profit.com.pk Saturday, 05 November, 2011

black economy

tax-to-gdp ratio

tax evasion

The segment of a country’s economicactivity that is derived from sourcesthat fall outside of the country’s rules and regulationsregarding commerce. The activities can be either legal orillegal depending on what goodsand/or services are involved.

The ratio of tax collection against thenational gross domestic product (GDP).Some states increase the tax-to-GDPratio by a certain percentage in order tocover deficiencies in the state budgetrevenue. In states where the tax revenuehas gone up significantly, thepercentage of tax revenue that isapplied towards state revenue andforeign debt is sometimes higher.

An illegal practice where a person,organisation or corporationintentionally avoids payinghis/her/its true tax liability. Thosecaught evading taxes are generallysubject to criminal charges andsubstantial penalties.

$166b

$8b

investopedia

Pages: 8

Bull’s storm KSE with150 point gain 2

KARACHI

STAFF REPORT

The growing influence of informal econ-omy, especially in developing countries,has created a great concern and is a bigchallenge for political and economic

managers. Pakistan’s informal economy is be-lieved to have grown to more than half the formaleconomy which yields a GDP of $166 billion. Ac-cording to research reports, the size of informaleconomy stands at $83 billion and that it couldyield the national exchequer revenue of $8 billionif taxed at 10 per cent.

Challenges for growthThis was said by Mian Abrar Ahmed, President,Karachi Chamber of Commerce and Industry (KCCI),while speaking at the business policy roundtable oninformal enterprise in Pakistan – Challenges forGrowth, jointly organised by KCCI and CIPe here onFriday. he explained that there are many factorsbehind people in Pakistan preferring not to registerbusinesses or declare actual income. At present mostof the tax burden is on industries and businesses.Agriculture which accounts for 22 per cent of GDP,contributes only one per cent in taxes while theIndustry which accounts for 25 per cent of GDPcontributes 63 per cent of taxes, he maintained.

transit trade Mian Abrar said that Afghan Transit Tradeis also a major source of informal econ-omy. According to FBR over the periodof two and a half years 35,000 con-tainers entered into Pakistan out ofwhich 29,000 about 83 per centcould not reach their destinations.This he argued results in a hugeloss to the national exchequer throughtax evasion. Informal economy growsalong with corruption, speed moneysmuggling, narcotics, government con-tracts and tax evasion. A study by LahoreUniversity of Management Sciencesshowed that out of Rs100, the governmentreceives only Rs38 and Rs62 is pocketedby the tax payers, tax collectors and taxpractitioners. It means Rs720 billion taxcollection in 2005-06 and Rs1.558 trillionin 2010-11 was only 38 per cent and if cor-ruption is controlled the revenue could beincreased to a gargantuan Rs4.10 trillion.

ease of doing businessPresident KCCI stated the World Bank re-duced Pakistan’s rank, in ease of doing busi-ness, to 105 while last year it was 96. Thisdiscrimination encourages people not to regis-ter businesses and to avoid paying taxes. Thereis also a trust deficit between people and thegovernment. Massive corruption in governmentdepartments, embezzlements and wastage hasbeen reported by auditor general of Pakistan.Coupled with this the corruption perception re-port by Transparency International also reflectsthe fact that people do not trust government offi-cials and they rather prefer to pay directly to wel-fare organisations in huge donations, charity, zakatetc. Pakistan is one of the lowest ranked countriesin tax to GDP ratio while it is one of the top rankingcountries who spend more on charity and welfareactivities. According to a survey Pakistan spends2.3 per cent of its GDP in charity as compared to

America (2.2 per cent), UK (1.3 per cent), and India(0.2 per cent). If stern measures are taken to curbcorruption then the confidence would be restoredand tax to GDP ratio has the potential to be en-hanced considerably. Giving amnesty to blackmoney holders reflects the state’s tax machineryfailure in performing its main function of collectionof tax where it is due. It is unfair to those who havebeen paying their taxes honestly, at much higherrates than those offered to tax evaders.

disCouraging informal eConomyPresident KCCI urged the government to take re-medial measures to discourage informal economyand tax evasion. Those responsible for colossal rev-enue losses to the national exchequer, tax evadersand their partners in tax machinery should be pun-ished and debarred from holding any public office.he voiced that smaller formal or shadoweconomies appear in countries with higher tax rev-enue that are achieved by lower tax rates, businessfriendly policies, fewer laws and regulations com-bined with consistent enforcement and less briberyfacing countries. The major driving force behindthe size and growth of the informal economy ap-pears to be an increas-

ing burden of taxation combined with pervasiveanti-state activities. In Karachi for the last coupleof years due to activities of some pressure groupsand political parties; extortion, land grabbing, kid-napping incidents have increased to alarming lev-els. It is estimated that in Karachi alone about Rs10million worth of extortion is carried out on a dailybasis. Supreme Court, armed forces and govern-ment agencies have taken serious notice of it andthe graph of these incidents has fallen but it is stilladversely impacting the economy.

trade, not aidhe urged the West and USA to give Pakistan tradeaccess rather than aid which will enable the infor-mal sector to indulge in export thus bringing theminto formal sector net. President KCCI was of theview that every country has its own idiosyncrasieswhile in Pakistan’s case we have been historicallyand chronically an aid dependant country. heopined to substitute aid with market access andtrade. he underscored that all the segments of so-ciety especially the government, business commu-nity, media, civil society, and intellectuals shouldjoin hands so that our tax to GDP ratio could im-prove considerably. This would, in turn, get rid ofhuge burden of internal and external debt thatwould enable the government to generate ample re-sources to run the state’s affairs and to providemore health and education facilities to the masses.

trust defiCitChairman Businessmen Group and formerPresident Siraj Kassam Teli was of the view

that the main reason of unwillingness ofinformal sector to get formalised was

the trust deficit in the system bureau-cracy and establishment. he gave theexample of Ashura (Bolton Market)

incidence where almost a majority ofthe claimants were from the informal sector

who despite having trusted the KCCI, re-viewed the claims forms with actual claims.he said if the informal sector is given properchance and trust they will get formalised. hesuggested Country Director CIPe Moin Fuddato invite the government officials in the con-sequent roundtables on informal sector.

addressing Core issuesChairman Sindh Board of Investment and for-mer President KCCI Muhammad Zubair Moti-wala while exchanging views stressed upon theneed to address the grass root cause of informaleconomy. To encourage the informal sector toget formalised, he suggested the governmentshould introduce the reward a penalty policywhich is the need of time. he suggested support-ing the corporate sector which was contributingthe major share of revenues to the national ex-chequer in the form of some rewards so that theunregistered persons may get inspired and registerthemselves to avail same benefits.

Former President KCCI Majyd Aziz, in thepanel, discussion articulated that the private sectorand the government’s departments lack “coopera-tive” approach. he pointed out the illiteracy factorwhich was also discouraging in the informal sectorto formalise. Country Director CIPe, Moin Fudda,Regional Director CIPe Andrew Wilson, eminentbusinessmen, representatives of State Bank of Pak-istan and managing committee members of KCCIalso participated and exchanged their views in thesaid roundtable.

Pakistan’s $83 billioninformal economy

is the size of Pakistan’s formal economy

is the amount Pakistan can generate bytaxing informal sector trades

Credit CrunchAn economic condition in whichinvestment capital is difficult toobtain. Banks and investors becomewary of lending funds to corporations,which drives up the price of debtproducts for borrowers.

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Saturday, 05 November, 2011

debate02HAFeez AslAm KHAn

The importance of publicenterprises is now auniversal phenomenaused to achieve the

desired social and economicobjectives. They are considered tobe the most effective form oforganisation for implementingpublic policies and developmentprogrammes especially in the lessdeveloped countries. The growth ofPSes showed a significant shift ineconomics and social thinkingbetween the 19th and 20thcenturies and it is universallyrecognised that the jurisdiction ofthe state is not to remain confinedto mere supervision or regulation.The prerogative of the state tointervene in the economicactivities and indeed to directlyparticipate in it has been fairlywell established in the moderngovernments and has been legallylegitimated and socially accepted.During the last three years, thePSes (PIA, WAPDA, Steel Mills,TCP, Railways National highways,Utilities Stores Corp etc.) havebecome a headache for thegovernment & its finances,swallowing Rs600 billion and inspite of an injection of billions ofrupees, they have gone from bad toworse. And in this space it issuggested that:1. PSes are accountable forachievement of the national goalsand respite to the public whichmiserably failed.2. At the operational level. Internalaudit, management ratios, cost andbudget control and effectivesupervision are some of thetechniques for ensuring desiredlevel of efficiency.3. Lack of professionalmanagement and qualified staff,suppression of full informationabout PSe activities, weakness ofparliamentary institutions, weakpolitical leadership, appointmentof undeserving crones as dead andmass scale employment ofunskilled staff are some of thefactors which serve as constraintsto an effective system ofaccountability.The general question that a costbenefit analysis sets out to answeris the status of a number ofprojects. But why bother with costbenefit analysis at all? The answeris provided by the familiar thesisthat what counts as a benefit or aloss to one part of the economy toone or more persons or nation as awhole. In cost benefit analysis weare concerned with the economy ofa defined society and not anyparticular fraction of it.One of the most popularapplications of cost benefittechniques is that of constructionof a hydel Power station may besmall or mega, construction of areservoir or a dam and themachinery for power generation,flood control or irrigation, tunnelshighways, bridges etc.In the present state of scientific

and technical knowledge, it isconvenient to list the main energysource under five headings. Fourof these can be grouped under thegeneral description: hydro-electric, oil, natural gas, coal andnuclear fuels (both actual &potential) and the fifth isalternative energy. electricity is now a serious issuethat is bringing people to thestreets as they now fed up withlong & un-announced load withtremendous hike in the powertariff (98 per cent). The problem ismanifold: acute shortage and highrising costs of oil, which havemade electricity unaffordable bythe poor and middle class - asituation created by relying onIPPs (Independent PowerProducers) and Rental PowerPlants (wasting Rs72 billion and isunder trial in the Supreme Court)The hydro component has, over theyears, dwindled to less than 30 percent from the peak of 75 per cent.It is unfortunate that a countrybestowed with large glaciers andwith water flowing from the

himalayan & Karakorum heightshas developed only a fraction of itspotential. WAPDA has its owntrained expert hydel engineers butwe went around the globe seekinghelp for the construction of a mall18 MW Gomal Dam (not yetcommissioned) while creating ahype in print & electronic mediafor 50,000 MW hydel potential.Not a single MW has been addedso far!The 4500 MW Diamer Basha,which was inaugurated by thePrime Minister on 18th Oct 2011(having already been inauguratedby General Musharraf in 2006), isin doldrums as World Bank ishesitating to fund Rs12 billions, assome portion is in the disputedKashmir territory and India hasalready informed the IBRD. A verypertinent question arises whyPakistan’s concerned officialpressed the bank immediatelywhen they came to know itsintentions, why they remainedmum. Our official set up is tooinert and suffer from a numbinglack of direction from the political

leadership. It owes an explanationto the nation, when the country isunder serious power crisis.In the recent meeting of IeePthere was a joint consensus tobuild Kala Bagh Dam, where allinfrastructure worth Rs30 billion –featuring offices, colonies, schoolsand hospitals – is available but fora reservoir and power station andcan be build in four to five years.Regarding the 969 MW NeelumJhelum project which wasapproved in 1989, an estimatedcost was Rs15 billion in June atRs84.5 billion and is now revisedto Rs333.91; showing an increaseof Rs249 billion or 296 per centdue to rupee devaluation. The costof escalation, change in designowing to earth-quack and the useof tunnel boring machines toadvance project implementation by18 months is not justified and gotchecked through an independentaudit team of Auditor General,which will show the inordinatedelay and overrun cost of all thehydel power projects includingMangla Raising Project started in

2004 adding 644 million, nothinghas been done so far. For the firsttime in the history of Pakistan, forNeelum Jehlum Project allconsumers were charged 10 paisaper unit and the total amountshould now be Rs23 Billion.WAPDA has also taken soft loanfor this project (IDB $133million,UAe $100million, Kuwait $40million, OPeC $30million, SADB$80million). India has so farconstructed 90 dams as against nilby WAPDA (Pakistan). If KishanGanga Project at river Jehlum iscommissioned the flow of water forNeelum Jehlum Project will bereduced by 30 per cent to 40 percent. In fact the chairman has notproved too successful since hisjoining, not being an engineer (aretired civil servant) andinterestingly during this periodgeneration capacity has been downto 17 per cent. PePCO is almostdepending on IPPs, who had fullgrip over PePCO and itsmanagement due to shortfall of5000 MW. he has not been able tolead from the front as is requiredfrom the head of institution. I happened to work as the financedirector in WAPDA, the short termremedy lies in augmentation andreplacement of machinery of ourold hydel & thermal plants, onwar-footing basis, which shouldnot take more than a year and savethe vicious circular debt nowmounted to more than Rs300billion.I would suggest that services of MrSaeed Akhtar Niazi; ex-Member(Power) - a guru of hydel planningconstruction & generation. MrTanzeem Naqvi ex-Member(Power) a successful chairman andMD KeSC. Mr Abdur RasheedKakar (elder brother of retiredgeneral Waheed Kakar) Sh, MerajAhmad MD (Power) as aconsultant may be utilised to avoidfurther damage. All of them arewell known for their integrity,competence and dedication.NePRA’s contributions could havesaved WAPDA and PePCO inproper monitoring the projects,working of discos, line losses dueto theft and other technical reasonbut it confined only to increase inpower tariff. I know Mr TahirBashrat Cheema since 1982 (whenI conducted enquires of all areaboards and many corrupt engineerswere removed, was in Multan)during interaction. I have found tobe a dynamic, intelligent and well-conversant with WAPDA’sproblems is also President IeeP(with dedicated support fromengineers) may be considered forNePRA for which the SupremeCourt has taken a serious exceptiontoday for determining the powertariff for non operational or nonexisting RPPs.Time is not on our side, strong willand war footing actions arerequired to rid people of Pakistanof this quagmire of shortage ofpower at the earliest.

FoRbes

IT’S now been a couple of weekssince Siri debuted as part of(AAPL) 4S. The response frommost people has been very positive.

however, in my opinion, Siri istremendously under-valued. People seeit as it is today, which is already the bestvoice recognition application in history.But people (including high-priced sell-side Wall Street analysts) fail to seewhere the puck is going for Siri. Siri willbe vastly more improved in as little as 2years from now. And the boundless num-ber of applications using Siri will explode.

In the way that the January 2007launch of iPhone set a ripple in theocean that would () in an all-out

tsunami, I believe Siri’s launch thismonth spells of business (GOOG).

1. Siri works. Voice recognition hasbeen the next big thing for 15 – 20years. We still have these frustratingexperiences when we call into check thebalance of our bank account and have toshout in the phone 5 times in a row, be-cause the application doesn’t recognizeus. Siri is the best voice rec app ever —and it’s still in “beta.”

2. . Not only does Siri accurately rec-ognize our voices but it has a personalityto boot. It’s that personality which makesthe app addictive because we start to feelover time that we truly have a personalassistant who is our friend.

3. Siri is hard to copy. For anyonewho doesn’t understand voice applica-

tions, it’s easy to think that Siri will beeasy to copy. It won’t. There are 2 partsto making a successful voice app: thevoice rec technology which has im-proved a lot but is basically a commod-ity and the app itself, which is acombination of art and artificial intelli-gence. It’s that 2nd part that’s so toughto replicate and that’s why Applebought Siri last year. It’s true Googlehas experience in the voice rec spaceand doing some simple voice apps butthey do not have the personality and AIof Siri and that will be very difficult tocopy — especially for a company thatdoesn’t sit at the intersection of the hu-manities and technology.

4. Siri helps own the customer expe-rience for Apple. Dan Frommer and oth-

ers have been talking about this for along time. Siri is a new interface forcustomers wanting to get information.It used to be text-based input to theirdesktops. Then, it was thumbing it in totheir mobile devices. Now, Apple is at-tempting to make it voice-based. Theypreviously were attempting to Balkanizeyour data needs by training for you to dospecialist searches for the informationwithin apps on your iPhone. Now,they’re training you to rely for doing anytask by leaning on Siri to do it for you.At the moment, most of us still rely onGoogle for getting at the info we want.But Siri has a foot in the door and it’strusting that it will win your confidenceover time to do basic info gathering.Siri can be potentially leveraged in other

devices that Apple ships in the futurelike TV to become the primary way youinterface with info you need.

5. Siri will vastly improve in the next2 years based on all the data it’s amass-ing. This game is about where the puck isgoing, not where it is today. Many peopleonly look at Siri as the application as itworks today. Yet, the biggest advantageover any other voice application out theretoday, and the apps still to be developed,is the massive data Siri is now and willcontinue to collect in the next 2 years.We know after the first weekend alone,there were 4 million Siri-enabled devicesout there probably collecting 1 – 2 utter-ances a day worth of data — all beingstored in Apple’s massive North Carolinadata center. All that data will allow Sirito get better and better. Think Siri hasawesomely funny answers to your crazyquestions now? Just wait two years.She’ll be even more your friend then,knowing you perhaps better that youknow yourself in some situations.

Why Siri is a google killer

In quest of electricitydevelopment - a nation in waiting

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The MFN status granted to Indiaand the assortment of ‘hue andcry’ and ‘buoyant sanguinity’that engulfs it, is one of thoseclassic cases of looking at both

the sides of a coin. In fact if one were todraw out the coin analogy, the MFN coinactually has a third façade – one that hasa probability akin to a coin falling, andstationing itself perpendicular to the

ground instead ofthe more customary‘heads’ or ‘tails’ po-sitions. That partic-ular façade is thepossibility that theMFN might turn outto be a catastrophe.Yes, anything re-lated to activityfrom the easternside of our neigh-bourhood nourishesthe doubting

Thomases in our neck of the woods; how-ever, one cannot repudiate the fruits thatthe move promises to bear – terms andconditions do apply though.

Looking at the more conventional sidesof the aforementioned coin; the ‘heads’ face– the positive side – is that it was a longoverdue reciprocation since it promises tobolster our commerce and ameliorate ourties with, what must be acknowledged as, agrowing economy. India had granted us theMFN status, all the way back in 1996 andthey reiterated their desire for Pakistan toreturn the favour in the recently held roundof trade talks in Mumbai, last month. Thetitle “Most Favoured Nation” is a quasi mis-nomer, and it could mislead the AverageJoe into perplexity. MFN status basicallyconnotes that Pakistan would no longer dis-criminate India in the realm of trade andcontinue commercial interaction with India

under the existing positives list of trade –something that Pakistan shares with over ahundred other nations. Pakistan and Indiaare already indulging in indirect trade viaDubai – which posts huge trade volumenumbers. Now these numbers would beposted as direct trade in the official reckon-ing, and in turn would result in India in-vesting capital in Pakistan. Not only wouldthis enhance the economies of the two re-spective nations, but the entire South Asiawould undergo a massive boost and nationswould begin to work in unison.

On the flipside, there is a genuine causeof scepticism as well. First and foremost,until and unless India removes the non tar-iff barriers and shelves its bias, the entireexercise is as useful as a leather jacket in ahot summer’s afternoon. Cooperating andletting go of the paranoia attached witheach other’s maneuvers is something that isetched in the mentality of both sides of theIndo-Pak divide, but now with Islamabadmaking an accommodating statement of in-tent, New Delhi must exhibit an act of pos-itive collaboration. India must reciprocatethe reciprocation, so to speak.

however the ‘tails’ side – the aforemen-tioned ‘flipside’ – has a denser copper tonickel ratio to throw the concepts of gravityand density into the mix. It is India afterall; the butt of Pakistani qualm. APTMAhave already flaunted their vociferousclamour regarding the concerns they haveregarding the matter, and they would needto be satisfied and given reassurances. Thehistorical antagonism due to the Kashmirissue and our geo-strategic interests hasalso been thrown into the cauldron as thedebate promises to simmer on for a while.

Moving back to the third side of this in-tricate coin ; something that all the stake-holders and the ones stirring the cauldronmust realise is the fact that the vehementdemonstration of negativity is totally un-called-for simply because if one restrictsone’s thought to the domain of commerce themove promises to be a fresh dawn in Indo-Pak commercial ties. Nevertheless, sans NewDelhi’s cooperation, the entire positivity sur-rounding the move might prove to be futile.All the same, the coin has been tossed andour government has called ‘heads’…

The writer is Sub Editor, Profit and can bereached at khulduneshahid@gmail.com

The FTA with Indonesia againsignals the government’sinclination towards increasedexport revenues to offset aidbottlenecks, in keeping with the

post-IMF posture of reducing dependence onnon-trade exogenous inflows. Yet the FTAmodel should prompt the government tobolster industry and manufacturing urgently,since our miniscule export mix invariablytends towards more imports than exports,compromising the main purpose ofpreferential trade arrangements in the presentmarket environment.

Ironically, closing the chapter on foreignfunding has not diminished the government’sappetite for cheap money, as its debt bellycontinues to swell from unprecedentedborrowing from the money market. And sinceheavy government presence chokes creditmarkets and crowds out private sectorinvestment, the subsequent scenario is a non-starter when it comes to enhancing productionand incorporating value addition in exports.

So, yet again we have a prudent policy, set

in the right direction, but with flawedfundamentals that can end up doing moreharm than good. The more accommodativemonetary environment, the trade deals witheager partners, all fail to deliver when marketspecifics are not adjusted rightly. Failingnecessary measures, we’re more likely to recordincreasing inflation and trade deficit ratherthan the contrary, hence a more restricted fiscalposition for the centre, demanding a swiftreturn to borrowing.

Our able finance managers obviously realsiethe centrality of trade enhancement to sustainedgrowth necessary for snapping out of stagflation.They must ensure adequate investment andenergy supply to manufacturing, so ourproduction matures enough to positively exploitnatural comparative advantages. Gyrations inthe international financial system are promptinga radical overhaul of trade relationships acrossthe world, with Asia’s emerging economiestaking the lead in the bottoming out process. Wemust be part of this progressive change, or riskbeing counted among chronically low growtheconomies for a long time.

When trade,not aid, matters

Sans NewDelhi’s cooperation,the positivitysurrounding the movemight prove futile

The MFN coin

and its three sides

Kunwar khuldune shahid

PIA: A crisis of reputation

There was a golden period when PIAhad a name in the global arena in wakeof their superior quality. It is sadden-ing to note that in the recent years PIAhas badly hampered its corporateimage. Safety is always the main prior-ity of the passengers when they take upflights. The urgency of saving the repu-tation of PIA calls for a serious crisismanagement. PIA has to impose morestringent safety standards and regula-tions in order to promote safe, secureand sustainable mode of air trans-portation. It is high time they go be-yond their existing standards of safetyand quality control.

muneeb mAlIK

lAhORE

Most Favoured Nation

As someone who is not a connoisseurof matters pertaining to economics, Iwould like to question your team re-garding the entire MFN issue. I haveread contradicting reports and opin-ions from various quarters and can’tseem to make up my mind. Does grant-ing MFN status to India mean that wewould be compromising our stanceover Kashmir and hence giving the In-dians the edge as for as their strategicposition in South Asia is concerned?Isn’t this too big a price to pay formere commercial growth? There are somany other countries that we canchoose to enhance our trading tieswith. Why India?

sHoAIb RIAsAt

lAhORE

E D I T O R I A L

A just economic order

SOCIAL deprivationamongst a majority of theworld’s inhabitant has ledto a divide that is nowthreatening to wipe out

the status quo. Millions across theglobe feel these inequalities arerooted in the attempts of the rich tofeed off the poor in their struggle forpower. In this context, the geogra-phy of poverty has changed drasti-cally over the last few years. Infigures that are striking to say the

least, more than 70 per cent of theworld’s poor now live in middle-in-come states. The fact that this pat-tern will in most likelihood continueover the next few years poses somesignificant questions. As economiesprogress, as they embark on a roadto prosperity, are these advancesmade keeping in mind human de-velopment and poverty reduction?While aggregate incomes may rise,the divide between the rich and thepoor is widening at more or less thesame pace.

A good place to start my analy-sis would be South Asia, where fig-ures indicate that 60 per centpoverty rate in 1981 dropped to 40per cent in 2005. While there hasbeen a percentage drop in poverty,over the last many years, there hasbeen an aggregate rise in the num-ber of people who are now livingbelow the poverty line. In South

Asia, according to figures from2005, 46 million people duringthis time slipped into poverty de-spite a so called improvement inpoverty. Three quarters of SouthAsia’s poor are living in India, andthe number of people below thepoverty line in India has increasedfrom 420 million to 455 million.

Merely matching global trends,merely focusing on indicators andnot real solutions is not sufficient inthe fight against poverty. It needs tobe understood that poverty is heav-ily dependant on the degree of in-come inequality. A reduction ininequality therefore benefits thepoor and vice versa. When growthtrumps inequality, the fight againstpoverty loses steam.

health indicators have also notkept up with the rise in income.What is most disturbing is thatSouth Asia has the highest rate of

malnutrition withperhaps the great-est number of mal-n o u r i s h e dchildren. Becauseof these indicators,they have highmortality rates, low cognitive per-formance, and more chances ofdropping out of school.

What is most striking in SouthAsia is the fact that social inequal-ities have decreased on the whole,however the situation has not im-proved fast enough to reduce thecumulative number of people liv-ing in poverty. Moreover, these in-dicators are representative of ageneral pattern of discrimination.What policy makers should focuson is a direct intervention thataims at accelerating socialprogress, with an increased focuson human development coupled

with greater genderinclusiveness.

Increased gen-der equality has theability to turn thetides in favour ofeconomic growth.

With changing global scenariosthere is a need to achieve a just so-cial order that aims at bridging thedivide between the rich and thepoor. While these are big chal-lenges they are not impossible toovercome given a human centricapproach is incorporated in theprevalent social setup. In the ab-sence of these policies, rising dis-contentment among the massesmay lead to revolt and political in-stability that will present itself as ahurdle to economic progress.

The writer is a professionalbanker and financial commentator

Basit Rizvi

For comments, queries and contributions, write to:

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

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S a t u r d a y, 0 5 N o v e m b e r, 2 0 1 1

More than 70 per centof the world’s poornow live in middle-income states

Kunwar Khuldune shahidSub-Editor

maheen syedSub-Editor

Profit for e-paper_Layout 1 11/4/2011 10:55 PM Page 3

Saturday,05 November,2011 We believe with long weekend ahead

of us, market direction may not bedetermined going forward

bilal asif, head of research at hmfs04news

Bull’s storm KSE with 150 point gainKarachi

Staff report

AS anticipated, market re-mained thinly traded with anactivity of 56 million shares

during the entire day. The benchmarkKSe-100 index however gained 150points on the back of buying interestin selective heavy weight stocks.eNGRO stood as the volume leader(4.7 million shares traded) on thenews that government is evaluatingalternatives to resume gas supply tocompany’s new urea plant.

The KSe 100 index closed at11957.30 levels with the gain of 149.84points, while KSe 30 index gained153.88 points to close at 11292.57 lev-els. All Share index closed at 8274.17levels after gaining 98.61 points. Total151 scrips advanced 82 declined and103 remain unchanged out of total 336scrips traded. PSO gained 4.7 per centon the expectation of outstanding cir-

cular debt being converted into govern-ment papers today. This led to a flurryof activity in the entire energy chain asall major oil companies includingOGDC, POL, PPL, ATRL and NRLclosed in green. The index heavy OGDCand victim of circular debt PSO werejumping higher and higher backed byrumours of circular debt resolution.

The top three index contributors addedover 100 points toward the total mar-ket move of 150 points.

Market intelligence regardingpossibility of 50mmcfd gas will besupplied to engro pushed the stockprice upwards. The market was moreinclined towards the positive direc-tion largely in the second half of the

trading session. Previously November4, 2011 was announced by variousgovernment representatives for con-version of Rs300 billion power sectordebt into the government bond. Webelieve with long weekend ahead ofus, market direction may not be de-termined going forward, said BilalAsif, head of Research at hMFS.

Punjab irrigation system faces challenges

lAHoRe

IMRAN ADNAN

LIKe the energy sector in thecountry, Punjab’s irrigationsystem is also facing similarchallenges of low-recoveryand high-operational and

establishment costs. The province is re-covering slightly over 77 per centthrough water cess (Abiana) against thetotal distribution cost that makes irriga-tion system unsustainable.

The research suggests that though,irrigated agriculture in the country is po-tentially cost-effective, but the establish-

ment cost of the system is relativelyhigher that shows the inefficiency of themanagerial system. Figures indicate thatthe establishment cost is even higherthan operation and maintenance (O&M)cost. Only 35.20 per cent is being spenton the O&M, while the rest is being eatenaway by the establishment.

A research jointly conducted by twouniversities, Al Qassim University,Saudi Arabia and University of engi-neering and Technology, Taxila, evalu-ates the cost of water paid by farmers,the irrigation benefits per unit watervolume, operation and maintenancecost and total production cost, including

the cost of irrigation, seed, fertiliser,pesticide, labour, etc.

Available data shows that 80 percent of food in Pakistan is producedthrough irrigated agriculture, while inChina and India, it is 70 per cent and 50per cent, respectively. Research pointsout that the performance of irrigationsystems has a major role in producingmore food and making irrigated agricul-ture cost-effective, but the present man-agement cannot provide food security inthe region. Improvements in institu-tional organisation and involvement ofstakeholders can improve the situation,study underscores.

It further suggests that there is a direneed for increasing productivity of the al-ready cultivated land and cropping inten-sity by improved water managementmeasures. Data shows that the total re-covery cost of the system as a whole is 77per cent that means the system bears aloss of about 33 per cent. It observes thatthe distribution cost constitutes a greatershare of the establishment cost as com-pared to O&M. Research recommendsimprovements in recovery are required tomake the system self-sustainable.

Research further points out that de-spite various government interventions,including institutional reforms, estab-lishment of Provincial Irrigation andDrainage Authorities (PIDAs), AreaWater Boards (AWBs) and farmer or-ganisations, to improve the overall gov-ernance in the water sector, real

situation has never improved.It underlines that there are major

problems in water cess recovery, unnec-essarily high cost of establishment andrelatively lower crop yields in compari-son of other countries. Farmers at tailends always complain about short irri-gation supply.

Research indicates that though, irri-gation in Punjab is profitable and itsprofitability may further be increased bydecreasing on-farm irrigation cost. Itsuggests that in order to make the irri-gation system more reliable and benefi-cial, it is necessary to decrease theestablishment cost. The Irrigation De-partment is over-staffed and needsright-sizing. Corruption, political inter-ference and social problems are themain hindrances, which need to be ad-dressed seriously.

g low-recovery, high-operational and establishment costs in storeg 80 per cent of food in pakistan is produced through irrigated agriculture

pak China bureau andpbit to host a delegation LAHORE: Punjab China Bureau (PCB) and PunjabBoard of Investment and Trade (PBIT) will jointlyhost an eleven member delegation of CommunistParty China (CPC), from 5th to 7th November, 2011headed by LU hao, member CPC central committeeand Secretary of CPC committee of Gansu province ofpeople republic of China. Chief executive OfficerPBIT, Iftikhar hussain Babar while giving details inthis regard informed that the aim of this delegation isto extend and enhance friendly relations between twocountries and to promote shared prosperity for thepurpose of promoting exchange and corporation intrade agriculture, infrastructure, resourceexploitation, tourism, education and culture. hefurther told that another major aspect of the visit ofCPC China in Punjab is to increase cooperation ondifferent areas of interest through which Gansuprovince plans to invite economic and tradedelegations from Punjab Province to participate inChina, Lanzhou investment and trade fair in July,2012. STAFF REPORT

exports of sports goodsincrease 5.39pc to $79.469mISLAMABAD: exports of various sports goodsincreased by 5.39 per cent, during the first quarter ofthe current fiscal year, when compared against thesame period last year. The overall sports goods'exports during July-September (2011- 12) stood at$79.469 million against the exports of $75.407 millionduring July -September (2010-11), Federal Bureau ofStatistics reported. Among the sports products, theexports of footballs surged by 16.38 per cent byincreasing from $31.931 million in July-September(2010-11) to $37.161 million during the same period ofcurrent fiscal year. The exports of gloves increasedfrom $28.977 million last year to $.32.358 million thisyear, showing an increase of 11.67 per cent, accordingto FBS provisional figures. however, the exports ofother sports good witnessed negative growth of 31.37per cent by falling from $14.499 million in 2010-11 to$0.862 million in 2011-12. On the other hand, theexports of sports goods increased by 0.88 per centduring September 2011 as compared to the exports ofthe same month of last year. APP

federal board of revenuegives relaxation in tax return formISLAMABAD: Federal Board of Revenue (FBR),on the reservations and apprehensions of its taxpayers, has given relaxation by amendments inAnnexure-D to the tax return form for the tax year2011. FBR on Friday has issued a Circular No. 18 of2011 (Income Tax), regarding amendments inAnnexure-D to the tax return form for the tax year2011 under which breakup of "education ofchildren, spouse and him/her-self and traveling(foreign and local)" is made optional which can beincluded in Sr-9. Amendments include motorvehicle in use (whether owned or not) running andmaintenance including lease rental and insurance"is simplified as, “Running and maintenanceexpenses of motor vehicle(s) and a new line hasbeen provided to write the contribution by familymembers. STAFF REPORT

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05

Saturday,05 November,2011

news

CORPORATE CORNER

pemra briefs civil servants of 95thnational management Course

ISLAMABAD: The officers of 95th NationalManagement Course visited headquarters ofPakistan electronic Media Regulatory Authority asa part of their Inland Study Tour (IST) to variousgovernment departments in order to have aninsight on their role and functioning. Dr. AbdulJabbar, Chairman, PeMRA welcomed thedelegation along with Director General (Licensing)Sardar Arfan Ashraf Kahan and Director General(Operations) Mr. Muhammad Farooq. Thedelegation was headed by Mr. Muhammad IsmailQureshi, Rector National School of Public Policy(NSPP). PRESS RElEASE

export processing Zoneauthority holds 98th bod meeting KARAcHI: Muhammad Tariq hassan, Chairmanexport Processing Zone Authority presided the98th ePZA BoD meeting at ePZA head office,Karachi. The meeting was attended by AbdulSattar Khokhar, J.S. Ministry of Industries;Zameer Ahmed, Secretary Industries, Govt. ofSindh; Zaigham Adil, executive Director Al-Tuwairqi Steel Mill; Sikandar Ahmed Rai,Additional Secretary Board of Investment andAbdur Rauf Member BoD. On this occasion, whiletalking to media, Muhammad Tariq hassan said

that ePZA has taken steps to revive the 70 closedunits by resolving their issues and has chalked outa strategy with collaboration of Board ofInvestment to promote new investments in thezone. he informed that with facilities likeuninterrupted utilities i.e. electrical, water, gasand telephone and investor friendly environment,ePZA would hopefully be able to surpass setexport target and achieve land mark $1 billionexports. PRESS RElEASE

usaid invites grant applications tostrengthen citizens’ voiceISLAMABAD: Recognising the fundamental needto build positive relationships and foster effectiveengagement between government and citizens.USAID’s Citizens’ Voice Project announced its firstgrants cycle inviting applications to strengthencitizens’ voice and public accountability. The goal isto improve engagement between citizens of Pakistanand the government on priority project-supportedinitiatives to advance good governance objectives.These grants aim on improving Water Rights’,Citizens’ Oversight of Municipal Services’ and energySector Oversight and Policy Reforms. The project willhave national coverage with focus on some prioritydistricts in various regions. PRESS RElEASE

Karachi plans on welcomingdelegates at uae expo 2011KARAcHI: The preparations are in full swing toorganise the first ever UAe expo 2011 –Magnificent 7, from November 30 to December 02at Karachi expo Centre. Plans have been finalisedto give the metropolis a festive look in order towelcome delegates from seven emirates during themega event. The occasion will mark 40 years ofPak-UAe friendship and accordingly the city willbe decorated with special monuments and other

decorative props. The event finale will be markedwith the grand celebration of UAe’s National Dayon December 2, 2011. PRESS RElEASE

Qatar airways eyesunderserved africa for expansionKAMpALA: Qatar Airways’ entry into two Africancities this week marks the first of potentially moreroute launches on the Continent as the airline’s CeOspelled out a commitment to grow its regionaloperations. The Libyan port city of Benghazi andUgandan city of entebbe have joined Doha-basedQatar Airways’ global network taking the carrier’sAfrican portfolio to 16 destinations. In addition to thepassenger flights launched to Uganda, Qatar Airwaysalso began the first of twice-weekly dedicatedfreighter services to entebbe. PRESS RElEASE

nbp’s additional 71 branchesto remain open on saturdayKARAcHI: Besides NBP's 287 authorised branchesthat are open on Saturdays; additional 71 brancheswill remain open and perform their approvedfunctions on Saturday, 5th November, 2011. Thepurpose of opening of another 71 branches is tofacilitate pensioners and governments’ salariedindividuals before eid. PRESS RElEASE

usf to set up tele-medicine networksISLAMABAD: Universal Service Fund (USF)awarded a contract worth Rs59 million to setuptelemedicine networks around Rawalpindi, Karachiand Multan, using the already deployed broadbandnetworks. The contract between OratierTechnologies and USF was signed by CeO-USF,Parvez Iftikhar and Director (Projects) Oratier, Ziaul Islam in the presence of Federal Secretary IT,Mr. Saeed Ahmad Khan at the Ministry of IT. The

project was approved by the board of UniversalService Fund, in its 25th Board Meeting chaired bythe Prime Minister in his capacity of being theMinister of IT. PRESS RElEASE

govt announces eid-ul-azha holidaysLAHORE: On the auspicious occasions of eid-ul-Azha and Iqbal Day, the Government of Pakistan hasannounced holidays from Monday, November 7, 2011to Wednesday, November 09, 2011. Consequently,Lahore Stock exchange shall remain closed for thesame period. The exchange will re-open onThursday, November 10, 2011. PRESS RElEASE

Papandreou may get the 151votes he needs tonight. Butwhat does this mean for us?This instability is killing us

ISlAMABAD: Irum Shahzad (cOO Eman Ad) andMohsin Baig(cEO)on the signing ceremony of AFPand ONlINE. PRESS RELEASE

Greek prime minister facessurvival vote, bailout in balance

AtHens

REuTERS

GReeK parliamentariansprepared to give their ver-dict on Prime MinisterGeorge Papandreou onFriday in a confidence vote

which could decide the fate of both thenation's european bailout deal and theglobal economy.

After intense pressure from europeanleaders, the government confirmed it haddropped plans to hold a referendum onthe bailout package, which had threat-ened an immediate crisis in the euro zoneand cast doubt on Greece's membership.

But the future of the 130 billion eurodeal remained hostage to wranglingamong Greek politicians, much to the dis-gust of voters living through dire eco-nomic times. Papandreou says heannounced the referendum on Monday -- sending shockwaves through worldmarkets -- to ensure political consensusfor the deal. his opponents have sincesaid they will back it conditionally but ac-cuse him of clinging to power.

"he is clinging to the steering wheelof a car that is heading over a cliff," Yan-nis Mihelakis, spokesman for the conser-vative New Democracy party, told MegaTV. Opposition politicians want Papan-dreou's resignation and early elections asa price for their support for the bailoutdeal -- which aims not only to save Greecefrom bankruptcy but prevent its prob-lems engulfing bigger euro zoneeconomies. For euro zone leaders -- andGreece's battle to avoid a debt default --the worst possible outcome would be a

stalemate, prolonging the agony over the130 billion bailout which euro zone lead-ers agreed only last week.

Finance Minister evangelos Venize-los promised to drop the referendum planin telephone calls to european leaders,his ministry said.

TOO TIGHT TO FORECASTAnalysts said Friday night's parlia-

mentary confidence vote, which Papan-dreou called when he announced thereferendum plan, was too tight to fore-cast. however, they had a hunch that Pa-pandreou might just scrape through eventhough 24 hours earlier his socialist gov-ernment was on the verge of collapse.

"This is the first confidence vote inmany many, years where we cannot tellwhat will happen in parliament. My feel-ing is that the prime minister will proba-bly have a positive outcome today," saidCostas Panagopoulos, head of Alco poll-sters. PASOK has 152 deputies in the300-member parliament. But one law-maker said that while she would stay inthe party, she would not back the govern-ment in the confidence vote, meaning Pa-pandreou could count at most on thesupport of 151 deputies.

Only one more defection would stripthe government of its majority and prob-ably trigger an early election.

electoral mathematics meant little onthe streets of Athens, where Greeks arestruggling with spending cuts, highertaxes and soaring unemployment.

"Papandreou may get the 151 votes heneeds tonight. But what does this meanfor us? This instability is killing us," saidPanayiotis Theofilas, 52, father of twoand a shop owner.

"Yesterday I spent all day in front ofthe TV, worrying. I couldn't work. Whatif they throw us out of the euro? We arefinished." For many Greeks, Papandreouhas turned into the villain rather than thetragic hero struggling to overcome eco-nomic, political and social problems thathave built up over years.

"The referendum was the worst ideaPapandreou ever had. he turned thewhole world upside down and now hewants a vote of confidence? how dare he?We are all very angry with him," said efiPeroyannaki, a 50-year-old shop assis-tant. "What happened this week was adisgrace. We looked bad and the euro-peans are already sick of paying for us."

CONDITIONAL OFFEROn Thursday New Democracy leader

Antonis Samaras dropped his oppositionto the bailout, which is being pushed byPapandreou's PASOK party, on conditionthat a short-lived coalition government isformed to take the country to polls.

That means the two main forces inGreek politics now back the deal, despitethe new wave of austerity it demands --on top of cuts which have pushed theeconomy into recession and broughtGreeks on to the streets in sometimes vi-olent protests. however, in the fracturedworld of Greek politics this does not en-sure the package will win rapid parlia-mentary approval.

Samaras made Papandreou's step-ping down a condition for forming acoalition to pass the bailout quicklythrough parliament and cancel the refer-endum. Papandreou told parliament hewas not tied to his post. But people inAthens also had low expectations of the

opposition and its ability to work withPASOK. "Papandreou looks stupid andSamaras so arrogant. They have nothingin common and they don't agree on any-thing," said Theofilas.

Through waves of austerity policiesdemanded by Greece's internationallenders, Papandreou has carried the par-liamentary group of his PASOK partywith him, despite much grumbling withinthe ranks. But a steady trickle of defec-tions has reduced his majority to thepoint that one or two waverers could in-flict a defeat in the confidence vote, ex-pected as late as midnight (2200 GMT).

UNFOLDING DRAMAGreeks gripped by the events gath-

ered around newsstands to catch aglimpse of the headlines on Friday. Thefinancial daily Kerdos captured the moodwith its headline: "everything on a knife-edge", while the pro-government dailyTan Neap ran with: "A balancing act onthe edge of a cliff." Papandreou has calledon his PASOK party to rally behind himin the confidence vote. But hispublic bravado appeared tomask an acceptance thathis term may come to anend soon. Governmentsources said Papan-dreou had struck a dealat a cabinet meeting onThursday underwhich he wouldstand down after hehad negotiated acoalition agree-ment with the con-s e r v a t i v eopposition -- pro-

vided he survives Friday's vote. Papan-dreou admitted he had made a mistake incalling on Monday for the referendum ona bailout, the sources said. even some ofhis loyalists have suggested it was timefor him to quit after they backed him atthe confidence vote.

"I do not want to humiliate my party'spresident -- the country's prime minister-- by toppling him tonight," PASOK law-maker Telemachos hytiris told state tel-evision. "But I want him now to rise to

the occasion as a primeminister who has

won the vote ofconfidence withprestige and

start discus-sions tomor-row on a unitygovernment so

the country canmove ahead."

greek shop owner, panayiotis theofilas

Peshawar: Bilal Mustafa managing director cEO Bokcutting cake on Bok 20th anniversary celebrationsalong with Bok senior officers at Bok head office,Mir Javed hashmat and others were also present onthe occasion. PRESS RELEASE

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top 5 perForMers sector wisesymbol open high low Current Change volume symbol open high low Current Change volume

Food ProducersAbdullah Shah 8.00 8.00 7.00 8.00 0.00 53Colony Sugar Mills 1.75 1.75 1.70 1.74 -0.01 23,501Engro Foods Ltd. 23.52 23.90 22.50 22.54 -0.98 91,748Habib Sugar Mills 28.10 28.50 27.50 27.88 -0.22 70,820Habib-ADM Ltd.XD 11.58 11.70 11.50 11.50 -0.08 2,995

Household Goods(Colony) Thal 1.70 1.11 1.11 1.11 -0.59 1,000AL-Qadir Textile 11.25 11.25 11.25 11.25 0.00 500Amtex Limited 1.67 1.70 1.45 1.60 -0.07 132,822Annoor Textile 13.00 14.00 14.00 14.00 1.00 1,000Artistic Denim XD 18.50 18.50 18.25 18.49 -0.01 1,049

Personal GoodsAHCL-NOV 31.00 31.00 29.45 29.51 -1.49 376,500AHCL-OCT 30.82 30.82 29.28 29.32 -1.50 516,500ANL-OCT 4.01 4.25 3.90 3.95 -0.06 24,500ATRL-NOV 120.42 121.50 117.90 119.21 -1.21 201,000ATRL-OCT 119.16 120.30 116.50 117.71 -1.45 200,000

Future ContractsAbbott Laboratories 102.49 103.00 101.00 102.10 -0.39 1,283Ferozsons (Lab) Ltd. 80.00 80.00 78.10 80.00 0.00 45GlaxoSmithKline Pak. 68.92 68.26 67.01 68.06 -0.86 1,557Highnoon (Lab) 28.09 28.09 27.65 28.09 0.00 100IBL HealthCare XD 10.92 11.92 10.99 11.92 1.00 25,154

Pharma and Bio TechP.T.C.L.A 10.89 10.98 10.65 10.71 -0.18 470,873Pak Datacom LtdXD 35.03 34.01 34.01 34.01 -1.02 500Telecard Limited 0.95 1.00 0.90 0.90 -0.05 68,502Wateen Telecom Ltd .68 1.70 1.52 1.65 -0.03 152,954WorldCall Telecom 1.13 1.19 1.00 1.06 -0.07 235,458

Fixed Line TelecommunicationP.T.C.L.A 11.47 11.77 11.42 11.64 0.17 4,752,418Pak Datacom Ltd. 31.65 32.66 31.65 32.66 1.01 1,430Telecard Limited 1.09 1.09 1.01 1.03 -0.06 194,249Wateen Telecom Ltd 1.51 1.68 1.47 1.50 -0.01 449,333WorldCall Telecom 1.32 1.35 1.15 1.28 -0.04 649,632

ElectricityGenertech 0.50 0.50 0.36 0.50 0.00 1Hub Power Co.XD 36.38 36.50 36.10 36.10 -0.28 1,022,035Japan Power 0.75 0.77 0.70 0.71 -0.04 38,682K.E.S.C. XR 1.70 1.70 1.56 1.60 -0.10 752,756Kot Addu PowerXD 41.36 41.80 41.25 41.53 0.17 220,355

BanksAllied Bank Ltd 63.16 64.00 62.50 62.69 -0.47 32,694Askari Bank 11.15 11.29 10.75 10.89 -0.26 944,906B.O.Punjab 5.94 6.08 5.79 5.83 -0.11 319,287Bank Al-Falah 11.15 11.35 10.70 10.89 -0.26 1,929,563Bank AL-Habib 29.95 30.20 29.55 29.91 -0.04 175,090

Non Life InsuranceAdamjee Ins XD 49.64 49.50 48.60 49.40 -0.24 6,785Ask.Gen.Insurance 8.50 8.50 8.10 8.47 -0.03 1,651Atlas Insurance 34.49 35.00 33.86 33.99 -0.50 1,110Central Ins Co. 48.67 50.00 48.00 49.79 1.12 3,909Century Insurance 7.16 7.50 7.06 7.50 0.34 1,500

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

Financial ServicesAMZ Ventures A 0.32 0.35 0.22 0.30 -0.02 9,463Arif Habib InvesXD 15.89 15.50 14.89 14.89 -1.00 13,487Arif Habib Ltd. 17.96 18.34 17.20 17.71 -0.25 19,659Dawood Equities 0.88 1.09 0.86 0.86 -0.02 9,495Invest & Fin.Sec. 7.26 7.26 7.25 7.25 -0.01 2,100

Equity Investment Instruments1st.Fid.Leasing Mod 1.70 1.50 1.50 1.50 -0.20 15,000AL-Noor ModarXD 3.98 4.00 3.60 4.00 0.02 25,100Allied RentalModXDXB 19.90 19.90 19.88 19.90 0.00 3,700Atlas Fund of Fund 6.00 6.10 5.90 5.90 -0.10 414,000B.F.ModarabaXD 5.56 5.56 5.00 5.56 0.00 7

MiscellaneousCentury Paper 14.13 14.35 13.90 14.02 -0.11 7,408Pak Paper Prod.XD 32.07 33.00 32.00 32.07 0.00 135Security Paper 35.05 36.20 34.50 35.60 0.55 15,179Johnson & Philips 8.00 7.00 7.00 7.00 -1.00 693Pakistan Cables 32.68 33.88 32.00 32.14 -0.54 1,104P.N.S.C.XD 16.03 16.06 16.00 16.00 -0.03 6,201Pak.Int.Con. SD 69.29 70.99 70.00 70.00 0.71 1,504TRG Pakistan Ltd. 1.70 1.78 1.65 1.75 0.05 70,965Murree BreweryXDXB 71.00 73.20 70.00 70.15 -0.85 7,612Shezan Inter.XD 112.81 112.81 109.00 112.81 0.00 5Pak Tobacco Co. 65.32 65.50 62.08 62.59 -2.73 400Philip Morris Pak. 140.00 140.00 133.00 140.00 0.00 2Shifa Int.Hosp.XD 29.85 29.51 29.10 29.28 -0.57 31,895Hum Network XD 16.49 16.50 16.50 16.50 0.01 1,500P.I.A.C.(A) 2.00 2.24 1.89 2.20 0.20 90,999P.T.C.L.A 10.75 10.95 10.68 10.80 0.05 551,671Telecard Limited 1.00 1.09 1.00 1.06 0.06 8,455Wateen Telecom Ltd 2.01 2.20 2.00 2.12 0.11 977,923WorldCall Telecom 1.16 1.24 1.11 1.14 -0.02 311,371Sui North GasXDXB 17.93 18.29 17.95 18.07 0.14 1,466Sui South GasXDXB 20.40 20.50 20.00 20.33 -0.07 40,702

symbol open high low Current Change volume

Oil and GasAttock PetroleumXD 403.85 404.69 396.00 396.87 -6.98 61,485Attock Ref.XD 118.78 120.40 116.10 117.57 -1.21 833,559Byco Petroleum 6.89 6.98 6.75 6.77 -0.12 399,510Mari Gas Co.XB 91.01 93.80 89.30 92.03 1.02 91,674National Ref.XD 325.19 334.90 308.94 310.82 -14.37 314,938

ChemicalsAgritech Ltd. 15.00 15.00 14.00 15.00 0.00 1,500Arif Habib CoXDXB SD 30.83 31.05 29.29 29.30 -1.53 2,485,646Biafo IndustriesXD 68.59 71.99 65.17 70.64 2.05 855Clariant Pakistan 140.69 143.49 137.50 139.79 -0.90 4,017Dawood Hercules 38.96 40.80 37.06 37.39 -1.57 244,529

Industrial metals and MiningCrescent Steel 23.90 24.70 23.25 23.59 -0.31 40,885Dost Steels Ltd. 1.45 1.50 1.41 1.45 0.00 8,285Huffaz Seamless Pipe 8.93 9.00 8.60 9.00 0.07 3,035Int. Ind.Ltd. 34.98 35.00 34.00 34.50 -0.48 25,300Inter.Steel Ltd. 11.56 11.52 11.00 11.00 -0.56 63,850

Construction and MaterialsAl-Abbas Cement 2.00 2.00 1.90 1.92 -0.08 26,799Attock CementXD 51.11 51.99 50.81 51.02 -0.09 108,952Berger Paints 11.79 12.00 11.60 11.91 0.12 4,762Bestway Cement 8.11 9.11 8.11 8.11 0.00 100Cherat Cement 7.66 8.19 7.50 8.01 0.35 197,042

General IndustrialsCherat PackagingXD 29.62 30.40 28.14 28.14 -1.48 14,022ECOPACK Ltd 2.49 3.25 2.21 3.08 0.59 614,084Ghani Glass LtdXD 41.17 42.00 39.12 39.60 -1.57 16,802MACPAC Films 7.72 7.95 7.01 7.65 -0.07 993Merit Pack 22.00 22.00 20.95 22.00 0.00 70

Industrial EngineeringAdos Pakistan 6.93 7.90 6.93 6.93 0.00 10AL-Ghazi Tractors 184.30 184.30 184.30 184.30 0.00 90Bolan CastingXD 28.50 28.50 28.25 28.26 -0.24 5,055Ghandhara Ind. 7.00 6.90 6.25 6.70 -0.30 5,004Hinopak Motor 108.00 108.00 102.60 108.00 0.00 2

Automobile and PartsAgriautos Indus.XD 58.00 58.00 58.00 58.00 0.00 2,000Atlas Battery Ltd. 169.52 170.00 168.50 168.94 -0.58 240Atlas Honda Ltd. 117.00 118.00 117.00 117.94 0.94 302Dewan Motors 2.63 2.79 2.43 2.51 -0.12 39,802Exide (PAK) 168.53 169.99 168.53 168.53 0.00 31

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

Mutual Funds

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

fund offer repurchase navHBL Money Market Fund 100.2768 100.2768 100.2768 HBL Multi Asset Fund 87.0103 85.3042 85.3042 HBL Stock Fund 97.6745 95.2922 95.2922 IGI Income Fund 101.8987 100.8898 100.8898IGI Stock Fund 112.3545 109.6141 109.6141 JS Principal Secure Fund I 121.5000 111.5200 117.3900 JS Principal Secure Fund II 104.1200 96.5000 101.5800 KASB Cash Fund 0.0000 0.0000 100.1087Lakson Equity Fund 106.3763 103.2779 103.2779

Markets

Saturday, 05 November, 2011

06top 10 sectors

52% 01%Construction & Materials

Chemicals Food Producers

02%Electricity

02%10%

Fixed Line Telecommunication

01%General Industrials

Financial Services

09%Banks10%Oil & Gas05%Personal Goods07%

International Oil PriceWTICrude Oil

BrentCrude Oil

STOCK MARKET HIGHLIGHTS

Index Change Volume Market ValueKSE-100 11957.30 +149.84 47,314,598 3,423,852,841LSE-25 3190.08 +40.59 1,849,389 66,889,284ISE-10 2642.25 +51.49 23,100 1,198,175

Major Gainers

Company Open High Low Close Change TurnoverBata (Pak) Ltd. 775.00 813.75 775.00 812.31 37.31 276Siemens Pak 900.00 924.75 860.00 924.75 24.75 150Wyeth Pak Limited 679.40 713.37 690.00 701.73 22.33 127P.S.O. 249.16 261.50 252.00 260.94 11.78 2,357,503National Ref.XD 322.00 334.50 320.61 331.31 9.31 178,048

Major Losers

Nestle PakistanSPOT 3200.00 3200.00 3100.10 3152.15 -47.85 411Attock Petroleum 433.56 440.00 421.00 424.74 -8.82 135,810UniLever Pak Ltd. 5611.34 5749.99 5507.00 5603.60 -7.74 12Service Industries 205.00 209.99 200.00 202.05 -2.95 612Rafhan Product 2607.67 2700.00 2599.99 2604.86 -2.81 106

Volume Leaders

Engro Corp 130.18 136.40 132.25 135.84 5.66 4,657,687Jah.Sidd. Co. 5.83 6.18 5.82 6.08 0.25 4,307,582Fatima Fert.Co. 23.97 24.47 23.62 24.17 0.20 4,166,506Bank Al-Falah 11.02 11.50 11.07 11.47 0.45 3,677,519D.G.K.Cement 21.55 21.94 21.60 21.81 0.26 3,028,266

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

Gold 24K 56,826.00 48,771.00 1756.00Gold 22K 51,608.00 44,245.00 –Silver (Tezabi) 1133.00 973.00 35.05Silver (Thobi) 1025.00 880.00 –

Interbank RatesUS Dollar 86.0200UK Pound 137.6836Japanese Yen 1.1020Euro 118.3979

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07

Saturday, 05 November,2011

closing bell

A B C D E F G H

8

7

6

5

4

3

2

1

White to play and mate in three moves

ThE NAME OF ThE gAME

chESS

BOONDOckS

DIlBERT

gARFIElD

BAlDO

sudoku solution

crossword solution

chess solution

Today’s soluTions

1.Qxh6+ gxh62.Rxh6+ Rh73.Bxf6# 1-0

A big problem is

staring you in the

face, and there's

not much you can do to

avoid it. That's a good thing,

of course, as you need to

handle it, but that doesn't

make it any easier to tackle.

ariesYour friends have

got your back --

but they need your

support in return! It's a good

time for you to show those

who mean the most to you

what you can do for them.

Little things are best.

taurusYour working

life is important

now -- so much

so that you might find it

hard to take anything else

seriously. That isn't really a

big deal, as long as you are

willing to dive in headfirst.

gemini

See if you can

clear important

work out of the

way quickly -- or better

still, put it off 'til tomorrow

or some other time. You need

to make sure that you've got

time to let your mind wander!

cancer

You make a

favorable impression

on the right people today --

so much so that you might

find yourself coasting into a

new position sooner than you

think! Your energy is just right

for making connections, too.

Money issues are

still on your mind,

but you need to either

put them off for another

day or tackle them on

your own -- getting help

from others just complicates

issues now. You can handle it!

leo

Try not to spend

more than you take in

today -- though that is

much easier said than done!

It's a good time for you to

leave your credit cards in the

freezer or somewhere else

you can't easily get to them.

aQuarius

Remember

that everything

changes today as

you work through your

weird energy -- you need to

make sure that you're dealing

with life as it really is, not

just how you want it to be.

Virgo

Someone needs

your help,

though you need to

use your intuition to figure

out who it is and what they

want. Fortunately, your ability

to tune into others' needs is

quite strong right now.

piscescapricorn

Your schedule is

quite unpredictable

today -- little things

turn into big deals, and

you may find yourself

postponing almost everything

you can just to keep up with

evolving circumstances.

libraYour spiritual and

interpersonal energies

are in sync right now,

and that could give a

huge boost to your love life

-- if you want one! Things

might be as good as they can

get, but try pushing a little.

scorpioYour energy just

can't seem to get

going today, but that's

fine -- you need some

down time anyway! Chill

out and let things happen

on their own. You can get

back to business tomorrow.

sagittarius

BRIDgE

cROSSWORD

fill in all the squares in the grid so that each row,

column and each of the squares contains all the digits.

the object is to insert the numbers in the boxes to

satisfy only one condition: each row, column and 3x3

box must contain the digits 1 through 9 exactly once.

hOW TO PlAy

WORD SEARch

ACROSS

1 Very sagacious (4,2,7) 8 having a run of luck (2,1,4) 9 Soviet forced labour camp(s) (5) 10 crystalline substance used to season food (4) 11 Natural inclination (8) 13 honolulu's state (6) 14 A Shakespearean heroine (6) 17 Surface film, leaking from a ship or well (3,5) 19 Factually correct (4) 21 Relay race stick (5) 22 Small hunting dog (7) 24 Negative propaganda aimed at damaging a person'sreputation (5,8)

DOWN

1 Try to get the girl? (3) 2 Eat — bird — believe (7) 3 In a highly excited state (4) 4 contrivance for holding a broken bone in position (6) 5 Diplomatic mission (8) 6 Type of fruit (5) 7 Terrifying dream (9) 10 Vehicle collecting young students (6,3) 12 Rubbish holder inside a rubbish holder (3,5) 15 End points (7) 16 cold summer drink (3,3) 18 Espresso with frothy milk (5) 20 (cause to) stumble (4) 23 Manage (3)

beach

boost

capital

clinic

crazy

date

dread

drill

drink

elegance

factor

force

gallop

handsome

joust

ladder

laugh

leaf

lens

litmus

lottery

lumber

nation

nicotine

orange

pact

pant

pastor

peach

rancid

riotous

search

sect

sham

side

slab

slat

slip

tart

teller

toll

trash

turmoilC

MY

K

CMYK

SuDOku

“I have the results

of your brain scan.

We found evidence

of extensive

PowerPoint

damage.”

Profit for e-paper_Layout 1 11/4/2011 10:56 PM Page 7

Saturday,05 November,2011

local importers at large importtinplate and CrC fromneighbouring country under thegarb of waste and scrap in order toevade duties of the government

news

08 sources

g Kbp warns the govt about launching a country-wide protest movement g Country to face acute urea shortage during rabi season

lAHoRe

IMRAN ADNAN

SUCCeSSFUL governments in Pakistan al-ways try to find out political solutions to eco-nomic issues. Alarmingly high urea pricespiral also indicates the same problem as

both the federal and provincial governments areblaming each other, while urea prices have skyrock-eted due to heavy profiteering.

Despite the fact that Pakistan has a world class ureamanufacturing infrastructure and surplus productioncapacity, the country is facing acute urea shortage thathas pushed its prices up to Rs1,800 per bag. But theirony of the situation is that governments, politicians,industry and urea dealers are still blaming each other.

On numerous occasions, Punjab government hasshifted urea shortage responsibility to Islamabad, butit never tried to evolve a fool-proof price control sys-tem. Senior provincial leadership is merely trying tosettle its score with the federal government by givingpress statements, while hoarders are on a money mint-ing spree. On the other hand, urea manufacturers arecrying against natural gas curtailment. They point outthat they have uninterrupted natural gas supply agree-ments for 12 months and have the first priority afterdomestic and commercial consumers. But their supplyis being curtailed by the gas utility companies. even anumber of court judgments could not provide them re-lief due to various political reasons, they underline.

Speaking to Profit, an unnamed official of a ureacompany stressed that the country would face an acuteurea shortage during this Rabi season mainly becauseof mismanagement at the part of government and gasutility companies. “Manufactures cannot be blamed forthe urea price increase. The government’s ad-hoc poli-

cies are responsible for this crisis. Industry had gradu-ally increased urea prices by Rs750 per bag in 32 years,but nobody is willing to understand why the industryhas to increase urea prices by Rs900 per bag in just 24months, he questioned.

Answering a query, he said urea producers had vastdealers network, mainly in rural areas, which made itvirtually impossible for the industry to ensure price sta-bility. he also shifted the burden on the government byavoiding the question that industry was equally respon-sible in profiteering in urea sales as it did not mentionretail price on fertiliser bags.

Trading Corporation of Pakistan (TCP) is an-other player in the market, which has the responsi-bility to ensure availability of essential commoditiesat reasonable price. It has been assigned to inter-vene in the market if prices of some essential com-modities swell in extraordinary manner. But, onevery instance, it reacts too late. In the present ureashortage, the state machinery has shown the similarattitude again. Industry has been warning for lastthree months that in the Rabi season the countrymay face a urea shortage of some 1.4 million tonnes,but nobody has taken any action. Now when the cri-sis-like situation has been created, and farmers areprotesting against unprecedented price hike, thegovernment has opened tenders for urea import. Inthe whole mess, farmers, especially peasants, arebeing affected badly. Rural economy in the countryis mainly running on credit. Farmers procure seeds,fertilisers and pesticides from agents and dealers oncredit, who exploit the situation and charge exorbi-tant rates as there is no effective price control sys-tem in place.

It is interesting to note here that the country has6.9 million tonnes installed capacity of urea fertiliser

against the national requirement of 6.3 million tons.Urea is a major fertiliser used in Pakistan, owing to itshigh nitrogen content of around 46 per cent. Figuresindicate that some 90 per cent fertiliser requirementswere met through urea in 2010, while the rest were ful-filled through di-ammonium phosphate (DAP) andother types of fertilisers.

Kisan Board Pakistan (KBP) has warned the gov-ernment about launching a country-wide protest move-ment against the government if demand of the growersensuring availability of fertilisers is not met forthwith.

This warning issued by the KBP District branchesheads, while leading the protest demonstrationsarranged by the board, on Friday, throughout thecountry to press the government for ensuring avail-ability of fertilisers at control price. According to theKBP Central Secretary Information haji MuhammadRamzan demonstrations were especially held inSouth of Punjab and Sindh against shortage of fer-tiliser and its black marketing. These demonstrationswere held on the call of KBP Central President SardarZafar hussein in Multan, Dera Ghazi Khan, Rajan-pur, Jampur, Muzaffargarh, Layyah, Vehari andother districts. While in Sindh, these demonstrationswere held in Ghotki, Jacoabad, Kashmor, Sukkur,Larkana, Shikarpur and Naushehro Feroze, Ramzanadded. Speakers addressing the demonstrators con-demned the anti-grower policies of the present gov-ernment and urged that fertilisers should be madeavailable at the earliest and prices of the agriculturalcommodities should be fixed a fresh. ‘Growers areunable to even recover their input cost due to increas-ing prices of fertiliser, pesticides and other agricul-tural inputs,’ they alleged.

They warned the government of a protest move-ment after eid if their demands are not met.

KARACHI

STAFF REPORT

The local markets are floodedwith tinplate and Cold Roll Coil(CRC) that have been importedthrough misdeclaration of

goods via Iran and Afghanistan by avail-ing zero-rated duty advantage.

The sources at local manufacturerssaid that the local importers at large im-port tinplate and CRC from neighbouringcountry under the garb of waste andscrap in order to evade duties of the gov-ernment. They said that the traders de-clare import of scrap hS Code number7204, which is zero-rated, but import

tinplate and other material in connivancewith officials of custom and other gov-ernment departments.

These traders are evading millions ofrupees revenues of the government andinvolved in trading of tinplate to theirbuyers of different sectors in the domes-tic market, they added.

They said that the local manufactur-ers have informed the custom authoritiesseveral times about the illegal trade oftinplate under misdeclaration with solidevidences but they are reluctant to takeany notice and are disinterested to exam-ine duly the import of scrap and waste.

The sources said that the tinplate im-ports are on the rise as it is usually sup-

plied to major cities where big go-downshave been established by the localtraders. Recently, it was found that heavyquantity of tinplate was imported underthe garb of scrap from the neighbouringcountry’s renowned steel company and isconstantly being smuggled unabated,they added. They said that industry isunable to compete with local traders inthe local market as majority of the differ-ent sectors purchase tinplates from ille-gal importers or traders.

They said that the local tinplatemakers urged the government to im-pose ban over the import of waste andscrap from Iran and Afghanistan so thatit could earn revenues from the legal

import of tinplate. The sources urgedthe government to protect the local tin-plate industry and impose duties on theimports of scrap and waste and get salestax, federal excise duty and advance in-come tax etc.

They also mentioned that the customauthorities should treat value as $600 ofthe imported waste and scrap tinplateand charge duties at Rs10,000 PMTwhich would stop under-invoicing on im-ports and at the same time will generatethe revenue for the government. Theysaid that it is high time the authoritiesplay its due role in order to encouragelocal manufactures and provide themprotection in long-run.

g local markets flooded with tinplate and CrC g heavy quantities of tinplate imported from neighbouring countries

sbp pumpsrs338.7b intobanking systemto run cyclicaldebt wheel

KARACHI

STAFF REPORT

The central bank on Fridaypumped a huge sum ofRs338.700 billion into the

money market to cater to theliquidity needs of the banks whichhad lent over Rs293.87 billion tothe cash-strapped government justa couple of days back on November2. The State Bank of Pakistan (SBP)Friday conducted its 7-days reverserepo operation and injectedRs338.700 billion into the bankingsystem at 11.52 per cent annual rateof return. The offered amount wasworth Rs359.550 billion but theState Bank accepted Rs338.700billion. excessive budgetaryborrowings by the cash-strappedfederal and provincial governmentsare believed to have created asevere liquidity crunch in themoney market. The rupee shortfallin the banking system is believed tohave been so compelling that theSBP has been injecting liquidityinto the money market during thewhole quarter of the currentfinancial year. The SBP recordshows that during July 17-October28, the central bank pumped a hugesum of over Rs3.204 trillion intothe rupee-starved banking systemthrough conducting some 25reverse repo operations. It was onJune 13, when the regulator hadconducted the last mop-upoperation to wipe out the excessRs34.500 billion liquidity from themarket.

fbr extends dateof tax payment

IslAmAbAD

STAFF REPORT

FeDeRAL Board of Revenue(FBR) extends the date ofpayment of tax along with the

return of total income statement offinal taxation for the tax year 2011.FBR on Friday has issued circularnumber 17 regarding extension inthe date of payment of tax alongwith the return of total incomestatement of final taxation for thetax year 2011. It has beenrepresented by the All Pakistan TaxBar Association and other tradebodies of the country that as thedate of filing of Return of TotalIncome Statement of final taxationfor the tax year 2011 has beenextended up to 21st November,2011. The fact that eid-ul-Azha isapproaching and many taxpayersare out of the country forperformance of hajj, the date ofdeposit of tax may also be extendedup to 21st November, 2011, saidFBR. Therefore, in exercise ofpowers conferred under section241A of the Income Tax Ordinance,2001, the FBR is pleased to extendthe date of deposit of tax liabilityalong with the return up to 21stNovember, 2011. FBR had extendedthe date four times due to theinconsistency in its system and nowit is finally allowing the tax payersto pay their tax and tax returns till21st November 2011.

tax evasion in tinplate imports causing losses to national exchequer

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