Key Euribor rates steady at 2-year low

 FRANKFURT: Key euro zone bank-to-bank lending rates were steady at two-year lows on Tuesday, held down by growing expectations for an ECB interest rate cut and the central bank’s fresh move to make it easier for troubled banks to access its ultra-cheap funding.

The ECB loosened its rules on Friday on accepting traditionally hard-to-value Asset-Backed Securities in its lending operations, a move expected to provide struggling banks with at least an extra 100 billion euros of usable collateral. 

Money market rates have more than halved since the central bank flooded the money market with over a trillion euros of cheap three-year funding, but the slide has levelled off in recent weeks as crisis tensions have risen and overnight rates have approached the ECB’s 0.25 percent deposit rate.

With markets awash with low-cost cash, the deposit rate acts as a floor for the money market as banks will only lend on open markets if borrowers are prepared to pay more than the ECB.

A cut in the ECB deposit rate – which policymakers have backed in recent weeks – would lower that floor.

On Tuesday, three-month Euribor rates, traditionally the main gauge of bank-to-bank lending, remained at 0.653 percent, which is the lowest since April 2010.

Six-month Euribor rates rose to 0.928 percent from 0.926 percent. Shorter-term one week rates, continued to hover near all-time lows remaining at 0.323 percent, while overnight rates climbed to 0.328 percent from 0.325 percent.

Dollar-priced three-month bank-to-bank Euribor lending rates  climbed to 0.966 percent, overnight rates jumped to 0.341 percent from 0.332 percent.

ECB policymakers have given fresh hints in recent days that the bank could cut interest rates, a move that would open up room for a further drop in market rates.

“Cutting rates is certainly an option as far as our monetary policy is concerned,” ECB Executive Board member Benoit Coeure told the Financial Times last week. (for story click )

“It was discussed at the last Governing Council meeting and I would expect the next council to discuss it again,” he added.

Earlier this month, the ECB extended its promise to supply banks with unlimited funding until the middle of January next year and did not rule out supplying further longer-term cash if the benefit of its twin three-year LTROs proved not to have been enough.

 The sharp fall in euro-priced interbank rates over the last half-year has brought benchmark euro-priced three-month rates to within touching distance of a record low of 0.634 percent hit in early 2010.

High excess liquidity in the banking system – now at 737 billion euros according to Reuters calculations – has led to heavy use of the ECB’s overnight deposit facility, where banks parked 750 billion euros overnight. Before the financial crisis, the amounts were minimal.

Euribor rates are fixed daily by the Banking Federation of the European Union (FBE) shortly after 0900 GMT.

Facing Goliath: India presents challenges and opportunities

The market seems promis­ing but export­ers must be wary of trade barrie­rs.  The market seems promising but exporters must be wary of trade barriers. DESIGN: JAMAL KHURSHID

KARACHI: 

Pakistan’s print and electronic media is abuzz with reports about the grant of Most Favoured Nation (MFN) status to India. Similarly, the local textile and garment industry is all gung-ho about exporting to India. Popular opinion is that textiles will get an overwhelming response because of superior quality of Pakistani products. But is that really the case?


Would our neighbours treat us as their long lost brothers and hand over their lucrative textile and garment market to us on a silver platter? The answer is, No! We would be naive if we are thinking on those lines. In fact, the ensuing battle for Indian market share would not be anything less but bloody and we should not expect their industry to play by the book.


Size matters


Pakistan’s textile and garment sector is overwhelmingly export based while opposite is the case for our neighbour. India’s textile and garment sector is at least six times larger than that of Pakistan. During the year 2008-09, India produced 54,966 million square metres of textile and clothing. Only 22% was exported while the rest 78% was used for domestic consumption. Out of this, 50% was consumed by the household sector while 28% by non-household sector.


In comparison, Pakistan produced 9,015 million square metres of cloth in 2008-09, out of which 21% was exported and balance 79% was available for local market, according to APTMA statistics. This does not mean that we are similar to India, this actually means that 21% of grey cloth was exported while the rest was lifted by the mills for onward processing, ie, dyeing and printing. As household consumption figures are unavailable, the best guess is that the domestic market is only 20% of our production.


The Indian textile industry is a very powerful lobby and their government gives them special treatment. Only last year, Pakistan’s cotton importers from India suffered huge losses because the Indian industry went back on their contracts due to increasing cotton prices. More recently, the government of India was forced to backtrack on its plan to give foreign supermarkets access to its retail industry.


If Indian retailers can prevent global giants such as Walmart and Carrefour from entering India, restricting Pakistan’s textiles would not be an issue.


Indian retail textile & garment market


Indian market for textile and garments is strikingly similar to Pakistan’s. A large portion of this market consists of products catering to traditional wear that are almost in unstitched form. Although Indian market for western-style clothing is predominantly man-made fibre-based, in contrast traditional wear is mainly cotton-based. This presents a lucrative opportunity for Pakistani manufacturers and traders, who cater to the local market’s demand, to go out and carve out a niche for their fabric in India.


As India grows, so does its purchasing power. Indian consumers spend 9% of their disposable income on clothing and footwear, compared to 6% in Pakistan. India’s per capita consumption of textiles during 2009 was 23.04 metres, which was about 5% higher than the previous year. India’s per capita purchase of all textiles was estimated to be 2,981.92 Pakistani rupees (exchange rate of Dec 25, 2009 – INR 0.588/PKR), in comparison Pakistanis spend Rs2,134.62 on textile and clothing.


Urban demand pattern for textiles & garments in India


Cotton shirts: The urban market for cotton shirts stood at 74 million pieces in 2009 (an increase of 5.63% from the previous year). Some 58% of this consumption originated from higher income households. Shirts priced more than PKR 382.50 accounted for 40% of market share. As Pakistan does not specialise in producing shirts, this segment is of little significance.


Cotton trousers: The market for cotton trousers increased by 19% in 2009 from the previous year and total size of the urban market stood at 57 million pieces. Sixty per cent of this was consumed by higher income households. Trousers priced more than PKR 612 accounted for 24% of market share.


Denim jeans: The urban market size for men’s denim jeans was 76 million pieces (4% increase) and 11 million pieces for ladies jeans (38% increase). Out of the total, 49% purchases were made by high-income households. Men’s jeans costing PKR 637.50 and above accounted for 46% of this market, while ladies jeans costing the same accounted for 40% of the market. Pakistan can do very well in this segment, particularly if the branded jeans segment is targeted.


Men’s cotton t-shirts: Seventy million men’s cotton t-shirts were purchased by urban consumers, representing a 3% increase over the previous year. T-shirts costing PKR 510 and above accounted for 12% of this market. Higher income households represent 14% share of the market.


Traditional-wear


Men’s cotton kurta pajama: The market size for men’s kurta pajamas was 18 million pieces, an increase of 80% over the previous year. Thirty-eight per cent of this market comprised purchases from high-income households. Kurta pajama costing PRK 476 and above accounted for 32% of this market.


Ladies’ cotton shalwar kameez: In 2009, 53 million pieces of ladies cotton shalwar qameez were purchased in urban India, which represents 10% growth over the previous year. Fifty per cent of this consumption was done by higher income households. Products having prices of PKR 1,147.50 or above enjoyed 11% market share.


This segment is set to benefit the most from the trade liberalisation programme as Pakistani traditional wear is very well received in India.


Conclusion


Trade liberalisation with India is certainly a welcome move as ultimately the consumer will get the most benefit in terms of choice. However, the consumer does not have any voice on either side of the divide and hence of little consequence. The Indian market for textile and garment seems promising from Pakistani exporters’ perspective, but they should be vigilant as non-tariff barriers remain the most potent threat.


The writer is a senior research analyst with the Pakistan Readymade Garments Manufacturers & Exporters Association


Published in The Express Tribune, 25th, 2012.

China money rates up on squeeze, PBOC injects funds

SHANGHAI: China’s short-term lending rates were up on Tuesday, hit by a liquidity squeeze as banks demanded funds ahead of the end of the first half and brokerages and fund managers needed cash to subscribe to a major initial public offering (IPO).


The People’s Bank of China (PBOC) moved to relieve the squeeze in the morning, injecting 95 billion yuan ($14.9 billion) into the money market through 14-day reverse bond repurchase agreements (reverse repos) in its regular open market operations on Tuesday.


The central bank also refrained from conducting regular 28-day repos on Tuesday, resulting in the automatic injection of an additional 50 billion yuan for the day.


Another 23 billion yuan worth of bills and repos are set to mature on Thursday.


The PBOC injected a net 55 billion yuan into the market last week through normal open market operations, its largest net injection since April.


“Had not the PBOC injected so much money into the system, money market rates would have jumped (further),” a dealer at an Asian bank in Shanghai said.


“Still, the liquidity squeeze is unlikely to ease much in the first half of July partly because banks have to pay extra reserves for an increase of deposits by the end of June.”


The benchmark seven-day weighted bond repurchase rate was trading at 4.2992 percent at midday, edging up from 4.1999 percent at Monday’s close. It was within an arm’s reach of a four-month high of 4.3392 percent hit late last week.


The 14-day rate inched up to 4.7571 percent from Monday’s 4.7406 percent, but with its rise capped by the PBOC’s 14-day reverse repos, which traders said reflected the central bank’s view that liquidity conditions would not improve much in the next two weeks.


HIGH DEMAND


Chinese banks are required to adjust their deposit reserves on the 5th, 15th and 25th of each month. They also need more money to meet regulatory requirements, such as loan-to-deposit ratios, by the end of the half of a year.


Traders reported banks’ deposit rates have been rising sharply recently as banks try to attract more savers to polish their half-year financial statements. This increases banks’ obligation to set aside reserve payments for July 5, they said.


“Even major state-owned banks are reluctant to lend recently as they are setting aside extra reserves for rising deposits,” said a trader at a Chinese commercial bank in Shanghai.


China’s biggest four state-owned banks, led by the Industrial and Commercial Bank of China, account for more than 50 percent of lending on the money market.


Institutions – mainly securities houses and fund management firms – are also preparing money to participate in a nearly $650 million IPO later this week, which traders said could briefly lock up hundreds of billions of yuan for subscriptions.


CITIC Heavy Industries Co, China’s fourth-biggest maker of heavy machinery, is launching a 4.13 billion yuan IPO on the Shanghai Stock Exchange, the second largest of the year. Institutional and retail subscriptions will open this week.


China’s IPOs typically attract huge subscriptions because IPOs often jump on debut, encouraging punters to speculate heavily on newcomers. As a result, large-scale offerings frequently cause short-term volatility in the country’s money market.

Board of Investment: A 1960s bureaucracy serving the 21st century investor

Despit­e being a govern­ment entity, invest­ment board strugg­les to cut throug­h red tape.  “Pakistan’s reputation has been irreparably damaged among foreign investors due to the Reko Diq case,” Board of Investment Chairman Saleem Mandviwalla.

ISLAMABAD: 

It is a government organisation, part of the Prime Minister’s Secretariat. Its chairman is a cabinet-level official who reports directly to the Prime Minister of Pakistan. And yet the Board of Investment (BOI) has a tough time getting the rest of the government to assist it in its core mission: facilitating foreign investment in the country.


In a remarkably candid interview with The Express Tribune, Saleem Mandviwalla, the current BOI chairman, laid out the challenge facing his organisation.


“Convincing foreign investors to come to Pakistan is the most difficult thing to do today,” says Mandviwalla. “Besides the obvious trepidations over law and order, foreign investors are put off by the bureaucracy, the corruption and what I should say is the lack of governance.”


Mandviwalla himself is from one of Karachi’s leading business families, which collectively has interests in real estate, automobile distribution, and plastics manufacturing. As an outsider from the private sector, he offers keen insights into the functioning of the government.


“Everybody blames the politicians and I feel bad for them. They do not actually govern the country. That is the job of the bureaucrats. They do a bad job and then the government gets blamed for it,” said Mandviwalla. “I do not mean the entire bureaucracy, of course. There are some very good civil servants. But by and large, the bureaucracy is a mess. They are stuck in the 1960s. The majority of federal secretaries do not even know how to compose an e-mail on their own.”


The Board of Investment was technically created to help foreign investors deal with the bureaucracy, by dealing with the government on behalf of the investors. Yet it seems that the BOI is treated no differently than a private sector organisation that merely happens to be housed in a government building. The BOI is currently struggling to get through the legal paperwork and approvals for approximately $800 million in foreign investment.


“We actually get criticised by the civil service for doing our job,” said Mandviwalla. “Some bureaucrats are very helpful, but the majority of them are disinterested.”


One particular example that the BOI chairman talked about was the manner in which the Tethyan Copper Company was treated. Tethyan is a joint venture between Chile’s Antofagasta and Canada’s Barrick Gold, two of the largest mining companies in the world. The two companies have spent $220 million in exploring a block of land allotted to them in Reko Diq, Balochistan. But now that they have finally found copper, the Balochistan government wants to kick them out, preventing them from capitalising on their investment.


“Pakistan’s reputation has already been irreparably damaged [among foreign investors] because of this, and may get damaged even further,” said Mandviwalla. “At every mining investment conference I go to abroad, people ask me about Reko Diq. It affects sentiments among mining companies looking to invest in Pakistan.”


Nonetheless, the BOI chairman admits that some parts of the government are particularly helpful, such as the Planning Commission, the finance ministry, and the Foreign Office. The commerce ministry, meanwhile, gets very low marks from Mandviwalla in terms of helpfulness.


The solution to the mess, according to the BOI chairman, is deregulation and reform. “We went from having a telephone call cost Rs10 per minute to one that now costs less than Rs0.50 per minute. How did that happen? It happened because we introduced serious reforms and deregulated information technology.”


To Mandiwalla, the reforms must start with the civil service itself, bringing an archaic bureaucracy up to speed with the needs of the 21st century investor. Whether or not he is optimistic that this will happen, he did not say.


Published in The Express Tribune, June 26th, 2012.

EU embargo already hurting Iran oil exports

Despit­e offici­al denial­s, Iran oil export­s have plumme­ted 40% in past six months to 1.5 mbpd: IEA. Despite official denials, Iran oil exports have plummeted 40% in past six months to 1.5 mbpd: IEA. PHOTO: REUTERS.

TEHRAN: The EU embargo on Iranian crude due to come fully into effect on Sunday, on the heels of further US sanctions, has already bitten deeply into the Islamic republic’s all-important oil sector.

Despite official denials, Iran oil exports have plummeted some 40 percent in the past six months, to 1.5 million barrels per day (mbpd), according to the International Energy Agency (IEA).

Storage facilities and anchored tankers are close to saturation as Iran tries to avoid cutting production from its oil fields, several foreign experts in Tehran say.

The IEA said up to 42 million barrels of oil were being kept in the stationary tankers.

It added, in its latest Oil Market Report of June 13, it says Iran oil exports could fall further in the second half of this year. It cautioned that its data were preliminary, and were challenged by Iran “routinely” switching off mandatory tracking devices on its oil tankers.

Iran disputes the data and insists it is exporting 2.1 to 2.2 mbpd.

Oil Minister Rostam Qasemi was quoted by the ISNA news agency as saying on June 15: “Oil exports continue as before. Oil sanctions against Iran will have no negative impact.”

The European Union, which up to last year imported some 600,000 bpd, or 20 percent of Iran’s exports, announced on January 23 it would phase in its embargo which becomes fully effective on July 1.

On Monday, the EU citing “a review of the measures” confirmed the embargo would be enforced from Sunday.

Most EU member states have already implemented cuts, with Spain and Greece halting imports in April.

Italy, Europe’s biggest importer of Iranian crude (180,000 bpd), is trailing but expected to follow suit within months, as soon as Iran delivers oil to Italian company ENI as reimbursement of a debt of hundreds of millions of euros.

European oil companies such as Shell and Total have suspended their contracts.

The EU embargo, imposed to pressure Iran to roll back its controversial nuclear programme, is coupled with US sanctions hitting Iran’s financial sector.

On Thursday, the US measures will toughen when foreign companies that do business with Iran’s oil sector will be threatened with US penalties unless their countries are granted exemptions on the basis of Iran oil import cuts.

Turkey, Iran’s neighbour to the north and its fifth-biggest oil customer, has made its sole refiner, Tupras, agree to trim Iran crude oil purchases by 20 percent and instead source from Libya.

South Africa, another important customer, has also gone with other suppliers.

In Asia, which absorbs 70 percent of Iran’s oil exports, the situation is mixed.

India, Iran’s number two customer, has announced an 11-percent cut to Iran oil imports this year, and South Korea, the third biggest customer, has axed 40 percent from its Iran input.

Japan, the fourth-biggest customer, slashed Iran oil imports by 65 percent in April while boosting shipments from Saudi Arabia.

But China — the top buyer of Iranian crude — has reportedly recently been bringing its imports back up towards its previous 400,000 bpd level after a dip earlier this year attributed to a row with Iran over prices and payment.

Beijing steadfastly refuses to cede to the US pressure.

Even where Iran is still selling its black stuff, repatriating the petrodollars generated — and they amounted to $100 billion in 2011 — is increasingly problematic because of the US financial squeeze.

Tehran is now accepting payment in other nations’ currencies, or is resorting to bartering its oil for food and goods.

And to ensure oil exports to some destinations, Iran is offering discounts of up to $20 per barrel to countries such as Pakistan, one European oil executive said.

It is even using its own tanker fleet to deliver crude, to get around the problem of cargo insurance posed by the looming EU embargo, according to international oil experts.

Another blow to Iran’s vital oil export revenues comes from the price for oil.

After a skyrocketing rise to a March peak, prices have tumbled to $90 a barrel for Brent reference crude. Analysts believe they could fall further this year as Europe’s debt crisis deflates the global economy.

That is far away from Iran’s predictions that the world would be unable to cope with reduced Iranian oil exports, and that the price would jump to $150 a barrel.

“Iran hopes a price rise will compensate for its lowered exports, but increased production in other countries, especially Saudi Arabia, have allowed a gradual phase-in of the embargo that has not destabilised the market,” one European expert said in Tehran.

Microsoft buys business social startup Yammer

Yammer has more than five millio­n users, includ­ing worker­s at 85 percen­t of the Fortun­e 500 compan­ies.  Yammer was launched in San Francisco in 2008. PHOTO: YAMMER


SAN FRANCISCO: Microsoft on Monday announced a billion-dollar deal to buy startup Yammer which specializes in social networks for businesses.


Microsoft said that it will pay $1.2 billion for Yammer, which will become part of the US technology titan’s Office Division.


“The acquisition of Yammer underscores our commitment to deliver technology that businesses need and people love,” said Microsoft chief executive Steve Ballmer.


“Yammer adds a best-in-class enterprise social networking service to Microsoft’s growing portfolio of complementary cloud services.”


Yammer was launched in San Francisco in 2008 and enables companies to make private networks that let employees communicate Twitter-style while keeping exchanges away from public viewing.


Yammer has more than five million users, including workers at 85 percent of the Fortune 500 companies, according to Redmond, Washington-based Microsoft.


Microsoft said that it planned to promote adoption of Yammer’s service tied to complementary offerings of software or services such as SharePoint, Skype, and Office 365.


“When we started Yammer four years ago, we set out to do something big,” said Yammer chief executive David Sacks.


“We had a vision for how social networking could change the way we work,” he continued.


“Joining Microsoft will accelerate that vision and give us access to the technologies, expertise and resources we’ll need to scale and innovate.”

South Korea firm wins $2.1bn deal for Kazakh plant

SEOUL: South Korea’s Samsung Engineering said Tuesday it had won a $2.1 billion order to build a power plant in Kazakhstan as the central Asian nation bids to meet growing energy demand.


Under the deal Samsung will build a thermal power plant with a capacity of 1,320 megawatts in southern Balkhash by 2018, Samsung said in a statement.


“Samsung Engineering is looking forward to being part of the modernisation of Kazakhstan’s power sector and furthering the strong ties between the two countries,” it said.


Kazakhstan, a former Soviet republic the size of western Europe, sits on enormous fossil fuel reserves and supplies of other vital minerals.


Rising energy prices have helped its economy post robust growth despite Europe’s debt crisis.

Pak skilled workforce losing competitive edge

Other South Asian labour­ers contin­ue to outshi­ne countr­y’s workfo­rce. Other South Asian labourers continue to outshine country’s workforce. PHOTO: FILE

ISLAMABAD: 

Pakistanis are increasingly finding it difficult to compete in the international market of skilled labourers as workers from India, Sri Lanka and Nepal continue to replace the country’s workforce on the basis of a better skill set.

“Pakistani labourers failed to match the standards of skilled workers worldwide,” observed Senate’s Standing Committee on Professional and Technical Training Chairman Senator Abdul Nabi Bangash during a meeting on Monday.

“Labourers from other South Asian countries, holding technical certificates from certified institutes, have surpassed the country’s skilled professionals,” he added.

It was noted that vocational training institutes in rural areas have been totally non-functional to address the weaknesses in this regard.

Skilled workers from the Philippines, Nepal, India and Sri Lanka continue to displace Pakistani labourers, which is a remarkable turnaround since Pakistani labourers used to dominate the market in the region as well as the Gulf in the past decade.

The recent cut in funds of the Higher Education Commission (HEC) also came under discussion and the panel urged HEC’s linking with the ministry for parliamentary business and interaction. The committee expressed its disquiet over the delay in release of funds to the HEC which had stalled the remuneration of employees, unanimously recommending that immediate steps be taken to address the matter.

Recognising the importance of education for the future of Pakistan, Bangash said that the only way to defeat terrorism was through imparting education to the masses.

Published In The Express Tribune, June 26th, 2012. 

BOJ’s account deposits to hit record on ultra-easy policy

BoJ2 400TOKYO: The balance of deposits which financial institutions park with the Bank of Japan is expected to reach a new record on Tuesday as the central bank continues to flood markets with excess cash in hopes of supporting the fragile economy.

Financial institutions’ current account deposits at the BOJ were expected to reach around 43.5 trillion yen ($546 billion) on Tuesday, according to an estimate by the central bank.

That would exceed the record 42.57 trillion yen set in March last year, when the BOJ injected huge amounts of cash to calm financial markets after the devastating earthquake and tsunami.

With interest rates virtually at zero, the BOJ has been buying government bonds and private debt under an asset-buying programme put in place in October 2010, in an effort to reinflate an economy beset by deflation by more than a decade.

But companies have been reluctant to borrow money for investment due to the weak economic outlook, prompting banks to pile the extra cash into current account deposits at the BOJ.

Analysts expect the BOJ’s account deposists to remain at high levels due to its ultra-easy policy, although they point out that the extra cash will do little to bolster the economy as long as corporate fund demand remains weak.

In a sign the BOJ is force-feeding cash to markets, the central bank on Friday failed to draw enough bids for its cheap, six-month fund operation for the ninth straight auction.

Former World Bank MD to head New Zealand central bank

WELLINGTON: Former World Bank managing director Graeme Wheeler was named Tuesday as the new governor of the Reserve Bank of New Zealand.


Finance Minister Bill English said Wheeler would take on the role when incumbent central bank chief Alan Bollard steps down on September 25 after 10 years at the helm.


Wheeler, 60, began his career in the New Zealand Treasury before joining  the World Bank in 1997, where he was managing director from 2006-2010 before  leaving to run an advisory business in the United States.


“Mr Wheeler’s extensive experience makes him a highly respected figure in world financial markets and within New Zealand,” English said in a statement.


“We were fortunate to have someone of his calibre available for this important role.”

US debt steady in Asia ahead of supply this week

TOKYO: US Treasuries prices were steady in Asia on Tuesday ahead of further supply this week, with the market expected to remain supported as investors remained sceptical about Europe’s ability to resolve its debt crisis.


The Treasury Department will offer $35 billion in two-year notes on Tuesday.


It will follow that with $35 billion in five-year notes on Wednesday and $29 billion in seven-year notes on Thursday.


“With the focus on Europe’s problems, the extra supply is expected to meet demand,” said Hiroki Shimazu, a senior market economist at SMBC Nikko Securities.


A European leaders summit in Brussels on Thursday and Friday will mark the 20th time EU leaders have met to grapple with the debt crisis.


Investors will be watching debt sales by Italy and Spain this week to gauge market confidence in their ability to continue funding their debt.


Italy plans to sell zero-coupon and inflation-linked bonds on Tuesday and medium- and longer-term bonds on Thursday. .


Spain’s Treasury will issue between 2 billion and 3 billion euros of 3- and 6-month T-bills on Tuesday, and is likely to pay its highest short-term borrowing rates in over six months as investors demand high premiums.


On Monday, Moody’s Investors Service downgraded 28 Spanish banks and two issuer ratings, and Spain formally requested up to 100 billion euros ($125 billion) to prop up its banks.


German Chancellor Angela Merkel put to rest the idea that Europe would issue common euro zone bonds to underpin its single currency.


The yield on US 10-year notes were steady from late US trade at 1.61 percent, but were down from 1.65 percent in Tokyo on Monday.


The yield on 30-year bonds stood at 2.68 percent, also steady from late US trade but below 2.74 percent in Tokyo trade on Monday.


On Monday, the Fed sold $8.37 billion in Treasuries with maturities ranging from March 2014 to October 2014 as part of its “Operation Twist” stimulus programme, under which it sells short-term notes and buys longer-term debt with the aim of pushing down long-term rates.


It will buy longer-dated securities on Tuesday, Wednesday and Friday, and sell more short-term debt on Thursday.


On the US data front, a report on Monday showed sales of new homes in May rose more than economists had forecast, but the market impact was muted.

Pakistan Railways operations go down to minimum

Passen­gers of expres­s trains facing hours of delay. Pakistan Railways has been left with a fleet of around 100 locomotives to run its entire operation, including 200 train and freight services. PHOTO: FILE

LAHORE: Pakistan Railways, which has been promised a bailout package in the federal budget for 2012-13, is still struggling to get back on feet as its operations have gone down to the bare minimum, leading to hours of delay in express trains.

Train operations in Lahore Division could not be resumed which were suspended in reaction to an attack on a train last week in which it was burnt by people protesting against power outages at Kamoki.

According to sources, 20 passenger trains are out of service, causing a loss of millions of rupees every day. Most of the locomotives, which were used to push these trains, have been parked for routine maintenance.

The railway has been left with a fleet of around 100 locomotives to run its entire operation, including 200 train and freight services.

In addition to this, the railway is continuously losing power vans which supply electricity in trains. According to Pakistan Railways spokesperson, out of a total of 68 power vans, only half are operating and the rest are parked at workshops for repair.

Sources say seating and water facilities are also unsatisfactory at railway platforms, forcing passengers, particularly women and the elderly, to sit on the ground and buy water bottles from stalls at high prices.

Passengers complain that all trains are pack to capacity, but still the management cries about losses. They also point out that trains often depart without filling water tanks and attaching power vans, and the locomotive usually fails during travel.

“It’s true that the railway is losing millions of rupees daily with the stoppage of many passenger trains, but this loss will be much less when compared to a situation in which we lose our coaches,” said the spokesperson of Pakistan Railways. In this regard, he cited last week’s incident in which the railway suffered a loss of around Rs180 million.

About the locomotives, he said these were either parked for routine maintenance or were being used for trains according to the schedule. “The situation is critical but we are trying to solve the issues. This will take time as we are still short of over 400 locomotives, which no doubt is a big number.”

He stressed that the railway was awaiting the release of the bailout package, most of which would be spent on repair and purchase of locomotives. However, he cautioned that the situation would not improve before eight months.

Published in The Express Tribune, June 26th, 2012.

Telecos invested $500m in fiscal 2012

Invest­ment improv­ed infras­tructu­re and outrea­ch of teleco­m servic­es. MAJOR SECTOR: $79m is the amount of FDI attracted by Pakistan’s telecom sector, during the previous year, which accounts for 5% of the total FDI in 2011.

ISLAMABAD: The telecom sector has invested more than $500 million during the last one year which helped improved infrastructure and other projects to ensure expanded services in every nook and corner of the country. In addition, Universal Service Fund (USF) also invested Rs3.5 billion during the period. Cellular mobile sector contributed in a major way in the investment.

According to data released by the Ministry of Information and Technology, telecom companies have reduced foreign direct investments (FDI) as compared to previous years because they have already laid down the required infrastructure. The breakup for the $500m investment included cellular services sector with $359 million, Long Distance International (LDI) with $109 million, Local Loop (LL) received $19 million and Wireless Local Loop (WLL) with $11million. During the last one year, telecom sector attracted over $79 million in FDI in the country which accounts for 5% of the total FDI in 2011.  It said that although companies have invested over $12 billion in building infrastructure and other projects in the last six years, there is no denying the fact that there are untouched lands and grey areas that need new or improved infrastructure.

However, due to the terrain and security situation, companies are reluctant to invest further. Pakistan Telecommunication Authority (PTA), recognising the fact, has worked out with operators and USF to make investments in areas currently out of reach from telecom services. An analysis of investment and FDI clearly reveals that the telecom sector needs an influx of new investments in near future to boost these figures. The auction of 3G licenses may boost the levels of FDI in Pakistan.

Published in The Express Tribune, June 26th, 2012.

McLeod Road mammoth: State Bank profits down 10% over two years

The centra­l bank is still the single most profit­able entity in the countr­y. The central bank is still the single most profitable entity in the country. DESIGN: JAMAL KHURSHID

ISLAMABAD: 

Despite rising government borrowing and high interest rates, profits at the State Bank of Pakistan have been declining for the last two years, largely due to a decline in non-interest income, declining by 10% over two years.

In an audit report of the central bank’s financial statements up to fiscal year 2011, auditors observed that the SBP’s net income declined, even though interest income kept rising. “Net profits in 2011 declined by 3.1% even though interest income [the biggest source of revenue] went up 16.4%,” observed report issued by the Auditor General of Pakistan’s office.

Despite the drop, the State Bank of Pakistan remains the single most profitable entity in the country – public or private – with a net income totalling Rs181 billion in 2011, down 3.1% from the Rs187 billion it earned in 2010 and 10% from the Rs202 billion it earned in 2009.

The main source of the central bank’s revenues is the monetisation of the national debt: the government asks the SBP to simply print money and then buy up treasury bills issued by the finance ministry to cover the federal government’s fiscal deficit. The government then pays interest on those bills that the State Bank bought simply by printing money, virtually out of thin air, a process that economists agree is highly inflationary.

In other words, higher profitability at the State Bank is a bad thing and lower profitability is a good thing. Higher profitability means that the government is financing too much of its deficit by printing money and causing inflation, which means higher interest rates, and thus higher income for the SBP. Yet in a twisted financial loop, the government also uses the State Bank’s profits to lower its fiscal deficit, by as much as 1% of the total size of the economy every year.

The auditors, however, appear to have drawn attention to the fact that it is not interest income that is declining, but rather non-interest income, on things such as foreign currency dealings, where the State Bank’s income is down almost 84% to just Rs1.9 billion, compared to Rs11.7 billion two years ago. The State Bank’s interest payments on its own debts also rose 38% over that same period to Rs13.3 billion, also contributing to the decline in net income.

“These are not healthy signs for the profitability of the Bank and required corrective measures,” observed the audit department.

In 2011, the SBP’s gross income rose by Rs30.4 billion, or 16.4% to Rs216 billion. However, the bank’s operating income – the profits its gains from such heads as the Banking Services Corporation and other activities – went from a profit of Rs10.5 billion in 2010 to a loss of Rs11.6 billion in 2011.

The report may well become fodder for other government organisations such as the finance ministry to begin criticising the central bank – which has always had a structure independent of the rest of the government – for what are perceived to be higher benefits for its employees. Insiders at the SBP, however, argue that the central bank needs to lure talent away from the lucrative financial services sector that it regulates, and hence needs higher salaries and benefit packages.

The central bank’s leverage ratio – the ratio of company’s debt to its equity – is also worsening. The leverage ratio has deteriorated by 1.6%, according to the audit report. The audit also warned the central bank to make efforts for minimizing its credit risk over non-interest bearing financial instruments.

Published in The Express Tribune, June 26th, 2012.

US T-notes track Bunds lower, brace for supply

 LONDON: US Treasury prices came under pressure on Tuesday from the prospect of a bout of supply this week and from weaker German Bunds, which were pulled down by the prospect of issuance from other highly-rated European borrowers.  * US 10-year government bond yields firmed 1.4 basis points to 1.62 percent, as equivalent German yields rose 3.5 bps to 1.50 percent. Trading in German Bunds has been choppy ahead of an European Union summit later this week, the latest in a series which have so far stopped short of the radical decisions that traders and investors see as necessary to resolve the euro sovereign debt crisis.

The Treasury market must also absorb bond sales this week including $35 billion in two-year notes on Tuesday, $35 billion in five-year notes on Wednesday and $29 billion in seven-year notes on Thursday.

Given a sluggish global economic backdrop and uncertainty over how the euro zone debt crisis will develop, analysts said there should be plenty of appetite for the safe-haven paper at the auctions.

“That’s easily going to be absorbed,” one trader said. “Guys are long that stuff versus the long end of the curve, and I think it’s going to go reasonably well.”

Five-year US bond yields firmed 1.1 basis points to 0.72 percent, while 30-year yields rose 1.5 basis points to 2.69 percent.

The euro zone could create a treasury for the shared currency and issue euro bonds in the medium term as the final stage of a fiscal union, a document prepared for this week’s summit of euro zone leaders showed on Tuesday. But analysts remained sceptical of any breakthrough this week after Germany on Friday resisted pressure for common bonds and a more flexible use of Europe’s rescue funds.

Upping the pressure on policymakers, Cyprus became the fifth euro zone country to turn to Brussels for emergency funding on Monday..

Analysts said the direction of the Treasury market would be highly dependent on developments in Europe.

Asked whether US 10-year yields could go back towards their 1.44 percent record low, Charles Diebel, head of market strategy at Lloyds said: “A lot of that depends on Europe. If you get worst case scenario kicking off in Europe, then you will get down there and probably lower on the safe-haven support.”

“In reality a sell-off towards 1.80, maybe as far as 2 percent is possible by year-end but that’s only with … better news,” Diebel added.

JGBs steady to firmer as tax plan approval awaited

TOKYO: Japanese government bonds were steady to firmer on Tuesday, supported by continuing concern about Europe’s debt crisis as investors expected an uneventful sale of two-year notes and the passage of a plan to increase Japan’s sales tax.


Market scepticism that a summit of European leaders in Brussels on Thursday and Friday will resolve that region’s debt woes lifted prices of US Treasuries overnight, which underpinned demand for JGBs.


Japan’s parliament is expected to approve on Tuesday a plan to double the sales tax to 10 percent over three years, marking a first step in cleaning up the country’s balance sheet.


The Japanese government on Monday began considering compiling a supplementary budget for the current fiscal year, possibly in autumn, to stimulate the economy, Kyodo news agency reported, citing government sources.


“The sales tax bill’s passage is expected, so it can’t be said to be a strong positive factor for the market, but it does reduce the chance of a negative factor. If it hadn’t passed, it would have been quite negative for JGBs,” said a fixed-income fund manager at a Japanese asset management firm.


The Ministry of Finance’s auction of 2.7 trillion yen of two-year notes on Tuesday is expected to proceed smoothly. The Bank of Japan now purchases bonds with up to three years left to maturity, and is currently buying much of the new issuance of two-year notes.


The coupon was set at 0.1 percent for the seventh consecutive two-year sale, matching the interest the Bank of Japan pays on its current account excess reserves.


The lowest accepted price at last month’s two-year sale was 100, and the bid-to-cover ratio was a strong 9.79, the highest since June 2005. That sale was conducted again due to an unprecedented glitch.


The 10-year JGB futures contract for September ended morning trading up 0.07 point at 143.77.


The 10-year JGB yield slipped 1 basis point to 0.820 percent, edging toward a nine-year low of 0.790 percent hit in June 4.


The 20-year yield was flat at 1.665 percent.

‘Geologists integral for exploitation of natural resources’

Geolog­ists from across the globe discus­s electr­icity shorta­ge in Pakist­an.  Pakistan has coal reserves of 185 billion tons versus the current consumption of 11 million tons only, according to the speakers at the conference. PHOTO: FILE


PESHAWAR: Speakers at a two-day international conference have termed the role of geologists integral in natural resource exploration of Pakistan.


Most of the resource exploration projects including Thar coal have failed to deliver because the role of geologists has been ignored, said Director Centre of Excellence in Geology Professor Dr Asif Khan while addressing the conference.


Geologists are the people who know the nature, depth and actual potential of the reserves, he added.


Geologist Dr Khan informed that his centre has recently started working with Department of Agriculture over irrigation and mitigation of land degradation in DI Khan region.


The conference is aimed at bringing together geologists, engineers from across Pakistan, Nepal, Bangladesh, Sri Lanka and the Netherlands to discuss the electricity shortage and exploration of natural resources.


They revealed through researched data that Pakistan has coal reserves of 185 billion tons extended over an area of 9,000 square kilometres versus the current consumption of 11 million tons only.


They said the world produces 41% of total electricity from coal while despite having abundant reserves Pakistan’s share of electricity from coal stands at almost zero.


Balochistan and Khyber-Pakhtunkhwa are endowed with 5.3 billion tons of copper, 47 million ounces of gold and 806 million tons of iron.


The irony of the matter is that instead of having excess iron Pakistan is importing it.


Mega hydel reservoirs including Turbela, Mangla and Warsak are producing electricity at 60 paisa per unit but still the cost of electricity the consumer is paying is far higher, thus bringing a lot of burden on the poor, they stated.


Exploration of natural resources has been the key in bringing industrial revolution in Europe, said former professor of University of Peshawar Dr Qasim Jan.


He added that presently there are 2,500 geologists working in the field, but their role in research and development is completely ignored.


Although hydel power generation is the cheapest in the country, yet no tangible step was taken to build dams from 1975 to 2000, said Water and Power Development Authority (Wapda) General Manager Rashid Ali Khan.


Mark Zuidgeest ITC Netherlands said Pakistan is an area prone to natural disasters. Constant mapping and Geographical Information Survey based on modern research tools are important to assess future hazards, he added.


The conference concluded at Bara Gali summer campus which was jointly organised by National Centre of Excellence in Geology, Department of Geology UoP with the sponsorship of HEC, Pakistan Petroleum, Pakistan Science Foundation, Pakistan Academy of Sciences and Weatherford.


Published in The Express Tribune, June 26th, 2012.

Samsung eyes 10 million mark for Galaxy S3 by end of July

The third versio­n of the Galaxy S series offers face-recogn­ition techno­logy and improv­ed voice-activa­ted contro­ls. Models hold new Galaxy S III devices as they pose for photographers during an event to launch the smartphone. PHOTO: REUTERS

SEOUL: South Korea’s Samsung Electronics, the world’s largest smartphone maker, said Monday it expects to have sold 10 million of its newest Galaxy S3 model by the end of July, two months after its launch.

J.K. Shin, head of the mobile communications division, said robust sales of the model would help Samsung’s mobile business post a second-quarter profit bigger than the first three months.

“We’re getting more positive reviews for Galaxy S3 than the previous Galaxy S1 and S2 since the release in Europe, the Middle East and Southeast Asia beginning May 29,” Shin said at an event to mark the phone’s domestic release on Monday.

He estimated that global sales of the new phone — currently available in 147 countries — would surpass 10 million next month, including about a million to be sold at home.

“We’re doing fairly well in emerging-economy markets… I think our second-quarter earnings will be better than the first quarter’s, despite the difficult economic situation in Europe,” Shin said.

The company, the world’s biggest technology firm by revenue, posted a record net profit for all its divisions of 5.05 trillion won ($4.44 billion) in the first quarter, thanks largely to strong smartphone sales.

The third version of the Galaxy S series offers face-recognition technology and improved voice-activated controls as well as a more powerful processor that lets users watch video and write emails simultaneously.

It also has a 4.8-inch (12.2-centimetre) screen that is 22 percent larger than the S2, while it can detect eye movements and override the automatic shutdown if the user is looking at the screen.

Samsung shipped 44.5 million smartphones in the first quarter, exceeding the 35.1 million of US arch-rival Apple, according to market researcher Strategy Analytics in April.

Samsung, embroiled in patent lawsuits in 10 nations with Apple, is pinning its hopes on the S3 to further erode its rivals’ market share before the expected new version of Apple’s iPhone 5 this year.

In a rare victory for the Korean firm, a Dutch court last week ruled in favour of Samsung and ordered the US giant to pay unspecified damages for patent infringement.

Govt to stop supply of 700MW to KESC

Compan­y will be provid­ed gas and oil to produc­e its own electr­icity. “We will provide gas and oil to KESC so that it could produce equal amount of electricity from its own power plants to meet the demand of Karachi consumers,” says Ahmed Mukhtar.

ISLAMABAD: Federal Water and Power Minister Ahmed Mukhtar has announced that the government will stop supplying 700 megawatts of electricity to the Karachi Electric Supply Company (KESC) to meet the requirements of National Transmission and Dispatch Company (NTDC), a decision which comes in the face of power riots in Punjab.

“We will provide gas and oil to KESC so that it could produce equal amount of electricity from its own power plants to meet the demand of Karachi consumers,” Mukhtar said while talking to a select media here on Monday.

He said KESC was receiving 700 megawatts of electricity on a daily basis even after its privatisation. “Now, we are working to stop export of 700MW, so that NTDC could meet its requirements.”

Commenting on prolonged power outages, he agreed that these were the result of poor governance, but ruled out any shortage of oil for power production. He expressed the hope that electricity supply would reach 13,500 megawatts by Tuesday evening compared to around 12,000 megawatts on Monday.

“We have fuel but there are hurdles in the way of transportation through tankers and railways,” he said.

Because of a sharp decline in power production, Hyderabad is facing eight hours of load-shedding every day, Lahore nine hours, Multan eight hours and Islamabad seven hours.

NTDC MD controversy

As NTDC Managing Director Rasool Khan Mehsud continued to hold office despite suspension, the water and power minister, while talking to the media, threatened that he would quit if Mehsud did not relinquish the charge.

According to sources, the NTDC managing director was enjoying the backing of a political party and the presidency. Now, the presidency has assured the minister that the NTDC managing director would be removed.

“One of us will have to leave the office and I will quit if he (Mehsud) remains in the office,” Mukhtar told reporters.

Soon after taking charge of the ministry about three weeks ago, Mukhtar had suspended Mehsud, citing ‘poor performance’. However, according to sources, he is still dealing with day-to-day affairs of the company.

“We have taken up the issue with the presidency and Mehsud will have to quit the post in a couple of days,” the minister stressed.

Mukhtar alleged that Mehsud was using his political connections to stick to his position, but said he would be shown the door soon and that required no summary to be sent to the prime minister.

Published in The Express Tribune, June 26th, 2012.

Pakistan seeks Indonesian support to join ASEAN

PTA will have positi­ve impact on both econom­ies: KCCI. The Association of Southeast Asian Nations, or ASEAN, was established on 8 August 1967 in Bangkok, Thailand, with the signing of the ASEAN Declaration (Bangkok Declaration) by the Founding Fathers of ASEAN, namely Indonesia, Malaysia, Philippines, Singapore and Thailand. PHOTO: AFP

KARACHI: Pakistan wants to join the Association of South East Asian Nations (Asean) and Indonesia should support it in its endeavour, Karachi Chamber of Commerce and Industry (KCCI) President Mian Abrar Ahmad said in a statement on Monday.

Asean was established on August 8, 1967, to accelerate economic growth and social progress among regional countries, including Indonesia, Malaysia, Philippines, Singapore, Thailand, Brunei Darussalam, Vietnam, Lao PDR, Myanmar and Cambodia.

In a meeting with the Indonesian Consul General Rossalis Rusman Adenan at KCCI, Ahmad said that the recent signing of the Preferential Trade Agreement (PTA) with Indonesia will open a new chapter of economic and commercial cooperation between the two nations. “KCCI believes that the PTA will boost bilateral trade ties and lead to a Free Trade Agreement (FTA),” he said.

Pakistan and Indonesia signed the PTA on February 4, 2012, whereby Indonesia agreed to offer preferential market access to Pakistan on 216 tariff lines at a preferential rate. Similarly, Pakistan has offered 287 tariff lines under the PTA.

As a result of the PTA, Pakistan-Indonesia bilateral trade can increase up to $2 billion in coming years from the current level of $800 million annually, he said. “Indonesia will be able to increase its export of crude palm oil to Pakistan; whereas, Pakistan can export its value-added textile goods, carpets, fabrics, leather, chemicals, surgical goods etc,” he added.

He called for Pakistani-Indonesian joint ventures in crude palm oil and value-added agricultural products. He also stressed upon the need for building trade links with the Economic Cooperation Organisation, which is an intergovernmental organisation involving seven Asian and three Eurasian nations, Central Asian Republics and member-countries of the South Asian Association for Regional Cooperation.

The Indonesia and Pakistan PTA will be enforced by July 2012. The Indonesian commerce minister is also due in Pakistan next month to meet his counterpart.

Published in The Express Tribune, June 26th, 2012.

Eurozone finance ministers head for talks in Paris

Pierre-Moscovici 400PARIS: The finance ministers of Germany, France, Italy and Spain will meet in Paris for talks on Tuesday evening, ahead of a crucial European Union summit at the end of the week, French Finance Minister Pierre Moscovici said.

“We want to work with Germany,” Moscovici told France Info radio, asked about the pressure on President Francois Hollande and German Chancellor Angela Merkel to reach an agreement on ways to curb the spiralling euro zone crisis.

“Tomorrow there is a meeting, which will be very important, between Francois Hollande and Angela Merkel and this evening I will receive the finance ministers: Mr. Schaeuble from Germany, Mr. Monti or Mr. Grilli of Italy and Mr. de Guindos of Spain along with the European Commissioner,” Moscovici said.

“We are in an active phase of preparation of this summit.”

Hollande wants measures like mutualised debt and joint bank deposit guarantees to be worked on at the same time as moves towards deeper fiscal integration, while Merkel, wants an accord on closer integration before any other steps are taken.

Music blogs: ‘Social media is word of mouth on steroids’

Music blog owners talk about the age of virals.  Music blog owners talk about the age of virals.

LAHORE: 

“With blogs and social media, each individual has the power to get his voice heard,” says Hamad Dar, who launched music site koolmuzone.pk in 2004. The Pakistani music industry was slowly deteriorating in the late 1990s and early 2000s, until an unlikely set of music bloggers like Dar — who was just 14 at that time — came to the rescue and revolutionised the way local music was being promoted.


Dar and his team set up the site without any help. But once the website proved its credibility, new as well as seasoned musicians approached them to upload their music. Koolmuzone’s first big scoop was revealing “Coke Studio” season 2’s line-up before the official press conference. After being online for eight years now, the website gets around 350,000 to 400,000 hits per month.


“Social media is like word-of-mouth on steroids. This is the best form of media yet,” Dar says. “Musicians don’t even need to network in the fraternity now. All they need to do is come up with a product and upload it on a public forum and wait for the response.” Dar explains that social media gives budding musicians higher chances of going “viral” and bagging concerts and album contracts without spending much on self-promotion. He highlights the like of the Cheapmunks, Beygairat Brigade and latest internet sensation, comedian Ali Gul Pir, who got a deluge of offers after their work received raving response on Facebook, YouTube and Twitter.


Creator of pakent.net, 18-year-old Haider Jamil has also made a splash. Jamil, whose aim is to provide underground artists maximum exposure, says there are two groups in the industry: artists who support blogs and online media and those who don’t. “Musicians such as Atif Aslam don’t like blogs, whereas Ali Zafar goes out of his way to promote music on blogs,” says Jamil. “SYMT’s Haroon Shahid gave an interview to our blog, which shows the prominence of music related blogs.” Pakent has an average of 200,000 to 300,000 hits per month.


Legal turbulence


Many music portals have to deal with profitability and copyright issues. Jamil explains that websites are dependent on revenues that come in through advertisements, which are, despite high site traffic, extremely low. This affects the cash flow and eventually the morale of the site creator.


He adds that record companies such as Fire Records have started accusing blogs of piracy.  According to Jamil, he got his hands on the unreleased soundtrack of Bol but due to the fear of copyright violation he did not release it. He adds that in order to avoid copyright problem, the administration waits till the artists send in the content themselves.


 Do these forums help?


“You don’t need a middle man,” comedian Ali Gul Pir tells The Express Tribune. “All you need is a YouTube channel and a camera, and you have a music video.” Pir explains that for his song, he did not publicise it on a music portal but let Facebook virality do its magic. “Thanks to Facebook shares, I have been approached by news channels who want to buy my song,” says Pir, adding that he is not accepting any offers at the moment.


Dar disagrees. “I have been handling marketing for many bands, and virality is a natural process if the product is good, but what the blogs provide is an initial push giving the video or song a couple of thousand views that can help it develop momentum,” he says.


Published in The Express Tribune, June 26th, 2012.

Indonesia central bank to issue bank ownership rule by end of June

JAKARTA: Bank Indonesia said on Tuesday that it was likely to issue new rules on bank ownership by the end of this month, with majority ownership to be allowed above 40 percent depending on the central bank’s approval.


Deputy governor Muliaman D. Hadad, in charge of banking regulation, said approval of majority ownership would depend on the bank’s financial health.


The central bank said last month that it planned to cap single ownership in the country’s banks at 40 percent for new investment, a rule that if implemented would scupper a $7.3 billion bid by Singapore’s DBS Group Holdings for Bank Danamon.

Market watch: Bourse falls early in session

KSE’s benchm­ark 100-share index declin­es 89 points.  KSE’s benchmark 100-share index declines 89 points.


KARACHI: The stock market faced a huge onslaught in the early hours of trade and fell deep – 90 points – into the red zone amid thin trade.


The Karachi Stock Exchange’s (KSE) benchmark 100-share index declined 0.65 per cent or 88.63 points to end at 13,642.19 point level.


There market did not trend on one huge rumour but different speculations. The election of the new prime minister could not revive interest in the market as investors are still worried about the Pak-US relationship and the worsening macro-economic fundamentals of the country, said JS Global Capital analyst Shakir Padela.


Stocks closed bearish amid concerns of a fall in global stocks and commodities because of the Eerozone debt crisis, said Ahsan Mehanti, an official at Arif Habib Corporation.


Trade volumes fell to the dismal level of 57 million shares compared with Friday’s tally of 84 million shares.


Foreign institutional investors were net sellers of Rs58 million worth of shares, according to data maintained by the National Clearing Company of Pakistan Limited.


Engro Foods and DG Khan Cement remained highly traded, however, share price of both scrips fell in the absence of any positive trigger.


Shares of 327 companies were traded on Monday. At the end of the day 74 stocks closed higher, 177 declined while 76 remained unchanged. The value of shares traded during the day was Rs1.8 billion.


Karachi Electric Supply Company was the volume leader with 8.3 million shares gaining Rs0.35 to finish at Rs3.18 on expectations of company showing profit in the next quarterly result.


It was followed by Engro Foods with 6.6 million shares declining Rs2.98 to close at Rs65.11 and DG Khan Cement with 6.1 million shares falling Rs0.98 to close at Rs39.18.


Published in The Express Tribune, June 26th, 2012.

Incoming: Linde Pakistan to invest Rs556m in power plant

The compan­y manufa­ctures and distri­butes indust­rial, medica­l and specia­lty gases.  KARACHI: 

Linde Pakistan has decided to invest Rs556 million to set up a power generation plant to produce four megawatts of electricity at its Port Qasim facility. Top management of Linde Pakistan, formerly known as BOC Pakistan, made this decision in a meeting held on Monday, says a notice sent to the Karachi Stock Exchange on Monday.


The investment will be funded with a combination of company’s internal resources and external borrowings.  The company manufactures and distributes industrial, medical and specialty gases.


Published in The Express Tribune, June 26th, 2012.

No trespassing: OGRA to cancel pipeline allocation of LNG importers

Seeks minist­ry’s green signal as import­ers could not meet commit­ments. Ogra had revealed its intention of cancelling the pipeline capacity allocated to the LNG importers including Global Energy of Turkey, Pakistan Gas Port and Engro Corporation. illustration: jamal khurshid

ISLAMABAD: 

The liquefied natural gas (LNG) import programme is facing major hiccups as the Oil and Gas Regulatory Authority (Ogra) has decided to cancel the pipeline capacity allocated to LNG importers after taking the petroleum ministry into confidence because of the failure of the importers to meet commitments within the set timeframe.

In October 2011, Ogra had allocated pipeline capacity to three LNG project developers, allowing them to use the pipeline network of state-run gas distribution companies for transporting 1.4 billion cubic feet per day (bcfd) of imported LNG to consumers.

A senior government official told The Express Tribune that Ogra, in a letter written to the petroleum ministry, had revealed its intention of cancelling the pipeline capacity allocated to the LNG importers including Global Energy of Turkey, Pakistan Gas Port and Engro Corporation.

The importers have failed to meet project requirements within the stipulated period of six months. “They have not even found global buyers as yet,” said the official.

According to him, the petroleum ministry had been involved in the whole process of allocating pipeline capacity to the LNG importers, prompting Ogra to take the ministry on board before going ahead with capacity cancellation.

Owing to the delay, an influential LNG lobby was trying to seek an extension in the deadline for financial close relating to the pipeline capacity, a petroleum ministry official said. Financial close is the completion of documentation process and preparation of a satisfactory business model.

According to an understanding reached with the government, the LNG importers were expected to enter into financial arrangements, agreements with LNG suppliers and gas buyers by the end of April, but they could not be able to achieve these.

In its recent decision on revenue requirements of gas utilities, Ogra also rejected the demand for billions of rupees made by Sui Southern Gas Company (SSGC) and Sui Northern Gas Pipelines Limited (SNGPL) for laying LNG infrastructure due to slow progress to meet commitments made by the importers.

Earlier to press ahead with the project, the government had asked SSGC and SNGPL to invest $1.2 to $1.4 billion in laying new pipelines and create room for LNG suppliers. At present, SSGC has the capacity to transport 500 million cubic feet of LNG per day.

Global Energy had committed to bring first consignment of 500 mmcfd by the end of June, followed by Engro bringing the same quantity in December 2012 and Gas Port importing 400 mmcfd in the first quarter of 2013.

At the time of allocating pipeline capacity, Ogra had warned LNG importers of capacity cancellation and seizure of bank guarantee if they failed to bring gas within the set timeframe.

The ministry had proposed bank guarantee of $35 million to be furnished by LNG importers, but at the time of allocating pipeline capacity, the amount was set at $10 million. Later, it was further reduced to $5 million, the ministry official said.

However, the LNG importers, who had to furnish bank guarantee within 90 days of capacity allocation, defaulted on this commitment as well and no company deposited even the reduced amount of $5 million, the official added.

Published in The Express Tribune, June 22nd, 2012.

World Bank agrees to fund Dasu hydropower project

Work on 4,320MW projec­t will start after Diamer-Bhasha Dam. The project will be constructed on the Indus River, seven km upstream of Dasu village and 74 km downstream of Diamer-Bhasha Dam. The project is situated on the Karakoram Highway, about 350 km from Islamabad. CREATIVE COMMONS

LAHORE: Following the signing of an agreement with the government of Pakistan for providing $840 million for the 1,410-megawatt Tarbela 4th Extension Project, the World Bank has also agreed to extend financial assistance to the 4,320MW Dasu Hydropower Project.

It has also been agreed that the project will be constructed in phases after work on the 4,500MW Diamer-Bhasha Dam is initiated and its financial plan is finalised.

Water and Power Development Authority (Wapda) Chairman Shakil Durrani stated this while presiding over a meeting here at the Wapda House to discuss the report submitted by an international panel of experts.

Addressing the meeting, the Wapda chairman said international financial institutions were taking keen interest in providing funds for Wapda projects due to excellent ‘economic internal rate of return’ (EIRR) of these schemes.

The Dasu project is part of the least-cost energy production plan of Wapda aimed at harnessing the country’s hydropower resources to improve the share of hydroelectricity in energy mix.

The project will be constructed on the Indus River, seven km upstream of Dasu village and 74 km downstream of Diamer-Bhasha Dam. The project is situated on the Karakoram Highway, about 350 km from Islamabad.

According to a statement issued by Wapda, the priority is to construct Diamer-Bhasha Dam for which land acquisition process has already started and 13 contracts for offices, colonies and roads have been awarded.

Dasu Hydropower Project will follow the initiation of work on Diamer-Bhasha Dam. Detailed engineering design, for which the World Bank is providing funds, and tender documents are likely to be completed in early 2013. Afterwards, construction work will commence.

The project will generate 21.3 billion units of electricity per annum and will also have positive impact on existing hydropower stations including Tarbela, Ghazi Barotha and Chashma.

Published in The Express Tribune, June 22nd, 2012.

Why was the Google chairman in Pakistan?

Schmid­t’s visit was unanno­unced and left only a bland govt press releas­e in its wake. “Eric is now playing the role of an internet evangelist, meeting with heads of state to see how the internet can help society in those countries,” says a source at Google. PHOTO: AFP

KARACHI: 

If the Google chairman’s quick, unannounced visit to Pakistan has anyone optimistic about Google investing in Pakistan; they should not get their hopes up. Eric Schmidt was here for nothing of the sort.

By most accounts, the visit was a brief one and kept secret for at least a day. Schmidt was in Pakistan on Thursday and met with the former prime minister Yousaf Raza Gilani in Islamabad, but the official press release was not issued by the prime minister’s office until Friday, and even that only included what Gilani asked Schmidt, not what the Google chairman himself said.

Google itself is remaining tight-lipped. A spokesperson for the California-based technology giant said only that “a team from Google is meeting with public and private sector leaders in Pakistan, as we do regularly, to better understand how local businesses and entrepreneurs are using technology.” Note how they refuse to even mention Schmidt by name, even though he was photographed with the then prime minister.

Sources inside Google say that there appears to be no communication about the visit internally within the company. One source at the company offered a clarifying comment: “Eric is now playing the role of an internet evangelist, meeting with heads of state to see how the internet can help society in those countries.”

For its part, the premier’s office has made no secret of what they wanted. Gilani, according to the government’s press release, is said to have recited a laundry list of items that Pakistan would like Google’s help on. And for good measure, the former prime minister threw in a request for Google to help finance a venture capital fund in the country.

It is unclear whether Schmidt brought up the subject of Google’s recent efforts to resist censorship on the internet. For example, on June 4 – the anniversary of the Tiananmen Square massacre in China – Google warned users in that country when they typed searches related to that day that their search would likely be censored.

And the company has had its fair share of run-ins with the government of Pakistan. The Google Transparent Report, a project that reveals when Google receives requests to take down content from its websites, suggests that Pakistan has asked the company to remove content twice over the past six months. One request was for the removal of nine items from Blogger, Google’s popular blogging service. Google did not specify what the content was, but suggested that the request was complied with, at least in part.

However, the company was willing to state what the second request was. “We received a request from the Government of Pakistan’s Ministry of Information Technology to remove six YouTube videos that satirised the Pakistan Army and senior politicians. We did not comply with this request,” says the transparency report.

Yet these requests seem child’s play compared to what happened in February 2008. In an attempt to block YouTube in Pakistan – ostensibly for hosting blasphemous content – the government’s over-zealous censors managed to block worldwide access to YouTube. A few bloggers later conjectured that the attempted blocking of YouTube was to prevent access to videos portraying election workers rigging results in Karachi, rather than for any blasphemous content.

In March, The New York Times (a partner publication of The Express Tribune) published a story about the government’s very open attempts to censor the internet in Pakistan. Some observers have suggested that Google may be trying to persuade Pakistan to not go down that path.

Danish Ejaz, an advertising executive in Karachi, said: “I think Google probably does not want Pakistan to become a second China, a country where many of their services are not available.”

Published in The Express Tribune, June 22nd, 2012.

World Bank initiative: Govt requests funds for power project with India

As a result, 500MW of electr­icity will materi­alise in three years. As a result, 500MW of electricity will materialise in three years.

KATHMANDU: 

Against the backdrop of a severe energy crisis, Pakistan has officially requested the World Bank (WB) to fund a project for the import of 500 megawatts of electricity from India, a senior official of the lending agency said on Tuesday.

“We are engaging with both the countries and a pre-feasibility study will soon be initiated,” said Senior Operations Officer for South Asia Diep Nguyen. She was speaking in Kathmandu at a workshop on regional cooperation in South Asia, organised by the World Bank.

WB’s chief economist for the South Asian region Kalpana Kochhar, who is involved in the trade normalisation process, said issues including technical details and electricity pricing will be ironed out over the next 18 months. The project will materialise in three years, she added.

The economist also said that while the exact cost of the project had not been worked out, the transmission line itself will cover a very short distance. She clarified that the WB was not involved in trade discussions except participating as observers. Kalpana said that South Asia was a severely energy-starved nation and the WB was working to improve energy cooperation. She said there were talks on building infrastructure between Pakistan and India for power sharing.

To a question regarding establishing compensation funds to mitigate the short-term impact of trade liberalisation, Kalpana said neither of the countries had requested a mechanism for compensation.

Kalpana said India was taking very seriously the “very big step taken by Pakistan in normalising trade ties,” adding that there was much hope that both sides would take to the process to its logical conclusion. She emphasised that trade agreements must be turned into reality by moving towards implementation.

The WB economist said that poverty in South Asia was heavily concentrated in landlocked and border areas. “The World Bank is figuring out the exact impact of regional integration on poverty reduction, which was an overlooked area so far,” Kalpana remarked.

She said the WB was working towards building on more facilities for improving border crossing between India and Pakistan. The lending agency has also been discussing virtual and phone connectivity between countries in the region.  There is a very low level of people-to-people contact in the region but for [increasing connectivity] the trust deficit has to be overcome, she added.

Senior Operations Officer Nguyen said the South Asia was the only region in the world that does not share any regional energy scheme despite having huge potential. In Pakistan, industrial load shedding has so far resulted in a loss of 400,000 jobs, Nguyen added.

The official highlighted the need to make various trade agreements effective by moving towards regional integration. India and Pakistan both trade more with China and very little with each other. Pakistan’s trade with India amounts to less than 5% of its total trade. She explained that according to various independent studies, both the countries will make huge gains if they normalise trade. In short, India is Pakistan’s main missing market and vice versa. Diep said the economic crisis in the US and Europe heightened the need for intraregional trade.

Published In The Express Tribune, June 13th, 2012.

Swedbank, SEB to buy Latvian state bank assets

Swedbank RIGA: Sweden’s Swedbank and SEB are to buy some of the commercial banking assets of a Latvian state-owned bank, which will then be turned into a development institution, the Finance Ministry said on Friday.

The Latvian government said earlier this week it had agreed to sell some of the assets of state-owned Mortgage and Land Bank as it pushed ahead with a clean-up of its banking sector after a deep recession during the 2008/2009 financial crisis, but did not name the buyers.

The Finance ministry said in a statement contracts about the sale of Mortgage and Land Bank’s commercial assets were signed on Friday and the deal would close within the coming six months.

It said the financial details of the transactions would only be disclosed after the deals were finalised.

Swedbank had made the best offer for assets concerning commercial loans, payment and deposit services, as well as a leasing company while SEB Wealth Management had provided the best offer for the Mortgage and Land Bank’s second tier pension plan management assets, the ministry said.

The centre-right government has said it will sell most of the assets of Mortgage and Land Bank by the end of 2013, after it decided in 2009 to turn the bank into a development bank and stop its commercial activities.

Latvia’s banking sector is dominated by Swedish banks and Swedbank and SEB are the top two banks by asset size. Both banks came under pressure in 2009 as a credit bubble burst in the Baltic state which slumped into a withering recession.

SECP launches e-subscription service

e-IPO will enable invest­ors to file share applic­ations throug­h intern­et. e-IPO will enable investors to file share applications through internet.

ISLAMABAD: 

The Securities and Exchange Commission of Pakistan (SECP) has announced that it will introduce the concept of e-IPO in upcoming Initial Public Offerings (IPOs) of shares and corporate bonds by companies.

“The concept will enable investors to file application for subscription of shares and corporate bonds through internet from their computers and mobile phones without going to their banks and wait in long queues,” the SECP said in a press release issued on Friday.

Giving the reason, it said the e-IPO would facilitate both the companies that intend to raise funds from the capital market and the general public applying for subscription of shares and bonds.

In order to seek views and discuss technical, legal and operational modalities of the initiative, the SECP has met with various stakeholders including representatives from the State Bank, Karachi Stock Exchange, Central Depository Company, share and bond issuers, banks, stock brokerage companies, share registrars and ballotters to the issue.

The corporate regulator believed that the e-IPO would help reduce time and efforts required for subscription of shares and bonds as well as help the issuer to efficiently raise funds from the market. It is also expected to contribute to reduction in the issue cost and improvement in turnover.

Under the existing manual system, investors are facing problems while applying for subscription of shares and bonds. They are required to go to their banks, manually fill in the subscription form, attach a cheque or pay order and photocopies of CNIC, etc, wait in long queues to submit application and within certain hours.

Other problems associated with the existing system includes unnecessary blockage of funds and increased cost of issue.

The SECP, however, made it clear that the manual system would also remain in place and run parallel to the e-IPO facility. The e-IPO will replace the manual system when investors are completely familiar with the new mechanism.

Published In The Express Tribune, June 23rd, 2012.

Russia central bank starts Aussie dollar operations

russia-central-bankMOSCOW: Russia’s central bank has this week started buying Australian dollars to buy bonds there as part of its strategy of diversifying its half a trillion dollars in reserves – the world’s fourth largest – a source familiar with the matter said on Friday.

“The central bank has started buying Australian bonds to include them in its portfolio,” the source said, adding that the bonds carry a relatively short maturity and the first settlement date was on Thursday, June 21.

The source also said that the Russian central bank has opened accounts at National Australian Bank, one of the four largest financial institutions in Australia, and carries out its operations in Australian assets through Austraclear.

The central bank was not immediately available for comment.

Central Bank First Deputy Chairman Alexei Ulyukayev said in late May that the bank was planning to start buying the Australian dollar “in the near future”, eventually taking its shares in reserves to above 1 percent.

As of Jan. 1, 45.5 percent of Russian forex reserves were held in US dollars, 42.1 percent in euros and 9.2 percent in sterling.. The Japanese yen and the Canadian dollar each accounted for a 1.6 percent share in the reserves, central bank data showed earlier this month.

Russia possess the world’s fourth largest gold and forex reserves after China, Japan and euro zone. The latest data showed, Russia’s reserves stood at $512.2 billion as of June 15.

Quarterly report: SBP terms 3.7% growth rate a notable feat

Wheat produc­tion estima­ted to declin­e amid lower yield. The State Bank observed that although the economy has shown some recovery in terms of GDP growth, the key macro indicators still remain weak.

KARACHI: 

The State Bank of Pakistan (SBP) has termed the economic growth of 3.7% ‘notable’, a figure that is below the government’s target of 4.2%.

The State Bank of Pakistan’s Third Quarterly Report released on Friday cites damage to cotton crop due to floods, ongoing energy shortage, rise in international oil prices and security concerns as the stumbling blocks.

It also hinted as wheat to be another stumbling block in the coming future. The commodity’s production, currently in process, is expected to drop amid lower yield and water shortage.

The growth rate of 3.7% posted during July 2011 to March 2012 is better than the growth of 3% last year and also comes in the wide range of 3% to 4% projected by the central bank.

This growth was supported by a better harvest, pick up in construction and increase in value addition from the finance and insurance sub-sector, adds the report.

The report also mentions that there has been a shift in the largest contributor during the financial year with commodity producing sectors taking over domestic growth such as car sales.

Agriculture sector

The agriculture sector performed better this year with livestock remaining the highest contributor in agriculture GDP.

Major crops, mainly the kharif crops – rice, cotton, sugarcane and maize – also contributed to agricultural growth.

The report gave a heads up to the disappointing wheat outlook, a commodity that contributes 13% of the total value addition by the agricultural sector and is cultivated over 37% of the total crop area.

Preliminary estimates suggest total production of 23.5 million tons, compared with 25.2 million tons realised in the previous year. Not only was the area under wheat cultivation lower this year, but crop yields also declined because of lower fertilizer use and water shortages.

Hence, even the incentive of higher wheat support prices fell short in enhancing production towards achieving the target of 25 million tons.

Industrial sector

Industrial sector surpassed its growth target of 3.1% for financial year 2012, mainly due to higher-than-targeted growth in mining and construction industries.

With the end of winter, construction activity – one of the largest contributor to the growth – gained further momentum particularly in March. As a result, cement sales reached a record high of 2.6 million tons in March 2012, showing a yearly growth of 10.6% over March last year. Moreover, some building material producers, whose production had been declining until the last quarter, posted positive growth in the third quarter.

According to preliminary estimates for fiscal 2012, the construction industry reported 6.5% growth compared to a 7.1% decline in FY11. This growth was well above the target of 2.5%.

Higher inflows of project aid and larger fund releases under the public sector development programme, suggest greater activity in public sector projects

The food, beverages and tobacco industry has performed well on the back of a better harvest, strong domestic demand, and greater exports to Afghanistan.

Over the past year, five new beverage plants have opened in Khyber-Pukhtunkhwa. The government also reduced excise duties on beverages in financial year 2012 budget. Similarly, oil and ghee exports to Afghanistan have also been higher.

In the pharmaceutical industry, the government reduced the custom duty on raw material imports – in most cases from 10% to 5% – which made exports more competitive.  In the domestic market, an upward revision of some medicine prices also led to improved margins.

Smuggling of Korean and Indian televisions

It is widely held that the import of consumer durables is impeding the domestic industry. In the case of home electronics, smuggling of Korean and Indian TV sets – via Dubai and Afghan Transit Trade route – and under-valuation and under-invoicing of Malaysian and Chinese air conditioners have put the local industry under stress.

In the lower-end of the market, the demand for fans has fallen substantially because of extreme load-shedding in Punjab.

The State Bank observed that although the economy has shown some recovery in terms of GDP growth, the key macro indicators still remain weak.

Published In The Express Tribune, June 23rd, 2012.

May cap franc for some time: paper

bank456ZURICH: The Swiss National Bank could maintain its cap on the franc for some time if economic growth remains subdued, its vice chairman said, adding that the limit on the currency could not be changed easily.

To shield the economy from deflation and a recession, the SNB set a floor of 1.20 francs per euro last September, after safe-haven buyers anxious about the euro zone’s debt crisis had nearly pushed it to parity with the common currency.

In an interview published on Saturday in French-language newspaper Le Temps, Jean-Pierre Danthine said the question of whether to cease the cap was “totally premature” and reaffirmed the SNB’s commitment to intervene in unlimited amounts to make the limit stick.

“If, as today, the economy continues to do neither well nor poorly, it is entirely conceivable that the limit will have to be maintained for a fairly long time,” Danthine said.

The SNB expects growth of around 1.5 percent this year, with momentum expected to slow in coming months due to weakness in the euro zone, Switzerland’s biggest trading partner. Its inflation forecast does not envision a threat to price stability due to the SNB’s vast expansion of liquidity.

Given the importance of foreign trade to Switzerland, some exporters and trade unions have asked the SNB to shift towards 1.40 per euro to weaken the franc further.

“You would need a radical change in the macroeconomic environment to imagine a change in policy,” Danthine said. “You cannot finely tune a minimum exchange rate as you do with interest rates.”

NO WEALTH FUND

Swiss politicians have proposed the SNB create a sovereign wealth fund for its vast foreign exchange reserves to boost returns. The SNB suffered a huge loss in 2010 after intervening to stem the franc’s rise against the euro.

Echoing comment made by SNB chairman Thomas Jordan on June 14, Danthine rejected the SWF idea, saying it would not be insulated from fluctuations in the exchange rate and could hamper the SNB withdrawing liquidity when necessary.

A governmental task force is doing contingency planning in case the situation in Europe worsens considerably, and policymakers have said Switzerland could consider capital controls to deter a flight to the franc if Greece left the euro.

Economists have said they would have little effect and could seriously hurt the Swiss banking industry.

Meat and dairy: In camels, ‘experts’ see non-existent export opportunity

UAF profes­sors use anecdo­tes and stereo­types to make a busine­ss case. HUMP: $10b is the value of global trade of camel meat and $7b is the value traded of camel milk globally. PHOTO: ATHAR KHAN/EXPRESS

FAISALABAD / KARACHI: 

Pakistan, with the sixth largest population of camels in the world, has the potential to become a globally significant exporter of camel meat and camel milk, according to livestock sector ‘experts’.

These surprising views were expressed at a one-day seminar held at the University of Agriculture Faisalabad (UAF), which was organised in conjunction with the Camel Association of Pakistan. The ‘experts’ claimed to have hit upon an industry which might benefit some of the most impoverished families in Pakistan, particularly Balochistan, but failed to back up their argument with credible statistics.

For instance, Dr Muhammad Afzal Hussain, assistant professor of animal nutrition and feed technology at the UAF, claimed that the global trade in camel meat is worth $10 billion and the trade in camel milk is worth another $7 billion. In reality, the global trade in these two commodities is so small that they are listed as negligible in the World Trade Organisation’s (WTO) database of global trade statistics.

The experts gathered at the seminar seemed far more interested in providing what seemed to be vaguely relevant anecdotes based on cultural stereotypes rather than hard, data-backed evidence. Iqrar Ahmed Khan, the vice chancellor of the university, said: “I used to live in the Middle East for over a decade. Any proposal relating to dates or camels is never declined because these two commodities have been part of Arab daily life for hundreds of years.”

Former Punjab livestock minister Mumtaz Minhas said: “The meat, as well as the milk, of white camels is revered in the Arab world and is sold at high prices. We have the potential to export [these commodities] to these countries and earn hefty foreign exchange.”

Yet more disappointing than what the seminar’s participants said was what they did not say. None of the participants pointed out the fact that Pakistan has the sixth largest population of camels in the world, or that it has been growing at about 2.6% per year for the last decade. But perhaps critically, nobody seemed willing to point out that there is simply no major market for camel meat anywhere in the world, at least not enough of one to justify a government-sponsored export strategy.

According to the WTO, the global export market for meat is worth about $112 billion. About one-third of that is beef, with global trade valued at $36.6 billion in 2011. The next biggest component is pork ($30 billion), followed by chicken ($25.4 billion). Camel meat appears nowhere in this picture, since it is rarely consumed and only consumed in countries that actually have their own camel populations, restricting the amount that is traded across borders.

The global trade in dairy products is smaller, but still worth a substantial $70 billion in 2011. Pakistan’s share in that trade was nonexistent.

By contrast, Pakistan is actually rapidly increasing its exports of beef and mutton, which hit almost $169 million last year and have been growing at over 50% per year for the past eight years. Minhas alluded to this opportunity only briefly by pointing out that retail prices of beef in Tehran are close to Rs1,200 per kilogramme (kg), compared to the Pakistani average of around Rs262 per kg.

Sources in Pakistan’s meat export business say they rarely if ever see any interest for camel meat exports and the order sizes are usually miniscule, making the business commercially unfeasible.

Published In The Express Tribune, June 23rd, 2012.

After consulting, a hesitant Ansari takes helm at Engro

He wanted to contin­ue his own busine­ss and was not willin­g to go to the job market. Ansari worked for the Bank of America as an analyst for no pay for as long as six months. PHOTO COURTESY: ENGRO

KARACHI: 

Only a man in a million would have the audacity to turn down the best job there ever was in the corporate sector of Pakistan. After all, who would say no to the repeated requests of the chairman of Engro Corporation – Pakistan’s largest private-sector conglomerate, with interests ranging from fertiliser and energy to foods and chemicals – to become its president and CEO?

A reluctant CEO

Ali Ansari replaced Asad Umar at the helm of Engro Corporation after the latter took early retirement in April to join politics. While there must have been many contenders for the most prestigious position in Pakistan’s corporate sector, Ansari was not one of them.

In fact, he had declined to be considered for the job when Engro Chairman Hussain Dawood first floated the idea. “I was running my own business and enjoying it. Moreover, I’d made a commitment to myself that I wouldn’t go back to the job market,” Ansari said while talking to The Express Tribune.

Some days later, Dawood called him again and told him the board of directors had unanimously recommended that he become president and CEO of Engro Corporation. “I’ve always taken my decisions myself and stuck by them,” says Ansari while describing his “dilemma.” So after consulting one of his old friends who now leads a major bank of the country, Ansari decided to accept the job.

The odd Grammarian

“I wasn’t particularly a good student at Karachi Grammar School. It worried my father. So he decided to send me to a boarding school,” says Ansari, who followed in the footsteps of his father and grandfather by pursuing a highly successful career in finance. His grandfather served as finance minister of Hyderabad Deccan. Ansari’s father worked for the National Bank of Pakistan and also played a key role in establishing Bank AlJazira in Saudi Arabia.

Ansari arrived in England as a 14-year-old in 1977. “Three years at the boarding school were the toughest in my life,” he said. His next destination was Richmond, an American college in London, where he studied business administration and finance.

My word is my bond

Ansari says he developed a life-long fascination with the city of London early on. He received multiple job offers after graduation from college. Yet he could not accept one, because he did not have a work permit. So he applied for the legal document and, in the meantime, worked for the Bank of America as an analyst for no pay for as long as six months.

Ansari’s career took a sharp upturn with the management buyout of the investment wing of the Bank of America. The name of his company changed from Bank of America to WorldInvest, he became a shareholder, the company grew five times in five years, and Ansari got promoted to the position of fund manager within a year. By all means, his career progression was tremendous so far.

But success doesn’t feel like success when one is just 28. “I wasn’t doing any value addition, I thought. Buying and selling shares didn’t seem exciting anymore. Also, my father was ill in Pakistan.”

So Ansari moved back to Karachi in 1992 and set up a textile business with his uncle. He did away with the business just after two years after using all his savings to pay his employees and vendors.

His next stop was in Hong Kong where he joined CLSA Asia-Pacific Markets, a financial services group, as head of Pakistan operations.

A multinational babu

Ansari was contacted by AKD Group Chairman Aqeel Karim Dhedhi in 1999. AKD wanted to expand his business by setting up state-of-the-art online trading, fund management and corporate finance operations. “You’re a seth, and I’m a multinational babu, I told AKD. We can’t work together,” Ansari said about his first reaction to AKD’s offer.

To understand each other better, Ansari and AKD decided to do a project together. “Dhan Fibres was a sick unit, and we got its owner a good price together,” Ansari said. The Dewan Group came along and AKD helped raise the money. With the finalisation of the deal, Ansari and AKD formally joined hands and the former became CEO of AKD Securities. “From acquisition finance and private equity to venture capital, at AKD I did everything that I loved.”

To his credit, AKD kept his initial promise of not interfering in the affairs of AKD Securities throughout Ansari’s stay at the company. “He had promised me that he wouldn’t call me or come to the office unless he’s asked to. He kept his word.”

Before joining Engro, he was running his own business, which is Pakistan’s first independent oil and gas drilling company. He says he accepted the Engro job because one should embrace challenges bravely. “It’s truly an honour to lead the most prestigious company in Pakistan’s corporate sector.”

Published In The Express Tribune, June 23rd, 2012.

Closed project revival said to benefit retired bureaucrat

The Rs144m capaci­ty buildi­ng projec­t has been extend­ed for one year. DRAIN ON RESOURCES: Rs18m has been earmarked for the institutional building project in next fiscal year.

ISLAMABAD: 

In what appeared to be another case of nepotism and waste of taxpayers money, the Planning Commission at the behest of the Prime Minister House has revived a closed project costing around Rs144 million allegedly to accommodate a retired blue-eyed boy.

The Planning Commission had to bite the bullet as it was pushed by the Prime Minister House to extend the Institutional Strengthening and Efficiency Enhancement Project by June 2013.

The total cost of the project is Rs144.2 million and it was among 14 other projects which were abandoned to save Rs25 billion. These projects were initiated in the name of capacity building but the real motive was to accommodate retired bureaucrats of the Planning Commission, said an official of the Planning Commission.

According to the official, the main beneficiary of the institutional strengthening project is Asif Sheikh who had retired around six years ago but was running the project by becoming a public sector development programme (PSDP) specialist.

Sheikh has been a contractual employee of the Planning Commission and gets salary from the account of the institutional strengthening project. He has even attained 65 years of age.

Incumbent Planning Secretary Asif Bajwa after joining the Planning Division had decided to close all capacity-building projects except for those which were of strategic nature and involved foreign grant. He had given marching orders to Sheikh and the Commission issued a notification to close the project by June 30.

However, sources said the decision has been reversed and the project has been extended for another year. An impression has been given that former finance minister Dr Hafeez Shaikh had called for extending the project. However, when Hafeez Shaikh was approached for comments, he categorically denied having given orders to extend the project.

A senior official of the Commission revealed that Asif Sheikh used his connections in the PM House to pressurise the Commission to extend the project.

According to next year’s PSDP document, so far Rs67.8 million has been spent on the project compared to the total cost of Rs144.2 million. For the year, Rs18 million has been earmarked for the project.

Defending the decision, Planning Commission spokesman Ishfaqullah Khan stressed that the government wanted to gradually complete the project since jobs of many people were involved. He admitted that the institutional building project does not meet the criteria set to continue some of the ongoing projects.

To press ahead with the project, he, however, said special criteria have been set which will protect crucial specialist jobs including that of Asif Sheikh.

The project was approved by the Planning Commission in 2007 aimed at enhancing its capacity and introducing corporate culture.

Ironically, according to another official, the institution (Planning Commission) has been ruined in the last several years, when officials were not even allowed to be groomed as the body was virtually run by a few handpicked people.

Asif Sheikh is currently out of the country and was unable to respond to queries.

Published In The Express Tribune, June 23rd, 2012.

HP may cut up to 1,000 jobs in Germany

hewlett-packard-logoBERLIN: US group Hewlett Packard, the world’s largest personal computer maker, may cut as many as 1,000 jobs in Germany as part of planned European-wide redundancies, WirtschaftsWoche reported, citing an unnamed staff representative.

HP is planning to cut about 8,000 positions in Europe by the end of 2014, the German magazine said, citing unnamed officials close to the company.

“As many as 1,000 jobs (in Germany) are acutely endangered,” WirtschaftsWoche quoted the labour representative as saying.

HP, which employs more than 300,000 workers globally, said in May the layoff of 27,000 workers, or 8 percent of its workforce, would be made mainly through early retirement and generate annual savings of $3.0-$3.5 billion as it exits its 2013/14 year.

HP, which posted a second-quarter profit above market estimates, aims to use cost savings from planned job cuts to drive organic growth.

Market Watch: Stock market in recovery mode

KSE’s benchm­ark 100-share index surges 130 points. KSE’s benchmark 100-share index surges 130 points.

KARACHI: 

The stock market staged a recovery on the last trading session of the week and almost covered for the decline posted in the last three trading sessions.

The Karachi Stock Exchange’s (KSE) benchmark 100-share index gained 0.96 per cent or 130.22 points to end at the 13,730.82 point level on Friday after plummeting 153 points for three consecutive days.

The bourse jumped after initial confusion as the ruling Pakistan Peoples Party managed to muster support among coalition partners for its candidate in the running for the prime minister post.

Trade volumes gained to 84 million shares compared with Thursday’s tally of 57 million shares. DG Khan Cement led the volumes board while Lucky Cement also remained among top volumes over attractive valuations, said JS Global Capital analyst Jawad Khan.

Oil stocks closed positive despite international oil prices remaining under pressure with Pakistan Oilfields and Oil & Gas Development Company jumping 0.9% & 2.5%. Fauji Fertilizer Company remained highly sought after over attractive valuations over market rumours that the fertilizer manufacturer recorded impressive urea sales in June.

Foreign institutional investors were buyers of Rs144 million and sellers of Rs202 million worth of shares, according to data maintained by the National Clearing Company of Pakistan Limited.

Shares of 354 companies were traded on Friday. At the end of the day 166 stocks closed higher, 77 declined while 111 remained unchanged. The value of shares traded during the day was Rs3.0 billion.

DG Khan Cement was the volume leader with 7.36 million shares gaining Rs1.08 to finish at Rs40.16. It was followed by IGI Investment Bank with 7.06 million shares firming Rs0.23 to close at Rs2.25 and Bank AlFalah with 6.63 million shares increasing Rs0.44 to close at Rs16.94.

Published In The Express Tribune, June 23rd, 2012.

Market watch: Stock market falls in dismal session

KSE’s benchm­ark 100-share index sheds 67 points. KSE’s benchmark 100-share index sheds 67 points.

KARACHI: Low participation and depressed activity continued on Thursday amid political uncertainty.

The Karachi Stock Exchange’s (KSE) benchmark 100-share index dropped 0.49 per cent or 66.58 points to end at the 13,600.60 point level.

In the latest twist, the Anti Narcotics Force (ANF) on Thursday issued a non-bailable warrant for the arrest of Pakistan Peoples Party’s candidate for the prime minister’s post, Makhdoom Shahabuddin for his involvement in the ephedrine case.

Furthermore, subdued sentiments in regional stocks markets and international commodity markets also dampened local investor confidence, said Topline Securities Senior Equity Dealer Mohammad Rizwan.

Trade volumes gained to 57 million shares compared with Wednesday’s five-month low of 47 million shares.

Oil stocks led the fall with Pakistan State Oil, Pakistan Petroleum and Pakistan Oilfields declining by 0.2%, 0.1% and 0.9%, respectively.

The fertiliser sector witnessed a dismal session following news that the government has diverted 300 million cubic feet of gas from Fauji Fertilizer Company to Karachi Electric Supply Company. Foreign institutional investors were net sellers of Rs164 million worth of shares, according to data maintained by the National Clearing Company of Pakistan Limited.

Shares of 348 companies were traded on Thursday. At the end of the day 93 stocks closed higher, 156 declined while 99 remained unchanged. The value of shares traded during the day was Rs2.2 billion.

Pakistan Telecommunication was the volume leader with 5.1 million shares declining Rs0.68 to finish at Rs14. The decline in stock value is primarily due to show-cause issued to the telecom giant by Competition Commission of Pakistan for abusing its dominant position in the market while providing broadband services.

It was followed by Hub Power Company with 4.0 million shares firming Rs0.13 to close at Rs41.93 and DG Khan Cement with 3.6 million shares declining Rs0.95 to close at Rs39.08.

Published in The Express Tribune, June 22nd, 2012.

State-owned enterprises discuss way forward

Regula­tors critic­ise corpor­ations for lack of transp­arency. ” Merit-based appointment of CEOs and boards of directors should be the key priority,” Former State Bank of Pakistan Governor Dr Shamshad Akhtar. PHOTO: AFP

KARACHI: It is not every day that the chief regulator of the corporate sector sits across the table with representatives of state-owned enterprises (SOEs) in the presence of other stakeholders and the media to discuss a proposed legislation on corporate governance for public-sector companies.

While SOEs came under fire for their lack of transparency during a roundtable session arranged by the Centre for International Private Enterprises (CIPE) in collaboration with the Ministry of Finance and the Securities and Exchange Commission of Pakistan (SECP) on Thursday, a majority of the SOE representatives present on the occasion seemed to approve of the overall thrust of the Public Sector Companies (Corporate Governance) Regulations 2012 draft.

After getting copies of the 21-page draft of the proposed legislation, the audience listened to the presentations of former State Bank of Pakistan Governor Dr Shamshad Akhtar and former president of the Institute of Chartered Accountants of Pakistan (ICAP), Syed Asad Ali Shah, on the state of Pakistan’s public sector companies in comparison with those operating in other countries.

In her presentation, Akhtar was highly critical of SOEs for a variety of reasons, particularly the weak capacities of states to run businesses.

According to a 2011 survey of the Organisation for Economic Co-operation and Development (OECD), the combined value of SOEs companies was close to $2 trillion, she said, adding that the public sector was still dominant because the world’s largest oil and gas companies, port operators, airlines, mining and insurance companies are controlled by the government.

“SOEs make up for 80% of the value of stock exchanges in China, 62% in Russia and 48% in Brazil. They accounted for one-third of foreign direct investments during the 2000s,” she said.

Akhtar also called for the removal of entry and exit barriers in the sectors of the economy that had traditionally been the domain of public-sector enterprises.

She said these companies were awarded privileged access to land, networks and distribution rights; exemptions from regulations and laws, such as competition and bankruptcy laws; exemptions from licensing; access to capital through development budgets, sovereign guarantees, export credit and preferential trading arrangements besides explicit and implicit subsidies.

“However, these privileges nurtured management complacency and inefficiencies and hamper operations of private companies.”

Currently, about 23 SOEs are listed on the Karachi Stock Exchange (KSE), but they constitute one-third of market capitalisation, according to her presentation.

She made many suggestions to turn around Pakistan’s SOEs, but put special emphasis on the merit-based appointment of CEOs and boards of directors and defining their respective roles and responsibilities.

The representatives of SOEs present on the occasion suggested a number of changes to the draft. One participant raised the question as to why the proposed legislation did not take into account the SOE-driven model adopted by China even when western economies also seemed to inclined towards nationalisation after the 2008 financial crisis.

Published in The Express Tribune, June 22nd, 2012.

Suzlon Group to sell China unit for $60mn

2345MUMBAI: Suzlon Group, which controls wind-turbine maker Suzlon Energy, said on Saturday it will sell stake in its China manufacturing unit to China Power New Energy Development Co. Ltd. for 3.4 billion rupees ($60 million).

Suzlon, the world’s fifth-largest wind turbine maker by cumulative installed capacity, will sell the unit with the majority of its assets and liabilities, it said in a statement.

“This is also in line with our previously announced strategy to dispose of non-critical group assets to reduce our long-term debt,” Suzlon Chairman Tulsi Tanti said in a statement.

“We are realigning our strategy to the China market with an agile, asset-light business model to achieve the high growth and margins but with lower investments,” he said.

Suzlon Group established its marketing operations in China in 2005, followed by a wholly-owned manufacturing facility in 2006. The company has till date installed over 900 megawatts of wind capacity in China.

IKEA to invest $1.9bn to open stores in India

ikea 400NEW DELHI: Swedish furniture giant IKEA plans to invest 1.5 billion euros ($1.9 billion) to open 25 retail stores in India, an Indian government statement said Friday.

An initial investment of 600 million euros will be followed by a further injection of 900 million euros, the statement said, without providing a timeframe.

IKEA has no existing stores in India, which at the beginning of this year allowed foreign companies to own 100 percent of “single-brand” retail ventures, up from an earlier cap of 51 percent.

The planned investment in India was confirmed during a meeting Thursday between IKEA CEO Mikael Ohlsson and Indian Trade Minister Anand Sharma in Saint Petersburg in Russia, the government statement said.

It comes at a time when foreign corporate confidence in Asia’s third largest economy is low, due to slowing growth, new restrictive tax policies and a perception of government paralysis in enacting further reforms.

Several press reports put the investment timeframe at 15 to 20 years, with the Press Trust of India saying 10 stores would be opened in the first stage, followed by another 15 outlets.

IKEA had reportedly been worried about sourcing norms in India which require foreign retail firms to source at least 30 percent of their products from local companies.

Copyright AFP (Agence France-Presse), 2012

GM adds 800 jobs at Texas truck plant

 CHICAGO: General Motors will hire about 800 people in order to add a third shift to its Arlington, Texas plant as it forecasts solid demand for large sport utility vehicles, the automaker said Friday.

“Based on economic uncertainty and gas price volatility, we took a prudent approach by relying extensively on overtime over the past few years,” Larry Zahner, manufacturing manager for GM North America, said in a statement.

“We see this segment stabilizing enough to add a third shift, reducing the cost and personal demand of overtime and providing us flexibility for possible increased demand as we introduce new trucks.”

The plant — which produces the Chevrolet Tahoe and Suburban, the GMC Yukon and the Cadillac Escalade — built nearly 270,000 vehicles last year with 2,500 hourly and salaried employees.

The third shift is expected to begin early next year, when production will be limited by the installation of new tooling and equipment.

GM has invested more than $7.1 billion in its US operations since it emerged from a government-backed bankruptcy in 2009.

Copyright AFP (Agence France-Presse), 2012

PIA needs a year to turn around, says chairman

Airlin­e to lease six aircra­ft, indust­ry needs safety expert­s. “PIA has taken 20 to 25 years to reach this position where it is today, so it will take some time to recover what it has lost in the last few decades,” says PIA Chairman Air Chief Marshal (R) Rao Qamar Suleman. PHOTO: REUTERS

KARACHI: Pakistan International Airlines (PIA) Chairman Air Chief Marshal (R) Rao Qamar Suleman has termed the carrier a big organisation where efforts to achieve a turnaround in fortunes will take at least one year to show results.

“I do not have a magic wand to turn around a big organisation like PIA in a few months. Our efforts will give you concrete results in at least one year,” said Suleman, who joined PIA around two months ago.

He was talking to the media at a seminar on ‘Challenges for Aviation Safety in Pakistan and South Asia’ here on Thursday. The PIA-sponsored seminar was attended by former employees of the Civil Aviation Authority (CAA), PIA and leading experts of the aviation industry.

“PIA has taken 20 to 25 years to reach this position where it is today, so it will take some time to recover what it has lost in the last few decades,” he said in response to a question. “PIA is not a hopeless case and it will bounce back due to its strong and trained workforce.”

Discussing the airline’s fleet improvement programme, Suleman said PIA would take on lease six or seven aircraft and the process would be completed in three to four months.

“Pakistan needs safety experts in the aviation industry as aviation safety is a relatively new field of study,” he said while referring to the plane crashes in the past two years.

He stressed that PIA would continue to support all efforts to ensure aviation safety and put special emphasis on training of human resource to enhance awareness of safety issues.

In his speech, Pakistan Airline Pilots Association (Palpa) President Captain Suhail Baloch asked the government to establish an independent transportation safety board having representatives from PIA associations like Palpa, SAEP and ATC Guild.

Other experts, while sharing their thoughts on the occasion, underlined the need for focusing on aviation safety in Pakistan, which has faced major accidents in a short span of two years.

They said Pakistan had a culture of secrecy that discouraged publishing of detailed reports on aviation accidents. They specifically pointed to Airblue (2010) and Bhoja Air (2012) aircraft crashes and asked the government to make public all investigation reports on the two incidents.

Endorsing public perception that investigations into aviation incidents are weak and delayed, they said most of the time insecurities, secrecy, political interference and vested interests hindered investigations in many countries and Pakistan was no different from them.

Published in The Express Tribune, June 22nd, 2012.

FBR waives penalties against custom duties

Fines ignore­d to attain the grand tax collec­tion target for curren­t fiscal year. SEEKING TARGET: Rs1.42t is the tax collection from July 2011 to April 2012 by FBR.

ISLAMABAD: 

The country’s tax authority, Federal Board of Revenue (FBR) on Friday announced waiver of penalties against custom duties in order to achieve its over-ambitious target of tax collection set for the current financial year 2011-12.

According to the official statement released, the FBR said that in order to ensure deposit of the outstanding principal amount of customs duty by June 30, 2012, the federal government has remitted whole amount of penalties, fines and surcharges under the section 202A, payable by a person against whom an amount of customs-duty is outstanding on account of any audit observation, audit report, demand notice or any adjudication order or who has failed to pay any amount of customs duty or claimed inadmissible refund or drawback of taxes due to any reason.

“It has been notified that in case where refund becomes due to any persons in consequence of a decision or judgment at a later stage after the issuance of this notification, the customs duty deposited by that person under this notification shall be refunded to him,” said the press release.

The move is one of measures the tax authority is pursuing to achieve this year’s revenue target of Rs1.952 trillion. From July 2011 to April 2012, the FBR collected Rs1.42 trillion in taxes and has to bag another Rs528 billion in the remaining two months to reach its target. Unofficially, the target has been revised to Rs1.928 trillion, according to an FBR official.

Hub Power Company (Hubco) last month availed a similar tax benefit scheme launched by FBR and paid its liability amounting to Rs1.65 billion, showing the strategy utilised by FBR can work.

Consequently, Hubco was exempted from default surcharge and penalty for non-payment.

As per the scheme, exemption was granted on the entire surcharge and penalty for non-payment, if the defaulter pays actual tax dues by May 31, 2012.

Published In The Express Tribune, June 23rd, 2012.

ECB eases collateral rules for banks

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ecbFRANKFURT: The European Central Bank said Friday it is easing its collateral criteria, in particular by accepting mortgage loans in exchange for central bank funds in a move that should help Spanish banks.

The ECB said in a statement that its policy-setting governing council decided at a meeting on Wednesday “on additional measures to improve the access of the banking sector to (its) operations in order to further support the provision of credit to households and non-financial corporations.”

Copyright AFP (Agence France-Presse), 2012

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USAID to help boost marble sector

Agency takes initia­tive to make the indust­ry global­ly compet­itive. MEAGRE: 0.1% is Pakistan’s contribution in the $62 billion global marble and granite exports during the year 2009-10 standing at $620,000.

ISLAMABAD: 

The US Agency for International Development (USAID) has planned to work closely with the private and government sectors to help design and implement initiatives that will make the local marble sector globally competitive, through its Firms project which seeks to develop a dynamic and internationally competitive business sector in Pakistan.

In this regard, the USAID’s Firms project on Friday gathered stakeholders across the country for a joint consultative session. The session was aimed at identifying industries’ bottlenecks and designing a strategic action plan based on the demand driven initiatives to promote the sector. Representatives from the Board of Investment (BOI), Trade Development Authority of Pakistan (TDAP), Pakistan Stone Development Company (PASDEC) and USAID discussed the issues faced by the sector. The consultative sessions will facilitate them in launching joint initiatives in collaboration with the USAID’s Firms project, which will translate into improvements within the industry, increased exports and international competitiveness through substantive value addition.

Speaking on the occasion, USAID Regional Director Fernando Cossich said that through consultations with key stakeholders, his organisation will facilitate the private sector in achieving further growth in the marble and granite industry. Highlighting the potential impact of improvement in the marble sector, USAID Economic Growth and Agriculture Office Director William Patterson said that through analysing the current status of the marble value chain and strategic interventions, USAID seeks to partner with small and medium enterprises and other organisations to decrease wastage, increase value addition and create jobs.

It may be recalled that Pakistan is one of the main marble producing countries of the world with over 70 types of marble mined locally.   Initial estimates indicate that over 300 billion tons of marble reserves exist across the country. Globally, marble and granite exports during the year 2009-10 were $62 billion of which Pakistan’s contribution is a meagre 0.096%.

Published In The Express Tribune, June 23rd, 2012.

Trans Mountain pipeline overbooked for July

Kinder-MorganCALGARY: Kinder Morgan Energy Partners said on Friday that shippers on its chronically overbooked Trans Mountain oil pipeline system between Alberta and the Pacific Coast will be limited to just 27 percent of their hoped-for volumes in July.

Kinder Morgan said the system, which carries Canadian crude to the Vancouver area and Washington state refineries, is overnominated by 73 percent. Land-based destinations are overbooked by 75 percent, the company said.

Increasing numbers of shippers are seeking to move oil to the Vancouver harbor, where it can be shipped to Asia and other markets offering richer returns than more traditional markets for Canadian crude such as the US Midwest.

Nominations have exceeded capacity since late 2010.

The company has proposed a $4.1 billion expansion of the system that would more than double capacity to 750,000 barrels a day. It would be in service around 2017.

For July, Kinder Morgan said total nominations for the system are 280,389 barrels a day for the Trans Mountain pipeline, 119,646 bpd for the Puget Sound line and 77,458 bpd for the Westridge Dock.

Appeal to consumers: ‘Save electricity until shortage is overcome’

People can save many megawa­tts by switch­ing off one bulb. Three million consumers of Fesco could save 300 megawatts by switching off only one bulb of 100 watts. PHOTO: FILE

FAISALABAD: 

Faisalabad Electric Supply Company (Fesco) Chief Executive Officer Engineer Iftikhar Ahmed has asked consumers to use electricity conscientiously in hot summer days until its shortage is overcome through the construction of dams and power houses.

“Electricity has become an integral requirement of our everyday life, but a sizeable number of power units are wasted through ‘unwanted abuse of electricity’,” he said while speaking to the media here on Friday.

He suggested that three million consumers of Fesco could save 300 megawatts by switching off only one bulb of 100 watts, adding this electricity could be used in industries, business and agriculture which would spur economic activities in the country.

Besides the role of consumers in saving electricity, Ahmed said, Fesco was also playing its part and was taking steps to minimise unscheduled load-shedding. He expressed the hope that within a few days the consumers would see a positive improvement in electricity supply, but at the same time asked them that they would have to cooperate with the company.

Published In The Express Tribune, June 23rd, 2012.

Govt to introduce labelling of GM food

Move aimed at protec­ting consum­ers from health and safety risks. Labelling policies are based on the assumption that the industry is unable or unwilling to identify the risks inherent in their GMO products. LAYOUT & DESIGN: SAMRA AAMIR FAIZAN DAWOOD

ISLAMABAD: The government has decided to introduce labelling of genetically modified (GM) food to protect consumers from malpractices of producers and suppliers of bio-technology products.

According to documents, the labelling of GM food will also give choice to the consumers whether to consume GM or non-GM food.

International rules for labelling of GM food vary considerably. Some countries are in the process of discussing legislation, some have mandatory laws in place for several years and others such as Canada have opted for a voluntary regime.

Australia has taken a leading role by implementing stringent, science-based regulations and is among the first countries in the world to introduce labelling laws which are not about safety but respect the rights of consumers to make informed purchasing choices.

Labelling policies were first introduced by the European Union (EU) in 1997, but since then many other countries including all developed nations have adopted some type of labelling policy for GM food.

Different options for GM food labelling are being considered by stakeholders in Pakistan, according to a concept paper relating to ‘Genetically Modified Organisms (GMO) and Food Labelling.’

Commercial release of any GM material requires approval of the National Bio-safety Committee. The commercial release depends on environmental safety testing along with food safety studies.

“The genetically modified BT cotton has been commercially released in the country and some proper and standard labelling is required to protect the growers, who are interested in growing BT cotton or otherwise,” reveals the concept paper.

Labelling was also necessary to protect the consumers from malpractices of producers and suppliers as there were evidences of mixing GM seed with non-GM seed, it said.

In the concept paper, two options for labelling GM food have been discussed, whether it should be mandatory or voluntary. Mandatory labelling will impose excessive costs on the producers of GM food, which will threaten research and commercialisation of goods. In contrast, voluntary labelling will limit producer costs and will be commercially and socially optimal.

Labelling policies are based on the assumption that the industry is unable or unwilling to identify the risks inherent in their GMO products. Therefore, the government intervenes in the market with mandatory labelling policies to ensure consumer protection from potential health and safety risks associated with consumption of GM food.

“Mandatory labelling may be a clear threat to the continued development of bio-technology products and processes. Nevertheless, in the absence of industry action, the government may be pushed by consumers and lobby groups to impose mandatory labelling to ensure firms are held accountable for product-specific uncertainties,” concludes the concept paper.

Published in The Express Tribune, June 20th, 2012.

Pakistan termed good investment destination

UK busine­ssmen wooed in semina­r on busine­ss prospe­cts in Birmin­gham. LCCI president said Pakistan being situated in the heart of Asia provided a gateway for businesses looking to expand into the Middle East and South Asian markets. PHOTO: AFP

LAHORE: Pakistan is a good destination for investment as it offers an excellent platform to UK businessmen for being a gateway to landlocked Central Asian states and the Middle East in supply of goods and services.

These views were expressed by Lahore Chamber of Commerce and Industry (LCCI) President Irfan Qaiser Sheikh while speaking at a seminar on “Business prospects in Pakistan”, arranged by the Birmingham Chamber of Commerce and Industry on Tuesday.

The LCCI president, who was leading a 37-strong business delegation, said Pakistan being situated in the heart of Asia provided a gateway for businesses looking to expand into the Middle East and South Asian markets.

Sheikh said Pakistan was open for business and entrepreneurs and investors could play a major role in its economic recovery as the government was committed to ensuring that the country became an attractive destination for them.

He underlined the need for collaboration among dynamic institutions for exploring business opportunities, which would go a long way in bringing much-needed positive turnaround in Pakistan’s economy.

The LCCI delegation expressed interest in collaboration and joint ventures with UK-based companies.

“We are here to play our due role to explore ways to promote investment and support businesses. We believe that our efforts will contribute to increasing trade between Pakistan and the UK to £2.5 billion by 2015, which is the vision of prime ministers of Pakistan and UK,” Sheikh said.

“Our economy is growing at around 3.5% to 4%, exports have increased to the record level of $25 billion, law and order situation has significantly improved and inflation has been checked,” Sheikh said.

Published in The Express Tribune, June 20th, 2012.

Bank of England votes narrowly against more QE stimulus

bank of englandLONDON: Bank of England policymakers voted 5-4 against pumping Britain’s recession-hit economy with more new cash under its Quantitative Easing (QE) programme, minutes of a meeting showed on Wednesday.

BoE Governor Mervyn King and three other central bank members voted earlier in June for more stimulus — up to a total of £50 billion (62 billion euros, $79 billion) — but they were out-numbered by those wishing to sit tight.

All nine members of the Monetary Policy Committee (MPC) meanwhile voted to leave the BoE’s main interest rate at record-low 0.50 percent, where it has stood for more than three years.

“Regarding Bank Rate, the Committee voted unanimously in favour of the proposition” to keep the level at 0.50 percent after ruling out a cut, the minutes said.

“Regarding the stock of asset purchases (QE), five members of the Committee… voted in favour” of the status quo.

“While acknowledging that further stimulus was likely to become warranted at some point, most members noted that there were several key events occurring over the coming weeks that could have a material bearing on the situation in the euro area and that there was merit in waiting to see how matters evolved there,” the minutes added.

The news comes amid hopes of fresh stimulus measures from the US Federal Reserve. Many on Wall Street were betting that the Fed would on Wednesday unveil plans to pump more cash into the market to boost the world’s biggest economy.

Britain’s central bank has injected £325 billion of new money into the economy since early 2009 — but analysts argue that more is needed because the country is back in recession.

“June’s MPC minutes left an extension of quantitative easing within the next month or two looking even more likely,” said Vicky Redwood, chief UK economist at the Capital Economics research group.

Under QE, the bank creates new cash to purchase assets such as government and corporate bonds with the aim of boosting lending and economic output.

The BoE said that King, along with two other MPC members voted to pump out an additional £50 billion of stimulus, while one member — Paul Fisher — suggested an increase of £25 billion.

Despite QE, Britain’s main banks have been reluctant to lend to businesses and individuals as they seek to repair their balance sheets, triggering the BoE to last week announce separate stimulus measures. 

The Bank of England on Wednesday said it had lent banks £5.0 billion in the first use of a facility to shield Britain’s financial system from the eurozone debt crisis.

The BoE said it allotted the full amount on offer for six-month loans with an interest rate of 0.75 percent. Wednesday’s auction was the first for the BoE’s Extended Collateral Term Repo Facility (ECTR) which King activated last week.

The BoE, along with the British government, also intends to shortly launch a “funding for lending” scheme — lasting several years — that would would offer cheap loans to banks in exchange for a wide range of collateral and on the condition that they increased lending to small businesses.

Reports said that about £80 billion would be made available under the scheme, which was also announced last week.

Britain escaped a deep downturn in late 2009 but fell back into recession in the final quarter of 2011 on the back of state austerity measures and the eurozone debt crisis.

Britain’s Conservative-Liberal Democrat coalition administration has slashed public spending and hiked taxes since it won power in 2010, after inheriting a record deficit from the previous Labour government.

Official data published on Wednesday showed the number of Britons claiming jobless benefits rose in May, ending two months of declines. But it also showed that the total of people in employment has hit a three-year high.

The BoE’s main task is meanwhile to use monetary policy as a tool to keep annual inflation close to a government-set target of 2.0 percent.

Official data published on Tuesday showed British 12-month inflation fell to a rate of 2.8 percent in May — the lowest level for more than two years.

Copyright AFP (Agence France-Presse), 2012

Force field: PAC slams audit dept for protecting the corrupt

Audit object­ions involv­ing Rs295m were not brough­t to body’s knowle­dge. Audit objections involving Rs295m were not brought to body’s knowledge. ILLUSTRATION: JAMAL KHURSHID

ISLAMABAD: 

Once praised for its untiring work, the audit department came under criticism, for the first time, here on Tuesday when the Public Accounts Committee found that the department was working hand in glove with corrupt elements.

In a meeting convened to discuss financial irregularities in the Ministry of Housing and Works, PAC Chairman Nadeem Afzal Chan noted that the audit department quietly tabled four audit objections involving Rs295.5 million for settlement without bringing these to the knowledge of the PAC.

In terms of the audit department, PAC discusses only those audit objections which are highlighted in the reports while there are numerous objections which the audit department sends for settlement without any discussion. However, PAC has the authority to even discuss objections which are recommended for settlement. But it usually does not take up such objections for discussion.

“How the AGP (Auditor General of Pakistan) can recommend objections for settlement despite knowing that there were losses to the exchequer,” asked Chan while expressing displeasure.

PAC directed Housing Secretary Kamran Lashari to initiate an inquiry and fix responsibility on those who caused losses to the exchequer. It also gave directives to Additional Auditor General Abbas Naki to proceed against those officials who recommended objections for settlement.

Since Akhtar Buland Rana has been appointed as the Auditor General of Pakistan, the performance of the audit department has been questioned. Rana avoids PAC meetings and often sends his deputy Naki to participate in the proceedings.

Rana is currently abroad and will return on June 29, said Deputy Auditor General Tahir Saeed.

According to the details, Pakistan Housing Authority suffered a loss of Rs140.9 million after making changes to the designs of housing schemes, approved during the second tenure of Mian Nawaz Sharif from 1997 to 1999. PAC also asked why the projects were started without approval of PC-I of the schemes.

The audit department also quietly sought settlement of another case relating to Prime Minister’s Housing Scheme, launched by former prime minister Mian Nawaz Sharif in 1999, and involving Rs103.2 million.

Despite clear violation of public procurement rules that led to a loss of Rs52.4 million in two different cases in 2005, the audit department did not highlight the objections for discussions. “It seems that the audit department has special sympathy for the housing ministry,” observed the PAC chairman.

PAC also gave June 25 deadline to the housing ministry for submitting details of those bureaucrats, judges and generals who got two plots at the expense of taxpayers. It also asked the housing ministry to produce the file carrying the order to give two plots to the bureaucrats.

“After going through the record, PAC will give its decision on allocating two plots each to the officials,” said Chan.

Published in The Express Tribune, June 20th, 2012.

US bonds firm as market awaits Fed decision

 TOKYO: Treasury bonds firmed slightly in Asia on Wednesday as investors awaited the conclusion of the US Federal Reserve’s latest policy meeting, at which many expect further stimulus steps.

The Fed is expected to extend the “Operation Twist” stimulus programme, which expires this month, under which it buys longer-term securities funded by the sale of short-term ones, with the goal of suppressing long-term borrowing costs.

Some speculate that central bank could also expand the “Operation Twist” programme by extending the average maturity of its portfolio.

The Fed is due to release a statement at 1630 GMT.

Fears about Europe’s debt crisis abated slightly on Tuesday, as Spanish 10-year yields fell after a short-term debt sale showed that country was still able to access international markets to fund its debt.

Further tests will come on Thursday, when Spain is due to sell up to 2 billion euros of two-, three- and five-year bonds.

“We have to see what the Fed does, but we also have to see how Spain’s debt sales later this week proceed. If Spanish yields rise again, we could see Treasury yields head down,” said a fixed-income fund manager at a Japanese asset management firm.

Investors’ improved risk appetite pressured safe-haven German Bunds, and the gap between 10-year Bunds and higher-yielding US Treasuries narrowed to 9 bps from 17 bps late on Monday.

The yield on 10-year notes edged down to 1.61 percent from 1.62 percent in late US trade, but were well above 1.56 percent in Tokyo on Tuesday.

The yields on 30-year bonds stood at 2.72 percent, down slightly from 2.73 percent in late US trade, but up from 2.65 percent in Tokyo trade on Tuesday.

On Tuesday, the Fed bought $1.72 billion in debt due between 2022 and 2031 as part of the “Operation Twist” programme.

Polish bonds hit highs before auction

polishWARSAW: Central European currencies clung to gains from the previous session on Wednesday, while Polish 10-year bond yields hit their lowest in more than 5 years, supported by hopes the Federal Reserve will provide more stimulus for the US economy.

The gains in bonds bode well for a sale of 2.0-4.0 billion zlotys of 5-year debt that may also give the zloty a boost thanks to demand from foreign investors, dealers said. Results of the tender are due at 1000 GMT.

“Polish bonds are immune to both rising risk premiums in euro zone peripheral bonds as well as the latest sell-off in the German market,” Bank Pekao said in a note.

“We expect solid demand from all major groups of investors (at the auction).”

The yields on 10-year paper fell as low as 5.14 percent in morning trade, and are down more than 70 basis points so far this year on the back of an improving fiscal situation of the European Union’s largest eastern economy.

With public debt levels that are half or less than those of Greece or Italy and an economy that has grown consistently in recent years when most others were contracting, Polish yields as a result are significantly lower than those of the euro zone’s debt-laden southern states.

But some dealers warn the rally may soon begin to flag.

“The market is pricing in nearly three interest rate cuts in Poland over the next two years, which is unjustified in my opinion. Moreover, the finance ministry is likely to pre-finance next year’s borrowing needs at these yield levels,” said a Warsaw-based fixed income trader.

He argued that a new bout of risk aversion due to the euro zone’s still-deepening crisis could also trigger losses for emerging debt markets like Poland.

“There has been no structural solution to the euro zone debt problems and Spain’s situation in likely to deteriorate further,” the trader said.

Spain lurched closer to becoming the largest euro zone country yet to be shut out of credit markets when it had to pay a euro era record price to sell short-term debt on Tuesday.

CURRENCIES EYE FED

The zloty traded flat at 4.245 to the euro by 0920 GMT, while the forint gained 0.1 percent to 287.11 versus the common currency. The Czech crown was also unchanged.

“The Fed decision is key today, but I think the auction could have a positive impact on the zloty. Recently we’ve seen investors globally buying into emerging market debt and selling euro zone bonds,” said a Warsaw-based currency trader.

The Hungarian forint hovered near six-week highs hit after gaining 1.4 percent on Tuesday on hopes that the country is getting close to starting talks about financial aid.

The Federal Reserve concludes a two-day policy meeting later on Wednesday, with expectations high that the US central bank will extend its bond-buying programme dubbed “Operation Twist”.

Dealers said an extension of the programme was already priced into the market and should have little impact, but a launch of an outright third round of quantitative easing (QE3) would further support the region’s currencies.

The Fed will announce its decision at 1630 GMT, with a news conference scheduled at 1815 GMT.

“If the Fed takes further action to stimulate the economy, then this will lift currencies in the region,” said Marcin Turkiewicz, the head of FX trading at BRE Bank.

“But I doubt that such a move will last for a long time given the ongoing crisis in the euro zone.”

The relatively robust Polish economy and hopes that Hungary’s government will eventually give in and agree an aid deal with the European Union and IMF have underpinned gains for the zloty and the forint in a rollercoaster year for emerging currencies.

Decisions in jeopardy after Gilani’s ouster

All decisi­ons taken by former Prime Minist­er Gilani from April 26 till date stand revoke­d. All decisions taken by former Prime Minister Yousaf Raza Gilani from April 26 till date stand revoked. These are likely to be protected through some executive orders or even in the detailed judgement of the SC but at this moment stand nullified. DESIGN: MAHA HAIDER

KARACHI: Budget speech: The presentation and subsequent approval of the fiscal budget given by Finance Minister Dr Abdul Hafeez Sheikh amid scuffles and protests in the backdrop stands nullified

 Sugar ban lifted: The ban on sugar export was lifted and allowed millers to export 200,000 tons

Petrol price revision: Petroleum product prices was decided to be reviewed on a fortnightly basis against the previous practice of once a month

Wheat purchase: The government took a populist but an economically unviable decision of procuring 7.7 million tons of wheat from farmers at Rs1,050 per 40 kilogrammes. The decision taken despite having 4.5 million tons in stocks

Byco’s tax holiday: A seven and a half year tax holiday was extended to Byco Oil Refinery Company

Tax waiver: All taxes and duties were exempted on materials to be imported or locally produced for the construction of the Iran-Pakistan gas pipeline including liquefied natural gas projects and other such ventures.

OGDC head appointment: The country’s largest explorer Oil and Gas Development Company was appointed new managing director Masood Siddiqui to replace Basharat A Mirza.

Published in The Express Tribune, June 20th, 2012.

Market watch: Bourse drops as investors adopts cautious approach

KSE’s benchm­ark 100-share index declin­es 71 points. KSE’s benchmark 100-share index declines 71 points.

KARACHI: The stock market took a dip on Tuesday as investors either stayed away or took a cautious approach as all eyes were on the Supreme Court proceedings.

The Karachi Stock Exchange’s (KSE) benchmark 100-share index declines 0.52 per cent or 71.14 points to end at the 13,682.99 point level.

Profit-taking started early in the session on rising current account deficit and then carried on as investors stayed cautious amid Supreme Court hearing, said Ahsan Mehanti of Arif Habib Corporation. The Supreme Court after trading hours declared Prime Minister Yousaf Raza Gilani ineligible to hold office. The court said that he had been ineligible since April 26.

Moreover, news regarding diversion of gas from captive power plant to Independent Power Producers created selling pressure in few stocks including cement and textile sector.

Lucky Cement and DG Khan Cement both declined 2.1% during the trading session.

Trade volumes were almost range-bound at 76 million shares compared with Monday’s tally of 80 million shares.

Further uncertainty on foreign flows also kept investor sidelined. Foreign institutional investors were buyers of Rs248 million and sellers of Rs214 million worth of shares, according to data maintained by the National Clearing Company of Pakistan Limited.

Shares of 334 companies were traded on Tuesday. At the end of the day 77 stocks closed higher, 180 declined while 77 remained unchanged. The value of shares traded during the day was Rs2.5 billion.

Second tier scripts dominated volumes. Jahangir Siddiqui and Company was the volume leader with 10.06 million shares gaining Rs0.06 to finish at Rs13.46. It was followed by Karachi Electric Supply Company with 7.08 million shares declining Rs0.31 to close at Rs2.76 and Nishat Chunian Power with 5.53 million shares falling Rs0.05 to close at Rs15.15.

Published in The Express Tribune, June 20th, 2012.

Swiss chemical process makes eco-friendly jeans

The techni­que can produc­e a pair of jeans using up to 92 percen­t less water, up to 30 percen­t less energy. The dying technology, known as Advanced Denim, was described at the 16th annual Green Chemistry & Engineering Conference.

WASHINGTON: It takes lots of water and chemicals to make a pair of jeans, and environmentally conscious clothing makers caught on years ago to the need to make more sustainable versions these popular pants.

But a Swiss chemical company said Tuesday its process for making eco-friendly jeans could streamline those efforts, saving enough water to cover the needs of 1.7 million people per year if one quarter of the world’s jean-makers started using it.

The dying technology, known as Advanced Denim, was described at the 16th annual Green Chemistry & Engineering Conference, sponsored by the American Chemical Society’s Green Chemistry Institute.

Miguel Sanchez, a textile engineer at Clariant, said the technique can produce a pair of jeans using up to 92 percent less water and up to 30 percent less energy than conventional denim manufacturing methods.

Traditional techniques may require as many as 15 dyeing vats and a host of chemicals, while Advanced Denim uses one vat and a new kind of liquid sulfur dye that requires just one sugar-based reducing agent, he said.

The process, if used on a wide scale, could save 2.5 billion gallons of water per year, prevent the release of 8.3 million cubic meters of wastewater and save up to 220 million kilowatt hours of electricity, he added.

“Advanced Denim wants to go beyond the technologies that are today considered standard for obtaining denim material,” Sanchez said.

Many other companies, including denim-giant Levi-Strauss, already make their own versions of eco-friendly jeans that use less water, are made with organic cotton, or use natural dyes. These products remain a niche market, however.

Jeans, particularly those that are distressed to appear as if they have been worn, have come under fire in recent years for wasting water, overusing harmful chemicals and using sandblasting that can endanger workers’ health.

Advance payments: Southern Electric claims no wrongdoing

Compan­y filed a Rs5b arbitr­ation claim agains­t WAPDA. Sepcol says it has filed an arbitration claim against Wapda for over Rs5 billion for various discriminations and violation of the PPA by Wapda. PHOTO: FILE

ISLAMABAD: Southern Electric Power Company Limited (Sepcol) in a statement issued here today has claimed that it faced discrimination soon after its inception which led to its delayed commercial operation date and a subsequent illegal termination notice which was withdrawn only after a forced compromise.

Sepcol says it has filed an arbitration claim against Wapda for over Rs5 billion for various discriminations and violation of the PPA by Wapda. This suit has been held in abeyance with the mutual consent of both parties and in the best interest of the nation as the country was, and remains, in dire need of electricity.

The statement further says that unable to meet its working capital requirements due to the aforesaid discrimination by Wapda, it was mutually agreed that all disputes/arbitration should be kept aside and Wpda would continue to provide the company with fuel payments in advance.

The statement says that the fuel advance is made against the Energy payments to be paid to the Company, hence the period of advance is only for 25 days. Every month the fuel advance is adjusted against the Energy invoice submitted by the Company for the electricity units generated and sold to Wapda during the month.

Published in The Express Tribune, June 20th, 2012.

French bank deposits rise in April: central bank

bank-of-francePARIS: Deposits at French commercial banks rose in April, Bank of France data showed on Wednesday, driven up by a need to meet tougher credit requirements and an increase in households deposits.

The central bank said that household deposits increased by 2.5 percent on a monthly basis in April and deposits to savings accounts liable to tax grew by 0.9 percent.

In aggregate, the bank said deposits rose by 0.6 percent in April from March to 1.129 trillion euros and up 7.6 percent from a year before.

For the past two years French banks have been working to meet tougher international credit rules, known as the Basel III agreement, created to avoid a repeat of the financial crisis of 2008.

In addition, the European Banking Authority has instructed large European banks to raise core cash reserves to a minimum of nine percent of total assets, which is higher than than banks need to meet under Basel III.

The overall French economy is sluggish and unemployment and uncertainty are high, factors which tend to encourage people to save rather than spend.

Copyright AFP (Agence France-Presse), 2012

China to provide $448m for Neelum Jhelum Dam

Progre­ss review­ed, projec­t likely to be comple­ted in 2016. The Neelum-Jhelum Hydropower Project is likely to be completed about two years ahead of schedule now that Tunnel Boring Machines (TBMs) have reached the site. PHOTO: FILE

LAHORE: Exim Bank of China will provide $448 million to help complete the strategically important Neelum Jhelum Hydropower Project, which will generate 969 megawatts of electricity.

In another significant development, the Central Development Working Party (CDWP) – a key project approval body – has given the go-ahead to revised PC-I of Neelum Jhelum project amounting to Rs274.882 billion.

These issues were discussed in a meeting presided over by Water and Power Development Authority (Wapda) Chairman Shakil Durrani, which reviewed progress on the project being constructed on Neelum River in Azad Jammu and Kashmir.

Briefing the meeting, Neelum Jhelum Project CEO said assembly of two German-made state-of-the-art tunnel boring machines was in progress at the site. First machine is expected to be operational in August while the second will start working in September.

“These machines will enhance the pace, thereby reducing construction period of the project by 18 months, resulting in an estimated benefit of Rs60 billion,” he said.

The meeting was told that construction work at all sites including the main dam, tunnels, underground power house and transformers was in full swing. Main and access tunnels spread over 23 km have so far been excavated. Overall progress on the project was 35%.

The project is being developed on priority to produce low-cost hydropower and win priority water rights over Neelum and Jhelum Rivers as India is constructing Kishan Ganga Dam upstream of Neelum Jhelum.

The project will contribute about 5.15 billion units of low-cost electricity per annum to the national grid. Annual benefits of the project have been calculated at about Rs45 billion and the project will pay back its cost in seven years.

Published in The Express Tribune, June 20th, 2012.

Bank of Ireland appoints new chairman

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bankDUBLIN: Bank of Ireland has appointed former Lloyds Banking Group banker Archie Kane as its chairman and key shareholder Wilbur Ross is also joining the board, the bank said on Wednesday.

Kane, who retired from Lloyds last year, replaces Pat Molloy, who oversaw the recapitalisation of the bank and the sale of a 35 percent stake to US investors led by Ross.

JGBs slip as investors await results of Fed meeting

jbg22TOKYO: Japanese government bonds edged down on Wednesday as some investors took profits after three days of gains, and as risk appetites perked up before the end of a US Federal Reserve meeting expected to produce some easing steps.

The US central bank is seen as likely to extend its “Operation Twist” stimulus programme, which expires this month, under which the central bank sells short-term securities to buy longer-term ones with the aim of driving down long-term borrowing costs. It could also expand the programme by extending the average maturity of its portfolio.

The Fed is due to release a statement at 1630 GMT, following a two-day meeting of its Open Market Committee.

“Everyone is waiting for the FOMC,” said Credit Suisse strategist Shinji Ebihara.

“They are expected to take some action, and not refrain from acting completely, but it remains to be seen if what they do will disappoint markets,” he said.

The 10-year JGB yield added 1 basis point to 0.820 percent after edging down half a basis point to 0.805 percent in the morning session.

The 10-year JGB futures contract for September ended down 0.15 point at 143.74, pressured by a strong performance in equities markets.

LIFE INSURERS NET SELLERS IN MAY

Japanese life insurers last month were net sellers of JGBS overall to the tune of 176.5 billion yen, excluding short-term bills, monthly data from the Japan Securities Dealers’ Association released on Wednesday showed.

That marked their first month of net selling since November 2008, and their selling of medium-term bonds was the largest to date, strategists said, though insurers were still net buyers in the superlong sector.

“This highlights that life insurers were not willing to chase yields lower, which is why we still see a relatively steep curve even when the bond market rallies,” said Le Ngoc Nhan, a JGB strategist at Morgan Stanley.

The yield spread between 10-year and 30-year bonds was at 1.035 points, not far from 1.040 points in the previous session, which was its widest since November 2010.

The 5-year yield added half a basis point to 0.220 percent, while the 20-year yield rose 2 basis points to 1.660 percent and the 30-year yield was up 1.5 basis points at 1.855 percent.

Underpinning JGB market sentiment, Moody’s Investors Service said on Wednesday that an agreement by the three largest political parties to raise the consumption tax is a positive factor for the country’s sovereign debt rating, as it marks one of the first serious attempts in many years to tackle Japan’s bulging deficit.

“Agreement on the tax deal had no big short-term impact on the JGB market, but it did remove a longer-term worry from many people’s minds,” said a fixed-income fund manager at a Japanese asset management firm.

Minutes of the Bank of Japan’s May 22-23 meeting, released on Wednesday, showed that a few board members want the central bank to be ready to act if risks to Japan’s economy materialise as a result of events in Europe.

Development banks earmark $175bn for sustainable transport

Asian-development-bankRIO DE JANEIRO: Eight multilateral development banks announced at the Rio+20 summit here Wednesday that they would set aside $175 billion to finance sustainable transport systems over the next decade.

The pledge was made jointly by the World Bank, Asian Development Bank, African Development Bank, Inter-American Development Bank, CAF-Development Bank of Latin America, European Bank for Reconstruction and Development, European Investment Bank and Islamic Development Bank.

Transport is one of the fastest-growing source of greenhouse gases, driven especially by urban growth in giant emerging economies.

Around one billion people are likely to move to cities over the next 20 years, which means traffic congestion, air pollution and road accidents will become major urban challenges.

The voluntary commitments were made at the start of a three-day summit in Rio de Janeiro to cap the UN Conference on Sustainable Development.

The gathering marks 20 years since the 1992 Earth Summit placed climate change, desertification and species loss on the world’s political agenda.

Copyright AFP (Agence France-Presse), 2012

Key Euribor rate flat as markets mull chance of rate cut

 FRANKFURT: Key euro zone bank-to-bank lending rates were unchanged on Wednesday as expectations that the European Central Bank could cut its deposit rate to zero offset rising sovereign debt crisis tensions.

Money market rates have more than halved since the ECB flooded money markets with over a trillion euros of ultra-cheap three-year funding in twin operations in December and February, but the slide has levelled off in recent weeks as crisis tensions have risen and overnight rates have approached the ECB’s 0.25 percent deposit rate.

With markets awash with low-cost cash, the deposit rate acts as a floor for the money market as banks will only lend on open markets if borrowers are prepared to pay more than the ECB.

Three-month Euribor rates, traditionally the main gauge of bank-to-bank lending, remained at 0.657 percent.

Six-month Euribor rates also stayed level, at 0.930 percent. Shorter-term one week rates, which have hovered near all-time lows, inched up to 0.322 percent from 0.321 percent. Overnight rates dipped to 0.333 percent from 0.334 percent.

Dollar-priced three-month bank-to-bank Euribor lending rates  fell to 0.948 percent from 0.963 percent and overnight rates decreased to 0.329 percent from 0.333 percent.

The euro-denominated Euribor rates remained at low levels after fresh hints from ECB policymakers that the bank’s deposit rate could be cut, a move that would open up room for a further drop in market rates.

“I could imagine a zero deposit rate,” Slovak ECB policymaker Jozef Makuch said last week, echoing earlier comments from Austria’s Ewald Nowotny.

ECB President Mario Draghi said on Friday the bloc’s economy faced serious risks and no inflation threat.

Earlier this month, the ECB extended its promise to supply banks with unlimited funding until the middle of January next year and did not rule out supplying further longer-term cash if the benefit of its twin three-year LTROs proved not to have been enough.

The sharp fall in euro-priced interbank rates over the last half-year has brought benchmark euro-priced three-month rates to within touching distance of a record low of 0.634 percent hit in early 2010.

High excess liquidity in the banking system – now at 773 billion euros according to Reuters calculations – has led to heavy use of the ECB’s overnight deposit facility, where banks parked 764 billion euros overnight. Before the financial crisis, the amounts were minimal.

Euribor rates are fixed daily by the Banking Federation of the European Union (FBE) shortly after 0900 GMT.

Financing the farmers: Loans to agricultural sector surge by 13.11%

Disbur­sement­s amount to Rs255 billio­n from July 2011 to May 2012. MAJOR SHARE: Rs132b is the amount disbursed by five major commercial banks in loans to the farmers. PHOTO: FILE

KARACHI: Agricultural credit disbursement by banks surged by 13.11% on year-on-year basis to Rs255.027 billion in the first eleven months of the fiscal year 2011-12. In absolute terms, disbursement of credit to the agriculture sector increased by over Rs29.566 billion in July-May, 2012 when compared with total disbursement of Rs225.461 billion in the same period of the last fiscal year.

Overall credit disbursement by five major commercial banks including Allied Bank Limited, Habib Bank Limited, Muslim Commercial Bank Limited, National Bank of Pakistan and United Bank Limited stood at Rs132.385 billion in July-May, 2012 compared with Rs123.100 billion in July-May, 2011 depicting an increase of Rs9.285 billion or 7.54%.

Zarai Taraqiati Bank Limited, the largest specialised bank, disbursed a total of Rs54.174 billion in July- May, 2012, down by 0.34% when compared with Rs54.359 billion disbursed in the same period of the last fiscal year. Punjab Provincial Co-operative Bank Limited disbursed Rs6.826 billion in July-May, 2012 up 38.69% when compared with Rs4.921 billion disbursement in the same period of the last fiscal year.

Fourteen domestic private banks also loaned a combined amount of Rs51.678 billion in July-May, 2012 up by 19.96% compared with Rs43.081 billion disbursed in the same period of the last fiscal year.

Five Microfinance banks including Khushhali Bank, NRSP Microfinance Bank, The First Microfinance Bank, Pak Oman Microfinance Bank and Tameer Microfinance Bank. disbursed a total of Rs9.963 billion in July-May, 2012 period.

It may be pointed out that the State Bank of Pakistan for the first time has given an indicative target of Rs12.20 billion to microfinance banks for disbursement of credit to agriculture sector during the current fiscal year.

Published in The Express Tribune, June 20th, 2012.

The nightmare of budget invalidation deemed unlikely

Court, legal preced­ent seen as too pragma­tic to risk the fate of the econom­y over one case. Court, legal precedent seen as too pragmatic to risk the fate of the economy over one case. PHOTO: FILE

Nobody expects the court would be so reckless as to invalidate the passage of the federal budget. Because if they are, they will unleash an economic nightmare.

Consider the facts: Article 74 of the Constitution requires the approval of the federal Cabinet, led by the prime minister, for a budget to be presented before parliament. This was done on the morning of June 1. That evening, Finance Minister Abdul Hafeez Shaikh formally presented the budget in the National Assembly.

Now the Supreme Court is saying that Prime Minister Yousaf Raza Gilani was disqualified from holding office on April 26. If that is true, and if the court decides that the prime minister’s decision to approve the budget is not valid, then that means the budget was not validly presented to parliament and hence its passage in the National Assembly is also void.

Consider for a moment what would happen if that were the case. The government then has 11 days till June 30 to elect a new prime minister, approve the budget in the Cabinet again, present it to the National Assembly, send it to the Senate for recommendations, and then pass it again in the National Assembly. Given the pace at which our government moves, that seems a tall order.

So what happens if the budget is not approved in time? The government’s expenses for everything starting July 1 will not have been approved and thus will not be paid. The direct personal impact will be on the 1.4 million government employees, who will not get their salaries. Ironically, this includes Chief Justice Iftikhar Muhammad Chaudhry himself. Millions more pensioners will also not get paid.

But the much larger problem is government debt. The government has approximately Rs1 trillion in short-term debt that needs to be rolled over next quarter, a significant percentage of which will need to be done next month. In addition, interest payments on the remaining government debt need to made.

The overwhelming bulk of this debt is held by the banking system. The banks have already dramatically scaled back lending to the private sector in the aftermath of the 2008 financial crisis. If they can now no longer rely on the government making interest payments on its debt on time, that is likely to create a wave of uncertainty that may well cause the banking system to freeze.

While it is likely that ATMs will continue working and ordinary cash transactions with banks will still take place, lending is likely to dry up. Businesses will find it extremely difficult, if not impossible, to finance their day-to-day operations, let alone expansion plans. In essence, we may return to what happened in late 2008, when the banking system froze and the rupee fell by over 29% as people moved their money out of the country. And Pakistan’s economy today is much more fragile than it had been in the run-up to that crisis.

Most analysts believe that the Supreme Court is highly unlikely to invalidate the budget. “The day-to-day activities of the government will always be validated by the Supreme Court if it is challenged because they want order to prevail in the country. Any activity that is ordinarily legal will likely to be automatically upheld,” said Zain Sheikh, a constitutional lawyer based out of Karachi.

Market analysts concur with this judgement. “I don’t think the nightmare scenario will play out. I don’t think the Supreme Court will unleash that level of uncertainty,” said Imtiaz Gadar, a banking sector analyst and economist at KASB Securities, an investment bank.

Published In The Express Tribune, June 20th, 2012.

Cornering the market: PTCL accused of violating competition regulations

CCP issues show-cause notice to the teleco­m compan­y to defend its positi­on. CCP says PTCL has abused its dominant position in the market for the provision of DSL services by being involved in the practice of predatory pricing and refusal to deal.

ISLAMABAD: 

The anti-trust watchdog has issued a show-cause to Pakistan Telecommunication Company Limited (PTCL) for abusing its dominant position in the market while providing broadband services.

The Competition Commission of Pakistan (CCP), headed by Rahat Kaunain Hasan, issued the show cause notice following an inquiry that determined that the PTCL was restricting and reducing competition in the market.

The commission has given a fourteen day deadline to the PTCL for defending its position in front of the CCP before it passes final judgement. According to the CCP Act 2010, the violation of the act may result in a penalty of up to Rs75 million or 10% of the total sales, whichever is higher.

“The inquiry report concludes that PTCL through the practice of margin squeeze has made the market for provision of broadband services through Digital Subscriber Line (DSL) technology uncompetitive and prohibitive”, announced the CCP on Tuesday.

The PTCL has prevented, restricted, reduced and distorted the competition in the market for provision of broadband services through DSL technology, said the CCP.

The commission is struggling to establish its writ as most of its decisions remain unimplemented. The CCP is also seeking financial autonomy as all other regulators are not paying their fees to the CCP, as required under the CCP Act.

The CCP held enquiry on a formal complaint filed by Micronet Broadband Limited, LinkDotNet Telecom Limited and Nexlinx Limited, alleging that PTCL has abused its dominant position in the market for the provision of DSL services by being involved in the practice of predatory pricing and refusal to deal.

According to the enquiry report, the relevant product market has been divided into the upstream market for access to the copper infrastructure and the downstream market for the provision of broadband services through the DSL technology. The relevant geographic market for both products has been determined to be the whole of Pakistan.

According to the enquiry report, the PTCL having a nation-wide copper infrastructure holds a dominant position in the upstream market for access to copper infrastructure, which is an essential input for the downstream market.

Based on the findings of cost analysis conducted by the enquiry officers, the PTCL being a vertically integrated incumbent, through pricing for access to its copper infrastructure, has reduced and squeezed the margins in the downstream retail DSL market to an extent that an equally efficient competitor cannot operate profitably.

The findings of the enquiry report reveal that this margin squeeze by PTCL, through low retail prices has gradually reduced the profit margins of the other retail operators which as per their financial statements are incurring losses.

Since PTCL’s entry in the DSL retail market, the number of total service providers has reduced from 11 to six and no new player has entered the market, an indication that the PTCL is violating its dominant position in the relevant market, said the CCP.

The enquiry report stated that generally lower tariffs in the retail market will be regarded as beneficial for customers, however, in this case lower retail tariffs have led to competitors being driven out of the market and may in the long run lead to the creation of a monopolistic situation.

“This would leave the consumers at the mercy of one super dominant player who will be at its free will to exploit the consumers”, concluded the enquiry report.

Published in The Express Tribune, June 20th, 2012.

Panasonic’s first Android-based ‘toughpad’ unveiled in Asia

The rugged tablet­s are popula­r in indust­ries such as defenc­e, utilit­ies and constr­uction. It was the first time the “Panasonic Toughpad A1″ was showcased in Asia. PHOTO: PANASONIC

SINGAPORE: Panasonic’s first Android-based computer tablet designed for tough environments such as battlefields was unveiled Tuesday at a major regional telecom fair in Singapore.

It was the first time the “Panasonic Toughpad A1” was showcased in Asia, where company officials said there is a huge demand for such a rugged device.

It has already previewed in the United States and production will start later this year, company executives said.

Satoshi Mizobata, a director at Panasonic’s Toughbook Asia Pacific Group, said the device is the firm’s first rugged tablet computer using the Android operating system.

Previous Panasonic “toughpads” use Windows.

“It’s military-type,” Mizobata told AFP at the Panasonic booth at the CommunicAsia telecom trade expo that opened Tuesday. “It is water-proof, dust-proof and shock-proof.”

The device weighs 0.97 kilogrammes and its 10.1-inch LCD display allows the user to read even under the sun while it is tough enough to withstand being dropped from a height of four feet (1.21 metres). It also has a nine-hour battery life.

Amos Tio, Southeast Asia general manager for Toughbook Asia Pacific Group, said the gadget will launch in the region in September and in the United States in August.

The rugged tablets are popular in industries such as defence, utilities and construction, as well as by workers in Asia’s vast palm oil plantations, company executives said.

Bank of England on verge of new money boost

englandLONDON: The Bank of England is close to launching a new round of monetary stimulus because of the worsening euro zone crisis, according minutes of its last policy meeting, which showed officials split 5-4 on the move, with Governor Mervyn King in favour.

The minutes show far stronger explicit support for more asset-buying quantitative easing than many economists had expected, and is the first 5-4 split on the MPC since June 2007. King was last in a minority in August 2009, when he also supported more QE than the majority.

Last month BoE policymaker David Miles was the only official to call for an expansion of quantitative easing — which is designed to help the economy by making borrowing cheaper — but economists had generally expected him to be joined by only one or two further members of the MPC this month.

King and external members Adam Posen and Miles both voted to increase quantitative easing by 50 billion pounds to 325 billion pounds. Paul Fisher, the BoE’s executive director for markets, supported a 25 billion pound increase.

Moreover, it looks likely that there could be a majority for more QE as soon as next month. “Most members judged that some further economic stimulus was either warranted immediately or would probably become warranted in order to meet the inflation target,” the minutes said.

“It’s quite a surprise, we had thought there could be a number of members voting for more QE, (but) four of them was clearly on the top end of expectations,” said Deutsche Bank economist George Buckley. “(It) suggests we’re going to see more QE very soon,” he added.

Gilts outperformed German government debt after the news. All members of the MPC believed that inflation was likely to be lower than the central bank forecast in May, when it predicted it would take until the second half of next yea r before inflation fell below its 2 percent target.

Data published on Tuesday showed that inflation fell unexpectedly to a 2-1/2 year low of 2.8 percent, further easing the way for the BoE to expand QE possibly as soon as next month. The BoE decided in May not to extend QE purchases largely because inflation was proving slower to fall than expected.

Separately, official data on Wednesday showed the number of Britons claiming unemployment benefit rose unexpectedly in May, the latest sign of the economy’s ill health.

The Office for National Statistics said the number of people claiming jobless benefit rose by 8,100 last month. Analysts had forecast a fall of 3,000 on the month.

In the BoE minutes, MPC members cited a fall in commodity prices and signs of less generous wage settlements as evidence of weaker inflation in the short term, and warned that risks to Britain from the euro zone debt crisis had intensified.

“The likelihood of a disorderly outcome looked to have increased, and that could, if it crystallised, have a significant effect on global demand and the stability of the banking system,” the minutes said.

Some MPC members had said they wanted to see the outcomes of Greek and French elections before deciding on more QE. Both took place last weekend.

Some also said instruments other than gilt purchases may be more appropriate to stimulate the economy. Last week the BoE and the government announced new liquidity measures and lending guarantees to support credit.

King, the governor, said in a speech last week that the economic outlook had darkened under a “black cloud” of worries about the euro zone debt crisis, and that the e case for further QE had increased.

Dutch court orders Apple to pay Samsung damages over patent

The Hague ruled Apple had violat­ed a Samsun­g patent used in some of Apple’s phones, tablet­s to connec­t to Intern­et. A folder of a judge is pictured during a hearing of an appeal between Apple and Samsung at the higher regional court in Duesselorf January 31, 2012. PHOTO: REUTERS

AMSTERDAM: A Dutch court ordered Apple Inc to pay damages to Samsung Electronics Co Ltd over a patent violation in the Netherlands, the latest twist in the global legal battle waged by the two rival phone and computer makers.

Apple and Samsung have been suing each other in about a dozen countries for the last few years as they compete globally for consumers in the fast-growing markets for smart phones and tablet computers.

The US company has accused Samsung of “slavishly” copying the iPhone and iPad tablet through products that run on Google’s Android software. The Korean firm has counter-sued with claims accusing Apple of infringing its patents.

A court in The Hague ruled Apple had violated a Samsung patent used in some of Apple’s phones and tablet computers to connect to the Internet, and said damages should be based on certain iPhone and iPad sales in the Netherlands.

The violation applies to iPhone 3G, 3GS, and 4 and iPad 1 and 2, the court said.

Damages should be based on Dutch sales figures since August 4, 2010, which the court said was the date when Apple could have known it was violating Samsung’s patent.

A Samsung spokeswoman said she did not know whether the ruling had any international implications, nor did she know how much money Samsung would ask for.

An Apple spokesman had no immediate comment.

The Dutch court dismissed three other patent infringements claimed by Samsung.

Apple has a complex relationship with Samsung, a conglomerate that makes computer chips, Galaxy smartphones and televisions.

While Samsung’s smartphones and tablet computers run on Android and compete with Apple’s products, Samsung is also a key components supplier to Apple.

Restaurant chain: Fatburger decides to taste the local market

Fatburger – Santa Monica, California-based fast-food chain – is the latest one to announce its intentions to take a bite out of the local food market.

KARACHI: 

The fast-food and restaurant market in Pakistan has reached a threshold where it may be recognised as a driving force for new investments. The billion dollar market of Pakistan isn’t only seeing growth of local food outlets but also attracting international food chains.

Fatburger – Santa Monica, California-based fast-food chain – is the latest one to announce its intentions to take a bite out of the local food market. One of fastest growing food chains around the world, Fatburger will be introduced in Pakistan soon by BIL Foods Ltd, a subsidiary of Dubai-based BIL Investments that owns a chain of restaurants and a chemical company.

Fatburger will join the likes of McDonalds, Pizza Hut, KFC, Hardee’s and OPTP that are already operating in the country. Not to mention hundreds of local restaurants and fast-food outlets opening each year to meet the growing demand.

According to industry sources, around 50 new food outlets were due to be operational during the last couple of months in Defence and Clifton areas of Karachi alone. Of those 50 some places, many have already opened while others are in the pipeline, sources said.

The list does not only include restaurants and fast-food chains but also cafes, bakeries and specialty food outlets, the source added.

The growth of the food business has even created a secondary market for young entrepreneurs as many online food portals have opened up and are doing well financially.

While there is no official data available about the size of this market, a conservative study of some 25,000 food centres by Food Connection Pakistan – an online food portal – found that Pakistanis spend at least Rs90 billion ($1 billion) on dining out every year.

“I believe, food is the only entertainment in Pakistan so far,” BIL Foods CEO Samiullah Mohabbat said while sharing his views about international food chains’ interest in Pakistan – in an email to The Express Tribune.

There is still a huge gap for international food chains to enter in the Pakistani market, Mohabbat said.

Referring to the benefits of doing business in Pakistan, the CEO said Pakistan has a strong human resource; English speaking workforce, cost-effective managers and technical workers. Besides, he added, it has a large and growing domestic market.

There are about 180 million consumers with rising incomes, he said, and a growing middle-class moving to sophisticated consumption habits – making it a strong emerging market.

Explaining what attracted BIL Investments towards Pakistan, he said good quality telecommunications and IT services, comprehensive road, rail and sea links, long-standing corporate culture in Pakistan make the country an attractive market for investment.

He further said that Pakistan’s strategic location makes it a regional hub and principal gateway to the Central Asia republics. The country has a long-standing link with the Middle East and South Asia and provides comprehensive duty-free facilities to the investors.

Excited about launching Fatburger’s first franchise in the country, Mohabbat hinted for more investments in the local food market.

“We are passionate about international franchising and seeing as there are flourishing opportunities present in the country,” Mohabbat said. “BIL Foods is striving to bring the highest quality of international brands to Pakistan and you will witness more of our endeavours in the near future,” he added.

BIL Foods will be opening five restaurants in three years, according to Mohabbat, and further development agreement would be signed after that period. Fatburger will follow Hardee’s example and open its first franchise on MM Alam Road, Lahore followed by Dolmen City Mall, Karachi. Mohabbat did not mention any exact dates.

Fatburger has over 95 locations in the US. In addition to its California roots, Fatburger has a strong presence across America. The fast-food chain has its franchises in Canada, Dubai, Hong Kong, Macao, Beijing, Abu Dhabi, Qatar, Saudi Arabia and Jakarta. Pakistan will be the latest addition to its portfolio.

Published in The Express Tribune, June 20th, 2012.

Australia Grange seeks partner for iron ore project

22zzzMELBOURNE: Australian iron ore producer Grange Resources is looking to sell at least a 30 percent stake in its $2.9 billion Southdown magnetite project in Western Australia to ease the funding burden, it said on Wednesday.

Grange appointed Deutsche Bank to advise on the selldown of its 70 percent stake in the project, which is designed to produce 10 million tonnes a year of magnetite concentrate for more than 30 years.

“The introduction of a third joint venture partner to the project is the best way to increase the project’s certainty and viability, and reduce the risk profile that Grange currently has with this project,” Grange Managing Director Russell Clark said in a statement.

There was interest in Southdown from around the world, particularly China and other Asian countries, he said. The project is already 30 percent owned by a Japanese consortium made up of trading house Sojitz Corp and Kobe Steel .

Kobe Steel, Japan’s no.4 steel maker, is reported to have paid between A$50 million and A$80 million when it bought its 10 percent indirect interest, which would value all of the equity in the project at A$500 million to A$800 million, Clark said.

Southdown is key to Grange’s growth as it is expected to produce four times as much magnetite as its existing Savage River operation.

Grange shares rose 2 percent to A$0.51 on Thursday outpacing a 0.2 percent rise in the broader market and valuing the company at A$589 million.

APCNGA: Body suggests cut in gas to captive power plants

Parach­a said that govern­ment should impose comple­te ban on use of gas genera­tors. “Government should impose complete ban on use of gas generators,” APCNGA Chairman Ghiyas Paracha. PHOTO: INP/ FILE

ISLAMABAD: 

All Pakistan Compressed Natural Gas Association (APCNGA) Central Chairman Ghiyas Paracha has said that for urgent relief from energy crisis and electricity shortage the captive power should be shut off to divert 344 million cubic feet per day of gas to power stations to produce 1,720 megawatts (MW) of electricity.

While giving suggestions to the Prime Minister’s Energy Committee Paracha said that the industry is getting enough gas for processing.

Paracha said that government should impose complete ban on use of gas generators. The generators in factories, petrol and CNG stations, high rise buildings, commercial plazas and houses are consuming gas which can alternatively be used to produce 2,000MW electricity. “We will give full support to government in this regard,” he added.  He said that APCNGA’s plan to curtail the energy crisis has been given to government.

Published in The Express Tribune, June 20th, 2012.

PC maker Dell to pay dividends

dellNEW YORK: Struggling computer maker Dell announced Tuesday it will use some of its cash stockpile to pay shareholder dividends as it pursues a shift to services.

Chairman and chief executive Michael Dell told CNBC television that in view of the PC maker’s cash position and a shift to a more diversified business model, “we feel confident this is a great time to return this capital to shareholders now in perpetuity.”

The company will pay 32 cents per share annually, amounting to an annual expense of $560 million, from a cash stockpile of $17.2 billion.

Jon Ogg of 24/7 Wall Street said the move was long overdue and follows similar moves by tech firms like Apple and Hewlett-Packard.

“Dell has been part of our technology dividend sinners for quite some time,” Ogg said. “It is now finally changing its policies and will start to unlock that shareholder value by paying a dividend to its common shareholders.”

Dell shares rose 0.93 percent to $11.97 and added another 2.7 percent in after-hours trade. But the shares are down from over $30 in 2007.

The company said in a statement it was taking steps to boost shareholder value through stock buybacks and the new dividend, and would be expanding its services to be more diversified.

“Dell is an end-to-end solutions provider today as we continue to build out our data center, software and services capabilities,” Michael Dell said.

“We have changed the conversation we’re having with our customers. We are a solutions company first, vertically focused, and creating more value for customers with innovative offerings that provide competitive advantage.”

Dell chief financial officer Brian Gladden said, “The payment of a quarterly cash dividend to Dell’s shareholders adds another element to our disciplined capital allocation strategy.”

Dell, once the biggest maker of PCs, has been hurt by a shift to tablet computers.

The company, which has slipped to third place in the global PC market, said last month its profit in the first fiscal quarter fell to $635 million. Last year, Dell said it would halt sales of its Android tablet computer in the US market, after failing to gain traction against rivals such as Amazon’s Kindle Fire and Apple’s iPad.

Copyright AFP (Agence France-Presse), 2012

India to sell unused foreign debt limit on June 20

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indian-rupee 400MUMBAI: India will sell the unused foreign debt limit in government and corporate bonds to overseas investors on June 20, the stock market regulator informed custodian banks on Wednesday, a source told Reuters.

The unused limits in government bonds to be auctioned under the no-residual maturity restriction category is 14.64 billion rupees ($261.9 million), and under residual maturity of over 5 years is 38.37 billion rupees, the Securities Exchange Board of India told banks.

Under corporate bonds with no residual maturity or sector restriction, the unused limit to be sold is 15.99 billion rupees and under corporate bonds long-term infrastructure category the amount to be sold is 78.02 billion rupees.

French market research firm comes to Pakistan

Sees huge growth potent­ial in emergi­ng Asian market­s. Ipsos claims that it is the third largest market research company of the world. Established in Paris in 1975, the company has gradually expanded worldwide with a turnover of €1.363 billion in 2011. PHOTO: ipsos.com

KARACHI: 

In the presence of a host of corporate executives, advertising professionals and marketing heads of different national and multinational companies, a France-based global market research firm announced its formal launch in Pakistan here on Tuesday.

Currently operating in 84 countries with 16,000 employees serving 5,000 clients, Ipsos claims that it is the third largest market research company of the world. Established in Paris in 1975, the company has gradually expanded worldwide with a turnover of €1.363 billion in 2011.

Ipsos began its operations in Pakistan in September last year. Its clientele includes a number of corporate giants, including Nestle, Proctor & Gamble, Unilever, USAID, Colgate-Palmolive, ICI and Glaxo SmithKline Consumer Healthcare.

Highlighting the reasons for the company’s decision to start operations in Pakistan, Ipsos co-president and global founder Didier Truchot said the country was already a big market for its existing clients in the global market. He also expressed dismay over the fact that many Pakistani companies went to Dubai-based market research firms to get insights into the current trends in the local market.

Claiming that the information provided by Ipsos will be accurate, relevant and useable, Truchot said it offered specialised services in advertising, marketing, media and technology, opinion and social research, customer and employee research, and global operations including survey management and data collection.

A look at the revenues of Ipsos reveals that while its operations in the countries of Asia-Pacific constituted just 15% in its consolidated revenues in 2011, the most recent year-on-year increase in revenues from the Asia-Pacific region was a massive 56.4%.

The corresponding increase in Ipsos’ revenues from the Americas remained just 12.6%, reflecting the fact that the company foresees a huge growth potential in the emerging Asian markets.

Among the international clientele of Ipsos are many notable corporate entities like Microsoft, Coca Cola, Google, Samsung, Mercedes-Benz and Pepsi.

Headquartered in Islamabad with client services office in Karachi and Lahore, Ipsos Pakistan has created since September about 50 permanent staff jobs in addition to over 400 ad hoc and on-call staff positions.

The company claims that its team can undertake any modular study and has multi-country research expertise with full coverage of both Pakistan and Afghanistan.

Quoting the CEO of Unilever Pakistan, an Ipsos representative said that as opposed to its size now, the fast-moving consumer goods company would be more than two and a half times the size five years later.

“Actionable market research will be the key, as it helps identify the bulge in the target market,” he said, referring to the necessity of having credible market research for sustainable expansion in businesses.

Published In The Express Tribune, June 13th, 2012.

Combining philanthropy and business for a win-win outcome

There is no reason why a social projec­t cannot also be a profit­able one. Entrepreneurs today are interested in investing capital in positive social projects if they have some potential of generating financial returns. PHOTO: REUTERS

KARACHI: In Pakistan, many education, health and poverty alleviation projects are financed by philanthropic contributions. One of the key challenges currently faced by the social sector locally and the world-over is the question of the sustainability and scaling of similar efforts.

The Monitor Group recently published an insightful study titled ‘From Blueprint to Scale’, in which they reviewed hundreds of examples of social sector inclusive businesses in Africa and Asia to answer the critical question on the role of philanthropy and impact investment in addressing social development challenges in developing and third world countries.

One of the challenges identified was finding a way to attract new entrepreneurs into the social sector; which has historically been dominated by private philanthropists and aid donors. The question asked was: if market-based inclusive business solutions hold some promise for wider social impact, then what is the ‘right design’ and ‘roles’ of various players to scale the solution and bring everlasting change?

According to Monitor’s study, there are clear and specific roles that philanthropists and impact investors can play in their efforts to alleviate poverty and bringing about sustainable change.

Monitor, in their aforementioned study, identified four distinct stages to help establish a sustainable market development model for impact investors. The stages are ‘Blueprint’, ‘Validate’, ‘Prepare’ and ‘Scale’.  The process starts with a philanthropist creating a ‘blueprint’ of an idea or design which delivers an efficient solution to meet specific needs of the impoverished. It is critical to connect the innovative idea with the needs of customers as well as suppliers in poverty-stricken areas. Next, the pioneer needs to ‘validate’ the business model in terms of financial viability and scalability. This is an iterative process which requires running market trials and testing various assumptions to fine-tune the business model. Many ambitious ideas die at this stage as either the consumer is ill-informed about the benefit of the idea, or is unwilling to part with their meagre yet hard earned incomes.

The final two stages require the social entrepreneur to ‘prepare’ proper conditions in the market and run an awareness program to enhance demand in order to support sustainability. This is vital if a new market or a new product is being created. Once the first 3 stages are delivered, the time is ripe for ‘scaling’.  At this stage, in order to enhance the footprint of the social project, impact investors step in and take over from philanthropists to help fund longer-term investments. The key challenges to the enterprise now remain controlling costs, exploiting efficiencies, and attracting additional impact investors and stakeholders to the novel idea.

We in Pakistan need our non-governmental organisations and philanthropists to learn from this model and focus on identifying new ideas, as well as converting many of the existing models into scalable for-profit models. This should be done before the capacity of philanthropists to give caps out, or donor fatigue settles in.

THE WRITER WORKS IN THE CORPORATE SECTOR AND IS ACTIVE ON VARIOUS BUSINESS FORUMS AND TRADE BODIES.

Published in The Express Tribune, June 11th, 2012.