain FDI, it will consequentially add value to quality of people’s life, create jobs, increase exports and strengthen overall economic structure of the country for which sovereign guarantees should not be treated as the only incentive. Concrete measure should be taken to this effect.The recent closure of plants for days and running it on lower capacity due to disruption and interruption of supply of fuel resulting from liquidity crunch appears to be disappointing and need to be taken care of immediately. Xenel exit as analysts expect, may translate into 2000 points gradual plunge in the benchmark at KSE 100 index. The profits of KSE have reduced extraordinarily from 722 million in 2008 to PKR 50 million in 2011 and share volumes declined by 540 million.

I

Fiscal Year Ending June 2011 2010 2009 2008 2007 2006

Turnover 123,310 99,694 82,784 62,435 44,131 27,911

Profit 5,425 5,556 3,781 2,601 2,654 2,768

Assets 146,240 122,696 90,186 62,697 44,994 43,515

Dividend 5,786 5,207 2,719 3,182 3,587 4,455

Generation (GWh) 8,352 8,337 8,257 7,205 7,214 3,930

Load Factor (%) 77 79 79 68 69 37

by Kamran Khan

30

November 2011

EEconomyCement Sector: turmoil and the way forward

akistani cement industry, which saw its golden era a few years ago, now confronts a slowdown; sales volumes are

sliding due to dwindling GDP growth and low commercial and developmental activity, curtailed PSDP, reduced consumption in flood-hit areas, withdrawal of inland freight subsidy have marred the exports. Cement consumption declined by 8.24 per cent during the fiscal year 2010-11. The country has 43 million tons annual production capacity whereas current demand stands at its half, forcing the industry to operate at 50% of its capacity.

Out of 24, almost 19 plants, situated in northern parts of the country, which contribute to 80% of total production, were forced to incur a loss of Rs. 10 billion during the last fiscal year. However, 5 plants in the southern region are better off (posted profit of Rs 4 billion) because of being able to export by sea and relatively higher local uptake. Exporting via the sea route is not a viable option for cement manufactures in the northern region.

Reduction in Federal Excise Duty (FED) by Rs 200 per ton and GST by 1% has given some relief but the All Pakistani Cement Manufacturer Association has demanded more effective and concrete efforts from the government to support the ailing industry that is at its lowest production level in last eight years. These supporting efforts include exempting cement from levy of excise duty over the next two years, which was a much needed reform as it would spur activity in the construction sector. Government should encourage the construction of concrete roads and use of cement blocks instead of bricks, which is also the modern and internationally recognized method of construction.

Aizaz Mansoor Sheikh Chairman All Pakistan Cement Manufacturers Association Pakistan (APCMA) whilst talking to the Value Chain explained that there is double taxation involved in the form of FED and GST, and demanded that FED should immediately be withdrawn as this double taxation is destroying the cement industry. Aizaz further demanded that, as immediate relief, submission of original custom clearance documents to claim rebate on exports to land-locked Afghanistan should be amended to allow accepting photocopies of custom clearance documents. If required by the government APCMA, being the apex institution of the country for the cement sector, will assist in endorsing required paperwork as this will be of great help in getting timely rebate related proceeds. He expressed his hope that by December 2011, 400 trucks will be allowed for trade related transportation to India which will help Cement industry to export cement to India on relatively lower cost as Pakistan Railways is charging $ 8 per ton, which translates into Rs 15 to 16 per bag, and including handling charges, it would work out to Rs 19 to 20 per bag which will be significantly reduced in case of road transport.

P

Export of Cement and Clinker Cement Clinker

Financial Years

Afghanistan Via Land

India Via Sea & Land

Other CountriesVia Sea

Other Countries Via Sea

Total Exports

%age Incr/(Decr)

Quantity in Metric Tons

2001-2002 106,620 - - - 106,620 100.00% 2002-2003 430,332 - - 41,500 471,822 342.53% 2003-2004 1,118,293 - - - 1,118,293 137.02% 2004-2005 1,407,900 - 157,270 - 1,565,170 39.96% 2005-2006 1,413,994 - 91,165 - 1,505,159 -3.83% 2006-2007 1,725,526 - 1,096,995 390,973 3,213,494 113.50% 2007-2008 2,777,826 786,672 3,045,995 1,106,127 7,716,620 140.13% 2008-2009 3,148,306 634,455 6,061,035 908,690 10,752,486 39.34% 2009-2010 4,013,671 722,967 5,637,163 283,436 10,657,235 -0.89% 2010-2011 4,723,491 590,104 3,912,344 200,169 9,426,108 -11.55% 2011-2012 (3Months) 1,314,913 163,340 857,105 - 2,335,358 0.21%

31

by Kamran Khan

November 2011

EEconomyBank pro�tability: up despite a recessionWhile banks across the world at first had to be bailed

out, and then struggled to earn any reasonable profits, banks in Pakistan are on a different track ‘all together’. In the worst post-WW-II recession, they are not only earning profits but, in some cases, have doubled their profits over last year. The beauty of the miracle becomes absolutely fascinating given the fact that growth in credit to the private sector remains virtually frozen. Next year (with their rapidly swelling portfolios of sovereign lending), our banks will create history by showing even better result when the economy either does not grow or grow by around 2.5 percent. Let us all hope that our bankers know where they are headed on the back of the peoples’ savings. According to bank approved the financial statements for the third quarter ending September 30, MCB Bank Ltd. registered before and after tax profit of Rs 24.165bn and Rs 15.515bn respectively. Pre-tax profit rose by 25% and after-tax profit was up 24% over the corresponding period last year. According to results for the third quarter, net interest income rose by 22% over September 2010, with non-markup income recording a significant growth of 32% to Rs 6.077 billion.These results were achieved in spite of the fact that gross loan portfolio of the bank (Rs 263.564bn as of September 30, 2011) went down 4% over its December 2010 level, and the classified loans’ portfolio also registered an increase of 8% over December 2010. On the operating expenses side, administrative expenses (minus the impact of pension fund reversal) increased by 13% over September 2010. The deposit base of MCB Bank went up by 12%, recording 12% increase in current accounts and 10% in saving deposits maintaining the CASA percentage at 81%. Return on assets improved to 3.3% compared to 3.1% in 2010, and the return on equity improved to 28.21% compared to 25.91% in 2010.The total asset base of the bank grew to Rs 685.524bn from Rs 567.553bn as at year end 2010 recording a rise of 21%. The factor responsible for this all round performance was that the investment portfolio (with higher concentration in risk free government securities) increased by 45 % over its December 2010 level. Consequently, earnings per share for September 30, 2011 were reported at Rs 18.55 compared to Rs 14.94 for the corresponding period last year. As a result, in addition to interim cash dividends of Rs 6.0 already paid in 2011 the bank also declared cash dividend of Rs 3.0 per share for the period ended September 30. United Bank Ltd. too showed much improved results as on September 30, 2011. In the nine month period, the

pretax profit of United Bank Ltd. reached Rs 10.952bn compared to Rs 8.060bn during the corresponding

period in 2010. The mark-up income

touched Rs. 52.532bn compared to Rs. 43.237bn in the same period last year recording a hefty rise of 21.5%. Consequently, the earnings per share rose to Rs 8.95 from Rs 6.58 last year.

Bank Alfalah Ltd. posted profit of Rs 3bn on September 30, 2011, which was up by a hefty 100% over Rs 1.5bn in the same period last year. This improvement in

profitability primarily emanated from higher net interest income which stood at Rs 13.1bn (up 33%) on account of better returns on advances and investments, which were up by an average 120-122 basis points due to higher interest rates with the cost of deposits remaining almost flat.The remarkable growth in profit was driven by higher non-interest income of Rs 3.9bn, which was up 16% compared to the results recorded by September 30, 2010 due to improved trading activity. Although provision against delinquent loans declined significantly by 57%, total provisioning remained almost flat to Rs 2bn. This was due to higher provisions against value of investments to Rs 1.4bn compared to just Rs 0.6bn in the first two quarters of 2011. Due to the bank’s improved performance, earnings per share doubled to Rs 2.2 over their 2010 level.As per the unconsolidated accounts of NIB Bank Ltd., the bank earned a profit after tax of Rs 1.565bn in third quarter of 2011. Improved performance on operating level as well as higher recoveries of delinquent loans and reversal of loss provisions made in previous periods led to these improved results. Besides recoveries, the bank’s non-performing loans reduced through debt restructurings which, along with the recently amended State Bank of Pakistan rules on the benefit of forced sale value of the collateral, permitted reversals of provisions to the tune of Rs 3.9bn in the third quarter of 2011. Non-mark-up income increased to Rs 815 million due to higher earnings from foreign exchange activities, capital gains on securities and the dividends received from NIB's wholly owned subsidiary – PICIC Asset Management Company. NIB also succeeded in reducing its operating expenses by 15% to Rs 1.2bn in 3rd quarter 2011 from Rs 1.4bn in the same period last year through a re-engineering of operating processes and by implementing tougher cost discipline.

Bank security bluesUnidentified dacoits walked away with Rs 5.2 million from a private bank situated within the precincts of the Rizvia police station, in the morning on October 25. They managed to flee after 25 minutes of their unperturbed operation by snatching the weapons of security guards and bagging CCTV devices. Such incidents are on the rise since the beginning of 2011

32

FF inancial Services

In the US financial services insider-trading

was legislated as a crime in 1934 but the first case

of this crime was detected in 1961 and the punishment was a fine of $3,000 and suspension for 20 days, though the maximum sentence is imprisonment for 20 years. Things have

changed a lot since then; in 2010 alone 53 cases

(40% higher than in 2009) were detected and

138 individuals were sentenced.

Banking: going back to the basics is the only option

hile most other countries are still struggling to devise ways of

reforming their financial system through improved regulatory regimes, Britain has been the first to do that by initiating the rationalization of its banking system that is also the biggest single employer of Britain’s manpower. The reforms will be guided by the detailed recommendations of the Independent Commission on Banking (ICB) that was appointed by the British government. Not surprisingly, the crux of ICB recommendations is the separation of retail-commercial banking from investment banking or a return to the era governed by Glass-Steagall Act of 1933 that was wrapped up by President Bill Clinton in 1999 courtesy the much touted deregulation of the financial services sector. In the US, which at last ended a long spell of corporate bail-outs, the first step has been the revival of the Dodd-Frank Act by former Fed Governor Paul Volcker. Federal Reserve Bank, Federal Deposit Ins, Corp., and Comptroller of Currency worked jointly on the draft with the Securities and Exchange Commission. The draft legislative measures were also released jointly by key regulators of the financial services sector, and have been placed in the public domain to invite comments on its contents until January 13, 2012 so that all stakeholders offer their opinions thereon to make it practicable. A final version is slated to take effect on July 21, 2012. What has been odd though is the way a clearly biased lobby in the media has kept calling the draft “the so-called” Volcker rule. Lobbies in the US media are projecting this legislation as the harbinger of market contraction, lower volumes, lower earnings and employee layoff from the financial sector.According to analyst Brad Hintz, banks’ fixed-income desks could see a 25% drop in revenue. Moody’s Investors Service predicted that the rule would be ‘credit negative’ for bondholders of Bank of America Corp., Citigroup Inc., Goldman Sachs, JPMorgan and Morgan Stanley, all having substantial “market-making” operations. That’s not so. The proposal is not unrealistic; it includes a series of exemptions for transactions designed to hedge the usual risks such as credit and interest rate or other specific risks. A bank would be exempted from the proposed restrictions if it hedges a specific risk position or a portfolio across multiple trading desks. But hedging trades would have to have a “reasonable,” not a correlation with risks.

Banks could also win exemptions if they are hedging risks that they are “highly likely” to face in the future. The proposed checks on proprietary trading are being called the “Volcker rule” because Paul Volcker is pursuing these reforms. But the fact that it will impact large banks including Goldman Sachs, J.P. Morgan Chase as well as the Citigroup, gives rise to suspicions that there is more than what meets the eye in the media criticism of the legislation.The focal point of this legislation is

limiting risk-taking that fuelled the 2008 credit crisis. As in the new legislation drafted by Britain’s ICB, this legislation too proposes to stop banks from making short-term trades for their own account, and from owning or sponsoring hedge and private equity funds. The main drivers of this reform are scores of cases of insider-trading that benefitted crooks in financial sector, and for a bit too long. In 2002, the worst cases were Enron and Worldcom, but since traders’ sins therein were not punished, courtesy suspect risk-hedging

contracts not only it went on but escalated to a breaking point in 2008.Besides banning proprietary trading, the legislation also requires two major changes: i.e. in the way traders engaged in market-making are compensated, and the extent to which the CEOs should be accountable for their banks’ market practices. The draft legislation requires that activities that put bank deposits in jeopardy must be checked. Besides, the rules also require that traders be paid out of fees and transaction spreads, not “appreciation” or profit from positions that are kept exposed for speculation.But the new obligations of the CEO have given rise to a controversy. While there is consensus among critics of the banking sector over its performance, as shown by

the 2007-09 crisis, they question whether upping a CEO's legal liability will make a real difference. Wayne Abernathy, of the American Bankers Association said "The Volcker rule proposal envisions having an army of nannies overlooking the work of the people who actually work with customers...How much more does an attestation bring that that [army] doesn't bring?"This view has a realistic dimension that focuses on what and how much can an individual do to ensure control over the widespread operations of any organization. Although the answer lies in developing fool-proof operating systems and supervisory disciplines, there never was, nor will there ever be, a remedy for the weak integrity of the front-liners.

Paul Volcker

W

November 2011

by A.B Shahid

33

FF inancial Services

It is time we seriously considered reviving the

DFIs to do a truly professional job of

financing infrastructure projects. But for their success, niche-based economic research is

imperative to realistically project the credit risks arising out

of changes in commodity, exchange and interest rates that

could impact the projects’, future at least

in the medium-term.

Cornelius Hurley, Director of Boston University's Morin Centre for Banking and Financial Law, who counts himself among those “who would like CEOs' heads on a stick” isn’t sure this is “the right way to go about it. At the end of the day he must rely on the represent- ations of his advisers anyway, and all this [the proposed regulatory regime] does is to make sure he doesn't sleep at night." The thing that, however, can work to a large extent is a tradition of harsh punishments for indiscipline. While there are elements faulting this initiative, there are saner elements too who support it, for instance, Sen. Carl Levin who told Reuters that "Placing personal and legal responsibility directly on corporations’ top executive is the key to ensuring that the financial firms comply with the Volcker Rule, and stop engaging in the risky activities that led to billion-dollar taxpayer bailouts."Despite banks' concerns, regulators may go easier on the issue of CEOs' legal liability than the industry's worst fears though the idea of holding CEOs personally accountable will add a strong deterrent effect to the Volcker rule. The first draft of the rules also does not explicitly call for CEO certification and, instead solicits feedback on whether it should be in the final rule. The supporters of the legislation also contend that large banks, whose depositors get deposit insurance cover from the state, should not be engaging in risky trading.Pakistan also experimented with the idea of combining its commercial and banking sector and the results were not different from those witnessed in the US. Pakistan’s stock exchanges experienced crises in 2003, 2005 and 2008 but it has yet to decide whether it is time to do what the rest of the world has come to accept. Pakistan has a serious image problem that has virtually frozen the much needed foreign investment. While investors in real economy and lenders abroad have stopped venturing into Pakistan’s investment and development finance projects, a stable equity market with transparency in market practices, could still appeal to individual investors and mutual funds abroad to invest in Pakistan. But if the Stock Markets continue operating as they do, hopes of attracting portfolio investment too could wither away, which would be very unfortunate.Investment implies far more than merely trading in shares and bonds; that is how the ordinary go about making their investment choices. To successfully manage large equity and fixed-income paper portfolios decision-makers need expertise in both country and sovereign risk assessment and the trend analyses of not just their prices but of all those factors that impact the future of the corporation whose debt or equity is held by the mutual fund. The area that didn’t attract as much attention as should have been the case is the institutionalization of economic research, even niche-based; some banks did a good job of developing expertise in this area but they are too few.

Far more is required in this area to effectively manage the risks institutions carry. In commercial banking, the Branch Managers are expected to develop this ability purely based on the experience they gain from the markets (wherein not all borrowers and players good risk-takers) they serve. Even in the business of commodity import, for instance of lintels, not many importers know the role rainfall in the seller’s country plays in determining the level of natural humidity in the grains and their acceptability in the market. Over-dry grin doesn’t become soft even

after it is boiled for long periods. If branch managers are not fed this crucial information –rainfall in countries supplying lintels–by their banks’ research units, they will establish import LCs drawn on just any country, and then regret that the imported lintels have been rejected by the market. This is just one of the many areas wherein such knowledge plays the key role in avoiding non-performing loans. The other big failed experiment was the wrapping up of the Development Finance Institutions (DFIs), which was justified on the logic that commercial banks had developed the requisite project finance expertise and there was no need for keeping development financing out of their ambit. The overall results of project financing proved this

axiom wrong and the indicator thereof is that while the industrial base did expand, banks overlooked the big developing gaps in the energy sector. As a consequence they kept financing plant expansion realizing little that expanded production capacities cannot deliver without equally expanded energy bases. That some of the projects included their own power generation units should not have been accepted as enough for their success and safe guarantee of repayment capacity generation without assessing their prospects in scenarios of substantially increased prices of the fuels for their power plants. That such sensitive analyses were not conducted led to these project loans turning into non-performing loans.Doing so, banks displayed inadequate grasp of the macro picture in the context of the physical infrastructure that was being ignored. Today,

many non-performing loans are the outcome of this limited view that ambitious (or bonus addicted?) bankers had become used to taking, realizing little that blocking large sums of depositors funds in (assets rendered inactive due to the power and energy shortages) could eventually lead to a liquidity squeeze in a country like Pakistan where savings don’t grow as much as they ought to.In view of the massive development needs of the country to evolve from its under-developed to developing status, and the limitations it now confronts in attracting external funding–either debt or investment, the last thing its banking system should do is to block national savings (rising slowly in a high inflation era) in projects without assessing their risks; they must develop this capacity to confidently finance development.

President Obama signs the Dodd-Frank Wall Street Reform and Consumer Protection Act in Washington on July 21.

November 201134

FFinancial ServicesFFinancial ServicesIncreasing trend of fraudsin banks by Rauf Nizamani

raud and forgery is a part and parcel of the banking business. Bank fraud is the use of fraudulent means to obtain money,

assets or other property held by a financial institution. Fraud may be said to be as an intentional misrepresentation of financial information by one or more individuals among management, employees or third parties. Fraud may involve: Falsification or alteration of accounting records or other documents, misappropriation of assets or theft, suppression or omission of the effect of transaction from records or documents, recording of transactions without substances, intentional misapplication of accounting policies and willful misrepresentation of transactions of the entity's state of affairs. No country and no financial institution is immune from it. This may be found in both developed as well as in developing countries. According to an estimate the banking industry in North America suffers a loss of an amount of about $ one billion in a year in this respect. Although this may not be eliminated fully but this may be checked and controlled with better and improved internal controls, vigilance and monitoring. This is important as the banks do not have their own money and they do business with public money and thus the cost of these frauds is ultimately passed on to the customers in one way or the other. Moreover, the frauds also involve a systemic risk and may prove fatal for the whole system. Therefore, the central bank of the country, being the guarantor of the public confidence in the

currency of the country and guardian of its financial system is bound to take timely and effective action in this respect and suggest measures to the banks and financial institutions to minimize the number as well as the amount of the frauds. However, as the controls also involve the financial cost to the financial institutions therefore most of them try to minimize and avoid them by circumventing the instructions and thus exposing themselves to higher risks.In Pakistan the fraud may be classified into two parts: 1) Management fraud and 2) Employee fraud. Management fraud often involves the manipulation of records and the account, typically by the senior officers with a view to benefiting in some indirect way whereas the non-management fraud is perpetrated by the employees by using fraudulent means to take money or other property from an employer. These frauds take several forms and usually involve some kind of falsification like false documents, lying, exceeding authority or violating an employer's policies, theft, embezzlement, defalcations, forgeries, substitution, suppression, payment against unclear effects, unauthorized lending, lending to ghost borrowers, kite flying and cross firing, unofficial borrowing, foreign exchange malpractice, impersonation, over involving, manipulation of vouchers, fictitious accounts, over and undervaluation of properties, false declaration of cash shortages, falsification of status reports, duplication of cheque books, mail transfer, interception of clearing cheques, computer frauds,

November 201135

inancial Servicesinancial Servicesfake payments, teeming and lading, robbers and others.The number of fraud and forgery cases in the banking industry in Pakistan is on the rise for some time mainly due to weak operational risk management. It registered an increase of some 39% in the quarter ended December 2008 as compared to the cases detected during the quarter ended Sept 2008. Total outstanding cases of fraud and forgery climbed to 6338 during Sept-Dec 2008 quarter as compared to 6288 cases at the end of Sept 2008. Similarly outstanding amount against these cases has also increased during the quarter by 7.2% to Rs 6.2 billion in Dec 2008. In 2010 Banking Mohtasib made the banks to pay Rs 133 million to the claimants which is 13% more than the amount paid in 2009. Main reason given in this respect was that the clean separation from bank services allows the delinquent employees to work in another bank and create a potential of further frauds there. As per definition of central bank in Pakistan over Rs 10 million bank frauds are considered serious severity frauds, Rs 1-10 million medium severity category frauds and below Rs one million low severity frauds. In the quarter Oct.—Dec 2008 number of cases of serious fraud increased by 1.1% to 186 with an amount of Rs 4.017 billion whereas medium severity cases reached to 399 with an amount of Rs 1.112 billion after a decline of 2.9% in Dec. 2009 and low severity cases increased by 1.1% to 5753 with an amount of Rs 1.426 billion. Serious fraud cases represented 1.6% of total cases with 77% of total outstanding amount. Medium severity cases were 4.2% of total outstanding cases with 15% total outstanding amount and low severity cases 94.2% of total cases with 8% share in total outstanding amount. Although the total amount involved in the fraud and forgery cases hovered around 6.5 billion to Rs 8 billion the number of cases is on the rise for last one year or so. Under serious fraud category 13 cases of Rs 687 million were reported during the quarter ended Dec. 2008 whereas 33 cases of Rs 126 million and 743 cases of Rs. 75 million under medium and low category respectively were reported. In Jan- March 2009 626 new cases involving an amount of Rs 825 million and in April-June 2009, 692 new cases involving an amount of Rs 1.504 billion were unearthed. The deterioration in the situation continued and some 758 cases of fraud and forgery involving Rs. 1.395 billion were unearthed in the banking system during the quarter ended Sept. 2009. It is noteworthy that some 84% amount of new cases falls in “Serious Fraud Category”. Fraud and forgery cases in banks are rising gradually mainly due to weak internal controls, which is posing a serious risk to the banking system and with the current surge some 5801 cases of fraud and forgery worth over Rs 8 billion are pending. According to SBP statistics some 10% increase has been witnessed in the fraud and forgery cases during the quarter ended Sept 2009 as compared to June 2009. During the period 22 fresh cases of serious fraud involving an amount of Rs 1.166 billion have been reported. The number of fresh cases in the medium and low severityserious fraud cases involving Rs 4.007 billion, 225 cases of medium severity involving Rs 682 million and 1508

cases of low severity involving Rs 235 million at the end of Sept 2009. Public Sector Commercial Banks had 50 serious fraud cases having an amount of Rs 1.353 billion besides 183 medium and 257 low severity cases involving an amount of Rs 573 million and Rs 57 million respectively.Frauds and the activities of fraudsters negatively affect the whole economy in general and banking sector in particular in many ways. Frauds cause hardship in banks especially those whose liquidity stated was already in doubt. As fraud cases in banks, continue to rise, bank's losses in terms of money also rise. Bank frauds tend to jeopardize and erode the public confidence of banks in general. They withdraw their deposits and avoid dealing with the banks for their business and economic needs. This naturally affects the business activity and economic growth. This also accentuates liquidity problems and some struggling with the distress syndrome find it hard to continue and thus wind up their business. As banks are in the business of taking risks therefore the problem of fraud and forgeries cannot be eliminated entirely. However, greater emphasis should be laid on minimizing the level of risk within acceptable risk tolerance level. The prevention and detection of frauds are basically the responsibility of the management through the establishment of effective and efficient internal control system. The banks need to improve their internal controls particularly to avoid ‘Serious Fraud’ cases to minimize their operational risk. This becomes important in the current economic situation of the country when economic indicators are not showing any healthy sign. Global Fraud Report published by Association of Certified Fraud Examiners has indicated that as the economy dips the inside fraud rises. According to the report, 80% of fraud is attributable to those works in accounting, operations, sales and customer services of purchasing department of lending institution. This calls for more caution in the matter. SBP apart from ensuring the sound system and practice in the management of operational risk monitors the magnitude and trends of the risk emanating from the failures of the control environment and system of banks. It also conducts investigation of cyber crimes in the areas of ATMs, Virtual banking and cheque frauds. Recently SBP received a series of complaints wherein some unscrupulous elements were defrauding the general public by ‘cheque washing’, a practice wherein the text of cheque is erased by chemicals and then re-written with a new payee and amount. Accordingly to prevent financial loss and to mitigate the reputational risk to the institution SBP advised the banks for assessing the adequacy and implementation of their internal control procedures pertaining to encashment of cheques preferably by using the ultra-violet lamps at branches.Keeping in view the current global financial turbulence, increased volatility and increased frequency of unforeseen incidents it had advised the banks that the importance of operational risk framework has increased manifold and they should take proper measures in this respect to minimize their operational losses and additional capital charge of operational risk.

November 2011

FFFF

36

November 2011

egulatory omplianceRR

exposing corruption, it has a tough time doing that. The reason therefore is that it has to prove corruption on the basis of the general civil laws, not laws that are specifically designed and lay down the code of conduct for tendering authorities so that establishing corruption becomes easy. Devising regulatory codes doesn’t call for “re-inventing the wheel” because examples thereof exist in developed as well as developing countries that could be indigenized; all we need is firm commitment to eliminating corrupt modes of tendering and transparent assessment of the tenders.In an article in the Financial Times, James Wheaton and Graham Smith compared the US and EU regulations on contracting that highlighted those aspects that continue to be sidelined in Pakistan. The article pointed to obligations of the tendering authorities that were rarely manifested by many tendering authorities in Pakistan. In the US there is a legislation known as "bid protest" that compels competition in contract awarding by all state offices via two tribunals – the General Accounting Office and General Services Board of Contract Appeals, or the GSBCA – with which contractors can lodge their protests involving malpractices by the tendering authorities. These tribunals are required to give their verdicts within 90 and 45 working days respectively. According to the authors of the article, in 2010 protesting contractors obtained relief in 111 (i.e. 42% of all the) cases filed with GSBCA.Regulations in the UK give crucial rights to contractors and suppliers. A court may issue an interim order that can suspend the contract, award damages against a tendering authority, or do both unless, after approval of the tender, the tendering authority and the contractor have entered into a formal contract. In the cases upheld by the court, the damages awarded against the tendering authority were equal to the cost of preparing the unsuccessful tender and were payable to the contractor who was disqualified due to tendering authorities’ malpractice. But what remains to be is seen a verdict that, (besides compensating contractors for tender preparation costs) also awards compensations for profitably employing resources that were withheld for the lost contracts i.e. the opportunity cost and lost profit.In this regard, European Union rules differ in respect of contracts for supply of goods and for service delivery i.e. construction projects or involving installation of plants.But they are far more complex and impose much stricter regulations on the tendering authorities in terms of their commitment to be fair and also ensure optimal output of taxpayer money – two principles that have not attracted the

ince 2007, besides many weaknesses of the Musharuaf regime, flaws of hasty de-regulation have begun

surfacing; it extracted a heavy cost over time since de-regulation was carried out without appreciating the fact that, since 1980s, it spurred speculation in every sector. As a consequence, progressively, economic cycles became shorter. It is also no surprise that, in this exercise, the regulations aimed at ensuring fair play in competition were overlooked. The de-regulation exercise was influenced by a craving for executing ambitious plans to modernise and expand the physical infrastructure, and involved a sizable amount of contracting for projects and supplies – areas wherein legislation was scanty, primarily to serve vested interests. It therefore isn’t odd that Pakistan has a weak regulatory image, especially in relation to ‘tender awarding practices’. The system survived courtesy corruption of the tendering authorities instead of making amendments in contracting rules, procedures and practices to make them fairer.This area needs review and re-regulation to build a fair image, and convey to the world our intentions to abide by transparency in contracting. What we need to revise and then adopt, by all means with rational indigenization, are the globally practised contracting regulations, procedures and practices. Sadly, contracting firms ignore these issues

and their incorporation in contracting codes.That regulations in this area are weak is highlighted by the scandals that regularly surface that the media thrive on but it doesn’t often lead to results in terms of punishing the culprit class that has made frauds its fulltime occupation. Until the laws are upgraded, procedures made transparent and tougher accountability, merely hoping for improvement in the current scenario is just

deception.Competition Commission of Pakistan (CCP) can’t be a substitute for requisite regulation; nor is it fair to expect it to deliver on a national scale minus legislation along the required lines. CCP is there essentially to see that the laws regulating competition are fully complied, and to ensure fairness in tendering but the first condition there for is the existence of requisite laws. Unlike CCP, Transparency International is under no official obligation to Pakistan to check corruption; it’s a global watchdog not a substitute national supervisory institutions.In spite of these limitations, these two institutions have been doing a marvellous job but find the assistance often less than adequate. Although the CCP often succeeds in

Contracting business: regulatingthe tendering authorities S

C

Instead, what we tend to rely on are Competition Commission and Transparency International to put their fingers on corruption in contracting

These gaps weaken the faith

of contractors, which we can’t afford give the

gaps in our physical

infra-structure that must be

plugged

37

by Nadeem Abdul Ghani

attention of our legislatures in the context of stricter regulation of the contracting sector. Effective January 1993, these rules became applicable to all EU members, and apply not just to state offices but to all the public services – local authorities, police services, fire brigades, and the state-funded educational institutions and health authorities.The first condition applying to tendering authorities is that all contracts must be publicly advertised in the EU’s Official Journal. The next asks tendering authorities who are large purchasers of goods (tendering for buying over an extended period) to provide their purchase plan in advance if the supply period exceeds a year. The third condition is that tendering authorities must not insist on any technical specifications that discriminate suppliers on that basis.The fourth is a set of rules that provide for the contract awarding procedures to clearly state the basis of tendering i.e. whether the tender is “open” and allows all interested suppliers to tender. There are well defined pre-conditions for contracting authorities if they decide to use ‘restricted procedure’ (whereby only those invited can tender) and the ‘negotiated procedure’ (wherein the tendering authority can negotiate only with contractors or suppliers of its choice).The fifth and key condition is that tendering authorities must specify in the tender on which of the two bases–the '‘lowest price’ or ‘most economically advantageous’–will a tender be awarded; if “most economically advantageous” basis is to be applied then criteria for determining “most economically advantageous” offer must also be laid down clearly in the tender. A realistic aspect of the regulations is that construction contracts involving amounts equal to or less than Euros 5 million, and supply contracts with values equal to or less than Euro 3 million have, very sensibly, been exempted from complying with these tough conditions.But one aspect that does leave doubts in the minds of most observers is that, tendering for the supply of arms and ammunition to the state has been exempted from all these otherwise judicious restrictions. For doing that, the cover is provided by the blanket of “state secrecy”.Finally tendering authorities are obliged to give reasons for

rejecting the tenders that were jugged unsuccessful. This is a practice that obliges tendering authority to assess the tender very carefully so as to forestall any accusation of partiality or bias–a consideration that is not taken seriously by tendering authorities in Pakistan, given the track record of their getting away unblemished in such controversies. The fact

that tendering authorities can get away with their questionable practices in awarding contracts on behalf of the state spoils Pakistan’s image.

The past record of the tendering authorities within the government is less than satisfactory. While, blame there for (i.e. corrupting the tendering authorities) is passed on to the contracting agencies, not much attention is paid to the fact that floating a truly fool-proof tender is the key obligation of the authority issuing that tender–in this case state offices. The fact that they often failed to make the tenders truly fool-proof i.e. beyond the alleged capacities of contractors to manipulate them with the connivance of the tendering authorities reflects poorly on the existing checks and balances.The US and EU regulations could serve as the guideline to legislate laws, rules, and procedures. We must have an institution on the pattern of the General Services Board of Contract Appeals in the US which, on the one hand could make the tendering authorities envision the likely consequences of their malfunctioning, and on the other assure contractors that only the competent among them will succeed on the basis of the most economic tender.It is equally important to make it mandatory for all the tendering authorities that are found guilty of misconduct in awarding a contract to an undeserving entity are forced to compensate the competent yet unsuccessful parties for the costs they incurred in tendering as well as the losses they suffered on account of keeping some assets inactive in the hope of winning the contracts that they lost. It will also assure contracting firms that justice will be done if a deserving contractor, that submits the most “economical tender”, is unjustly disqualified by a tendering authority. Establishing the monetary values of such losses will call for expertise relevant to this business, which may require setting up new institutional arrangements – expert outfits that either have, or can develop, competence in assessing the opportunity cost of idling of the various assets-types implying thereby the requisite combination of financial and engineering expertise. Loss adjusters in the insurance sector could undertake this job provided they add to their outfits the financial expertise dimension.Let us also not forget that, instead of being expanded to match Pakistan’s consistently rising population and the impact of climatic changes thereon, the country’s physical infrastructure was allowed to corrode. What we confront now is a massive challenge in terms of making up for this prolonged neglect, and doing so quickly. Undertaking this task on credible and truly economic grounds requires that laws governing the contracting business are overhauled to bring them at par with the best in the world. This is an urgent need that can no longer be postponed because our challenges grow virtually by the day; the power sector is a frightening example of the gaps that need plugging at the earliest, and for that we need to build an image that is far fairer than the one we have right now in awarding contracts but the legislators seem busy in futile political debates.

Shouldn’t it be made imperative for the tendering authorities to give their reasons for rejecting tenders?

Legislation on contracting

needs revision and quickly to plug the huge

gaps in Pakistan’s

infra-structure

November 2011

egulatory omplianceRR C

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Environmental impact of pesticides

ll countries have an aim to enhance their agricultural production by using all methods which include better

seeds, better fertilizer, adequate water supply, modern irrigation methods i:e sprinkling or drip irrigation, tunnel farming to cater and/ or control all type of better ploughing methods etc. One major issue which is to be tackled by the farmers is the attack of pests/ insects on the crop.There are certain type of small flying insects which are necessary for better growth of plants and crops. The best example here is the honey bee. Presence of honey bee can enhance the production of any crop by way of better and enhanced pollination process.Here the comment is that there are various organisms which start eating the leaves, flowers etc and hence the quality and quantity of the output decreases. For this purpose the farmer resorts to use of insecticides and pesticides to control the attack of pests. The basic comments is that while the use of such chemicals may be absolutely essential in some cases but the indiscriminate use without proper care and caution can be harmful to all type of human life and may be the root cause of many diseases prevalent currently. Proper awareness of the farmer for use of these chemical is very important and our Government has particularly failed to enhance the awareness of the farmer in this respect.The most common mistake in our country is that after the spray of any such chemicals on fruit or vegetables, without waiting from the necessary time period in which produces does not have to be brought to the market,(the farmer violates this period inadvertently) brings it to the market. The consumption of such dosed fruit and vegetables can be very dangerous to human health. Similarly if such fruit and vegetables are fed to the animals then the milk and meat of these animals to be used by human beings can play havoc with their health. As hinted earlier there are some organic methodologies provided by the nature and this may be used to the maximum. This is a very vast subject and authentic books are available on this subject.The honey bee is one of such insects which compete to get food from the same source as other insects and pests. What happens that the pests attack the crop in the shape of a butterfly (one state in metamorphosis).These butterflies have to get food from the same flowers and/or the leafs of the crop. The honey bee also collects nectar from flowers of the same plant. As biologically honey bee is stronger specie and as because the butterfly of the pests cannot compete with the honey bee hence it migrates to the other nearly possibly sites.Similarly in animals due to various unhygienic conditions, certain insects find their way into this stable, barn etc. The animal dung and the moisture availability in these places are

AAgriculture

November 2011

Similarly in animals due to various unhygienic conditions, certain insects find their way into this stable, barn etc. The animal dung and the moisture availability in these places are very conductive to their growth. These insects then start sucking the blood of the animals and continue to rest on the skin of the host animals. If a flock of chicken is roaming around in these places, then these chicken would continues to pick these insects from their skin. The metabolism and the immune system is not vulnerable to these bugs and even after eating these insects the chicken produces healthy meat tissues.. There are other natural ways where we can mitigate the bad effect of pests and insects on crops and protect our crops and enhance the quality and quantity of production.

The environmental impact of pesticides is often greater than what is intended by those who use them. Over 98% of sprayed insecticides and 95% of herbicides reach a destination other than their target species, including no target species, air, water, bottom sediments, and food. Pesticide contaminates land and water when it escapes from production sites and storage tanks, when it runs off from fields, when it is discarded, when it is sprayed aerially, and when it is sprayed into water to kill algae. • The amount of pesticide that migrates from the intended

application area is influenced by the particular chemical's properties: its propensity for binding to soil, its vapor pressure, its water solubility, and its resistance to being broken down over time. Factors in the soil, such as its texture, its ability to retain water, and the amount of organic matter contained in it, also affect the amount of pesticide that will leave the area. Some pesticides contribute to global warming and the depletion of the ozone layer.1) Air2) Water3) Soil4) Effect on plants5) Effect on animals life

6) Persistent organic pollutants7) Pest resistance8) Pest rebound and secondary pest outbreaks

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by Tariq Iqbal Khan

Air

AAgriculture

November 2011

In some jurisdictions the authorities make arrangements to spray pesticides through aerial spay methods which are dangerous to all other type of plant and animal life.Pesticides can contribute to air pollution. Pesticide drift occurs when pesticides suspended in the air as particles are carried by wind to other areas, potentially contaminating them. Pesticides that are applied to crops can volatilize and may be blown by winds into nearby areas, potentially posing a threat to wildlife. Also, droplets of sprayed pesticides or particles from pesticides applied as dusts may travel on the wind to other areas, or pesticides may adhere to particles that blow in the wind, such as dust particles. Ground spraying produces less pesticide drift than aerial spraying does. Farmers can employ a buffer zone around their crop, consisting of empty land or non-crop plants such as evergreen trees to serve as windbreaks and absorb the pesticides, preventing drift into other areas. Such windbreaks are legally required in the Netherlands.Pesticides that are sprayed on to fields and used to fumigate soil can give off chemicals called volatile organic compounds, which can react with other chemicals and form a pollutant called tropospheric ozone. Pesticide use accounts for about 6 percent of total tropospheric ozone levels.

Health Effects of PesticidesThere are no significant studies carried out in this respect in Pakistan. As already discussed, there is indiscriminate use of pesticides and insecticides without proper awareness of the user. Here extracts from some studies carried out abroad are cited which may give some idea about the bad effect of indiscriminate use of such chemicals.

AsthmaResearchers found an association between asthma and use of pesticides by male farmers. (Senthilselvan et al, 1992) Although this study involved adults, it raises concerns about children's exposures to pesticides used in the home or residues brought home on parents' clothes or equipment.

Birth DefectsIn United States the commonly used pesticide, chlorpyrifos(brand name Dursban) caused severe birth defects in four children exposed in utero. Chlorpyrifos is used widely as an agricultural chemical, but is also the most common pesticide used indoors to kill termites, fleas, roaches and in pest control strips. (Sherman, JD. 1996 Chlorpyrifos (Dursban)-associated birth defects: report of four cases. Arch. Env .Health 51(1): 5-8)

WaterIn the United States, pesticides were found to pollute every stream and over 90% of wells sampled in a study by the US Geological Survey. Pesticide residues have also been found in rain and groundwater. Studies by the UK government showed that pesticide concentrations exceeded those allowable for drinking water in some samples of river water and groundwater. Pesticide impacts on aquatic systems are often studied using a hydrology transport model to study movement and fate of chemicals in rivers and streams. As early as the 1970s quantitative analysis of pesticide runoff was conducted in order to predict amounts of pesticide that would reach surface waters.There are four major routes through which pesticides reach the water: it may drift outside of the intended area when it is sprayed, it may percolate, or leach, through the soil, it may be carried to the water as runoff, or it may be spilled, for example accidentally or through neglect. They may also be carried to water by eroding soil. Factors that affect a pesticide's ability to contaminate water include its water solubility, the distance from an application site to a body of water, weather, soil type, presence of a growing crop, and the method used to apply the chemical. In Pakistan effluents from the factories and some times the pesticides used by farmers do find their way in the drainage system. In 1982 in District Haripur in Pakistan, the non treated effluents from a fertilizer factory were drained into

A study in Minnesota found significantly higher rates of birth defects in children born to pesticide applicators and in regions of the state where chlorophenoxy herbicides and fungicides are widely used. (Garry, 1996) In California, mothers living and working in agricultural areas with high pesticide use had a higher risk for giving birth to children with limb reduction defects. (Schwartz, 1988) A study of pregnant women in Iowa and Michigan found that women exposed to multiple pesticides had an increased risk of giving birth to a child with cleft palate. (Gordon, 1981) Researchers found higher rates of numerous birth defects in children born to Norwegian farmers exposed to pesticides, including hormone effects like hypospadia and undecided testicles. (Kristensen and others, 1997)

a water stream which caused huge damage to animal life in near by villages. (The factory had to pay damages)Maximum limits of allowable concentrations for individual pesticides in public bodies of water are set by the Environmental Protection Agency now in Pakistan. Similarly, all the governments in European Union and US regulate maximum concentrations of pesticides in water.

Neurological EffectsPesticides can be potent neurotoxins. When people are exposed to neurotoxins they may feel dizzy, lightheaded, confused and may have reduced coordination and ability to think. These are the short-term effects, while long term exposure can result in reduced IQ and learning disability, associated with permanent brain damage. In spite of wide reporting of adverse symptoms, until recently, few studies

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AAgriculturecould link permanent brain damage to such exposures. There is new evidence that prolonged exposure to pesticides in areas where they are used routinely may cause permanent brain damage to children who live in these areas.

Hormone DisruptionWhile some substances cause physical birth defects, others can cause subtle hormonal effects on the developing fetus or affect a child's functional capacities. Hormone disruptors have been linked to many health problems including reproductive cancers. The drug DES, which was given to pregnant women to prevent miscarriage between 1941-1971, worked as an endocrine disrupting chemical on the developing fetus. Decades later, many of these DES exposed daughters developed cervical cancer. Twenty-four pesticides still on the market, including 2,4-D, lindane and atrazine, are known endocrine-disrupters. Aside from increases in reproductive cancers, increasing rates of the following conditions are reported. Animal studies link many of these conditions with prenatal exposure to hormone disrupting substances. Pakistan also faces few other problems very peculiar to our country:-• Import and use of expired chemicals.• Use of chemicals not in accordance with the instructions given by the manufacturer.• Over or under dosage • Use of chemicals which have been banned in other countries.All of these issues need proper attention by the Government. Awareness of the farmers and control on sale of any harmful chemicals and pesticides is the duty of the Government.

Dr. Elizabeth Guillette studied the brain function of 4-5 year old children living in the Yaqui Valley area of Sonora, Mexico. Although the children share similar genetic backgrounds, they had very different patterns of exposure to pesticides. Dr. Guillette compared children living in the Valley, where large quantities of agricultural pesticides are used, to children living in the foothills where pesticides are used infrequently. In 1990, high levels of multiple pesticides were found in breast milk and cord blood of newborns from the valley. The children living in the valley, with high levels of pesticide exposure had less stamina, poorer eye-hand coordination, poorer memory and were less skilled in drawing figures. (Guillette, Environmental He. Perspectives, June 1998)

CancerNational trends indicate that rates of childhood cancer have been increasing. Researchers at MDH concluded that these increases were also evident in Minnesota. Swenson and S. Bushhouse, "Childhood Cancer (A. Incidence and Trends in Minnesota, 1988-1994". Minnesota Medicine, vol. 81, December 1998.) Between 1973 and 1991, all cancers combined increased an average of 1% per year and brain cancer increased 2% per year. Specifically:

Incidence of acute lymphocytic leukemia (ALL) rose 27.4% between 1973 and 1990, from 2.8 cases per 100,000 children to 3.5 cases per 100,000 children. From 1973 to 1994, incidence of childhood brain cancer increased 39.6%. Wilms tumor incidence in the same years rose 45.6%. In teens aged 15-19 between 1973 and 1995, cancer incidence rose for the following: non-Hodgkin's lymphoma 128%, testicular cancer 65%, ovarian cancer 78% and all cancers combined 24%.

(National Cancer Institute, SEER, Cancer Statistics Review, 1975-1995. Ries et al ed. 1998; Gurney, J.G. et al, Trends in cancer incidence among children in the United States. Cancer, vol 78: 532-41, 1996; DeVesa, S.S. et al, Recent trends in the United States, J. Natl Cancer Inst 87: 175-182, 1995.)

Sheila Zahm and Mary Ward, summarized the studies of pesticides and childhood cancer and concluded that the following childhood cancers were linked to pesticide exposure: leukemia, neuroblastoma, Wilms tumor, soft-tissue sarcoma, Ewing's sarcoma, non-Hodgkins's lymphoma, and cancers of the brain, colorectum and testes. They noted, it is noteworthy that many of the reported increased risks are of greater magnitude than those observed in studies of pesticide-exposed adults, suggesting that children may be particularly sensitive to the carcinogenic effects of pesticides. (Zahm and Ward, 1998, Environmental Health Perspectives, vol. 106)Thirty-seven pesticides have limited, suggestive or sufficient evidence of carcinogenicity in animals. (International Agency for Research on Cancer). Although the literature on pesticides and cancer is extensive and not fully conclusive, the following are a few examples linking pesticides and childhood cancer.

Leiss et al found a 4-fold increased risk of soft-tissue

Parental use of pesticides in the home or garden during pregnancy was associated with 3- to 9-fold increases in leukemia in Los Angeles Co. (Lowengart,1987)

sarcoma among children whose yards had been treated with pesticides during childhood.

A review of 17 case-control studies and one cohort study shows a possible role for pesticides in childhood leukemia. (Zahm and Ward, 1998) Elevations in brain cancer risk related to at least one measure of pesticide exposure were demonstrated in nine studies. (Zahm and Ward, 1998) 2,4-D, a widely-used phenoxy herbicide, goes by the name Weed-Be-Gone. There is suggestive evidence that 2,4-D causes cancer. The phenoxy herbicides are associated with increased risk for non-Hodgkins lymphoma, soft tissue sarcoma and prostate cancer. A March, 1993 EPA report stated that 2,4-D contained deadly dioxins, which are stored in fatty tissue, causing cancer, birth defects, miscarriages and reduced fertility

November 2011

Conclusion1. Awareness programmes to be carried out intensively.2. Proper control on import of such chemicals.3. Proper control on the production of local manufacturing. 4. Sample testing of produce in the market.

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SRC

November 2011

Corporate Social Responsibility:the many ways of manifesting it

orporate growth and profitability are important and essential pre-requisites for businesses to survive.

Equally, if not more, important and inevitable are the societal goals that need to be identified and addressed in letter and spirit so that marginally or non-productive lives are transformed into active partners. Any amount of economic progress is meaningless, in fact not complete, without balanced social development, which is an absolute necessity for the entire humanity. Therefore, what counts a great deal in life is not just what we do for ourselves but, more importantly, what we do for others. It is our ethical and moral obligation and for businesses their ‘corporate social responsibility’. In a developing country such as Pakistan, that is exposed to numerous cultural and socio-economic shocks the need for realizing and fulfilling ‘Corporate Social Responsibilities’ warrants immediacy as well as urgency. This, in particular, is true of an environment where quite a large portion of the population is living below the poverty line. In such an environment the role and responsibilities of individuals as well as institutions become crucially important. In this context, the onus is not just on the government, but on the many well off especially those in business and industry. In essence, businesses are social institutions because they employ people. Thus, while striving to achieve ever-higher levels of progress and profitability, they must be actively involved in promoting social values, bringing about socio-economic uplift, and addressing the problems emanating therefore. Profits and social responsibilities are integral components that are intertwined; they complement and fuel each other. A prosperous and content society is a market that can help boost economic progress and profitability for businesses at large. Besides business and industry, for many other corporate sector entities Cricket has been a notable catalyst for social transformation. Being a popular game all over the world, every year many cricket tournaments are organized among different teams at different locations around the world, ICC Cricket World Cup being the highest forum of championship in 1-day cricket. Apart from entertainment, this event also serves to foster goodwill and better relationship among the competing teams, brings huge economic benefits to the countries where these tournaments are held and also churns out huge revenue for tournament organizers. The amount of official money (paid to the tournament organizing cricket authorities) involved in cricket is pretty big. ESPN Star, for example, has won the audiovisual rights for ICC events from late 2007 until 2015 for $ 1.1 billion besides sale of other sponsorship rights which could fetch further chunks of money.Hosting high profile cricket tournaments has become a

minefield of socio-political, economic and cultural claims while at the same time serving as a tool for earning huge amounts of revenues for the event organizers. Sponsors on the other hand provide resources to cricketing authorities to organize tournaments that benefit these authorities in developing playing facilities and remunerating the players, umpires, and all other staff responsible for a whole variety of functions in organizing the event. This is a reflection of their sense of Corporate Social Responsibility.Seen in this perspective, the recently held “Faysal Bank Twenty-20 Cup” tournament in Pakistan was a welcome move. Initially held under the umbrella of the then ABN Amro Bank, the 9th edition of this domestic event was held in Karachi from 25th September to 2nd October 2011, and was sponsored by Faysal Bank Limited. Besides Faysal Bank, there were 11 business entities that sponsored the participating teams, and the event carried a prize of Rs 2.5 million for the winners and Rs 1 million for the runners up, besides prizes for the winning teams and the ‘man of the match’ in group matches, and the quarter and semi-finals. It is interesting to note that on the occasion of the prize awarding ceremony, the tournament final winning team’s captain announced a donation of half a million rupees for the flood-affected in the province of Sindh. Hopefully, similar gestures were made by the event organizers and the sponsors as part of their duties towards the oppressed and the needy. One only wishes that other organizations and institutions also accept to be the organizers and sponsors of this prestigious domestic tournament as a part of their corporate social responsibility towards the socio, cultural and economic transformation of the society.

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Karachi: Mr. Wazir Ali Khoja , Senior Member, Board of Governors of PCB & Chairman NIT is presenting Best Bowler of T-20 Tournament Prize

and Souvenir to Mohammad Rameez of Rawalpindi Rams.

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By Jauhar Ali

Interview

In an environment where people, seemingly disenchanted with synthetic drugs, are increasingly turning towards natural medicines and products derived from herbs, medicinal plants and minerals etc., the role and responsibilities of institutions devoted to eastern system of medical treatment increase manifold. The bigger the name higher the responsibility. Hamdard Laboratories (Waqf) is a prominent name which has been serving the ailing humanity through eastern system of medicines for over a century now. Being one of the leading manufacturers of herbo-mineral products and medicines, the responsibilities of Hamdard to come up to the people’s expectations have become enormous and challenging. To pass on to our readers the policies, plans and projects of Hamdard Laboratories (Waqf) to meet the emerging challenges Value Chain has had an opportunity to interview Dr. Navaid ul Zafar, Managing Director of this premier institution. Dr. Navaid ul Zafar is a thorough professional with sound academic and professional background, and is a moving spirit behind efforts aimed at ensuring quality control and maintaining a regular flow of production and supply of medicinal and herbal products to the market.—Editor

Hamdard: Pioneers in Herbo-Mineral Products

Q. Before we talk about the contributions of Hamdard Laboratories (Waqf), may I request you to enlighten our readers with a brief history of this prestigious institution?A. Hamdard has a long history starting with establishment of Hamdard Dawakhana by Hakim Hafiz Abdul Majeed in Delhi, India, in 1906 with a mission to ease the pain and suffering of the sick with the use of healing herbs. On his demise, his son Hakim Abdul Hameed carried on his father’s mission. Later, his brother Hakim Mohammed Said came to the fore and after his migration to Pakistan succeeded in setting up Hamdard in Karachi in June 1948. With devoted and dedicated efforts of Hakim Mohammed Said, Hamdard has grown in stature, and today it is regarded as one of the largest manufacturers of herbal medicines and products with its star product Rooh Afza having 60 to

70 per cent market share within and outside the country. The product has been the winner of FPCCI’s Best Export Trophy Awards consecutively for the last 16 years.

Q. You are considered as the moving spirit behind efforts aimed at maintaining the image and raising the stature of Hamdard. What are your major responsibilities in such a huge organization and how do you manage them?A. Our cherished goal at Hamdard is “Quality at all costs”. This requires continuous research and quality control. While maintaining the quality of our products and medicines, one of my main responsibilities is to ensure a regular flow of production and marketing of Hamdard’s products and medicines. In an environment where procurement of raw materials and their use for making

An Interview with Dr. Navaid ul Zafar

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products and medicines at reasonable prices is unpredictable, the task is quite challenging especially when the intention is not to pass on the burden of additional cost on to our consumers. However, this aim has so far been achieved successfully. it is through dedicated teamwork, efficient management efforts, and the system set up by Shaheed Hakim Mohammad Said and further strengthened by Mrs. Sadia Rashid, Chairperson, Hamdard Laboratories (Waqf) that I have been able to ensure quality of our products, an uninterrupted production, sale and supply of our products, and further improvement and expansion in the projects initiated under the umbrella of Hamdard Foundation Pakistan.

Q. Organizations survive and grow provided they have practicable future plans of action and implement them earnestly. What are your goals and plans for the growth of your organization?A. Briefly speaking, we aim at providing more effective medicines for the treatment of those diseases that mostly hit the poor. Hamdard Laboratories (Waqf ), equipped with modern and state-of-the-art instruments are quite capable of achieving this goal. We also aim to make it a multinational company of international repute with the highest standards of manufacturing and quality control for the greater good of the ailing population of the world.

Q. Do you have any new business projects coming up?A. Yes, certain plans and projects are under consideration for further growth of Hamdard. They include expansion of facilities in Karachi and Lahore for production of Rooh Afza, complete revamping, renovation and expansion of storage facilities in Hamdard’s factories, installation and commencement of new filling/capping lines with enhanced speed in Peshawar, development of new research based products and many more plans that are in the conception and feasibility assessment stages. To keep Hamdard on the move, you just have to keep pace with time and the changes it necessitates. That, to me, is the key to

success of an organization in serving all its stockholders.

Q. Luck is often blamed for failure in achieving desired success. What is your opinion about luck and hard work for success in life?A. Luck means chance or opportunity which nature provides to every individual. In my opinion luck is interlinked with hard work for success. It is generally through hard work that opportunities are converted into success. Hard work is the source and essence for success in life. This is borne out by the biographies and auto-biographies of successful men and women around the world. I think the role of hard work is 90% and that of luck just 10 % in the success of a man or an organization.

Q. Is intellect a close preserve of a few individuals or is it gifted to all but utilized only by a few in the right way?A. God has gifted intellect to all of us. That’s why intelligence is regarded as human beings’ main characteristic. However, not all of us utilize this divine gift in the right way either due to lack of education or training or both.

Q. Investment plays a dominant role in the economic development of a country. In your opinion, what steps should be taken by the Government of Pakistan to attract investments, especially from foreign countries?A. Several initiatives have already been taken to attract investments; they might yield positive results if something could be done to improve the law and order situation, besides ensuring uninterrupted and adequate supply of electricity, which is the life-blood for industrial growth.

Q. It has always been a cherished dream to make Pakistan an ideal state. In your opinion, how could this dream be converted into reality? A. This is possible, besides other factors, through promotion of business and trade which is unfortunately hampered by unethical practices. Therefore, in our efforts to boost economic activities it is important to devise and implement strategies designed to root out corruption from all segments of our society. Quality education is yet another segment that needs utmost attention because that’s what inculcates civilized moral values to our children and prepares them for taking on their responsibilities in life with the true sense of devotion.

Q. Hamdard’s products are known for high quality standards, and that’s why they are used globally. Do you still think there are competing forces in the market which could adversely affect your marketability?A. In my view, a healthy competition is always good for organizations to grow. There are several organizations in Pakistan, India, China and several countries in the West that produce herbal medicines and products. The problem arises where sub-standard manufacturing units spring up, and in order to beat the ongoing price hike, they produce sub-standard medicines at comparatively lower cost. They not only damage the reputation of the manufacturers of

Interview

President Islamic Republic of Pakistan Mr. Asif Ali Zardari is Awarding 35th Export Award to Dr. Navaid-ul-Zafar, Managing Director of Hamdard Laboratories (Waqf) Pakistan Karachi

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quality tibbi medicines and products, but also play with the health of different segments of our society. There is need for taking steps that could check such practices.

Q. As a leading manufacturer of herbal medicines and products used internationally, what is the role of Hamdard in attracting foreign exchange for the country?A. Hamdard contributes to sizable earning of foreign exchange through export of its products and medicines. Roof Afza, for instance, is exported to many countries of the East and the West. This has enabled us win export merit trophies consecutively for 16 years indicating our ever-increasing share in foreign exchange earnings, and contribution to foreign exchange reserves of the country.

Q. At present, our country is suffering from natural disasters like flood and dengue fever. Kindly scribe the precautionary measures and role of Hamdard in overcoming these dilemmas.A. Hamdard (Waqf) Pakistan is operating mobile dispensary program consisting 16 vehicles since 1963. We are operating 4 vehicles in Karachi, 4 in Lahore, 2 in Rawalpindi, 2 in Hyderabad, 2 in Multan and 2 in Faisalabad. Each vehicle has a doctor on board equipped with medicines that provide free medical aid to the flood affected people. We are also providing tents, distilled water and medical aid to the flood affected people via our medical dispensaries. We have established temporary schools in flood devastated areas so that affected children can continue their studies in this difficult time. Furthermore, we are also researching and striving hard to make an efficient medicine in our Hamdard

InterviewDr. Navaid-ul-Zafar belongs to the family of hakims and physicians. His uncle late Hakim Muhammad Yahya migrated to Pakistan with Hakim Mohammed Said and joined Hamdard in 1948. After the death of his uncle his father, late Dr. Hafiz Mohammed Ilyas, a practicing MBBS doctor joined Hamdard on the request of Hakim Abdul Hameed and Hakim Mohammed Said, as the GM Hamdard Laboratories (Waqf), in 1965, and eventually became the Managing Director.Before completing his Masters in Pharmacy from USA, and PhD. in Pharmacology from University of Karachi, Dr. Navaid ul Zafar did B. Pharmacy from Karachi University with first class first position, and won the Quaid-i-Azam Gold Medal. He started his career in Hamdard in January 1985 as Director Planning and Development, including the responsibility of Director Production. He was promoted to the post of Deputy Managing Director in 1991, and became Managing Director, Hamdard Laboratories (Waqf), in April 1993 after the demise of his father. He is also Senior Mutawalli of Hamdad Waqf, Vice President of Hamdard Foundation Pakistan, founding member of the Governing body of Madinat-ul-Hikmah, member Finance and Planning Committee of Hamdard University, founding member of Majlis-i-Nazima Hamdard Foundation Pakistan, and also a member of the Board of Trustees of Hamdard Laboratories (Waqf) Pakistan.

Laboratories. to eliminate dengue virus. InshAllah we will be successful in developing a remedy/cure for dengue virus up to next year. Q. Due to the energy crisis in our country, the energy prices are increasing day by day. What would you like to comment on this?A. Government and private sector need to cooperate with each other to solve this issue. Private sector is running their machinery on electric power generators which are increasing the production cost of the products. Government needs to utilize our mineral resources to produce cheap energy power otherwise industry will be destroyed. Hamdard (Waqf) Pakistan is generating solar and wind energy at Hamdard University. Similarly government and private sector need to jointly cooperate with each other to overcome this problem.

Q. Why our youth is inclined towards illiteracy and extremism?A. Education should be for the knowledge, not for degrees. Today’s students have degrees but not knowledge. That’s why such students prove useless in their professional career and they are unable to find suitable jobs. These students are then inclined towards extremism due to less knowledge and unemployment. Secondly, our trade and industries have been destroyed due to terrorism and bad law & order situation, Leaving many students are unemployed. Unemployment and extremism are the basic reason for devastation of our youth.

Q. America’s open threat to invade Pakistan has proved that Americans want to repress Pakistan. What should be the role of Pakistani nation concernin this threat? A. The government will stay silent if Chief of Army Staff does not respond on the US government threat. This nation needs a true and sincere leadership. It is very necessary for us to unite over single point agenda. The whole of Pakistan needs to be one nation in order to survive. Pakistan accordingly needs continuity in policies and leadership vision. We need a leader who can give us a true vision.

10 times more titanium and energy reservoir discovered on moon

hile the Earth is steadily being depleted of its natural resources,

it might become imperative to look to the sky for alternatives. A new map of the Moon has revealed an abundance of titanium ore (Titanium is as strong as steel but nearly half as light, which makes it a highly desired also very expensive metal) as well as a rare ‘Helium-3’ (an isotope of helium which is non-existent in our planet) that is up to 10 times richer than on Earth, a finding that could one day lead to a mining colony on the moon. The discovery was made by a camera aboard the US ‘Lunar Reconnaissance Orbiter’, which swept the surface of the Moon, scrutinizing it in seven different light wavelengths.

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RR

November 2011

esearch & DevelopmentFood insecurity in Islamic Countries by Saqib Arif, QurratulAin Afzal, Soha Ahmed and Mubarik Ahmed

F Germany and the Czech Republic are ranked at least risk of food insecurity.The Organisation of Islamic Cooperation (OIC) (formerly Organization of the Islamic Conference) is the second largest inter-governmental organization after the United Nations which has membership of 57 states spread over four continents. The Organization is the collective voice of the Muslim world and ensuring to safeguard and protect the interests of the Muslim world in the spirit of promoting international peace and harmony among various people of the world. Most of the OIC countries are comprised of the less developed part of the world. This situation is revealing day to day increasing challenges for them. The global ‘food insecurity’ menace is raising very serious concerns for OIC’s. According to the FAO of the UN, an average 15% of the total population of 57 OIC is undernourished, a condition where food intake provides less than the minimum energy requirement on regular basis. OIC countries’ total food & agriculture trade balance stood at -$40.1 billion in 2009 with imports worth $126 billion (12% of global imports,) whereas its total exports were worth $85 billion (8% of global exports.) (Source: UN’s International Trade Center data.)Somalia has the highest percentage of population undernourished at 62%, whereas Pakistan has the highest number of undernourished people at 44 million (26% of the population.) (figure 1)

ood security is the physical, social and economical access to sufficient, safe and nutritious food at all

times to all the people. Though, higher agricultural productivity places a vital role in maintaining food security, it does not however, guarantee a consistent and sufficient food availability to cater to national needs. In fact food security is a complex process that is regulated by a number of things including government policies, productivity, local and international market fluctuations and interventions, transportation mechanism for supply to deficit areas, economic and social stability, purchase power of the buyers based on their net income etc. etc. The four broad components that ensure food security in any part of the world include food availability (through domestic production or imports), food access (all time access to common resources by the whole population), utilization (utilization of safe, nutritious food and clean drinking water to meet the physiological needs of all populations at all times), and the stability (consistent availability at all times to cover cyclic events and natural catastrophe). In the last few years the globally threatening situation of food insecurity, specially in the developing world has raised serious concerns. As a result of this the food security has no more remained a linkage between starvation and crop failure, and has emerged as a social and political dilemma. Food security is now globally addressed by the factor that includes the physical and economic access to food along with stability and food absorption. These elements are the key parameters that reveal the attainment of food security at national, societal, communal and household level. Social and economic structure of a community, society, or nation is an indicative of feat or failure of food security indicators.The recent global food crises in the years 2007 & 2008, resulting into a severe hike in food prices revealed an exacerbating situation of food security in the world. Poverty across the world has markedly increased due to food and economic catastrophe during 2007 to 2009 around the world. Keeping in view these parameters it is established that many of the developing and least developed countries are facing physical, economic and poor health constraints that protract the food insecurity crises. Poor resources and poor economic situation of many countries including Angola, Haiti, Mozambique, Burundi and the Democratic Republic of Congo have been ranked as the most food insecure countries in the world. Pakistan is ranked 11th at extreme risk on Food Security Risk Index(FSRI),while Bangladesh and India are ranked 20th and 25th, respectively. Developed countries including the United States, France, Canada,

Most undernourished OICs

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esearch & DevelopmentA research carried out in 2011 on OIC countries categorizes the OIC countries in four groups:Minimal Secure Countries (High Income Net Food Importers)This includes UAE, Kuwait, Lebanon, Oman, Qatar, Bahrain, Saudi Arabia. These countries do not have strong agricultural base and are exposed to global food supplier fluctuations. Largely Secure Countries (High Income Net Food Exporters) These countries have strong agricultural base and are the most secure OIC countries to include Nigeria, Kazikistan, Indonesia, Turkey, Iran, Moroco, and Malaysia.Food Insecure Countries (Agro-based Countries but Facing Malnutrition)These countries have a reasonably strong agricultural base and include Sudan, Pakistan, Niger, Bangladesh, Afaghanistan, Cameron, Uganda etc. Examples can be given of Pakistan and Sudan that have more than 20 million hectare of arable land but food insecurity prevails nationwide.Highest Food Insecure CountriesThese includes Somalia, Comorus, Tajekistan, Yemen, etcThe global crisis, arising from the continuous increase in food prices, addressing the food insecurity situation in the world. According to Third World Resurgence (2010) estimates the recent increase in basic food prices and oil in 2007-2008 caused an increase in number of extreme poverty population by 130-150 million. About 40-50 million people are compelled to fall in hunger due to price crisis of 2007-2008, most of them are populated in least developed countries. Price hike crisis is exacerbating the food security situation in all OIC countries as well. The highest food price index in OICs are presented in figure 2.The main factors that are gearing the world food price fluctuations are evaluated by SESRICK(Statistical ,Economic

and Social Research and training center for Islamic Countries),2011, as follows:Demand and Supply situation due to rapid growth in the emerging markets, in particular in India and China since mid of 2000 and Bio-Fuel production; Exogenous Supply shocks due to bad weather and droughts; Speculation in international commodity markets which has been increased due to low real interest rates in the developed countries during and after the financial crisis.

Suggestions The OIC countries, specifically the ones that are vulnerable to the effects of global food price fluctuations, should be encouraged to establish grain resources by regrouping the countries regionally to prevent risks of food insecurity. These countries may interact with each other by providing commodity loans in case of any requirement.The OIC countries should establish their independent “Grain Exchanges” for local and international marketing. These exchanges can serve as a focal point and consortium, not only for trade but can play a significant role in investments in the agricultural sector, leading to its modernization. The membership of such grain exchanges should be open to business, industry, farmers, producers, procedural and merchandisers.The regional OIC countries should consider establishing some agreements about the most preferred trade nations among themselves for supporting and facili¬ting each other on food security matters.A reserve fund for OIC countries should be established for providing support to each other in case of any requirement by any of the members countries.There should be more frequent exchanges of scientists and expertise, policy makers, planners for the OIC countries to share each other’s experiences.

Source: ILO, LABORSTA online database 2011

Figure 2: Top 10 OICs with highest food price index in 2008

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EXPO Pakistan 2011Showcasing Pakistani Products to the world

akistan’s priority number one is a rise in its external inflows to ensure that its foreign exchange reserves are

boosted for repaying its maturing external debt liabilities that expanded in the past four years as a consequence, primarily, of the rise in oil price that placed a huge burden on its external accounts. Pakistan is therefore focusing on all those efforts that could boost its foreign inflows, and one significant effort in this regard was the recently held Expo Pakistan Exhibition.Pakistani export sector is flourishing despite all obstacles and problems due to their hardwork and commitment to international standards. Recently, Pakistan was able to successfully achieve the export target of 25 Billion US Dollars, showing the potential in its export trade sector. To further develop the export potential of Pakistani industries, the 6th edition of the Expo Pakistan 2011 was held at Expo Center Karachi on 20-23 October 2011. Expo Pakistan is a special event of the Trade Development Authority of Pakistan, and has been held annually since 2005. The objective behind organizing Expo Pakistan was to provide the Pakistani business community an excellent opportunity to interact with the foreign buyers – who are in the country to participate in the event – and to understand requirements from a whole range of buyers under one roof. It also paved the way for international investors and buyers to develop an interest in Pakistani products and manufacturing facilities, recognizing Pakistan’s potential as a trading hub.The exhibition was inaugurated by Honorable Prime Minister Syed Yusuf Raza Gilani at the Governor House Karachi on 19th October. Prime Minister Yusuf Raza Gilani said on the occasion that by 2014, Pakistan is expecting to qualify and benefit from the European Union’s special import treatment under the GSP Plus regime allowing duty free access for all export products. He said that the government has made concerted efforts to acquire better market access for Pakistani products to the world markets. “In this regard, the President and I have been emphasizing that Pakistan needs “Trade, Not Aid”.Referring to efforts for market access, he said: “Pakistan has already entered into preferential and free trade agreements with China, Malaysia, Sri Lanka, Iran, and Mauritius. I would strongly urge our exporters to take full advantage of the market access opportunities of the bilateral agreements”.Sindh Governor Dr. Ishrat-ul-Ebad, Chief Minister Syed Qaim Ali Shah, Commerce Minister Makhdoom Amin Fahim, Minster for Overseas Pakistanis Dr. Farooq Sattar, Port and Shipping Minister Babar Khan Ghori and President FPCCI Haji Ghulam Ali were also present on the occasion.More than 295 exhibitors, who are the leading exporters of Pakistan, set up their stalls in Expo Pakistan while 582 plus foreign delegates visited the Expo 2011. The exhibition displayed over 10,000 products made in Pakistan in 25 different sectors including textiles, fashion garments, dairy

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products, fresh fruits and vegetables, fertilizers, carpets, sport goods, surgical items, cutlery, information technology and software, pharmaceuticals etc. Export orders worth $ 517 million were finalized for various products at the exhibition. Last year, the exhibition was successful in securing trade agreements worth $80 million. This was stated by the Chief Executive of the Trade Development Authority of Pakistan (TDAP) Tariq Puri during his address to a press conference at the venue of exhibition. He said that around 1,650 business meetings were held between the foreign buyers and Pakistani exhibitors and manufacturers, while 1,093 foreign buyers visited different products stalls.He termed the exhibition as a successful event as 15 memorandums of understanding (MoUs) have been signed between foreign and local traders during the event. Tariq said that a Hong-Kong based company M/s Ormita has signed a MoU with a Pakistani food processing company M/s Alpha Dairies worth $120 million for the first year with a provision to go up to $300 million. He further added that

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‘SCALP 2011’ – Putting Supply Chain at the core of corporate success

lobalization of trade beginning the mid 1990s necessitated that, to expand and grow companies

stretched their reach and explored new markets besides serving their own markets. Besides, to be able to compete, on the one hand they had to tap the most economical supply markets and on the other discover the most economical and swift routes to reaching their final markets. Strengthening these vital capacities highlighted the need for discovering the most efficient and cost-effective two-way supply chains. The current global reality is that markets are expanding beyond national borders and re-defining the way demand and supply are to be managed. Global companies are now driven by markets not just across their borders but across the continents. Supply chains are now essential for business success, and to effectively compete in global markets, businesses require efficient and sustainable supply chains to meet the complex needs of the whole variety of markets they serve. Equally important is the fact that organizations appreciate the importance of strategic buying, which holds the key to gaining competitive advantage in their industries/sectors.Regarding the potential and importance of supply chain management and procurement, ‘Supply Chain and Logistics Pakistan’ (SCALP 2011) conference, organized by Terrabiz in association with Supply Chain Association of Pakistan (SCAP), was held on October 1, 2011 at a local hotel in the metropolis. The agenda of the conference was “Putting Supply Chain at the Core of Corporate Success”.The event was attended by professionals and corporate entities from the supply chain and logistics managementindustry of Pakistan. More than 300 delegates including CEOs and executives of supply chain, procurement, logistics, strategic planning, finance,

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Rabia Garib, Asad S. jaffar - Phillips, Qayser Alam -Unilever, Hamza Wasi Hashmi - Terra biz, Wajahat Ather - Byco, Dr. Ashifi Gogo & Hassan Jamal - SAP at Supply Chain and Logistics Pakistan

a Polish company is finalizing a partnership deal with a Pakistani company in IT Software with tentative business of $1 billion. He said that TDAP had provided services of interpreters in Chinese, Japanese, French, Spanish, Arabic, German and Russian to foreign buyers. The presence of trade delegates from 52 countries of the world including United States of America, Japan, Germany, Greece, New Zealand, Argentina, Mexico, Poland, Thailand, Mauritius, Singapore, South Korea, Malaysia, China, Madagascar, Russia, Brazil, United Arab Emirates and others made this exhibition a truly international event and helped Pakistan to be recognize as a new trade hub in the South Asia. Beside the country’s own companies, Chinese and Japanese pavilions in the expo were also the center of attraction for the foreign visitors.The exhibition will not only increase Pakistani exports but also pave the way for access of Pakistani products to international markets. It may be worth mentioning here that the timing of the Expo Pakistan 2011 set by the TDAP was perfect allowing the foreign buyers and local exporters to make future trade contracts for the Christmas and New Year celebrations in the West. According to the TDAP, Pakistan had successfully come out of the bad-patch of uncertainty and managed to strengthen its stability across the globe by organizing of such mega shows, which had left the international delegates largely inspired as they showed interest in visits to the manufacturing units in different industrial cities of the country. The unexplored resources of Pakistan offer countless developmental, trade and industrialization opportunities for the global business community. The Trade Development Authority of Pakistan (TDAP) deserves credit for taking the initiative of holding an international mega event in the city that would go a long way in boosting confidence of both local and foreign investors.

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distribution, corporate affairs, out-sourcing & material management from different sectors like pharmaceutical, retail, automotive, manufacturing and oil and gas attended the conference.Hamza Wasi Hashmi delivered the inaugural address for the Conference in which he spoke about exploring this profession and organizing forums and conferences, and training programs to reinforce the potential.Qayser Alam, President Supply Chain Association of Pakistan (SCAP) and Vice President Supply Chain department, Unilever Pakistan stated in his address that supply chain is an essential for corporate success. Profit maximization is possible by implementing an effective supply chain management process. He also highlighted the fact that Unilever Pakistan believes on market differentiation and the demand supply gap is always a key indicator of this strategy.Hanif Ajari – Director Strategic Development Getz Pharma, said, “The main challenge is to meet the supply demand gap when a big part of the country is affected by heavy floods and this is where local experts of supply chain play a vital role.”Philips Electrical Industries of Pakistan Chairman Asad S. Jafar said in his speech that the implementation of enterprise resource planning (ERP) is necessary for dealing with competing demands for scarce resources within big organizations. Jafar further added that a management information system which facilitates the flow of integrated information among all business functions provides tangible and qualitative results.Speaking on the occasion, Byco Petroleum Vice President (Commercial) Wajahat Ather said that a company must document all its operations and set a sound estimate of demand for ERP to improve the overall organizational efficiency. He further added that integration of up-to-date data through ERP ensures that the company can survive in seasons of high and low sales.Addressing the SCALP 2011, SAP Pakistan Country Liaison Manager, Hassan Jamal said that business management software solutions are not as expensive s many industrialists think. ERP is affordable and it can recover the cost very soon if implanted wisely. He added that leading companies, including Nestle and National foods, increased their fleet productivity substantially by adopting ERP.Sproxil CEO Ashrafi Gogo in his address said that sometimes technology is not the solution to a company’s poor financial state. “Processes should be in place first, especially in case of small and medium sized businesses. Technologies can later be used to improve those processes”. He said his company has provided a technology based solution to the issue of fake pharmaceutical products by ensuring a secure post-manufacturing supply chain.SCALP 2011 provided an opportunity to benefit from face to face exposure and high seniority networking opportunities with the leading professionals of the industry. It also highlighted factors, relationships and strategies that can help national logistics and procurement professionals to improve their tactics for the global markets.

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“Death of martyr gives life to the nation”Rich tribute Paid to Hakim SaeedKarachi; Speakers at the meeting of Hamdard Naunehal Assembly Karachi chapter paid rich tribute to the personality and services of Shaheed Hakim Mohammed Saeed on the occasion of his 13th Day of Martyrdom.The meeting was held on Tuesday October 18, 2011 on the topic “Death of martyr gives life to the nation” in the memory of Hakim Said at a local hotel.Speaking on the occasion, the chief guest and former ambassador of Pakistan, Abdul Qadir Jaffer said that education for all was quite essential for the progress and at any rate we should make full arrangements for spreading education in the country. “According to Hakim Said’s instruction education be supplemented with training, because without training education could not yield good results” he added.He congratulated Mrs. Sadia Rashid, President, Hamdard Foundation Pakistan on best training of children through the platform of Hamdard Naunehal Assembly and properly running the institutions, left by Hakim Said.‘We failed to give progress to the country but the new generation would definitely be successful’, he anticipated.Mrs. Sadia Rashid in her speech said that Hakim Said was an institution – a personality who loved Pakistan with his heart and soul and his watchword: “Love Pakistan – Build Pakistan” was an evidence of his patriotism. He was a physician par excellence, a thinker and reformer who wanted to reform his society through education and dissemination of knowledge, she added. Hakim Said left the world on October 17, 1998 but he had already showed the way of education, knowledge and reconstruction of society to the nation, she said and advised the children to follow the example of service to nation, set by him, when they grow up and took the charge of affairs of the country.Child speakers in their speeches maintained that every year the day of 17th October made them saddened and reminded them about the struggle of Hakim Said for the education, health and betterment of children in the country. Besides Masud Ahmed Barakati and Syed Shamim Rizvi, respectively senior director and deputy director of Hamdard Foundation; seasoned journalist Nusrat Nasarullah, guests, teachers, students, children and their parents attended the meeting.

In the United States, pesticides were found to pollute every stream and over 90% of wells sampled in a study by the US Geological Survey. Pesticide residues have also been found in rain and groundwater. Studies by the UK government showed that pesticide concentrations exceeded those allowable for drinking water in some samples of river water and groundwater. Pesticide impacts on aquatic systems are often studied using a hydrology transport model to study movement and fate of chemicals in rivers and streams. As early as the 1970s quantitative analysis of pesticide runoff was conducted in order to predict amounts of pesticide that would reach surface waters.There are four major routes through which pesticides reach the water: it may drift outside of the intended area when it is sprayed, it may percolate, or leach, through the soil, it may be carried to the water as runoff, or it may be spilled, for example accidentally or through neglect. They may also be carried to water by eroding soil. Factors that affect a pesticide's ability to contaminate water include its water solubility, the distance from an application site to a body of water, weather, soil type, presence of a growing crop, and the method used to apply the chemical. In Pakistan effluents from the factories and some times the pesticides used by farmers do find their way in the drainage system. In 1982 in District Haripur in Pakistan, the non treated effluents from a fertilizer factory were drained into

International Coal Conference-2011:the curtain raiser

he power supply shortages have brought to the fore the fact that, while Pakistan has the natural resources that

could plug the energy (oil and gas) gap that is now preventing the optimal utilization of its installed power generation capacity, exploration and utilization of these resources did not keep pace with the rising national needs. It is a case of political and bureaucratic neglect and belatedly, attempts are on to make up for this gaff.Among the many natural resources that Pakistan has been blessed with, coal is the one that is in abundance but the least exploited; for decades, no effort based on the modern exploration and extraction technology was implemented due inconsistencies in government policies and repeated changes in the profile of government although the dormant Thar coal exploration project could have prevented the current energy conundrum if coal was extracted wisely a decade ago. The present government has belatedly taken the initiative of organizing an International Coal Conference-2011 in the city of Karachi on October 22 to create awareness, showcase the potential, attract investment therein, and lay open all the initiatives of the Federal and Sindh government in utilizing Thar coal deposits in Sindh, that are be among the largest in the world. The conference was held under the auspices of Thar Coal Energy Board and Sindh Board of Investment and was attend by the Pakistan’s Prime Minister of Pakistan Yusuf Raza Gillani, Chief Minister Sindh Syed Qaim Ali Shah, Governor Sindh Dr. Ishrat-ul-Ebad, reputed national and international sector specialist‚ potential investors‚ existing project developers‚ the representatives of global development financial institutions‚ diplomats and other stakeholders.Prime Minister Gilani traced the history of Thar coalfield back to its inauguration by Benazir Bhutto in 1993. The plan to extract coal reserves was shelved by subsequent regimes, but the current PPP-led government was finally transforming Bhutto’s vision into reality. With full utilization of the coal reserves, 100,000 MW could be produced over the next 300 years, claimed the PM. He even looked forward to a future in which surplus electricity could be exported to other regional countries for which, “various institutions were effectively working under Thar Coal Energy Board and the government would encourage foreign investment in this field.” The government will gradually reduce its dependence on imported oil for power generation shifting over to hydro and other power generation bases that could utilize coal reserves to produce cheaper power for Pakistan’s people and its industries. We have to create a balanced energy mix by gradually increasing coal-based power generation, bringing it at par with world average of 40 percent power generation.

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Zubair Motiwala, Chairman Sindh Board of Investment, briefed the forum about investment potential of Thar coal and disclosed to the participants that international companies from China, South Korea, Germany, UK, Czech Republic, Australia and Turkey have shown their interest in investment in mining and power generation using Thar coal, and in the related infrastructure projects. He said that the Government of Sindh is going to conduct third International Competitive Bidding for blocks VIII, IX and X of Thar coal field and also for the blocks in Sonda and Badin for attracting international investment in developing coal mining and power generation projects in Sindh. Denying some misconceptions about Thar coal, Dr Marcos Leontidis, mining expert from Greece, said that the stripping ratio in Thar is around 6.6:1, which is much better than many lignite mines around the world, including Greece. Dr Larry Thomas, renowned expert from Britain, said that the Sulphur content in Thar is acceptable being at 0.7 percent, which is lower than That in many other lignite resources already being used in the world, and its moisture levels are the same, or even less than those in most of the lignite mines in the world. Mr Mohamamad Younus Dagha, who is Secretary, Sindh Board of Investment, said in his report “Coal–the way to achieve energy security for Pakistan” that efforts were underway to promote Pakistan’s huge coal reserves, and to dispel the many myths and misconceptions about coal-based energy and pollution. Officials assured the foreign investors that the government has decided to prioritize the project, and it is in the process of resolving critical institutional and regulatory issues so that the provincial government can undertake the project without further delay. All federal and provincial ministries, departments and state agencies are working collectively under the Thar Coal Energy Board on fast track to materialize the Thar Coal project. The government confronts an overwhelming task of plugging the expanding energy demand-supply gap that is likely to double in the next 15 years. Projects such as mining coal from Thar, could help the government overcome the energy shortfall.

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cienceShoes for blind ‘see’ their way

t present people with limited or no vision depend either on walking canes, which help them detect

obstructions, or seek help from friends and other people for assistance, or use voice-based navigation aids. But an Indian student successfully developed a shoe into a hepatic device for the blind and visually impaired persons. The shoe can become a substitute of white cane for the blind persons. The student, “Anirudh Sharma” named the shoe as “Le Chal”. The shoe uses the various map and geo-tagging applications like Global Positioning System (GPS), Google Maps, Google Earth and others to locate the exact locations. The ‘Le Chal’ is intended to guide the user to specific destinations through vibrations on different areas of the shoe. The user has to state his final destination through an Android App or his Desktop, which is in synchronization with the shoes. Google Maps assists in obtaining maps, and turn-by-turn directions are loaded into the shoes. When the user starts walking, the GPS transmitter is fed with the location, using Google Maps. Data is sourced through the GPS and sent to the receivers located in the shoes, which in turn, generate a vibration effect to give the user an idea of direction and place. At turns, vibration feedback is activated in the shoes to indicate the direction for turning. The strength of the vibration depends upon the overall proximity from the destination, that is, vibration is weak in the beginning and is incrementally stronger at the end of the navigation task. The built-in proximity sensor of the shoe can detect up to 10 feet, informing the user of the surroundings and allowing him or her to make decisions and plan the next move.

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Nanostructure solar silicon cell: e�cient & cheaper way for solar energy

oday's world is faced with several challen-

ges, which include the depletion of fossil fuels and its increased cost. Researchers in Singapore have exploited advanced nanostructure technology to make a highly efficient and yet cheaper silicon solar cell. With this development, the researchers hope that the cost of solar energy can be halved. Developed jointly by Nanyang Technological University (NTU) and Institute of Microelectronics (IME), the new thin-film silicon solar cells are designed to be made from cheaper, low grade silicon. However, it is able to generate

electricity currents close to that produced by traditional solar cells made from costly, high quality silicon.According to Professor Dim- Lee Kwong, of IME, the demand for thin film cells is expected to double by 2013.

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Number of Facebook friends linked tobrain structure

new study by UK scientists reveals a correlation between the size of

particular areas of the brain and the number of “Facebook friends” a person may possess. The research was conducted by Prof. Geraint Rees, a Wellcome Trust Senior Clinical Research Fellow at University College London (UCL) and has been published in the journal “Proceedings of the Royal Society B”. The researchers found a strong connection between the number of Facebook friends an individual had and the amount of grey matter in several regions of the brain. One of these regions found bigger was the amygdala, a region associated with processing memory and emotional responses.This innovative research seeks to help clinicians and scientists study higher cognitive function to understand how thought and perception arise from brain activity, and how such processes break down in neurological and psychiatric disease. In particular, this new research helps us to begin to understand how the brain may evolve in response to use of social media and the Internet.

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Monitoring Desk

OmniTouch: Now any surface is a touchscreen

icrosoft Research and Carnegie Mellon University have created a wearable projection system that turns pads of paper, walls or

even a user's own hands into graphical, interactive surfaces.OmniTouch employs a depth-sensing camera, similar to the ‘Microsoft Kinect’, (a motion sensor camera range from the Microsoft gaming console series ‘Kinect Xbox 360’) to track the user's fingers on everyday surfaces. This allows users to control interactive applications by tapping or dragging their fingers, much as they would with touchscreens found on smartphones or tablet computers. The projector can superimpose keyboards, keypads and other controls onto any surface, automatically adjusting for the surface's shape and orientation to minimize distortion of the projected images.The device includes a short-range depth camera and laser pico-projector and is currently mounted on a user's shoulder. But the team says it ultimately could be the size of a deck of cards, or even integrated into other handheld devices.

"We see this work as an evolutionary step in a larger effort at Microsoft Research to investigate the unconventional use of touch and gesture in devices to extend our vision of everywhere computing even further. The optical sensing used in OmniTouch, allows a wide range of interactions, similar to the capabilities of a computer mouse or touchscreen. It can track three-dimensional motion on the hand or other commonplace surfaces, and can sense whether fingers are "clicked" or hovering. What's more, OmniTouch does not require calibration — users can simply wear the device and immediately use its features. No instrumentation of the environment is needed; only the wearable device is needed.

Data travelling by lightew data travelling technology developed by German scientists of ‘Fraunhofer Institute for Telecommunications and Heinrich Hertz Institute HHI in Berlin’,

Germany, will enable the computer users to transfer the digital data in a new medium – Light. In near future, computer users in future can use internet or transfer their data without using cables or wireless LAN simply through beam of light from a bulb. With this technology, regular LED bulbs can be turned into optical WLAN with only a few additional components. The technology is named as Visible Light Communication (VLC). The lights in this technology will not just for lighting up, they will also transfer data. Data through this medium will be transmitted quickly and safely and in HD quality to user’s iPhone or laptop, with no loss in quality. The scientists are able to transfer data at a rate of 100 megabits per second (MB/S) without any losses, using LEDs in the ceiling that light up more than ten square meters (90 square feet). The receiver can be placed anywhere within this radius, which is currently the maximum range. Users will be able to transfer four different modes of data (pictures, video, audio and text) to four different computers at the same time with this technology, just like a simple Local Area Network (LAN). A simple photo diode on the laptop acts as a receiver. The diode catches the light; electronics decode the information and translate it into electrical impulses which are the language of the computer. One advantage is that it takes only a few components to prepare the LEDs so that they function as transfer media. One disadvantage of this technology is that as soon as something gets between the light and the photo diode (for example, when someone holds his hand over the diode) the transfer will be impaired. Laptops, Palm devices or mobile telephones are all potential end devices. Currently the scientists are developing their systems toward higher bit rates. Using red-blue-green-white light LEDs, they will be able to transmit 800 Mbit/s in the lab.

Monitoring Desk

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aiz Ahmed Faiz, the man who acquired a legendary status in his life time, was

born in Sialkot, hundred years ago. Sialkot also has the distinction of being the birth place of another legend–Allama Iqbal– who too was a reformer par excellence and also the forerunner of what later became the great Progressive Writer’s movement in India.Faiz got his education in Lahore and for a while taught in a college in Amritsar, but then joined the British Indian Army and rose to the rank of Lieutenant Colonel and also received the M.B.E. In 1947, he resigned from the Army and became the Editor of the famous Lahore-based English daily “Pakistan Times” where he made a name for himself in journalism. That’s when his long struggle with the establishment began because he was a strong believer in social justice that bore no shades of racial, ethnic or religious segregation. From beginning to the end, his poetry reflects this belief and what makes him unique is that, unlike other revolutionary poets, he adopted the traditional poetic lingo to express his views, which earned him recognition as a classical poet.As Faiz’s concern for suffering humanity and his gross indignation against the exploitation of the poor grew, his poetic vision underwent a transition from romanticism to social realism, though his poetry continued to reflect the influence of Ghalib, which made his poetry an absolutely fascinating expression of the growing and unabated gulf between the rich and the poor, and his picturesque depiction thereof in his poetry to arouse human consciousness about this ongoing travesty. His following lines convey just that:

Dilbari thehra zuban-khalq kulwane ka namAb nahien letay pari roo zulf bikhraney ka nam

His unmatched success as a poet was that his poetry was admired by the elite as well as the masses – a rarity not many poets can claim. Estelle Dryland admired Faiz’s wonderful command over the use of traditional imagery and conventions to express political and social views when she said, “the decoder who has scant knowledge of the poet and his work can enjoy the richness of the traditional romantic imagery – the nightingale, the beauty of the beloved, and the yearning of the lover as he contemplates the exquisiteness of the object of his attention. The more poetically aware may, however, will recognize the poet’s skilful manipulation of imagery, whereby the beloved may assume the identity of the homeland, the fight for freedom, or perhaps even God.”As with Dr. Allama Iqbal, Diwan-e-Ghalib was a full time companion for Faiz; he used to keep it by his pillow. Ghalib helped him in developing a sense of one-ness with his fellow human beings–the sort Ghalib envisaged in his famous lines:

Qatray mein Dajla dikhai na de or juz mein kul,khel larkon ka hua deeda-e-beena no hua.

This fascinating interplay of the old and the new prompted Edward Said to refer to it in his essay “The mind of winter: reflections on life in exile” in the following words:“Faiz’s major – indeed quite unique in any language – achievement was to have created a contra-punctual rehtoric as well as rhythm whereby he could use classical (qasida, ghazal, masnavi, qita), and transform them before his readers rather than break from the old forms. You could hear old and new together… The crucial thing about Faiz is that, like Garcia Marquez, he was read and listened to by the literary elite as well as by

the masses……....His purity and precision were astonishing, and you must imagine therefore a [unique] poet whose poetry combines the sensuousness of Yeats with the power of Neruda. He, I think, was one of the greatest poets of this century.”In his Lenin Prize acceptance speech, Faiz quoted these lines from the great Persian mystic and poet Hafiz Shirazi:

Khalal pazir bawad har bina ke mi bini, bajuz bina-e-mohabbat ki kahli az khalal ast.

Every foundation that you see is defective, except the foundation of love which is without defect).

This was a reference to love and pain in its universal sense, which Faiz subscribed to. How he felt about the miseries of the poor who were being trodden by a corrupt establishment is reflected in the following romantically expressive lines:

Aur bhi dukh hain zamane mein muhabbat ke sewaChahaten aur bhi hain wasl ki shahat ke sewa

After Gen. Zia-ul-Haq disbanded the democratic regime and launched his very own brand of ‘Islamic’ governance, Faiz went into exile and became the editor of the Afro-Asian Writers’ magazine Lotus, which was then being published from Beirut. During the period of several years while he stayed in Beirut, he visited many countries but could not overcome the pain of being cut off from Pakistan. Edward Said who met during that period wrote: “His closest friends were the Palestinians, but I sensed that, although there was an affinity of spirit between then, nothing quite matched – language, poetic convention, life, history. Only once, when Iqbal Ahmad, a Pakistani friend and fellow exile, came to Beirut did Faiz seem to overcome the estrangement written all over his face.”

Baad-e-khizan ka shukr karo, Faiz, jis ke hath,Name ksi bahar shumail ke aaye hain

The rich legacy Faiz leaves behind will inspire the coming generations because misconduct by the state is now almost a global tragedy, and is escalating poverty because a judicious distribution of wealth appears ever-more unimportant cause for the governments to pursue. As a matter of fact, that is happening; look at the up-coming young Faiz-inspired poets.

Faiz: the poet who becomesever-more relevant

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portsSS

he famous Motor Speedway in Las Vegas became the scene of

one of the most unfortunate events ever in the history of car racing. A massive crash in which 15 sports cars were piled up also caused the death of the famous British driver Dan Wheldon as several cars went flying into the air.This event, organized by IndyCar, turned into total chaos at Turn 2 of the 1.5-mile (2.4-kilometer) Las Vegas Motor Speedway oval on the 12th lap of the race. Apparently, the chain of car crashes began when driver Wade Cunningham’s car swerved and J.R. Hildebrand clipped him. Hildebrand went airborne and Cunningham’s car went into the fence wall. It was debris everywhere across the track. You could see and smell smoke billowing on the rear mirrors of your cars. That is how it was recounted by driver Danica Patrick who was taking part in her final race as the full-time IndyCar driver.Driver Ryan Briscoe says he never saw anything like it. According to him, to drivers who had to drive through the flying debris in that lap, “it looked like a war scene” cut out of the movie called ‘Terminator’.That the tragedy that occurred was feared by diver Patrick who had predicted a chaotic race given the high speeds in qualifying rounds, and the race track was bound to become jam-packed with 34 cars racing on the

track.“There was a chunk of fire that we all were driving around. You could see cars scattered.” Patrick was not the only driver who had fears about what could happen in this over-packed race. Dan Wheldon had expressed similar feelings but was extremely excited about the race. “This is going to be an amazing show. It is going to be a packed race [a hint about the 34 cars that were to be in it], and you never know how that’s going to turn out.” That’s what he wrote in a blog for USA Today newspaper. There was, however, scant concern about this possibility in IndyCar – the organizers.In 2005, Dan Wheldon became the first Englishman since 1966, to win the Indianapolis 500. In 1966, the then top English driver Graham Hill won this honour. In this race, Wheldon was a distant second to Hildebrand until the leader lost control and nipped the wall on the last lap, allowing Wheldon to speed past. But that was not the end. What followed thereafter was chaos.Wheldon, who was traveling behind the cars that initiated the crash, simply couldn’t avoid the mayhem that took place. IndyCar Chief Executive Randy Bernard later said “Our thoughts and prayers are with his family today.”Later, Dan Wheldon’s fellow pilots decided to drive a five-lap salute in his honor—many of the drivers weeping as they completed that solemn gesture of their affection with Wheldon.

e say, Salman Butt finds himself here on trial accused of these

charges because of the words of his one-time friend and agent Mazhar Majeed.” It was the stand taken by Ali Bajwa, the lawyer defending the former captain of Pakistani’s cricket team in a court in London.Prosecutors however alleged that, in return for bribes they took, Butt and fast bowlers Mohammad Amir and Mohammad Asif together with Mazhar Majeed conspired to bowl 3 consecutive no-balls during Lord’s Test against England in August 2011.Bajwa however contended that was not the case and told the jury that: “I anticipate that everyone in this case will agree that there was, at the very least, a criminal conspiracy between Mazhar Majeed, Mohammad Amir and Mohammad Asif.”But Salman had a weak explanation for the nine mobile phone SIM cards that the police had found in his hotel room after the scandal broke. All he could say was that it was cheaper to buy local phone cards when he was on tours overseas.As for the cash he was found with, he said he brought $12,000 [from Pakistan] with the aim of buying a special-edition wrist watch costing around 8,000 pounds but his reasons for transferring over $180,000 into his mother’s account–tax purposes– were the weakest.

The scene after the 15-car pile-up in which the British driver Dan Wheldon died and several drivers were badly injured on October 17, on Las Vegas Speedway Salman Butt

The great tragedy Butt in courtT “W

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quality tibbi medicines and products, but also play with the health of different segments of our society. There is need for taking steps that could check such practices.

Q. As a leading manufacturer of herbal medicines and products used internationally, what is the role of Hamdard in attracting foreign exchange for the country?A. Hamdard contributes to sizable earning of foreign exchange through export of its products and medicines. Roof Afza, for instance, is exported to many countries of the East and the West. This has enabled us win export merit trophies consecutively for 16 years indicating our ever-increasing share in foreign exchange earnings, and contribution to foreign exchange reserves of the country.

Q. At present, our country is suffering from natural disasters like flood and dengue fever. Kindly scribe the precautionary measures and role of Hamdard in overcoming these dilemmas.A. Hamdard (Waqf) Pakistan is operating mobile dispensary program consisting 16 vehicles since 1963. We are operating 4 vehicles in Karachi, 4 in Lahore, 2 in Rawalpindi, 2 in Hyderabad, 2 in Multan and 2 in Faisalabad. Each vehicle has a doctor on board equipped with medicines that provide free medical aid to the flood affected people. We are also providing tents, distilled water and medical aid to the flood affected people via our medical dispensaries. We have established temporary schools in flood devastated areas so that affected children can continue their studies in this difficult time. Furthermore, we are also researching and striving hard to make an efficient medicine in our Hamdard

hile the Earth is steadily being depleted of its natural resources,

it might become imperative to look to the sky for alternatives. A new map of the Moon has revealed an abundance of titanium ore (Titanium is as strong as steel but nearly half as light, which makes it a highly desired also very expensive metal) as well as a rare ‘Helium-3’ (an isotope of helium which is non-existent in our planet) that is up to 10 times richer than on Earth, a finding that could one day lead to a mining colony on the moon. The discovery was made by a camera aboard the US ‘Lunar Reconnaissance Orbiter’, which swept the surface of the Moon, scrutinizing it in seven different light wavelengths.

November 2011

OObituary

She then settled down in London, where her daughters joined her. After the sad end of Zulfiqar Ali Bhutto, she accepted to become the Chairperson of the PPP–tough task for a lady who paid heavily for pursuing the party’s objectives.After Gen. Zia-ul-Haq installed what was little more than a hoax in the name of democracy in 1985, she returned along with Benazir Bhutto. For a lady who suffered absolutely shattering shocks that one can imagine, she was remarkably committed to reviving the party founded by her husband and fought for achieving the party aims. It was this valor that had kept Zulfiqar

Bhutto upright during the travesties that the Bhutto family, and the whole nation, lived through beginning July 5, 1977 until he was tragically hanged. Before the elections in 1988, she handed over the office of the party chairperson to her daughter Benazir Bhutto, and in the cabinet that Benazir Bhutto formed in end-1988 after PPP won the elections, Begum Nusrat Bhutto accepted the office of a federal minister. She was twice elected Member National Assembly, served as senior minister, and a constant support for her daughter who too was twice elected Prime Minister. But during that period, her major concern was the tension between Benazir Bhutto and Mir Murtaza Bhutto. It was her great desire that Murtaza and Benazir patched up. She was overjoyed when the brother and sister met in the Prime Minister’s House in Islamabad.But luck didn’t favour her for long; this reunion did not last long. In 1996 Begum Nusrat Bhutto had to face another heart-breaking tragedy from which she never recovered–the broad daylight killing of her eldest son, Murtaza Bhutto, in Karachi while her own daughter Benazir Bhutto was holding the office of the Prime Minister. When she finally reached 70 Clifton from London, she was in a state of delirium; it was clear from her acts that the tragedy had shocked her. Mir Mutaza Bhutto’s body was lying there.After Gen. Pervaiz Musharaf imposed martial law to oust Nawaz Sharif, implying the end of democracy yet again, she, along with Benazir Bhutto, had to leave Pakistan and settle in Dubai. By that time, tragedies began taking their toll on her health. Her health began deteriorating and she began to suffer from Alzheimer’s disease. Gradually, her condition deteriorated and she became bed-ridden. For the past several years, she was in intensive care in Dubai. She had gradually lost all senses which, in a way, was a blessing for her because she didn’t know about the final tragedy that befell her family – the assassination of Mohtarma Benazir Bhutto.

ehind every great man there is a lady. That’s an age-old saying whose

truth was often proved by great ladies like Begum Nusrat Bhutto–the lady behind Zulfiqar Ali Bhutto who remains a legend for the people of Pakistan. Born on September 21, 1929, Nusrat Bhutto – a former first lady of Pakistan, widow of Shaheed Zulfikar Ali Bhutto and mother of the former premier Begum Nusrat Bhutto died on October 23rd, in Dubai. She had been bed-ridden for a long time.By descent, she was an Iranian Kurd, and traced her origin to the legendary statesman and soldier Salahuddin Ayubi. Her father a wealthy businessman from Isfahan decided to settle in Karachi before partition of the Indian sub-continent in 1947. After the creation of Pakistan, she went through a challenging period when trains carrying refugees from India were pouring into Karachi. As a committed member of the Women's National Guard at that time, she joined the relief operations for millions of refugees in providing them food and shelter.The experience turned her into a committed social worker – a quality that she will always be remembered for. But her marriage to Shaheed Zulifikar Ali Bhutto was a turning point in her life because, from a social worker, it turned her into a politically conscious social worker. As the wife of Pakistan's dynamic foreign minister, she had to travel with him far and wide. Later, as the first lady from 1973-77, she functioned as a political leader and fought the political battles that Zulfiqar Ali Bhutto had to wage during his term as Prime Minister.She was truly proud of being a Pakistani. She served as chairperson of the Red Crescent Society besides representing Pakistan at international forums. She also received various international awards for her contribution to the greater good of the masses, especially women and children. Zulfiqar Ali Bhutto had written in a letter to one of his confidantes that if Nusrat had not married him, he would have remained simply a “feudal Zulfikar”.The testing times began when Bhutto was overthrown by Gen. Zia-ul-Haq, and his highly controversial trial leading to his hanging – an act condemned by the whole wide world. Like her husband, Nusrat Bhutto was a fighter; during the Zia dictatorship, she fought street battles demanding justice for her detained husband and empowerment of the people. But in 1979, after the fake trial and tragic execution of late Zulfiqar Ali Bhutto, she and her family were placed under house arrest by Zia-ul-Haq. Only due to health concerns was she later permitted to leave the country.

Begum Nusrat Bhutto:the legend behind a legendB

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the famous Academy-Award- winning Pixar in 1986 with a former Lucasfilm computer graphics unit that Jobs purchased from a movie industry titan– George Lucas. On the personal side, during his much celebrity bachelor days he had established a relationship with folk singer Joan Baez and settled into family life in Palo Alto. In 1991 he got married in a ceremony that was presided over by a Buddhist monk confirming his conversion to

Buddhism due to the ideas he acquired during a long visit to India in 1970s when he spent time with Buddhist monks. He leaves behind three children by his wife and a daughter from a woman he dated during his days as a bechelor.When Steve Jobs resigned from Apple Computers, to many, the departure of a perfection-driven personality amounted to removing the heart and soul of Apple computer. That view wasn’t overly pessimistic. Apple’s lustre faded after Jobs left. In 1996 Jobs and co-owners of Apple Computers reconciled and Apple Computers bought NeXT for $429 million. Jobs was once again back to lead Apple Computers.Under his leadership, Apple grew from strength to strength after Jobs revamped the Macintosh line of products and gave the world his prime inventions – iPod, iPhone, iPad, and the iTunes online shop. Jobs was obsessed with product design and aesthetics, and with making advanced technology simple to use – a quality that distinguished him. While introducing iPad2, he told his audience “Technology alone is not enough… It is technology married with liberal arts, married with humanities, that yields the results that make our hearts sing.” That this quest paid off is proved by the fact that, in August, Apple surpassed ExxonMobil as the world’s most valuable company based on stock value, which was a tribute to the genius Steve Jobs displayed by providing the world precisely what it needed.Long work hours eventually took their toll; Jobs developed cancer for the treatment of which he underwent an operation in 2004 and prolonged post-operation therapies. The recovery took time but he bounced back three years later with another hugely successful invention – the touchscreen iPhone. But he again had to go on medical leave in January 2009 for a liver transplant but returned to work in June looking weak though he claimed being healthy. As expected, he fell ill again and resigned from the office of CEO handing over the helm to chief operating officer Tim Cook.He spent a lifetime struggling with complex technologies but was known for his trademarks of simplicity – mock black turtleneck shirt, blue jeans and running shoes. Within the business world, Jobs was viewed as the man who liked to be seen as a hippy, always in revolt against the big companies, while in the corporate sector he was seen as the greatest CEO.

n October 6, Steve Jobs left for the heavens after giving

the world some of the most amazing inventions in computer technology that gave millions a world of convenience and comfort besides giving businesses the key instrument – the ‘work station’. Walter Isaacson has written Job’s biography, which will be released by its publisher Simon & Schuster later this year, and provide the world with a wealth of knowledge about this one-of-a-kind admirable character.Jobs came into the world on February 24, 1955 in San Francisco as the son of a single mother but a couple in the nearby Mountain View adopted him when he was barely a week old. As a child, Jobs didn’t know that the orchards around Mountain View would one day become the technology hub known as the ‘Silicon Valley’.Jobs was fascinated by computers right from the childhood, and even as a high school student, he attended lectures at Hewlett-Packard Computer Company in nearby Palo Alto, and also did his summer job in this company with engineer Steve Wozniak – the man who would become his closest friend later on; besides common interests, what brought the two together was the fact that both were college dropouts.Jobs was admitted to the Reed College in Portland, Oregon, but he left college after completing just one semester, though he kept attending selected classes, including on calligraphy. Later on, he cited his fascination with calligraphy as the reason why Macintosh computers – a brand later introduced by Apple Computers – were designed with multiple typefaces.He began his professional career as a technician for video game pioneer Atari and joined a “Homebrew Computer Club” with his friend Steve Wozniak. Shortly thereafter, in 1976, he and Wozniak founded Apple Computers in the garage of Job’s family home. Jobs was then 21 and Wozniak 26, but both had a vision – inventing a technology that could turn the otherwise number-counting computers into communication devices. At first, Apple Computers introduced its computers and then the Macintosh brand, which became popular around the world in the early 1980s. Jobs became the idol of his devotees who saw Macintosh as the response to the powerful empire Microsoft had built courtesy its ubiquitous Windows operating systems. But that aspiration was given a jolt by Job’s exit from Apple Computers; he resigned from Apple in 1985 because of an internal power struggle that created unpleasant tensions. Thereafter he started NeXT – a company that specialised in producing sophisticated workstations for businesses – another of his remarkable inventions, and in 1986 co-founded

�e departure of an icon who leaves behind great memoriesO

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products, fresh fruits and vegetables, fertilizers, carpets, sport goods, surgical items, cutlery, information technology and software, pharmaceuticals etc. Export orders worth $ 517 million were finalized for various products at the exhibition. Last year, the exhibition was successful in securing trade agreements worth $80 million. This was stated by the Chief Executive of the Trade Development Authority of Pakistan (TDAP) Tariq Puri during his address to a press conference at the venue of exhibition. He said that around 1,650 business meetings were held between the foreign buyers and Pakistani exhibitors and manufacturers, while 1,093 foreign buyers visited different products stalls.He termed the exhibition as a successful event as 15 memorandums of understanding (MoUs) have been signed between foreign and local traders during the event. Tariq said that a Hong-Kong based company M/s Ormita has signed a MoU with a Pakistani food processing company M/s Alpha Dairies worth $120 million for the first year with a provision to go up to $300 million. He further added that

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