Wednesday, 12 December, 2012

‘The world has become a global vil-lage’; this has become more of a clichénow. Although this is true, however theduelers of this world have been experi-encing the most variable economic con-ditions across the globe. Since the rise ofIndustrial Revolution and subsequentlythe emergence of the free market econ-omy, the term Economic System has be-come move of a system of distributorsand receivers forming the status quo.

During the centuries of colonisation,the world powers collected the resourcesfrom around the world. It is interestingto note that the poorest nations of theworld were the richest in natural re-

sources! The whole Industrial Revolutionand the economics façade of the worldeconomic powers was erected from theblood and sweat of the poor nations.

Industrial Revolution and free mar-ket economy has promoted a system ofthe concentration of wealth .Amazinglyonly 20 richest people of the world havemore than half wealth of the total world.The economic disparity has made thisworld, a world in which there are averageper capita income is more than $13,000whereas most of the central African anSub- Saharan are living at an ebb of lessthan $200 per annum. The Economicwar between the worlds corporate hasmade the poor countries a war groundand the poor a fuel. Take the example ofSierra Leon, a country rich with dia-monds, yet the whole nation has been

facing an inferno of civil war for morethan ten years. The diamonds which aresold are actually blood diamonds. Theconcept of trickle down system of econ-omy, has decided the fate of poor na-tions; they only get, what rich has left. AnAmerican economist said “There is nosuch thing as a free lunch, someone hasto pay for it.”

The rich nations due to this economicvariation have become debtors and thepoor nations, the borrowers. This tenderborrower relation has further caused anextreme disparity among the people ofrich and poor nations. The race for cap-turing world economic resources amongthe powerful nations have left the macro-cosm under a cloud of smoke, smoke thatis emitted by the insinuated bodies of thepoor. The free market economy has made

the rich further rich and poor penny less. This system of free market moves

with a philosophy ‘feed the horses, sothe birds would get their food! Theworld Institutions’ such as IMF andWorld Bank are also the contributorsfor this system of economic disparityand Variation. These Institutions are inactual Controlled by the rich nations;their policies and function manifest thedesires of large rich Economies. Thepeople of poor nations have been fur-ther squeezed through a control of theirInternal Policies.

The hard earned GDP of these poornations is gulped by these Institutions inthe name of debt retirement a debt thathas never been utilised by these people.It is interesting to note that the poor na-tions of the world are the most populated

countries, and that makes these coun-tries large consumer societies, the soci-eties which are a market for these bigcorporates. The hard earned money istaken away by the large corporatesthrough alluring and enticing techniquesof advertisement.

The free market economy and thecorporates have become leaches, suck-ing the blood of poor nations. The plun-dering of resources and exploitation ofneeds has been further agar voting dif-ferences between different nations.Every year millions of terms of wheatand medicines are thrown into oceans,but the hungry people are left to facehunger and ailing are left to face deathbecause free market economy does notallow free distribution which may causemarket imbalance.

World economic variations

HAssAn Ayub

Comment

KARACHI

STAFF REPORT

THE local car and auto partsmanufacturers Tuesdayappealed to the StandingCommittee of the NationalAssembly on automobiles

to cross check their facts on duties andprices of the used imported cars and lo-cally made cars from the industry in-stead of relying on figures provided by,what they said, vested interests.

The appeal was made by the mem-bers and officials of Pakistan Automo-bile Manufacturers Association (PAMA)and Pakistan Association of Auto Partsand Accessories Manufacturers (PAA-PAM) here at a briefing Tuesday.

Chairman PAAPAM Munir K. Banasaid commercial import of used carswas officially banned but instead ofprosecuting the flouters of this ban, thegovernment bodies, including FederalBoard of Revenue (FBR), were backingthe criminals issuing forged and mis-leading figures.

Bana alleged that FBR had wronglyclaimed that age limit reduction of theused cars might cost the kitty Rs 17 bil-lion per annum, based on duties/taxescollected during 12 months of 2011-12on approx 56,000 imported used cars.

“In fact, the revenue generated bythe government on similar quantity ofvehicles manufactured by the local in-dustry would have been Rs 21.5 billion,exceeding the levy on used cars by Rs4.5 billion per annum, an increase of 26percent,” he said.

Citing an example, he pointed outthat on a Corolla manufactured in Pak-istan the FBR was getting governmentlevies equivalent to $5,568 while onsimilar imported car the totalgovernment revenue wasonly $4,400.

The chair-man PAAPAMsaid the foreignexchange com-ponent of aCorolla carwas $5400while simi-lar fiveyears oldused car isimported at$ 1 0 , 6 8 2 .“This meansthat the state notonly loses on rev-enues but also in for-eign exchange when anyfive years old car is imported,” he

added.In case of three years old used car

the duty component was higher at$7040 but the foreign exchange compo-nent is also higher at $11600.

Bana said the OEMs and burgeon-ing auto parts manufacturing indus-tries, consisting of over 3000 SMEunits, the backbone of the auto industryensuring uninterrupted supply of hi-tech auto parts for assembly of all kindsof vehicles, deposited around Rs 80 bil-lion per annum into the governmenttreasury. Sharing an example, he saidthe local addition in Corolla was equiv-alent to $4400 per unit. “These partsare produced by local auto vendors thatprovide jobs to thousands of workerswhereas in case of used car there is nolocal component and every componentis made in a foreign country thus thejobs are created outside Pakistan,” thechairman said.

Bana said the above facts also beliethe FBR claims where they state that nomanufacturing existed in Pakistan andall auto parts were imported by the as-semblers from Thailand, Japan etc.

“It is also unfortunate that the FBRhas also not even mentioned the colos-sal foreign exchange losses suffered bythe government, as a consequence ofimports of used cars. It is a known factthat import cost of CKD for a new vehi-cle is lower than 50% of an average C&Fcost of a used vehicle,” headded.

He said based onthis apparent

gap, the import of 56,000 used cars in2011-12 resulted in foreign exchangeoutflow of US$ 454 million as againstUS$ 218 million, that would have beenincurred on similar quantity of CKD kitsfor local assembly of vehicles i.e. a sav-ing of US$ 236 million.

DG PAMA Abdul Waheed pointedout that the used car import was al-lowed so that the consumers could getautomobiles at low rates. However, thestatistics proved that the prices of usedcars were comparatively much higher orsame as that of Pakistan made new cars.

“The price of brand new Pakistanmade Corolla is $16900 while a fiveyears old imported used car of same en-gine size is sold at $15100 and this smalldifference of $1800 is not worth drivinga five years old car,” he said adding thata similar three years old car is sold in thelocal market at $18600. “Is it worth buy-ing a three years old car at higher pricethan a brand new car,” he questioned?

He said all the car manufacturers inPakistan provide two years performancewarranty of the cars they sell. Moreoverthey guarantee availability of all sparesand repair of these vehicles at their ded-icated workshops. In contrast, there isno warranty for the used cars.

He brought to the notice of the Na-tional Assembly Committee that whileeven 20 years old Pakistani models are

still plying on the roads one wouldhardly see an imported used car surviv-ing on our roads five years after import.

“This is simply because the sparesof most of these cars are not availablelocally and whenever a used car breaksdown due to want of spares they have tobe imported by air,” he said adding thatthe spares are costly as they cannot beimported in bulk making the mainte-nance cost of these vehicles exorbitant.

Representative bodies of localOEMs and auto parts manufacturerssaid that It would be in the best interestof the government to encourage localauto industry, as both assemblers aswell as APMs are fully documented in-dustries and pay their fair share oftaxes, besides providing employment toover 2 million persons. On the otherhand, used car imports is not only amisappropriation of concessionary ben-efits meant for Overseas Pakistanis butit is a crime in the sense that the expa-triates’ documents are misused toarrange commercial imports of vehiclesin their names.

The PAMA and PAAPAM membersalso appealed the government to traceand bring all the used car dealers intothe tax net so that they become fullydocumented and pay their due share oftaxes. Used car dealers’ associationshould also be registered with Direc-

torate of Trade Organizations toprove which expatriates

they representing andin what capacity

they had been au-thorized to sell

the cars giftedby them for

their fam-i l i e s ’

p e r -s o n a luse.

Auto manufacturers blast FBRover misleading revenue figuresg Say government collects more revenues from auto industry g Disprove FBR’s revenue losses of Rs 17bn

IMF repaymentsmay pressure C/Adespite burgeoningremittances

KARACHI

STAFF REPORT

The worker remittances, which totaledat $ 5.98 billion during first fivemonths of the current fiscal year rang-ing from July to November (FY13), aresaid to be a major supporting head onthe country’s current account list.“The consistent upward trend in the re-mittances is providing support to thecurrent account as during the 4MFY13it was witnessed with the surplus of$258 million,” said Abdul Azeem, anInvestCap analyst. Overall, the analystsaid, the decline of 25 percent was ob-served in total remittances to $1billionin November as during the month ofOctober a huge remittance of $ 1.37bil-lion was witnessed due to Eid factor.However, 5MFY13 remittancesrecorded growth of 14 percent YoY to $5.98billion. Saudia Arabia was the mostprominent source, as its share reachedto 27 percent, up by 0.9pps YoY during5MFY12, thereby becoming the largestcontributor to remittances. Home re-mittances coming in from the UK expe-rienced massive growth of 42 percentYoY (+ $252mn) during 5MFY13. How-ever, Abdul Azeem warned that theIMF payments were more than likely toexert pressure on the current accountdeficit. Moreover, he said, due to lowerimports and rising exports, the tradedeficit showed a diverging trend byposting 7 percent YoY decline in4MFY13. Despite the global economicslowdown exports posted growth of 5percent YoY in 4MFY13. The majorcontributor remained the textile groupexports, which improved by 5 percentYoY, said he. Going forward, the ana-lyst said, the textile exports were esti-mated to be the prime driver for thegrowth in exports as its cotton yarnsegment posted colossal growth of 37percent. The exports were being sup-ported by the cotton yarn demand com-ing in from China and Hong Kong. Onthe other hand, declining in oil prices isone of the major reasons behind the de-clining in import bill.

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02

Wednesday, 12 December, 2012

Major Gainers

COMPANY OPEN HIGH LOW CLOSE CHANGE TURNOVERUniLever Pak 9801.00 9950.00 9850.00 9897.83 96.83 2,440Sanofi-Aventis Pak 352.00 368.00 368.00 368.00 16.00 100Pak.Int.Cont. SD 228.46 239.88 232.60 239.88 11.42 25,500Salfi Textile 141.97 149.06 149.06 149.06 7.09 4,000Service Industries 168.00 175.00 170.00 174.99 6.99 3,300

Major LosersBata (Pak) 1610.00 1530.00 1530.00 1530.00 -80.00 100Nestle Pakistan Ltd. 4840.00 4800.00 4795.00 4800.00 -40.00 2,100Shezan Inter. 455.00 433.00 432.25 433.00 -22.00 200Exide (PAK) 313.00 314.00 300.00 302.09 -10.91 1,400National Foods 275.63 283.50 261.99 266.06 -9.57 37,800

Volume Leaders

Jah.Sidd. Co. 17.83 18.25 16.96 17.26 -0.57 13,894,000Maple Leaf Cement 13.91 14.22 13.50 13.79 -0.12 8,859,000Sui North Gas 24.25 24.70 23.05 23.41 -0.84 7,794,000Fauji Cement 6.58 6.62 6.42 6.45 -0.13 7,209,500Engro Foods Ltd. 92.57 95.99 93.00 93.55 0.98 5,590,500

Interbank RatesUS Dollar 97.2583UK Pound 156.3621Japanese Yen 1.1787Euro 126.0273

Dollar EastBUY SELL

US Dollar 97.30 97.80Euro 125.64 127.08Great Britain Pound 155.70 157.44Japanese Yen 1.1693 1.1824Canadian Dollar 97.70 99.30Hong Kong Dollar 12.36 12.56UAE Dirham 26.38 26.65Saudi Riyal 25.87 26.10Australian Dollar 101.27 103.86

Business

Karachi women

entrepreneurs meet US official

KARACHI: Vice President FPCCI (Federation ofPakistan Chamber of Commerce & Industry)Begum Salma Ahmed invited Executive DirectorSarah Peck of the newly formed U.S. PakistanWomen’s Council to meet the leading women en-trepreneurs of Karachi at Federation House.The meeting between the US official and Karachi’swomen entrepreneurs was a frank exchange ofviews and a lively interaction where many promis-ing proposals were discussed in detail. The partici-pants agreed that women’s participation inPakistan’s development would ensure a bright fu-ture for the country. President-elect WCCI KausarJunejo, President Young Women EntrepreneursNaazish Lutfullah also participated in the meeting.

Banks to facilitate public in exchanging

demonetised Rs 5 banknote

KARACHI: State Bank of Pakistan (SBP) hasasked the banks operating in the country toissue necessary instructions to their branchesto facilitate the general public in exchangingdemonetized Rs 5 banknote by December 31,the end of this calendar year. All banks should

display posters/banners regarding the last datefor the exchange of the demonetized Rs 5 ban-knote at public counters and other visibleplaces in and outside their branches, the StateBank said in a Circular issued to the Presi-dents/Chief Executives of all commercial andmicrofinance banks (MFBs). Neither SBP/SBPBSC nor banks will exchange or pay any valueof such banknote to any person or institutionafter the above-mentioned deadline (December31, 2012), an SBP circular said. It may be re-called that the last date for exchanging thisbanknote from the field offices of SBP BankingServices Corporation (SBP BSC) and branchesof all banks is December 31, 2012, till bankinghours.

Nova Nordisk Symposium on Public

Awareness Diabetes Programme

ISLAMABAD: Nova Nordisk the world’s biggestmaker ofinsulin, recently arranged a sensationalPublic awareness program on diabetes mellitusthat was held at a five-star hotel in Islamabad.The inauguration of this event was opened by theGeneral Manager, RanaAsfarZafar. During theevent, speakers shared their knowledge and in-sight on diabetes mellitus. Specially invited inter-national speakers Senior Vice President, Mr.Yesper Holland, and Vice President (BANE) Dr.Ole Molskovbech, shared their cases on the latestresearch of diabetes mellitus, its causes and itstreatment with the audience. More over theChairman of Institute of Medicine, ProfessorJamal Zafar, Dr.Bilal bin Yunus from ShalimarMedical and Dental College (Lahore) ,Baqai Med-ical University’s Asst. Prof., Dr. ZahidMiyaan, alsoshared their views on the pathogenicity and epi-demic nature of the disease in Pakistan.

Etihad Airways and Alitalia

direct Rome-Abu Dhabi services

LAHORE: Alitalia, Italy’s flag carrier has begun di-rect services from Rome to Abu Dhabi with a cele-bratory flight to the capital of the United ArabEmirates (UAE) and the flight was greeted by a tra-ditional water canon salute. Also greeting the flightwere H.E. Sheikha Lubna Bint Khalid Al Qasimi,UAE Minister for Foreign Trade, H.E. GiorgioStarace, Italian Ambassador to the UAE, H. E. AliMajed Al Mansoori, Chairman of the Abu Dhabi Air-ports Company (ADAC), and senior executives fromEtihad Airways. Alitalia are operating the newflights in conjunction with codeshare partner EtihadAirways. The launch of the new direct Rome-AbuDhabi service follows last August’s announcementthat the Italian carrier would fly four weekly returnAirbus A330 services between the two capitals.

KARACHI: National Bank of Pakistan (NBP) held a press

briefing on creating awareness about NBP product, the

press briefing was given by Shaheryar Qaisrani,

EVP/Divisional Head, Agri Business Division CRBG;

.Pervaiz Taj Bhatti, SVP/Consumer & Retail

Banking/SME; .Adnan Adil Hussain,SVP/Divisional Head-

CRBG, Farooq Hassan,SVP/Divisional Head-Business

Development,CRBG and Syed Ibne Hassan, vice

President / Divisional Head(A) Corporate

Communication & Brand Management Division.

PTCL holds fun filled

go-karting activity

ISLAMABAD: Pakistan TelecommunicationsCompany Limited (PTCL) held a day long go-kart-ing event for its employees in conjunction with theearlier held Annual Sales Conference.Held at the go-karting track in Islamabad, theevent was organized as part of PTCL’s efforts todevelop team building and to synergize and invig-orate its employees. The activity offered a chanceto various departments to come at one platformand develop mutual coordination and team work.Go-karting is one of the most popular forms ofmotor sports in the world. It is not only a greatway to spend a fun filled day with family andfriends, but is also considered a stepping stone to-wards professional racing.

CORPORATE CORNER

KARACHI

STAFF REPORT

SPANISH Ambassador to PakistanJavier M. Carbajosa Sanchez Tues-day said his country could cooper-ate with Pakistan in areas rangingfrom fashion textiles to perishable

items like fruits as Spanish firms were now fo-cusing more on the emerging Asian markets.

“Cooperation can be materialized in theareas of fashion textiles, banking, shipping,transportation, pharmaceutical, dairy, fruitsetc.,” said Sanchez during a visit to the KarachiChamber of Commerce and Industry (KCCI)Tuesday.

He endorsed that prospects to enhancePak-Spain trade do exist. Political re-lations between the two countrieswere good, however, trade relationsneeded to be enhanced.

He said media was portraying an“unfair picture and perception” of Pakistanwhich was different from reality. To attractinvestment, safety security, political stability,infrastructure and utilities are of prime impor-tance.

He noted that many Euro-zone countrieswere facing economic slow-down, however,Spain would revive its economy on a fast-pace.He said Spain was the world leader in renew-able energy in wind, solar, etc. and Spain pro-duces 23 percent energy from renewablesources which was highest in Europe.

The Spanish cellular phone service

provider O2 was the first cellular serviceprovider in Europe, but Asia was traditionallynot a commercial priority of Spanish firms.

“However, Spanish companies are nowconcentrating on Asian markets,” said theenvoy.

Earlier, President KCCI Muhammad Ha-roon Agar urged the ambassador to ask Span-ish investors to invest in renewable energysolutions in the energy-hungry Pakistan.

Agar said Spain, being world leader in solarpower, had enormous potential to invest in al-

ternate and renewable

energy solutions and help Pakistan in technol-ogy transfer.

He said that Pakistani textiles, fashion andleather garments, sports goods, fruits had ex-cellent potential to be exported to Spain.

Present trade volume less than $ 1 billionwas far below than potential and serious effortswere needed to enhance Pak-Spain bilateraltrade. Major items of imports from Spain weremachinery, iron and steel products, ceramicproducts, boilers, telecommunication equip-ment, chemicals etc. Pakistan seeks Spain’ssupport to get GSP plus status and fair accessto EU market. Keeping in view mounting eco-nomic crises in Europe there was a need to de-velop close ties between Spain and Pakistanand get mutual benefits.

Pakistan can help Spain to expand its tradeto Central Asian countries, China, India and

Middle East while Spain in turn could helpPakistan expand its trade with European

countries, in transfer of technology,human resource development, import of

human resource to Spain etc.Agar also proposed the signing of

an MoU between KCCI and Barcelona orMadrid Chamber of Commerce to enhance

exchange of trade information, trade dele-gations.

According to KCCI, Spanish exports havedoubled in last 10 years, reaching 134 millioneuro in 2011, showing a steady progress,though still much journey ahead. Imports en-hanced from 194 million euros in year 2000 to429 million in 2011.

All eyes on PAkistAnSpain eyes Pakistan for augmenting below $1bn bilateral trade

HSBC pays record fine to settle USmoney-laundering accusationsHSBC is to pay a record $1.9bn (£1.2bn) to settle allegations thatit laundered money for drug cartels and broke sanctions in theUS to allow terrorists to move money around the financial sys-tem. In the latest embarrassment for Britain’s banks, the HSBCchief executive, Stuart Gulliver, said he was “profoundly sorry”as he confirmed the scale of the fine. It is the largest ever forsuch an offence and even greater than the £940m the bank hadfeared it faced after the allegations first surfaced in the summerin a report by the US Senate. “We accept responsibility for ourpast mistakes. We have said we are profoundly sorry for them,and we do so again,” he said, insisting Britain’s biggest bank was“a fundamentally different organisation” now.The fine for HSBC comes barely 24 hours after Standard Char-tered paid £415m to US regulators, and as banks such as RoyalBank of Scotland and UBS brace for a wave of fines in comingdays for attempting to rig Libor following the £290m penaltyslapped on Barclays in June. MOniTORing dESk

KARACHI

STAFF REPORT

The Mennonite Economic Develop-ment Associates (MEDA) has re-cently signed a Memorandum ofCooperation with Khushhalibank topromote economic developmentand access to finance in Pakistan.

MEDA is an international non-profit making organization workingin various countries all over theworld, and implementing USAID’sEntrepreneurs project through key

partners in Punjab, Sindh,Baluchistan and KPK.

The USAID-supported entrepre-neurs project aims to significantly in-crease the incomes of 75,000 mostlywomen micro-entrepreneurs en-gaged in dairy, hand embellishedfabrics, beekeeping and medicinalplant collection across Pakistanthrough production and quality im-provement, access to better marketsand business service providers suchas micro-finance institutions.

The main objective of this col-

laboration is to provide sustainablesolution for access to finance bymicro-entrepreneurs. Both organi-zations agreed to identify potentialmicro-entrepreneurs and help facil-itate meetings with those willing toavail microfinance facilities fromKhushhalibank. They also decidedto take appropriate measures toprepare business plans for inter-ested micro-entrepreneurs, im-prove their technical skills andlinkage development with market.MEDA agreed to strengthen links of

Khushhalibank with these busi-nessmen and women including reg-ular communication, coordinationand counselling. At its end, Khush-halibank pledged to provide orien-tation of its microfinance programto the implementing partner organ-izations, introduce their programsto potential borrowers for their bet-ter understanding, select eligiblegroups and individuals for microfi-nance services as per its policiesand provide them with the neces-sary loans requested on merit.

KHUSHHALI BANK, MEDA AGREE TO FACILITATEENTREPRENEURS ON MICRO-FINANCING

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