profitepaper pakistantoday 19th march, 2012

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profit.com.pk The global innovation revolution Page 03 Monday, 19 March, 2012 I F strong risk appetite and subsequent market rally of the last few weeks was a pleasant surprise, the more recent correction was anything but unexpected. as impressive as the rise right through the psychological 13,000 barrier has been, profit taking was in order. Yet this is an over simplistic view of the situation. a number of questions remain, hence the undertones of punter excitement in most week-end market reports. One, the sudden rush of volumes that buoyed the market has yet to be explained. Deficits are in red, growth is retarding, revenue is shrinking, and the overall economy is near dysfunctional. still the stock market decoupled from the real economy. Why? two, there is little agreement among brokers regarding relevance of political developments. is the market blinking because of existential worries in the PM house? if, in the worst case market scenario, heads roll in the highest tiers of the government, will the market really rally, as some have dared declare? Or are pundits restricting themselves to technicals and charts, not taking cue from fundamental indicators? three, are we about half way through yet another replay or replays? is this Mar ’04, Jun ’07, aug ’08 all over again, when black money filtered through the market, bidding it up, luring smaller, more innocent investors, only to leave another collapse, more fingers burnt? the new week will not provide credible answers to most of these questions. But it will tell how much the market has moved away from the real economy. Or whether the previous week’s sell off was more than prudent profit taking. Maybe the system has been misused yet again. if that is so, the welcome return of risk is not cause for joy. Rather, it should warn those with less (financial) muscle to stay away, and prompt the regulator to jump in. Either way, we will watch closely. QuICk EDIt and the market swings, again! KARACHI ISMAIL DILAWAR t HE major foreign banks operating in Pakistan are, reportedly, rolling back their consumer financing network in the country where, the banking analysts believe, a snail-paced judicial system was rendering the banks unable to recover their non- performing loans. they, however, would continue with corporate and investment banking, muck like the local banks which, having adopted a risk-averse behavior towards the private borrowers, are pocketing huge sums through diverting their advances to the risk-free and heavily-weighted government securities. the Citibank, the sources said, is all set to shut down its consumer banking division in Pakistan. Other foreign banks, likely to follow the suit, are believed to be the HsBC and Barclays, suggest the unconfirmed reports. the Citibank, which has marked its 50- year presence in Pakistan and is regarded as a pioneer of consumer banking in the country, has invited bids for selling out its credit cards portfolio. according to industry sources, the bank has received two to three offers from other banks that include the Faysal Bank and silkbank Bank. initially, the sources said, the bank was in talks with Habib Bank Limited (HBL) for the sell off of its consumer banking division. the Citibank management, however at a later stage, suspended negotiations with the HBL for reasons best known to it, said the sources. “the Citibank is still indecisive to whether or not proceed with the sale,” a banker, privy to the matter, confided to Pakistan today. While the managements of the foreign banks seemed to have lost confidence in Pakistan where intermittent political turmoil and a long-lasting so- called “War on terror” has plagued the already ailing economy through adversely impacting the investment situation in an unprecedented manner. “Probably these decisions (of banks) are based on situation of our economy,” commented a corporate observer. the statement carries enough weight if analyzed in the backdrop of the banks’ ever increasing non-performing loans (nPLs). according to official data, the country’s banks counted their bad debts at over Rs 623.193 billion during second quarter of FY12 (sept-Dec). this amount depicts a slight decrease of 1.0 percent when compared to Rs 629.555 billion, the banks’ nPLs during first quarter. Of the total defaulted-upon amount, over Rs 7 billion belonged to the foreign banks. interestingly, however, whereas the other banks’ bad debts moved southward that of the foreign banks swelled to Rs 7.574 from the previous quarter’s Rs 7.230 billion. this was despite 6.3 percent increase in their nominal cash recovery (against their nPLs) that stood at Rs 134 million. asked why the foreign banks were tending to close down their consumer financing businesses, the banking analysts pointed finger at a slow-paced judicial system in the country of 180 million. Given this situation, the commercial banks have been more risk-averse and extending little advances to personal borrowers. according to the central bank, the volume of banks’ personal loans contracted to Rs 8.55 billion up to June 2011 over the same month in 2010. “in Pakistan main problem rests with the judicial system where the cases are delayed for years,” said an experienced banker. Requesting anonymity, the banker said whereas recovery cases in the banking courts world over were heard and resolved within 60 days, in Pakistan a bank has to wait for at least 15 years to see its recovery case settled. at the end of the day, the banker said, the petitioning bank has to see the value of its recovered money reduced to a great extent. the expert also cited the current economic conditions as a major attributable factor for the foreign banks’ fading-away interest in Pakistan saying “it is also a factor but not that big”. More worrisome for the banks, the analyst said, was the fact that there was a negative tendency growing among the borrowers in Pakistan not to clear their bank liabilities. “People don’t want to repay. Even the big companies do not,” he said. also, there are some who suggest that a tough competition from other foreign banks, like the standard Chartered, were making the Citibank wind up its division. the industry observers believe that whatever result comes out of the reported intentions of the Citibank, the standard Chartered Bank is perceived to appear as the biggest beneficiary. ClOsurE OF COnsumEr BankIng In PakIstan Citibank reviewing bids of Faysal and silkbank after talks with HBl collapse LAHORE STAFF REPORT P akistan is fast attaining the status of Business Opportunity Zone (BOZ) for potential foreign investors because it is not only the energy sector where investments would earn rich dividends but huge untapped mineral resources of trillion of dollars worth are a great attraction for foreign businessmen. this was stated by LCCi President irfan Qaiser sheikh while talking to Canadian asia division analyst Christopher Martin, First secretary Canadian High Commission John Gosal and Director asia division Elyas irfani on saturday. LCCi senior Vice President kashif Younis Meher and Vice President saeeda nazar also spoke on the occasion and gave their point of view on country’s economic strengths and weaknesses. the LCCi President informed the visiting delegation that the agriculture sector also offers a huge potential particularly any investment made in livestock and dairy sectors is bound to make big gains. the LCCi President said that economic indicators were fast turning positive, law and order situation is also becoming satisfactory while investment climate is picking up with every passing day. the availability of cheaper skilled and unskilled labour, low priced land as compared to other regional countries and an infrastructure of international standards would definitely create a win-win scenario for global investors. irfan Qaiser sheikh urged the Canadian officials to send a business delegation to Pakistan so that it could have first hand knowledge about the available opportunities here as the Lahore Chamber of Commerce is planning a sector-specific delegation to Canada in coming months. talking about MFn to india, the LCCi President said that Pakistan and india have much more to gain from improved bilateral trade. But the caveat is that the trade between the two countries is hassle-free, barrier-less and removed from historical baggage. in the presence of Core issues between the two countries and indian ntBs, the desired economic results would be a day dreaming. Pakistan government would have to ensure a level playing field. Quoting an example of electricity tariff, the LCCi President said how industry could remain competitive at high price of electricity when in india, for industry it is 10.5 cents, in Bangladesh 10.75 cents and sri Lanka it is 10.75 cent. in Pakistan tariff is already 15 cents meaning that 45 per cent higher as compared to the region. the LCCi President made it clear that Pakistan government would have to address the concerns of the local manufacturers as a number of sectors including pharmaceutical, automobile, motorcycle, petrochemical, autoparts, sugar, textile, cooking oil and ghee industries have genuine reservations. Over the Gas shortage, irfan Qaiser sheikh said that the completion of iran-Pakistan Gas pipeline project and the establishment LnG terminals in karachi in another two to three years down the line would be a good breakthrough. He said at present, the official trade between the two countries is far below the true potential. Most of the Pakistan-india trade takes place via third countries, like Dubai. transportation and communication links are far from being efficient. Pakistan and india together form the most populous and contiguous consumer market of world. Over 1.4 billion people or around 86 percent of south asian population lives in these two countries. two economies represent almost 95 percent of the south asian GDP. the combined world trade of both countries stands around Us$682 billion while their current official bilateral trade is still below Us$2 billion. india exported over Us$251worth of goods and service in 2011. imports into india increased to Us$370 billion last year. the value of Pakistan’s international trade is less than one tenth of india’s global trade. Pakistan’s exports increased top over Us$25 billion first time in 2011. imports into Pakistan increased to over Us$35 billion last year. this is around two percent of international trade and 0.4 percent of their combined world trade. such a large market size can be a long- term source of economic growth for both the countries. Pakistan penetrating Business Opportunity Zone PRO 19-03-2012_Layout 1 3/18/2012 11:48 PM Page 1

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profitepaper pakistantoday 19th march, 2012

Transcript of profitepaper pakistantoday 19th march, 2012

profit.com.pk

The global innovationrevolution Page 03

Monday, 19 March, 2012

I F strong risk appetite andsubsequent market rally of the lastfew weeks was a pleasant surprise,

the more recent correction wasanything but unexpected. asimpressive as the rise right through thepsychological 13,000 barrier has been,profit taking was in order. Yet this is anover simplistic view of the situation. anumber of questions remain, hence theundertones of punter excitement inmost week-end market reports. One,the sudden rush of volumes thatbuoyed the market has yet to beexplained. Deficits are in red, growth isretarding, revenue is shrinking, and theoverall economy is near dysfunctional.still the stock market decoupled fromthe real economy. Why? two, there islittle agreement among brokersregarding relevance of politicaldevelopments. is the market blinkingbecause of existential worries in the PMhouse? if, in the worst case marketscenario, heads roll in the highest tiersof the government, will the marketreally rally, as some have dareddeclare? Or are pundits restrictingthemselves to technicals and charts, nottaking cue from fundamentalindicators? three, are we about halfway through yet another replay orreplays? is this Mar ’04, Jun ’07, aug’08 all over again, when black moneyfiltered through the market, bidding itup, luring smaller, more innocentinvestors, only to leave anothercollapse, more fingers burnt? the newweek will not provide credible answersto most of these questions. But it willtell how much the market has movedaway from the real economy. Orwhether the previous week’s sell off wasmore than prudent profit taking.Maybe the system has been misused yetagain. if that is so, the welcome returnof risk is not cause for joy. Rather, itshould warn those with less (financial)muscle to stay away, and prompt theregulator to jump in. Either way, wewill watch closely.

QuiCk edit

and the market swings,again!

KARACHI

ISMAIL DILAWAR

tHE major foreign banksoperating in Pakistan are,reportedly, rolling back theirconsumer financing network

in the country where, the bankinganalysts believe, a snail-paced judicialsystem was rendering the banksunable to recover their non-performing loans. they, however,would continue with corporate andinvestment banking, muck like thelocal banks which, having adopted arisk-averse behavior towards theprivate borrowers, are pocketing hugesums through diverting their advancesto the risk-free and heavily-weightedgovernment securities.the Citibank, the sources said, is allset to shut down its consumer bankingdivision in Pakistan. Other foreignbanks, likely to follow the suit, arebelieved to be the HsBC and Barclays,suggest the unconfirmed reports. theCitibank, which has marked its 50-year presence in Pakistan and isregarded as a pioneer of consumerbanking in the country, has invitedbids for selling out its credit cardsportfolio. according to industrysources, the bank has received two tothree offers from other banks thatinclude the Faysal Bank and silkbankBank. initially, the sources said, thebank was in talks with Habib BankLimited (HBL) for the sell off of itsconsumer banking division.the Citibank management, however ata later stage, suspended negotiationswith the HBL for reasons best knownto it, said the sources.“the Citibank is still indecisive towhether or not proceed with the sale,”a banker, privy to the matter, confidedto Pakistan today.While the managements of the foreignbanks seemed to have lost confidence

in Pakistan where intermittentpolitical turmoil and a long-lasting so-called “War on terror” has plaguedthe already ailing economy throughadversely impacting the investmentsituation in an unprecedentedmanner.“Probably these decisions (of banks)are based on situation of oureconomy,” commented a corporateobserver. the statement carriesenough weight if analyzed in thebackdrop of the banks’ ever increasingnon-performing loans (nPLs).according to official data, thecountry’s banks counted their baddebts at over Rs 623.193 billion duringsecond quarter of FY12 (sept-Dec).this amount depicts a slight decreaseof 1.0 percent when compared to Rs629.555 billion, the banks’ nPLsduring first quarter.Of the total defaulted-upon amount,over Rs 7 billion belonged to theforeign banks. interestingly, however,whereas the other banks’ bad debtsmoved southward that of the foreignbanks swelled to Rs 7.574 from the

previous quarter’s Rs 7.230 billion.this was despite 6.3 percent increasein their nominal cash recovery(against their nPLs) that stood at Rs134 million. asked why the foreignbanks were tending to close downtheir consumer financing businesses,the banking analysts pointed finger ata slow-paced judicial system in thecountry of 180 million.Given this situation, the commercialbanks have been more risk-averse andextending little advances to personalborrowers. according to the centralbank, the volume of banks’ personalloans contracted to Rs 8.55 billion upto June 2011 over the same month in2010. “in Pakistan main problem restswith the judicial system where thecases are delayed for years,” said anexperienced banker.Requesting anonymity, the bankersaid whereas recovery cases in thebanking courts world over wereheard and resolved within 60 days,in Pakistan a bank has to wait for atleast 15 years to see its recoverycase settled.

at the end of the day, the banker said,the petitioning bank has to see thevalue of its recovered money reducedto a great extent.the expert also cited the currenteconomic conditions as a majorattributable factor for the foreignbanks’ fading-away interest inPakistan saying “it is also a factor butnot that big”.More worrisome for the banks, theanalyst said, was the fact that therewas a negative tendency growingamong the borrowers in Pakistan notto clear their bank liabilities. “Peopledon’t want to repay. Even the bigcompanies do not,” he said.also, there are some who suggestthat a tough competition from otherforeign banks, like the standardChartered, were making the Citibankwind up its division. the industryobservers believe that whateverresult comes out of the reportedintentions of the Citibank, thestandard Chartered Bank isperceived to appear as the biggestbeneficiary.

ClOsure Of COnsumer Banking in Pakistan

Citibank reviewing bids of faysal andsilkbank after talks with HBl collapse

LAHORE

STAFF REPORT

Pakistan is fast attainingthe status of BusinessOpportunity Zone (BOZ) forpotential foreign investors

because it is not only the energysector where investments would earnrich dividends but huge untappedmineral resources of trillion ofdollars worth are a great attractionfor foreign businessmen. this wasstated by LCCi President irfan Qaisersheikh while talking to Canadianasia division analyst ChristopherMartin, First secretary CanadianHigh Commission John Gosal andDirector asia division Elyas irfani onsaturday. LCCi senior Vice Presidentkashif Younis Meher and VicePresident saeeda nazar also spokeon the occasion and gave their pointof view on country’s economicstrengths and weaknesses. the LCCi

President informed the visitingdelegation that the agriculture sectoralso offers a huge potentialparticularly any investment made inlivestock and dairy sectors is boundto make big gains. the LCCi President said thateconomic indicators were fastturning positive, law and ordersituation is also becomingsatisfactory while investment climateis picking up with every passing day.the availability of cheaper skilledand unskilled labour, low priced landas compared to other regionalcountries and an infrastructure ofinternational standards woulddefinitely create a win-win scenariofor global investors. irfan Qaisersheikh urged the Canadian officialsto send a business delegation toPakistan so that it could have firsthand knowledge about the availableopportunities here as the LahoreChamber of Commerce is planning a

sector-specific delegation to Canadain coming months. talking aboutMFn to india, the LCCi Presidentsaid that Pakistan and india havemuch more to gain from improvedbilateral trade. But the caveat is thatthe trade between the two countriesis hassle-free, barrier-less andremoved from historical baggage. inthe presence of Core issues betweenthe two countries and indian ntBs,the desired economic results wouldbe a day dreaming. Pakistangovernment would have to ensure alevel playing field. Quoting anexample of electricity tariff, the LCCiPresident said how industry couldremain competitive at high price ofelectricity when in india, for industryit is 10.5 cents, in Bangladesh 10.75cents and sri Lanka it is 10.75 cent.in Pakistan tariff is already 15 centsmeaning that 45 per cent higher ascompared to the region. the LCCiPresident made it clear that Pakistan

government would have to addressthe concerns of the localmanufacturers as a number of sectorsincluding pharmaceutical,automobile, motorcycle,petrochemical, autoparts, sugar,textile, cooking oil and gheeindustries have genuine reservations.Over the Gas shortage, irfan Qaisersheikh said that the completion ofiran-Pakistan Gas pipeline projectand the establishment LnG terminalsin karachi in another two to threeyears down the line would be a goodbreakthrough.He said at present, the official tradebetween the two countries is farbelow the true potential. Most of thePakistan-india trade takes place viathird countries, like Dubai.transportation and communicationlinks are far from being efficient.Pakistan and india together formthe most populous and contiguousconsumer market of world. Over 1.4

billion people or around 86 percentof south asian population lives inthese two countries. two economiesrepresent almost 95 percent of thesouth asian GDP. the combinedworld trade of both countries standsaround Us$682 billion while theircurrent official bilateral trade is stillbelow Us$2 billion. india exportedover Us$251worth of goods andservice in 2011. imports into indiaincreased to Us$370 billion lastyear. the value of Pakistan’sinternational trade is less than onetenth of india’s global trade.Pakistan’s exports increased topover Us$25 billion first time in2011. imports into Pakistanincreased to over Us$35 billion lastyear. this is around two percent ofinternational trade and 0.4 percentof their combined world trade. sucha large market size can be a long-term source of economic growth forboth the countries.

Pakistan penetrating Business Opportunity Zone

PRO 19-03-2012_Layout 1 3/18/2012 11:48 PM Page 1

news02Monday, 19 March, 2012

KUNWAR KHULDUNE SHAHID

MOst of us, at some point inour lives, dream about cul-tivating our preferredcrops in the vast fertile

lands of southern Punjab, sittingproudly atop tractors that we have fan-tasised about, traversing inception-esque fields – a field within a field,within a field – and carrying the mantleof national economy on our very ownshoulders. Okay, this might’ve been anever so slight exaggeration, but this iswhat all of us have to infuse into ourdaydreaming schedules if we are to sur-vive in this land of ours. if the words ofMiftah ismail, Punjab Board of invest-ment and trade Vice Chairman, to theFaisalabad industrialists are anything togo by, all the industrial magnates in ourneck of the woods should forego manu-facturing and start harvesting fields toserve the nation. the rationale providedfor this ‘groundbreaking’ career counsel-ing, is that industries wouldn’t be get-ting power supply anytime soon anyway,hence, they might just as well get up andstart cropping!

now, while Mr Miftah ismail re-stricted his professional therapy to therealm of industry, if the vindication forthe counsel is the energy predicament,then that’s something that affects everysingle one of us. and therefore, weshould all take a leaf out of his intellec-tual treasury and follow suit. Depend-ing on who stands where in letting theirimagination run riot with regards towheat or cotton cultivation, or indeedvisualising themselves as caretakers ofcattle and poultry one can earmarktheir preferred specialisation in thefarming domain. Of the plethora ofquotable quotes bestowed upon theFaisalabad industrial tycoons by thevice chairman, the one that stood out,especially with regards to the nationalscheme of things was the line, “Youshould focus on bringing in foreign in-vestment into Pakistan,” and also “the

government of Punjab trying its best toovercome the energy shortages but itwill take some time.”

the hint provided for the durationof this “some time” that the governmentis being touted to take is that it wouldtake longer than potential career shiftsof a generation of industrialists. so ba-sically it has come to this, that instead ofgiving us a timeframe that showcases aline of action with regards to improvingthe energy quagmire, the governmentofficials are now asking the nation to in-dulge in activities wherein the energyshortage doesn’t remain that big anissue while the bigger picture of pros-

perity continues to be served – this is ofcourse in the ‘greater interest of the na-tion.’ the government seems all set totake us all the way back to stone age –and maybe beyond – as the hierarchy isrunning out of excuses to satisfy the dis-gruntled industrialists.

after the whole MFn debate, andwith the impending influx of indiangoods into the market, i’m sure theaforementioned verbal jottings wouldcreate an atmosphere of buoyancy forour industrialists who’d already be hav-ing sleepless nights over the cabinet’sdecision to remove the indian negativelist even before any guarantees on the

non-tariff Barriers (ntBs) from ourneighbours. the industrialists are han-kering after any inkling of optimism thatcan trace on the trade front, and if thisis what they’re going to be served with,who could blame them from consideringthe MFn decision a disaster waiting tohappen. Maybe, just maybe, the govern-ment should think about solving thebiggest issue that hampers our economicgrowth rather than give the industrial-ists, comical career counseling.

The writer is Sub-Editor, PakistanToday. He can be reached [email protected]

REUTERS

FELIX SALMON

FRank Partnoy makes a greatpoint: the word “client” hasbeen over-used by investmentbanks so much that by this

point it “has become Orwelliandoublespeak”. But the problem is muchdeeper than one of semantics. When allcounterparties are considered clients,then that creates a corporate culturewhere all clients are considered littlemore than counterparties. and that, inturn, can be evil and poisonous.Partnoy says that “the firm’s salespeopleknow who is a client and who is a mere acounterparty”, and to a certain degreehe’s right. a sovereign wealth funddealing with the equity derivatives desk isa counterparty; a private individualwhose money is being managed byGoldman sachs asset Management is agenuine client. if you’re paying Goldmanfees, you’re quite unlikely to be called a“muppet”, and no one in the firm is goingto try to “rip your eyes out”.But that doesn’t mean that Goldman willalways be acting in your own bestinterest, rather than its own.stockbrokers, famously, receivesubstantial fees from their clients, butdon’t have a legal fiduciary duty to thoseclients, and do have a demonstratedtendency to steer their clients into the

investments which end up paying themthe highest commissions.and even companies paying for M&aadvice are sometimes .in other words, no one can complacentlyassume that they’re a favored client ofGoldman sachs and that thereforeGoldman will be ripping off others ontheir behalf, rather than ripping off itsown client. not even people writing largechecks to Goldman every quarter.i’ve been talking to bankers in the dayssince came out, and there’s a prettymuch unanimous feeling that bankers’loyalty to clients, at least at Goldmanand other big investment banks, hasbeen declining across all aspects of thebusiness, for many years. Greg smithwas in equity derivatives — an areawhere it’s incredibly easy forsalespeople to hide fees if they’reinclined to do so. in fact, it’s so mucheasier for a bank to build its fee intothe pricing of complex bespokeproducts than it is to charge that feedirectly, all banks do exactly that. it’slike buying “commission-free”currency when you go on holiday: youknow full well that the bureau dechange is still making money; it’s justmaking that money by giving you a badprice for your dollars, rather than bycharging you a high commission.But in a business devoted to making ever-increasing sums of money, it’s very easy

for those hidden fees to get bigger andbigger over time. i talked to one formerequity derivatives executive a couple ofdays ago, who said with surprisingvehemence that in his day, the big clientswere God: you built in fees, yes, but younever ripped them off or tried to steerthem into something which was not intheir best interest. now of course what hewas saying was self-serving, but i think ithad an element of truth to it, too.there’s been a lot of talk in the pastcouple of days about how smith was notmuch of a star at Goldman: he was thesole person trading Us equity derivativesin London, which is always going to be amarginal job at best, and he hadn’t risenvery far up the greasy pole given how longhe worked at the firm. Certainly it’s a bitof a stretch to call him an “executive” atGoldman, as that term is generallyunderstood: he didn’t even have anyemployees. But at the same time, hisrelatively lowly position in the company isentirely consistent with a tale of a smartbut ethical professional who didn’t makeas much money for the firm as his peersdid, just because he didn’t rip off hisclients to the degree that they did.all of which is to say that it’s worth takingseriously about the latest spate ofderegulation in the securities markets. ithink that there’s a lot to like in the JOBsact, especially the idea that we shouldstop forcing companies to go public just

because they have 500 shareholders,including employees. Companies shouldbe encouraged to give out equity to theiremployees, without worrying that if theydo so, they’re on some kind of iPO trainwhich can’t be derailed. at the same time,however, there’s a lot of deregulation inthe JOBs act which seems aimedprimarily at giving banks a greateropportunity to make money, largely at theexpense of investors in the primarymarkets. has some strong and importantpoints: the primary markets are rife withinformation asymmetries, and someoneneeds to protect the interests of investors,rather than allowing banks to rip them offwith legislated impunity. all big banks arepublic companies. Public companies arealways under a lot of pressure, from theirown shareholders, to grow. But as acountry, we have a public interest inseeing those banks shrink. the tension isclear. and if regulators try to get banks toshrink, the banks in turn are going tomake even greater efforts to extract thehighest profits possible from thebusinesses they retain. Which is anotherway of saying that they’re going to rip offtheir clients even more. so let’s beassiduous when it comes to regulation,because neither banks nor their boardsare going to lift a finger to protect clientinterests. not when they’re trying tomaintain and maximize their ownprofitability.

Why we should allbecome farmersg Punjab Boi Chairman believes industrialists should retrace a new career path, maybe we should all follow suit

‘Business exhibitionsare pivotal for economic activitiesof any country’

LAHORE

STAFF REPORT

sPECiaL assistant to ChiefMinister Punjab Food andEnvironment, Mansha Ullah Butt

said that the business exhibitions playsvital role in the economic activities ofany country and create soft image. Hewas addressing as the chief guest afterinaugurating 8th international PlasticPrinting and Packaging industry &international Food Equipment &technology (3P) Exhibition here atExpo Centre Lahore. the 3P expo wasjointly organized by the FaktExhibition Private Limited andPakistan Plastic Manufacturersassociation (PPMa) will be continuedtill Monday march 19 2012. Mansha Ullah Butt congratulated theexhibitors and event organizers whobring the intentional exhibitors belongfrom india, China, italy, Germany,taiwan, Japan and other Europeancountries. He said that Punjabgovernment was very much supportivefor the businesses and taken varioussteps for their facilitations. Hewelcomed the international exhibitorson their visit to Pakistan, especiallyPunjab to display their products andtransfer of technology. More than 200companies from around 50 differentcountries of the world were displayedtheir machinery and packagingmaterial at the Lahore Expo Centre forthree days show. talking to the reporters, Chairman,PPMa, shakeel ahmed said thatPakistan has great potential to exportfinished plastic goods to theinternational markets condition tosupportive government policies. Hesaid Pakistani plastic sector was facingnumerous problems from smuggledplastic raw material from iran whichdisturbed the people doing legalbusinesses in the Pakistan. He saidPPMa raised its voice at differentforums but not avail. the ChairmanPPMa, said that till 1990 PakistaniPlastic industry was at par with itsindian counterparts, however, afterfavorable government policies by theindian government to their industrypushed them far ahead to Pakistan. Onthe other hand Pakistani industry hasbeen caught in various problems whichare never resolved by any concernedauthority. He demanded thegovernment to establish HydroCracking Plant which will ensure thecheapest raw material for Pakistaniplastic industry. He said for the last twodecades the government was workingon Hydro Cracking Plant but nobreakthrough was occurred. CEO, FaktExhibitions, salman khan tanoli saidthat 3P expo was 8th annual exhibitionin row without government support. Hedemanded the government to give theExhibitions sector status of industryand patronize them. He said exhibitionscrate soft image of Pakistan globally asnumber of intentional exhibitors wereparticipating in this expo will bring themore foreign visitors to Pakistan whenthey will return back to their nativecountries. He said that Fakt wasfounded with the principal objective ofbuilding bridges among Pakistan andinternational Countries by promotingcommerce, trade and business throughits corporate Exhibitions andConferences.

Why banks will continue to rip off clients

special assistant to Chiefminister Punjab food andenvironment, manshaullah Butt iterates theimportance of exhibitions

PRO 19-03-2012_Layout 1 3/18/2012 11:48 PM Page 2

ksBl’s ‘Building successful CorporateBrands in Pakistan’ by mr Javed JabbarKARACHI: Mr. Javed Jabbar will conduct a one-day programme for the karachi school forBusiness & Leadership (ksBL), on “Buildingsuccessful Corporate Brands in Pakistan”, on the20th of March, in karachi. this course has beendesigned for senior Executives of public andprivate organizations who are responsible forinstitutional communication, marketing andadvertising as well as those working withadvertising agencies and Branding Consultancies.Mr. Javed Jabbar is well known in the corporateworld as a thought leader in the area of corporatebrand building and growth. He is the founder ofand led for 20 years, MnJ Communications (Pvt.)Ltd., one of Pakistan’s and asia’s trend-settingcommunications and advertising firms. Mr. Jabbarhas also served as a Federal Minister in threeCabinets and as a senator. PRESS RELEASE

six experiments filmed in four cities, three countriesKARACHI: What would you do for anUltrabook™ computer? that’s the question intelasks in Ultrabook™ temptations, a series of sixlight-hearted experiments filmed in four citiesacross six countries and posted to Youtube today.sleek and stylish, Ultrabooks™ are a new categoryof computers inspired by intel. they are the nextgeneration in mobile computing—-thinner, lighterand more responsive than traditional laptops, butjust as powerful and secure. “People are drawn toUltrabooks in a way we have never seen beforewith traditional laptops,” said Claudine Pache,digital marketing manager for intel australia andnew Zealand. “We devised the ‘Ultrabooktemptations’ experiments to see how far peoplewould go to get their hands on an Ultrabook.” the

six experiments, filmed in australia, indonesiaand thailand, were designed to tempt people andintroduce Ultrabooks™ to consumers throughYoutube. in ‘Daring temptation’, an Ultrabook isinstalled in a display case near a busy area withthe simple instruction: ‘smash Glass to WinUltrabook’ and a small hammer. Would acommuters prove bold enough to smash the glassin public and claim the prize? according to JayantMurty, intel’s asia Pacific director of brandstrategy and integrated marketing: “We wanted tolaunch Ultrabook™ to the world in a fun andunexpected way. Ultrabook™ temptations showshow these great new devices can inspire anddelight us during everyday moments. PRESS RELEASE

iCCi organises two-day ‘Power of entrepreneurship’ workshopKARACHI: two day workshop on the Power ofEntrepreneurship was held on 6 th and 7 th March2012 at karachi. it was organized by islamic Chamberof Commerce & industry in collaboration with OHsL.this conference was addressed by Mr. nisar a Memon,Former Union Minister, Dr. Mirza abrar Baib, sEVP &Group Chief training & Development Group, nBP, HOand Ms. attiya nawazish ali, assistant secretaryGeneral, islamic Chamber of Commerce & industryand syed iqbal ashraf, Managing Director and CEO ,PaiR investment Company, limited. Mr. nisar aMemon in his address talked about different forms ofentrepreneurship including political & social. He alsodiscussed the importance of Corporate socialResponsibilities for encouraging entrepreneurship. Mr.Baig while speaking as Guest of honor at the functionstated business basics are still fundamental to creatingvalue in an enterprise. to succeed as entrepreneurconservative economic analysis and disciplined,detailed management practices are must for creatinglong term value. there was a great appreciation for Mr.Ozair Hanafi who had conducted the program veryprofessionally as a lead trainer. PRESS RELEASE

PtCl faisalabad wins ‘region of the month’ awardFAISALABAD: Pakistan telecommunicationCompany Ltd (PtCL) has awarded its Faisalabad regionteam with the ‘Region of the Month’ shield inrecognition of its outstanding efforts for provision ofbest customer care and outreach services duringJanuary 2012. Executive Vice President Customer Care,kamran Malik (left) and Executive Vice PresidentContact Centers, Junaid azeem (center) presented theaward to Regional General Manager Faisalabad,Muhammad abrar Chudary (right) at a ceremony heldin One stop shop CtX, Faisalabad. Other PtCL officialswere also present on the occasion. PRESS RELEASE

Bio-diesel production from seedsISLAMABAD: kohat University of science &technology with the collaboration of Directorate of

science and technology, Govt. of khyberPakhtunkhwa is going to initiate a project thatwould mean for the production of Bio-diesel fromthe seeds of jatropha Plant. in this regard, ameeting was held under the Chairmanship of ViceChancellor, kUst, Prof. Dr. nasir Jamal khattak onMarch 15, 2012 in his office in consultation with therepresentatives of the Directorate of science andtechnology, Govt. of khyber Pakhtunkhwa,Peshawar. the meeting was attended by Prof. Dr.Fida Younas khattak, Dean Faculty of Physicalsciences, Prof. Dr shafiq ur Rehman, Dean Facultyof Biological sciences, Dr. Javed abbas Bangash,Director, Directorate of science and technology,Peshawar, Mr. abid suhail, Deputy Director,Directorate of science and technology, Peshawar,Mr. abdullah Registrar, kUst kohat, Mr. altafHussain, Director Works, kUst kohat, Dr. WaheedMurad (Focal Person), assistant Prof. Departmentof Plant science, kUst kohat, Dr. amirMuhammad khan, assistant Prof. Department ofPlant sciences, kUst kohat. PRESS RELEASE

news

Monday, 19 March, 2012

03

CORPORATE CORNER

BERKELEY

LAuRA TySON

A s countries around theworld struggle to lay thefoundations for strongersustainable growth in thefuture, they would do well

to focus on policies that encourageinnovation. Empirical studies acrosstime and countries confirm thatinnovation is the primary source oftechnological change and productivitygrowth. and investments in researchand development, as well as in thescientific and engineering workforce onwhich they depend, are critical driversof innovation and nationalcompetitiveness.a new by the national science Board,the governing body of the nationalscience Foundation in the Unitedstates, examines trends in suchinvestments for both individualcountries and regions. these trendsindicate that the global landscape forinnovation changed significantly duringthe last decade.that landscape is likely to changefurther as several asian economies,particularly China and south korea,increase their investments in R&D andscientific and engineering education tosecure their place as significant hubs ofinnovation. at the same time, crushingdebt burdens may compel the Us,Europe, and Japan to reduce theirinvestments in these areas.the Us remains the global leader inR&D investment, spending an estimated$400 billion in 2009 – a total boostedby President Barack Obama’s stimulus

package, and higher than China, Japan,and Germany combined. But, in termsof R&D spending as a share of GDP, theUs ranked only eighth in 2009 (at 2.9%of GDP). the Us share remained abovethe OECD average, but this was mainlythe result of national differences in theamount of R&D defense spending.indeed, defense accounted for 52% ofUs R&D in 2009, and for more than50% during the last 25 years. thedefense share of R&D in the EuropeanUnion and Japan has been and remainsmarkedly lower – less than 10% in theEU and less than 5% in Japan in 2009(no comparable data are available forChina and south korea). Over the nextdecade, sizeable cuts in defensespending as part of overall deficitreduction could mean a significantreduction in R&D investment in the Us.Between 1999 and 2009, global R&Dspending grew at an average annual rateof 7%, accelerating to 8% during the lastfive years, despite the global recession.During the entire period, R&D spendinggrew significantly faster than globaloutput, reflecting both increasinggovernment support and a rising shareof technology-intensive industries inglobal production and trade. But theseaggregate figures obscure differencesamong countries and regions. Over thedecade, the Us share of global R&D fellfrom 38% to 31%, the EU share fell from27% to 23%, and asia’s share rose from24% to 32%. Within asia, R&Dspending in China grew at anastounding 20% annual pace – twice thecountry’s GDP growth rate – and by2009 China had surpassed Japan tobecome the world’s second-largest

investor in R&D.spending onR&D also grewrapidly – about10% annually – insouth korea. Bycontrast, R&Dspending grew by 4% inJapan, 5% in the Us, androughly 6% in Europe.throughout the world, the businesssector remains both the predominantperformer and the predominant funderof R&D investment. in 2009, businessaccounted for 75% of R&D funding inJapan, 73% in south korea, 72% inChina, 67% in Germany, and 60% in theUs, whose companies are the largestR&D investors in terms of absolutepurchasing power, spending more thantwice as much as Japanese businesses.But over the last decade, while it hasrisen rapidly in many other countries,including China, singapore, southkorea, and israel.Global multinational companies are thelargest business-sector R&D investors inthe Us and other countries. Forexample, multinational companies,whether headquartered in the Us orelsewhere, accounted for about 84% ofprivate (non-bank) R&D investment inthe Us in 2009, about the same as adecade earlier. and , often in innovationclusters around research universities.But this share has declined during thelast decade, as Us multinationals haveshifted some of their R&D from the Usand Europe to asia in response torapidly growing markets, amplescientific and engineering talent, andgenerous subsidies.

,with

manycountries already

offering sizeable tax credits and extendedtax holidays. the asian economies havebeen particularly aggressive in the use ofsuch incentives. and, recognizing thatthe availability of a workforce with thenecessary skills is a key determinant ofwhere businesses locate their R&Dactivities, many countries are increasingtheir investments in tertiary educationand training in science, engineering, andtechnology. Engineering accounts foronly 4% of all bachelor’s degrees in theUs, compared to 19% in asia – whichnow accounts for half of all engineeringdegrees being awarded – and 33% inChina. Many countries are also changing

their

immigrationlaws to make it

easier to attracthighly skilled

workers, especiallyscientists and

engineers, who areincreasingly mobile.

Meanwhile, immigration policies inthe Us and Europe are making it more

difficult to attract and retain suchworkers, compelling companies to shiftR&D abroad to find the talent that theyneed. as a result of these changes, theglobal landscape for innovation has beentransformed over the last decade. Ours isnow a world in which many emerging-market countries have madeadvancement in science and technology atop priority, and in which multinationalcompanies’ R&D investments havebecome much more mobile. as the Usand other developed countries embarkon austerity plans to contain their debt,they must heed these changes in theinnovation landscape and boost theirinvestments in R&D – and in science andengineering education – even as theymake painful cuts elsewhere.

A version of this article was firstpublished in Project Syndicate

innOvatiOnThe global

revolution

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